By Jessica Obeid

Energy infrastructure has chronically been a target in times of war. The recent conflict in the Middle East, however, has elevated these assets into critical instruments of geopolitical and economic pressure. Attacks have targeted pipelines, power plants, and oil and gas facilities, alongside the instrumentalization of hydrocarbon flows, exerting significant pressure on countries in the region and disrupting global markets.

From drone strikes on Gulf refineries and liquified natural gas (LNG) complexes to the use of fuel supply as political leverage, the targeting of high-value energy assets has exposed the risks inherent in fossil fuel-dependent systems and oil rentier economic models.

Attacks on Saudi Arabia’s Abqaiq facility, the world’s largest single facility crude oil stabilization plant, Qatar’s Ras Laffan, the world’s largest LNG complex, and the United Arab Emirates’ Ruwais refinery, among others, have demonstrated that concentrated energy infrastructure is a risk multiplier. The Strait of Hormuz, through which 20–30% of global oil and around 20% of LNG exports flowed before the 2026 Iran war, has emerged as a major chokepoint for the global economy. The negative consequences have cascaded, with oil prices exceeding $120 per barrel, supply chains disrupted, and strategic reserve releases reaching their limits. Almost 1 billion barrels of crude oil were taken off the market during the war, amounting to the worst energy supply shock in history.

From Climate to Security

The conflict will accelerate a fundamental shift in the driver behind green investment. Energy security will become the most powerful enabler of the global energy transition.

The greatest challenge of conflict-driven disruptions is that their effects can endure long after the fighting stops. The end of the Iran war and the reopening of the Strait of Hormuz will not restore the prewar dynamics of the global energy market. The conflict has already redirected policy and investment toward sustainability, efficiency, and resilience. In the medium to long term, the demand for localized and clean energy systems will increase, driven less by environmental priorities and more by security concerns.

Defense budgets are set to expand at the expense of green financing, widening the funding gap when the Global South needs it most.

Historically, the dominant narrative around green investment has been largely Western-led, centered on environmental, social, and governance (ESG) mandates, carbon targets, and climate diplomacy. The Iran war has underscored the importance of economic and energy security, which have long driven green investments, particularly in clean energy, in many developing countries. Securitization is the key engine that will enable a sustainable transition and focus on green investments. States do not abandon security imperatives for political convenience.

This reframing has significant implications for capital allocation. Investments previously evaluated on decarbonization metrics and ESG returns are being stress-tested against geopolitical risk models. Security, however, requires significant capital. This comes at a time when global green financing is under increasing strain and becoming more fragmented.

Green Capital Retreats

As the need for green investments expands, the financial capacity and political will to meet these needs are shrinking. Western capital is scarcer due to shifting priorities in the U.S. and tightening fiscal constraints across Europe. Defense budgets are set to expand at the expense of green financing, widening the funding gap when the Global South needs it most.

Globally, mitigation finance for developing countries must increase by a factor of 4 to 8 to reach $1.6-3.2 trillion annually by 2030 to meet climate targets, while adaptation needs are estimated at $140-300 billion per year. Adaptation finance reached $32.4 billion in 2022, a three-fold increase from 2016 levels but far below the amount needed.

Green financing has long failed to mobilize at the scale or speed required to close the growing shortfall between climate needs and available capital, and the situation is deteriorating. Between January 2025 and 2026, the U.S. withdrew from major international climate financing mechanisms, including the Green Climate Fund (GCF), the largest climate fund, and the Loss and Damage Fund, established in 2022 as climate damage compensation fund, while also cutting funding for climate and environmental projects both domestically and internationally.

Green development frameworks in Africa, South Asia, and Southeast Asia, which have been built on the pledges of sustained Western capital flows, are now facing a significant funding gap. For example, the Just Energy Transition Partnerships (JETPs) has secured $50 billion in total pledges from the U.S., Canada, and several European countries, yet only $9 billion has been distributed. In 2025, the U.S. pulled its financial contribution to JETP.

More broadly, green financing has long been associated with complex frameworks, strict conditionalities, and lengthy application and implementation timelines. Yet the energy transition in the Global South requires large-scale capital, technology transfer, and capacity building that cannot afford to wait for Western foreign policy priorities to rebalance.

Strategic Positioning

As Western climate finance contracts and energy security concerns intensify, Gulf states will be the emerging architects of green investments in the Global South. Their strategy is to reduce risk through geographic and industry diversification while pursuing long-term influence in global energy markets.

Globally, green financing has largely prioritized clean energy projects, and Gulf states have increasingly become key players. Saudi Arabia’s Public Investment Fund identified $19.4 billion in green investment requirements, while Saudi clean energy champion ACWA Power has developed around 53 gigawatts (GW) of renewable energy projects across 14 countries in Africa and Asia. Similarly, the UAE’s renewable energy leader Masdar has delivered around 65 GW of renewable energy capacity globally, with projects spanning Morocco, Egypt, India, Pakistan, and Uzbekistan.

At the same time, the war’s exposure of vulnerabilities across centralized fossil fuel infrastructure is elevating the strategic importance of clean energy, including decentralized energy systems. Solar generation, battery storage, and distributed microgrids are structurally more resilient than centralized hydrocarbon networks vulnerable to chokepoints, sabotage, and supply disruptions. Investments in these systems across the Global South can serve as a long-term energy security hedge that aligns directly with Gulf strategic interests and capital capabilities.

The conflict will shape the architecture of a new global energy order, increasingly influenced by the Gulf. As Western multilateralism wanes, Gulf capital may step into a role that has been historically dominated by development banks, export credit agencies, and bilateral aid programs.

For the Global South, this shift presents a timely opportunity, especially if investment frameworks are structured to build local capacity and supply chain resilience. Technology transfer, local content, and workforce development must therefore become pillars of these partnerships.

For the Gulf, this will be the most consequential repositioning of economic influence since oil wealth first accumulated in the 1970s. As global markets become more fragmented and volatile, Gulf states will also seek more geographically distributed and diversified investment portfolios to reduce exposure to concentrated risks. The difference is that this time, the exported resource is energy resilience itself. Amid geopolitical instability, climate vulnerabilities, and capital retrenchment, resilience may become the most valuable commodity.

Jessica Obeid is a Gulf Committee - Policy Council member of the Rihla Initiative for Green Economic Growth. Obeid is an energy engineer and strategist with a portfolio career spanning over 17 years of experience from complex infrastructure to high-level policy and regulatory reform, contributing to the development of clean energy systems in the Middle East, Africa, and Europe.

Section: (rihla-initiative) Photo: Aleksandar Pasaric

By Saurabh Punamiya

Wars teach lessons in resilience economics that are often absent from the conventional wisdom of policymakers. Today, across the Gulf countries, trade routes have become the theater of geopolitics and supply chain risks. Shipping insurance is stoking inflationary pressures. Access to fertilizers and energy goods are matters of national security and sovereignty. One carrier estimates the conflict is adding $40 million to $50 million a week in extra costs once fuel, war-risk premiums, and storage are counted. The Gulf states import 85% of their food, so maritime disruption is a stability risk.

The Strait of Hormuz has long been a critical chokepoint. In 2025, nearly 15 million barrels a day of crude, about 34 percent of global crude oil trade, passed through the waterway, 21 miles (33 kilometers) wide at its narrowest point. China and India together received 44 percent of those exports. Blocking the passage, which Iran had threatened to do many times, would cause a shock that would travel far beyond oil, into credit, inventories, and investment timelines.

Amid rising U.S.-Iran tensions and concerns about the vulnerability of shipping routes, India and the Gulf Cooperation Council (GCC) formally launched negotiations on a free trade agreement (FTA) on February 24, 2026. The talks signaled a shift toward proactive thinking on how to build institutions to mitigate the next shock, which happened to come four days later with the start of U.S. and Israeli strikes against Iran. The war is a stress test for the India-GCC relationship. It also demonstrates how future shocks will punish over-reliance on a single route.

The corridor has the scale to justify a more ambitious agenda than changing tariff arithmetic. India–GCC trade reached $178.56 billion in FY 2024–25, with exports of $56.87 billion and imports of $121.68 billion, accounting for 15.42% of India’s global trade. Over the last five years, India-GCC trade grew at an annual average of 15.3%. The GCC is a market of about 61.5 million people with GDP around $2.3 trillion. Cumulative GCC investment into India exceeded $31.14 billion by September 2025. The nearly 10 million Indians living in the GCC play a key role in strengthening the bond.

The energy relationship further underscores the strategic exposure. Government data has long noted that GCC countries account for around 35 percent of India’s oil imports and 70 percent of its gas imports. Interdependence at this scale cannot be managed through ad hoc crisis calls. It requires a framework that anticipates risk and rewards investment. The mistake would be to frame this as a story about tariffs. Tariffs are the most visible part of the relationship but not necessarily what will drive it forward. The lack of institutional credibility must be addressed to reach the real prize, an investment cycle that leads to more trade, investment and integration. Call it a Green New Deal for the Arabian Sea, not as a slogan, but as a disciplined pipeline of projects and rules that make decarbonization bankable.

Industrial decarbonization will require engineers, technicians, safety specialists, and project managers moving across grids, hydrogen-ready infrastructure, industrial retrofits, and new production lines.

Start with corridor enablement. More than a line on a map, a corridor is an operating system. The India-GCC talks should put shipping resilience, port readiness, and multimodal redundancy on the agenda, alongside the digital rails that keep trade moving when paperwork becomes a bottleneck. Subsea fibre and trusted documentation standards must be treated as critical economic infrastructure, not technical afterthoughts. That means negotiating the plumbing as seriously as the policy. Contingency routing agreements and common port procedures for priority cargo. Pipelines where they make economic sense, serving as insurance rather than trophies. Subsea power and data cables that make the region faster, more connected and more resilient. Mobility corridors that let project teams move quickly, because projects fail as often from permitting delays as from shortages of capital.

Next, place industrial decarbonization at the center of the growth strategy. Both India and the Gulf will be penalized if their industry remains carbon-intensive and exposed to volatile fuel costs. The transition opportunity clusters into four linked channels: clean electricity cooperation that stabilizes systems; green molecules, such as hydrogen derivatives, that decarbonize fertilizer, refining, and shipping; clean manufacturing supply chains in electrolyzers, power electronics, and grid equipment; and a materials strategy for the critical inputs that set the transition cost curve.

Each channel has its own enabling logic. Electricity needs grid codes, balancing arrangements, and investable models for transmission and storage. Hydrogen derivatives need certification that survives scrutiny and offtake contracts banks will believe. Manufacturing needs long-term finance and standards that protect integrity. Materials need joint approaches to sourcing and processing so electrification does not recreate dependency.

None of this scales if people are treated as an afterthought. The 10 million-strong Indian community in the Gulf is a labor-market interface. Industrial decarbonization will require engineers, technicians, safety specialists, and project managers moving across grids, hydrogen-ready infrastructure, industrial retrofits, and new production lines. Predictable project-linked mobility, qualification recognition, and skill partnerships are productive infrastructure.

If this sounds like a lot to ask of an FTA, that is the point. Trade agreements used to lower transaction costs. Now they must also lower uncertainty. The talks should institutionalize delivery: a resilience and connectivity workstream with a crisis playbook, a standards forum that aligns definitions and credible measurement, and a standing mechanism for business and labor feedback so implementation does not lag behind ambition.

The Gulf’s comparative advantage is balance-sheet capacity while India’s is scale deployment. The negotiations should therefore commit to a climate finance partnership built around three mechanisms: a joint platform that crowds in private capital through co-investment and blended finance; a project preparation facility that makes pipelines bankable and speeds financial close; and a standards and certification forum that makes the word “green” measurable and investable. Judge success by whether sustainable finance flows rise, projects reach financial close faster, and the corridor remains operational under stress. If that happens, the initiation of the 2026 FTA talks will be remembered less as a trade negotiation and more as the moment the region and India decided to shape their interdependence rather than allowing it to be dictated by market forces and shocks.

Saurabh Punamiya is a South and Southeast Asia Policy Council member of the Rihla Initiative for Green Economic Growth. He is a climate-finance and sustainability strategist with eight years of experience working across transport decarbonization, carbon markets, and public-private climate initiatives. He currently works on aligning corporate climate disclosures with emerging policy and investment standards, helping organizations navigate voluntary carbon markets and finance credible emissions reductions.

Section: (rihla-initiative) Photo: GCC Secretariat

By Dawud Al Ansari

The war has already reshaped the Gulf, not only in security but also in economic strategy. One might assume that climate tech will become less relevant in the post-war Gulf. After all, crisis management overrides longer-term concerns: hard security, reconstruction, and economic stabilization are likely to dominate the policy agenda. Moreover, Foreign Direct Investment (FDI) flows will likely be curtailed, leaving less financing for ambitious sectoral bets. And the Gulf Cooperation Council (GCC) states, drawn into a conflict they did not seek but that many of their neighbors openly celebrated, may become more inward-looking and less inclined to prioritize climate security.

Yet the opposite may well prove true. The war has triggered a chain of external pressures that make resilience and the internalization of financing more imperative. At the same time, pre-war domestic imperatives, including the critical need to broaden national sectoral bases, persist. In this constellation, climate tech may emerge as even more central than before.

Structural Necessity

GCC countries, as rising middle powers in an increasingly polycentric global order, pursue well-documented geopolitical ambitions: regional hegemony, strategic hedging among major powers, and the perpetuation of a distinctive social, political, and economic model. Yet these ambitions are largely contingent on, and ultimately subordinate to, underlying material imperatives, principally the need to sustain growth and, with it, domestic stability.

Economic and sectoral expansion is not merely a policy preference but a structural necessity. The Gulf is distinctive among high-income regions in that its citizen populations remain exceptionally young, creating a structural imperative to absorb large (and growing) cohorts of nationals each year into productive employment. About half of the GCC citizen population is under age 25. The security apparatus and conventional energy have historically absorbed most of the GCC labor supply and served as conduits for distributing rent throughout the economy but are now saturated.

Each GCC economy therefore faces the fundamental challenge of labor absorption, albeit at different stages. In some countries, depending on their degree of hydrocarbon dependence and demographic make-up, spiking unemployment has become an existential concern. In others, the discourse remains focused on embedding nationals into meaningful parts of the economy. But the underlying challenge is shared, and expanding the productive base through new sectors is a structural precondition of social stability.

Climate tech’s occupational profile, centered on a mix of engineering and technical capabilities, maps well onto the graduate labor force GCC universities are producing.

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Choosing which sectors to expand into is not, however, neutral. Different sectoral pathways imply different forms of dependency, resilience, and vulnerability, shaping not only economic outcomes but also the broader meaning of security. The war is reshaping the thinking of GCC leaders at this juncture.

Stability as a Business Model

The dominant model for financing the new GCC economy has rested on a clear premise. Sovereign wealth funds would play a supporting role, but the primary driver of new sector development such as artificial intelligence, data infrastructure, logistics, and advanced manufacturing, was to be FDI. Saudi Arabia alone targeted $100 billion annually by 2030. For this, GCC countries have offered investors a compelling proposition: strategic geography, lowest-cost energy, cheap expatriate labor, low-tax regimes, and, at face value, streamlined decision-making. But principally, the prospect of absolute stability sustains the credibility of the entire model. Establishing this geo-economization was arguably the central objective of the 2023 Saudi-Iran rapprochement in the first place.

Iran’s predominant “low-maintenance, high-gain” style of warfare has, however, targeted this vital condition directly. Sustained drone and missile harassment have been calibrated not to trigger overwhelming retaliation, but to inflict maximum damage on the GCC’s image as an island of predictability.

Iran’s strikes on data centers and regional technology headquarters are therefore not merely symbolic as they hit GCC countries precisely where the new economy was meant to take root. Investment decisions in these sectors are sensitive to perceived risk and long-term predictability; even limited disruptions can disproportionately deter investors. While an apocalyptic, depopulated Dubai remains a fantasy, European heavy industry seeking to relocate or US technology companies considering new data center locations will have less reason to favor the Gulf. While most effects on the GCC may prove temporary, some impairment of the FDI model is likely to endure and will require refined sectoral planning.

Internalizing the Bet

This rupture, however, may set further dynamics in motion. First, declining FDI cannot halt economic expansion in the GCC. Instead, the source of capital will shift, and where foreign investors prove absent or unreliable, domestic funding will need to compensate — and GCC sovereign wealth funds have the institutional means to do so. Until now, their predominant role has been complementary, co-investing alongside foreign capital rather than leading. Their role in domestic economic development is, however, likely to become substantially more active.

Precedents exist: Saudi Arabia’s Public Investment Fund has loaded renewable energy assets onto its balance sheet, despite their typically lower rates of return. Similarly, Mubadala in Abu Dhabi operates with a mandate that explicitly integrates development objectives alongside financial returns. The war is likely to accelerate this shift, expanding the range of assets these funds support domestically and lowering the threshold for investments justified primarily by resilience, especially where FDI has become difficult to attract.

Second, industrial planning has traditionally been a decisive vehicle for GCC economic development, and the question of which sectors to prioritize will likely need to be reopened once the war ends. In recent years, the AI and data center sector has received the most attention across GCC economies, but it is also the most structurally exposed to the new configuration. The sector is overwhelmingly led by foreign firms choosing between competing locations, not by national champions; and its demand logic is aggregated and regional, meaning that once facilities are built elsewhere, the opportunity does not return. Its physical infrastructure remains vulnerable, and it is labor-light, offering little on the employment dimension where domestic pressure is most acute.

Under these conditions, expected returns alone no longer determine sectoral viability. What increasingly matters is whether a sector can be financed autonomously, operate without heavy dependence on external actors, and contribute directly to systemic resilience. Climate tech satisfies all of these criteria, and does so in ways that connect the domestic, the strategic, and the international dimensions of GCC ambition.

Three Imperatives, One Sector

Climate tech, understood here as the engineering, infrastructure, and systems-level work of adapting to the accelerating impacts of climate change, has so far received less attention in GCC economic planning than, for instance, AI and logistics. Yet the war will likely change this over the medium term for reasons that are structural rather than incidental. What distinguishes climate tech, alongside a few other sectors, such as desalination infrastructure and defense industries, is that it simultaneously addresses three distinct imperatives the war has either created or significantly amplified. The first is domestic economic development.

While climate tech is capital-intensive, it does generate demand for a broad range of skilled labor, and it can be financed through sovereign wealth rather than FDI. Climate tech’s occupational profile, centered on a mix of engineering and technical capabilities, maps well onto the graduate labor force GCC universities are producing and offers technically demanding, nationally meaningful employment. The GCC’s own exposure to extreme heat, water scarcity, coastal vulnerability, and stress on ageing urban infrastructure generate demand for precisely this kind of green urban development, from next-generation district cooling systems to flood-resilient coastal development and large-scale water reuse infrastructure.

The second is internal strategic resilience. Strikes on infrastructure and data centers have demonstrated that security vulnerabilities extend well beyond the military domain. Security will likely be understood more expansively, increasingly encompassing the resilience of critical systems against environmental as well as military threats. Driven by the domestic demand outlined above, this shift is not an abstract concern but a concrete policy agenda.

The third is external projection and regional positioning. Shifting geopolitical dynamics will ultimately require greater regional economic engagement, even as post-war Gulf states turn inward in the short term. Sovereign wealth can launch new sectors, but sustaining them requires private capital, which in turn requires exportable demand beyond the Gulf’s small domestic markets. Incoherent US Middle East policy and the likely deterioration of Iran’s post-war economic position will together open a regional vacuum that only the GCC can plausibly fill in influence, development leadership, and institutional capacity.

GCC actors such as Masdar and ACWA Power have already established the capacity to deploy complex energy and infrastructure projects across the Global South. The capabilities underpinning this track record are transferable to climate adaptation: entities that have successfully financed and delivered utility-scale solar in Morocco or Uzbekistan carry the same institutional DNA needed to deliver coastal resilience infrastructure in Bangladesh or Indonesia, whether through existing national champions or new ones.

The Quieter Shift

The consequences of war are seldom unidirectional. Climate tech can emerge as a major sector in the Gulf precisely because the imperatives are mutually reinforcing: domestic investment builds capability, capability enables external deployment, and external deployment reinforces the strategic positioning underpinning GCC hegemonic ambitions in the post-war regional order.

The more consequential shifts may well occur in the quieter domain of sectoral reorientation, and climate tech is likely to be near its center. Early signals will be visible in sovereign wealth fund allocation decisions and in whether GCC industrial policies treat adaptation infrastructure as a strategic sector rather than an environmental afterthought.

Dr. Dawud Al Ansari is a Gulf Committee member of the Rihla Initiative for Green Economic Growth. He is a leading expert in geopolitics, energy, and development, specializing in global issues and GCC-related questions. As President of the Muscat-based Shaheen Institute for Strategy & Development, he leads research programs on foresight, economics, and strategic affairs.

Section: (rihla-initiative) Photo: Aleksey Kuprikov

By Vuyiswa Hlongwane

The war that erupted in late February has been analyzed primarily through the lens of Middle Eastern geopolitics. But for Sub-Saharan Africa (SSA), the conflict represents a structural shock arriving through multiple, compounding channels. Understanding its impact on the future of Gulf-Africa relations requires disaggregating the bilateral and multilateral channels carefully, as the effects are neither uniform nor simple.

Before the war, investments in SSA’s climate-related projects were already precarious. The International Monetary Fund’s May 2025 working paper on scaling up climate finance in the region documented a persistent and widening gap between climate investment needs and available resources, compounded by rising debt burdens and constrained fiscal space. The war has accelerated that squeeze.

The World Bank’s April 2026 Africa outlook revised SSA growth down to 4.1% for 2026, unchanged from 2025, but down from the 4.4% forecast in October. The revision was driven directly by the war’s effects: rising fuel and fertilizer costs, disrupted investment flows, and deteriorating external conditions. Debt-servicing costs across the continent had already doubled from 9% of government revenues in 2017 to 18% in 2025. Approximately half of African countries are either at high risk of or already in debt distress.

As the World Bank’s chief economist for Africa stated plainly, “There is very little scope actually for these countries to deal ​with this crisis because they just don’t have a lot of fiscal space.” For governments already choosing between debt repayment and development spending, a war-induced cost shock does not produce a climate finance trade-off; it eliminates the choice entirely.

The strain is concentrated in oil-importing economies with limited policy room: Burundi, Ethiopia, Kenya, Malawi, and Mozambique face the sharpest exposure. The Strait of Hormuz, through which approximately one-fifth of global oil shipments pass, has remained effectively closed despite the ceasefire announced on 8 April. The US Energy Information Administration has warned that fuel prices could continue rising for months even after the strait reopens. That warning is already being absorbed into transport costs, food prices, and import bills across the continent.

The asymmetry here is noteworthy. SSA’s oil-exporting economies, Angola, Gabon, and Nigeria, receive a short-term fiscal windfall from elevated oil prices. But windfall revenues in commodity-dependent states have a poor track record of being channelled into climate investment, particularly in the absence of the institutional frameworks that Gulf partnerships were beginning to provide. A higher oil price and a weaker Gulf investment pipeline are not a neutral trade-off for the continent’s green transition.

The more consequential long-term risk is the disruption to Gulf climate capital, and this requires understanding how significant that capital had become. Over the preceding three years, Gulf states had emerged as major investors in Africa’s green economy, driven by strategic imperatives around food security, critical minerals access, and sovereign wealth fund diversification into renewable portfolios. At COP28, the UAE pledged $4.5 billion for African clean energy projects.

In October 2024, Saudi Arabia pledged approximately $41 billion to SSA infrastructure over the coming decade, including $7 billion already deployed in the renewable energy sector, largely through ACWA Power, which is currently leading Project DAO, South Africa’s largest hybrid renewable plant, valued at $800 million. As recently as August 2025, Qatar’s Al Mansour Holdings announced $103 billion in planned investments across six African countries, spanning mining, energy, and infrastructure.

This was not aid, but strategic capital, structured through blended finance vehicles and public-private partnerships that required stable, long-term planning horizons to close. Now, with Gulf sovereign wealth funds facing domestic war costs, regional instability, and heightened uncertainty, accelerating long-term infrastructure commitments in frontier markets is unclear.

The pipeline of deals that was being negotiated — across East Africa in particular — is now at material risk of delay or withdrawal. Uncertainty alone is enough to stall transactions that require years of relationship-building and regulatory alignment to reach financial close.

A higher oil price and a weaker Gulf investment pipeline are not a neutral trade-off for the continent’s green transition.

A less visible but significant channel runs through labour migration. Millions of African workers are employed across Gulf states, and their remittances function as informal climate resilience funding for household adaptation decisions that formal climate finance does not reach. Ethiopia alone has an estimated 500,000 workers in Saudi Arabia. If prolonged conflict weakens Gulf labour demand or disrupts air connectivity, worker rotations slow, recruitment stalls, and remittance flows contract. The macroeconomic consequences are felt most acutely in the households and rural communities that formal climate adaptation programs have consistently underserved.

Taken together, these channels point to something beyond a temporary disruption. SSA was already facing a structural climate finance gap, running far ahead of what multilateral institutions and Western donors have delivered, and a post-COP political environment in which traditional climate finance commitments were being quietly revised downward. The Gulf was emerging as a credible alternative. Gulf investors were less encumbered by conditionality, motivated by genuine strategic interest, and increasingly organized around the infrastructure that Africa’s green transition actually requires.

That alternative is now suspended at precisely the moment it was beginning to materialize. For a continent that contributes less than 4% of global emissions but bears some of the heaviest costs of climate change, the Gulf crisis represents a development emergency that the standard frameworks of climate finance accountability were not designed to capture. Responding to this crisis demands a more honest reckoning with how fragile the architecture of African climate investment truly is.

Vuyiswa Hlongwane is the Rihla Initiative Regional Coordinator for Sub-Saharan Africa at the Bourse & Bazaar Foundation. She is a sustainability professional deeply committed to fostering green economic growth and sustainable development across Sub-Saharan Africa.

Section: (rihla-initiative) Photo: Narai Chal

By Mohamed El Dahshan

The war in the Gulf has had a complex and manifold impact on the economies of the region. While its shock is "asymmetric," the war inevitably affects all sectors of Gulf economies and has led the sovereign investment funds of the Gulf Cooperation Council states to adjust their strategies.

In the April 2026 edition of the World Economic Outlook, the International Monetary Fund (IMF) downgraded its growth projections for all Gulf countries. While Qatar, Kuwait, and Bahrain are moving into recession territory for 2026, Saudi Arabia, the UAE, and Oman remain firmly above 3%, owing not only to their maritime access beyond the Strait of Hormuz, but also to their energy mix. GCC economic diversification policies and infrastructure investments have enabled important mitigation the war’s economic impacts.

The Saudi Central Bank governor has, for instance, credited “decades of structural reforms and strategic investment in infrastructure and institutions, equipping the Kingdom with the capacity and flexibility to absorb shocks while sustaining investor and consumer confidence” for softening the impact of the ongoing crisis. Likewise, the UAE has in recent years accelerated efforts to diversify the national economy, reduce reliance on oil, optimize national resources, and create an attractive business environment for growth. in March 2026, the UAE Ministry of Economy and Tourism (MOET)’s Economic Integration Committee, referred to the country’s “advanced and resilient economic model that enables it to handle regional and international crises.”

The war also brought to the fore the interplay of security and renewable energy, which will certainly impact investment trends. Attacks on power plants, and perhaps even more critically on water desalination facilities, could represent “a watershed moment” for the energy transition; both globally, with the world reeling from disruptions in the oil supply chain, but likewise in the Gulf, where power stations found themselves targeted during the war. Diversifying energy sources may foremost become a security goal, ahead of an environmental one.

But the cyclical nature of GCC foreign investments is not new. For decades, the challenge has been the oil price boom-bust cycles, correlating with expansion and contraction cycles in public spending and investment. One factor that accelerated the GCC diversification drive was the oil price collapse in 2014-2016, triggered by a booming US oil production, and capital accumulated in sovereign wealth funds became financial buffers in the event of crises. The “rainy day” is afoot; subtle and overt policy changes are unfolding and will continue to do so over the course of the year.

The immediate term will therefore be dominated by repair, recovery, and stabilization. Damage to hydrocarbon facilities has been estimated at $25 billion, with some of the worst damage, such as Qatar’s Ras Laffan LNG facility, projected to take up to 5 years to repair — but countries will certainly endeavor to accomplish this in shorter amounts of time. Domestic infrastructure spending, safety nets, and policies boosting local purchasing power will likely also see a boost in the form of tax holidays and exemptions. Regional stabilization will be among the spending priorities of the GCC, beginning with the smaller GCC countries, such as Bahrain and Oman, and moving outwards to key regional partners like Jordan and Egypt.

While economic recovery is anticipated for the second half of 2026 and early 2027 – contingent on the duration of the war – a return to the status quo ante should not. Beyond the immediate priorities outlined above, two investment trends are thus to be anticipated.

First, localization is set to accelerate in 2026. Leading the trend is Saudi Arabia’s Public Investment Fund (PIF). Notwithstanding a decade-long FDI binge, the PIF is a longtime advocate of localization, motivated both by economic interest, but with a large subtext of sovereignty. In its latest five-year strategy, announced mid-April (though touted as early as October of last year), the Fund hopes to focus on impact and value creation, by building competitive domestic “ecosystems” in the verticals it is most invested in.

GCC sovereign funds are set to double-down on medium- and long-term investment plans in risky sectors as they change economic diversification and transformative returns.

The six ecosystems listed in the Saudi strategy are tourism and entertainment, urban development, advanced manufacturing, industrials and logistics, clean energy and renewables, infrastructure, and Neom, Crown Prince Mohammed Bin Salman’s flagship project. Compared to the 13 “strategic sectors” listed in the 2020-2025 strategy, this realignment is more than cosmetic and reflects a significant shift of priorities. Yet when pressed about international investments, PIF governor Yasir Al-Rumayyan was unambiguous: “What I want everyone to understand, we are not scaling back on our international investments.”

Qatar remains committed to its Third National Development Strategy (NDS3), unveiled in 2024, as a roadmap to its 2030 National Vision. NDS3 seeks to consolidate areas of competitive advantage that emerged with the structural and business environment reforms of the previous NDS iterations, and prioritizes the development goals of the National Vision. The NDS’s multitudinous objectives are organised into four loosely defined pillars — Energy, Diversification, Business Environment, and Innovation — giving policymakers ample leeway for adaptation. Investment authorities have, over the past weeks, touted technology, AI, sustainable energy, and advanced manufacturing as priority investment sectors and continue to emphasize innovation and diversification as long-term investment drivers.

And only this month, the UAE’s “Make it in the Emirates“ event, an initiative and product showcase originally created to encourage local manufacturing in the aftermath of the COVID-19 pandemic, witnessed record participation and deal announcements, with Minister of Industry Sultan Al Jaber resolutely announcing at the meeting that “In the UAE, we do not simply endure hardships. We emerge from them stronger”, and nudging the conversation away from “In-Country Value” – the UAE’s favored term for industrial localization — to supply chain localization.

This leads us to the second trend: GCC sovereign funds are set to double-down on medium- and long-term investment plans in risky sectors as they change economic diversification and transformative returns.

This resolve is exemplified by the Qatar Investment Authority (QIA), which aims to “make longer-term commitments and strategic investments in our internal capabilities and relationships.​” QIA continues to tout the growing share of renewables in its portfolio, while embracing riskier tech investments. Of the seven investments it has announced since the beginning of the year, four were AI products, and two related to space exploration.

Meanwhile, Mubalada’s tech investment fund has partnered with BlackRock on a $30 billion AI infrastructure fund. PIF’s “Vision portfolio” also includes multiple AI companies, a sector that the Kingdom is so sanguine about, it has designated 2026 its “year of artificial intelligence.”

And just a few days ago, on April 30th, the Abu Dhabi Investment Office (ADIO) unveiled its rebranded identity, “Beyond Capital,“ centered on its “legacy ahead” and focusing on economic transformation beyond investment promotion and attraction, and on human capital development and societal impact. Much like its Saudi counterpart, ADIO is seeking to develop “priority clusters,” while “continuing to advance export growth, strengthen supply chain resilience and deepen global partnerships.”

While it may be true that the impact of the war may only be fully understood after it ends, GCC economies are attempting — and succeeding — in keeping a step ahead, in both the news, and the planning cycles. While long-term trends are holding the line, the countries appear to have used the external pressure to realign priorities and push forward with local development plans — a priori, to investor plaudits.

Mohamed El Dahshan is a development economist. He is Managing Director of OXCON, an economic development consulting firm focusing on fragile, conflict, and violence-affected and transition countries. He is also an Associate Fellow at the Bourse & Bazaar Foundation.

Section: (rihla-initiative) Photo: IRNA

By Rumaitha Al Busaidi

During the initial 39 days of war, U.S. and Israeli strikes on Iran moved beyond oil depots to energy and petrochemical infrastructure and Iranian retaliatory strikes hit power, fuel, and desalination systems across the Gulf. More than 400 incidents carrying potential environmental risk have been documented across the region and the environmental consequences have widened with every new category of target.

Somewhere in the Gulf today, a desalination plant damaged by strikes is being assessed for structural and environmental contamination. The chemicals it needs to operate still arrive by sea, through a strait that has been effectively closed for two months. Families at the end of that chain do not track shipping indices or ceasefire terms. They turn on a tap.

Bushehr, Iran’s only operating nuclear power plant, has emerged as one of the most alarming flashpoints. Iran reports that it has been struck four times. The International Atomic Energy Agency has warned of a serious risk to nuclear safety. Qatar’s Prime Minister, who revealed that his government had simulated the effects of a Bushehr incident, put the consequences plainly: no clean water, no fish, no life. Gulf desalination plants are not designed to filter radioactive material. If contamination enters the sea, it enters the tap.

The environmental cost of this war is now embedded in the conditions of life across the Gulf. It is moving through contaminated waters, disrupted food systems, threatened desalination infrastructure, and ecosystems absorbing more stress than they were built to withstand.

Pollution from uncontrolled fires may enter soil and water, leach into groundwater, and be absorbed by crops. The war’s carbon footprint is accumulating alongside the visible destruction. Analysis of the first 14 days of fighting estimated more than 5 million tonnes of carbon dioxide equivalent—more than the combined annual emissions of 84 nations. The largest share came from the destruction of civilian buildings, homes, schools, and hospitals. Burning fuel in storage and targeted depots added another major share. Methane leaks from damaged gas infrastructure, rerouted civilian aviation, and the fuel consumption of thousands of combat flights are contributing to an atmospheric burden that will outlast the fighting itself.

Reconstruction will deepen that burden further, as damaged infrastructure is rebuilt using concrete, steel, and other energy-intensive materials. These emissions are part of the same chain of damage already moving through water systems, ports, coastlines, and food supply chains.

Ecological damage does not respect borders or battlefields. After a strike sank an Iranian warship off Sri Lanka, satellite imagery documented a 12-mile oil spill, illustrating how quickly the geography of this war has expanded. Toxic smoke from burning fuel and petrochemical infrastructure has drifted across urban populations and into ecosystems along major migratory corridors.

Over Israel, where more than 500 million birds cross each spring along the African-Eurasian flyway, air defense systems have shot down cranes and pelicans after mistaking them for incoming drones.

Across the Gulf, the pressure extends from sky to sea. Smoke, pollution, repeated explosions, and sustained maritime disruption are placing additional strain on ecosystems already weakened by warming seas, salinity, and chronic contamination. These waters are home to the second-largest dugong population in the world after Australia who are now threatened.

By mid-March, the region’s food import pathways were already under strain, with scarcity and price increases of between 40 and 120 percent reported across the region. Roughly 20,000 seafarers on nearly 2,000 ships remain stranded on either side of the waterway, a situation the United Nations has described as unprecedented in the post-Second World War era. Even during pauses in bombing, ecological risks continue to accumulate as vessels remain trapped, consuming fuel, rationing supplies, and operating as potential sources of pollution in confined waters.

This conflict has exposed the water-energy-food nexus in its most immediate form. The Strait of Hormuz carries around a fifth of the world’s oil. Gulf states remain deeply dependent on food imports, with more than 70 percent of GCC food supplies moving through Hormuz. Freshwater production relies heavily on desalination, which in turn depends on continuous energy and a steady maritime flow of chemicals, spare parts, and operating inputs. When the strait closed, pressure fell on all three systems at once.

The environmental cost of this war is now embedded in the conditions of life across the Gulf. It is moving through contaminated waters, disrupted food systems, threatened desalination infrastructure, and ecosystems absorbing more stress than they were built to withstand.

The 1991 Gulf War remains the closest precedent and offers one measure of the cost ahead. The United Nations Compensation Commission processed claims seeking roughly $352.5 billion and awarded $52.4 billion in compensation, including more than $5 billion for environmental and public health damage. It established that environmental harm from armed conflict can be documented, valued, and compensated at scale.

Today’s damage is broader and more complex. The ecosystems now absorbing the burden of this war were already under strain from chronic pollution, water insecurity, and rising environmental pressures. The scale and spread of industrial targeting raise the prospect of a far more complex remediation challenge. The damage is still accumulating, and the question of who will bear the cost remains unresolved.

A temporary pause cannot stop pollution from moving through soil and sea, carbon from settling into the atmosphere, or ecosystems from unravelling under pressures that long predate this war and will long outlast it. The region’s ecology is recording the price of this conflict in real time. Future generations will live inside that record long after the battlefield falls silent.

Rumaitha Al Busaidi is an Omani climate strategist, policy advocate, and sustainability leader currently serving as Business and ICV Development Manager at Hydrogen Oman (Hydrom). She is also the Vice President of the Environment Society of Oman. She is a member of the Gulf Committee of the Rihla Initiative for Green Economic Growth.

Section: (rihla-initiative) Photo: IRNA

Over the past decade, the member states of the Gulf Cooperation Council (GCC) have established themselves as central actors in climate finance across the Global South, deploying capital at scale, shaping investment corridors, and positioning themselves within the next phase of global green development. The war now unfolding in and around the Gulf is jeopardizing the GCC’s climate finance ambitions.

In this piece, Gulf-based climate policy experts Aisha AlRumaihi, Owais Jwaied, Ahmed Samir Elbermbali, Rumaitha Al Busaidi, Deema Almasri, Jessica Obeid, and Dawud Al Ansari offer an initial assessment of the impacts of the war.

The contributors are all members of the Rihla Initiative for Green Economic Growth, which brings together practitioners and policymakers working across energy, climate finance, infrastructure, and economic strategy in the Gulf and the Global South.

Across the contributions, the impact of the war becomes clear. Gulf investment will become more selective, more closely tied to resilience and security, and more attentive to the systems that underpin economic stability, such as utilities like water and energy, trade flows, or digital infrastructure. Capital is unlikely to retreat from the Global South, but will be redeployed with greater emphasis on strategic alignment, risk management, and long-term positioning. This reordering of priorities will shape not only the scale and direction of GCC investment, but also the structure of climate finance across the Global South in the years ahead.

Gulf Climate Finance Is Adapting, Not Retreating

Aisha AlRumaihi

The war has disrupted supply chains, increased uncertainty, and raised the cost of long-term investment. In this environment, investors are expected to become more cautious, prioritizing shorter-term and lower-risk opportunities over climate projects that depend on stability and extended planning horizons. At the same time, heightened geopolitical risk has reinforced the importance of energy security, which may lead some GCC countries to sustain or expand oil and gas production in the near term. This may slow elements of the transition, but it does not suggest a departure from longer-term climate objectives.

These pressures are also creating new openings. GCC countries are expected to increase investment in local innovation, regional capabilities, and domestic industries across renewable energy, green technologies, and sustainable infrastructure. This shift reduces exposure to external disruptions while strengthening resilience within national economies. At the same time, recent developments have elevated food and water security as core components of the climate finance agenda, pushing toward a more integrated and systems-based approach to sustainability.

The effect of the war is a shift in the form of Gulf climate finance rather than a retreat from it. Investment is becoming more flexible, more adaptive, and more closely aligned with resilience, while continuing to support clean energy, infrastructure, and climate partnerships across the Global South.

Gulf Green Investment Is Becoming More Selective

Owais Jwaied

Regional conflicts are unlikely to curtail GCC engagement in climate finance across the Global South. They are, however, reshaping its priorities, geographical orientation, and strategic function. The conflicts in and around the region are pushing Gulf states to view green investment not only as a mechanism of decarbonization, but also as an instrument of strategic resilience. Economic security, energy security, and climate resilience can no longer be treated as separate domains, particularly given the vulnerabilities associated with the Strait of Hormuz and repeated threats to critical infrastructure.

Climate finance is increasingly being integrated into a broader GCC strategy aimed at reducing exposure to shocks, protecting trade routes, and consolidating regional influence. This shift is making Gulf green investment more selective and more closely shaped by security considerations, even as countries such as the UAE, Saudi Arabia, and Qatar retain the financial capacity to invest abroad. Projects that combine climate and strategic value are likely to be prioritized, including grid resilience, desalination, food security, strategic ports, battery storage, green logistics, and renewable energy linked to industrial corridors.

The main effect of the war is not a reduction in Gulf climate ambition, but a narrowing of how and where that ambition is deployed. Without stronger de-risking mechanisms, blended finance structures, and local institutional capacity, more fragile parts of the Global South risk receiving less transformative finance, even as GCC green investment continues at scale.

Gulf Climate Finance Is Under Pressure

Ahmed Samir Elbermbali

Before the war, Gulf climate finance had real momentum. Major sovereign funds, infrastructure commitments, and clean energy deals had positioned the region as one of the few actors with both the capital and the time horizon to drive investment across the Global South. This mattered in a context where climate finance needs were already far outpacing delivery, particularly in lower-income and frontier markets.

That trajectory is now under strain. The region expected to anchor the next phase of global green investment is operating in a more constrained environment, shaped by heightened risk, pressure on infrastructure, and a weaker outlook for long-term capital deployment. Gulf climate finance has not receded, but it is facing more difficult conditions at a moment when demand for it remains high.

Capital depends on stability to move at scale. The immediate effect is not a collapse in Gulf climate ambition, but a slowdown in delivery. Commitments may remain in place, but implementation is likely to take longer, risk appetite is narrowing, and the gap between pledged and deployed capital is set to widen.

Environmental Risk Is Reshaping Gulf Climate Finance

Rumaitha Al Busaidi

The environmental cost of the war is becoming central to water security, maritime stability, and the systems that sustain daily life. As pressure on energy infrastructure reveals structural vulnerabilities, desalination systems are emerging as a critical point of exposure. Facilities damaged by strikes are being assessed not only for structural integrity, but for environmental contamination, while the chemicals required for their operation continue to depend on maritime access through a strait that has been under sustained disruption.

Beyond individual facilities, the environmental footprint of the war is expanding across systems and geographies. Early analysis of the first weeks of fighting estimated more than 5 million tonnes of carbon dioxide equivalent, exceeding the annual emissions of dozens of countries. Toxic smoke from fuel and petrochemical fires, oil spills moving across maritime routes, and damage to marine ecosystems are placing additional strain on environments that were already under pressure. These dynamics are exposing the water-energy-food nexus in its most physical form. The Strait of Hormuz carries around a fifth of the world’s oil, more than 70 percent of GCC food imports move through it, and freshwater production depends on energy-intensive desalination supported by steady maritime supply chains. When the strait came under pressure, all three systems were affected simultaneously.

This has direct implications for Gulf climate finance. The war is shifting capital toward environmental resilience, water security, and the protection and repair of critical systems. Investment priorities are placing greater weight on safeguarding infrastructure, managing ecological risk, and strengthening the systems that sustain daily life, both within the Gulf and across similarly exposed regions.

Water Security Is Moving to the Center of Gulf Investment

Deema Almasri

The war is exposing a vulnerability that has long been overshadowed by the focus on oil and gas: water. With direct strikes on energy and civilian infrastructure, including water tankers and desalination plants, the Gulf is being forced to recalibrate. The era of large external climate and green economic investments is being reassessed, with greater emphasis now placed on domestic infrastructure resilience.

From a water security perspective, this shift is not surprising. In the Gulf, water and energy are tightly interconnected. Desalination accounts for a significant share of electricity use across GCC countries, and in a region where more than 90 percent of municipal water depends on desalination and groundwater, disruptions to power infrastructure translate directly into water insecurity. Recent developments have made clear that energy infrastructure is also water infrastructure. This is changing the underlying logic of investment. Efficiency and cost optimization are no longer sufficient. Redundancy, flexibility, and the ability to withstand disruption are moving to the centre of planning and financing decisions.

This will shape Gulf climate finance at home and abroad. Outward investment is unlikely to disappear, but it is becoming more selective and more closely tied to resilience and security objectives. Capital is expected to prioritise projects that strengthen food systems, water and sanitation, clean and reliable power, and supporting infrastructure across the Global South. In this context, investment decisions are increasingly guided by the extent to which they contribute to shared resilience and long-term stability.

Resilience Is Driving the Next Phase of Gulf Renewable Investment

Jessica Obeid

The vulnerabilities exposed across water and environmental systems are mirrored in the region’s energy infrastructure. The conflict in the Middle East is destabilizing energy markets, but it is also set to drive the next phase of GCC green investment, particularly across the Global South. Energy infrastructure has long been a target in times of war, but recent developments have elevated pipelines, refineries, and LNG facilities into instruments of geopolitical and economic pressure. From drone strikes on Gulf energy assets to the use of fuel supply as leverage, these dynamics have exposed the risks embedded in fossil fuel-dependent systems and oil-based economic models.

This is shifting investment priorities. Sustainability, efficiency, and resilience are taking on a more central role as pillars of economic and energy security. Over the medium to long term, the move toward localized and clean energy systems is expected to accelerate, driven increasingly by security considerations. GCC countries are well positioned to shape this transition, supported by capital capacity and a strategic approach focused on geographic diversification and long-term positioning in global energy markets.

For Gulf climate finance, this translates into a stronger focus on decentralised renewable systems, including solar generation, battery storage, and distributed microgrids, which are structurally more resilient than concentrated fossil fuel infrastructure. Investment in these systems across the Global South serves not only climate objectives, but also longer-term economic and strategic interests. Gulf capital is therefore likely to remain active at scale, with resilience emerging as a core driver of deployment.

Climate Technology Is Gaining Strategic Importance in the Gulf

Dawud Al Ansari

It may be tempting to assume that climate tech will become less relevant in the post-war Gulf. Crisis conditions tend to shift attention toward hard security, reconstruction, and economic stabilization, while foreign direct investment is likely to become more constrained. Yet the opposite may prove true. The war is reinforcing the importance of resilience and the internalization of financing, while pre-existing domestic priorities, particularly the need to diversify economic structures, remain firmly in place.

Declining FDI is unlikely to halt economic expansion in the GCC, but it will change how it is financed. Where foreign capital becomes less reliable, domestic funding will need to compensate, and GCC sovereign wealth funds have the institutional capacity to do so. This is likely to expand the range of sectors supported domestically and lower the threshold for investments justified by resilience. At the same time, industrial policy priorities are likely to be reassessed. Under these conditions, expected returns alone no longer determine sectoral viability. Greater weight is placed on whether a sector can be financed independently, operate with limited external dependency, and contribute directly to systemic resilience.

Climate tech meets these criteria. Defined as the engineering and systems-level adaptation of infrastructure, water, and the built environment to climate stress, it connects domestic development, strategic resilience, and external engagement. For Gulf climate finance, this implies a greater focus on adaptation infrastructure, water systems, and other engineering-intensive sectors, alongside continued outward investment. The war is therefore likely to elevate climate tech within GCC economic planning and investment strategies, rather than marginalize it.

Section: (rihla-initiative) Photo: Acwa

By Dina Zayed

The old order is crumbling, and taking billions in development funding with it. Seismic cuts to global aid, paired with a deepening legitimacy crisis in how we organise for social change and the green transition, have left few organisations unscathed. Following a busy year for climate diplomacy and international development finance, the signs are unmistakable: our geopolitical order has shifted. But every collapse creates openings, and some unlikely players may need to step more firmly into the spotlight.

As Western donors retreat and European and North American philanthropies scramble to find their footing, can a new power bloc from the Global South rise to fill the void? And could Gulf philanthropies lead the charge?

The accurate scale and size of the philanthropic muscle in the region is little known, but all indicators suggest that regional philanthropy is a force to be reckoned with. Recent analysis on just the six Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – estimates philanthropic giving of over $210 billion. In the latest survey of global giving, three countries in the Middle East made it to the top ten. Saudi Arabia and the United Arab Emirates (UAE) also featured as international leaders in giving to transnational causes, with one-third of respondents in both countries donating beyond their borders.

This is part of a picture in which high-net-worth individuals and families from the Global South are rapidly growing in influence, and with it, signaling a shift in global philanthropic dynamics. For example, Asian billionaires are expected to account for more than half of the world’s newest high-net-worth individuals by 2028. The Centre for Asian Philanthropy and Society notes that the potential to give in Asia, where some of the world’s most climate-vulnerable communities live, is at least 11 times more than what is currently donated. The number of billionaires grew sevenfold from 1993 to 2020.

In the Gulf, where nearly 60 percent of the region’s population is under the age of 30, new generations of wealth holders will be redefining the philanthropic landscape in the very near future. Many of these new philanthropists are already showing a greater affinity to climate and energy, and as Badr Jafar, founder of the Pearl Initiative also described, the region’s philanthropic future fits within an overall context in which an estimated $70-90 trillion in global wealth will change hands to millennials and Gen X in the coming decades, with $26 trillion of that in Asia and Africa alone.

For better or worse, since the region hosted the United Nations climate negotiations, several Gulf states have been playing a more pronounced role in green diplomacy and climate action on the international stage. Seasoned observers can see that Gulf development aid is beginning to consider global climate commitments more carefully. As part of the COP28 package, one of the world’s largest private climate investment funds, Altérra, was launched – with an initial $30 billion commitment from the UAE and a vision to mobilize $250 billion in climate solutions by 2030.

The Gulf stands at a crossroads. This is a landscape where concentrated wealth, a growing interest in international development, and a near-existential push for economic diversification can create a rare alignment of interests and resources. For the region’s philanthropies, now may be a good time to chart a new course and help guide the region’s navigation of a new geopolitical era. But if Gulf philanthropies want to wield their seductive power more ambitiously, we first need to understand current giving patterns and reckon with the challenges ahead.

Seasons of Change: Rising Gulf Influence?

The Gulf’s philanthropic ecosystem has a unique history. Gulf philanthropy is, in many ways, a mirror to the state. Royal Foundations, like the King Khalid Foundation and Mohammed Bin Salman Foundation in Saudi Arabia, the Royal Foundation for Humanitarian Action in Bahrain, or Al-Maktoum Foundation in the UAE, operate in ways that closely resemble official foreign aid, and serve as ‘instruments of soft power’ or ‘philanthro-diplomacy.’ Each of these institutions has played an outsized role in supporting national development priorities, and their grantmaking has traditionally appeared to be closely aligned with government visions for social change.

Private foundations, which do not necessarily have direct connections to royal families, still broadly show the extent to which the line between the individual, the family, and the business is blurry. Family businesses in the GCC make up to an estimated 90 percent of the private sector – and this also shapes how private wealth is leveraged for philanthropy. The giving of family offices is tied to reputation and brand, and a tremendous share of giving goes untracked and is unstructured.

Instead, networks, proximity, and relationships are the main determinants shaping giving strategies.

When it comes to climate change, there is generally little data on the state of philanthropic giving in the region, and we know that growth rates are among the lowest in the world. Yet, there is a strong likelihood that some of the region’s most significant areas of focus have climate dimensions that go underreported. Too often, Arab philanthropists are missing from global conversations, especially about the changing role of philanthropy, and we need to do better at capturing their expertise.

Gulf philanthropists have had a strong historical focus on education and health, with some international work around poverty alleviation and relief. Like many of their peers in emerging economies, the tracked information on their giving doesn’t reflect their collective power or financial assets. We also know that there are tremendous transparency challenges. Owing to Islamic and cultural traditions of discretion in giving, the sector has been characterized as “notoriously low profile”. There is little standardization of reporting. But strategic giving and experimenting with new models of grantmaking, including creative online platforms, have a more substantial presence across the region than is often acknowledged – and they are rapidly growing.

So what could this picture tell us about the future of Gulf philanthropy as the region mobilizes to find its place in a new era?

Firstly, in a context where many philanthropic resources are an instrument of soft power and at times, helping lead the way for Official Development Assistance (ODA), reflecting on Gulf aid patterns and recognizing that change is already afoot is one place to start. Gulf donorship has never followed a single logic, and GCC countries have had diverse journeys in how they fund, what they fund, and why – even if much of the GCC’s donor power has tilted towards mobilizing private-sector involvement and social spending.

Trends point to a future in which Gulf philanthropists may invest in technology development, research and innovation, with an emphasis on enterprise and a commitment to backing national agendas.

But Gulf foreign aid has also shifted, over a few decades, from a solidarity-based model to one aligned with a growing emphasis on global governance norms and humanitarianism. Gulf aid favours blended finance and commercially driven giving, with a strong focus on technological platforms and cooperation. Investment priorities and aid mirror one another. Gulf funding has also been called cautious capital, and observers describe an investment agenda paired with what’s been dubbed “bailout diplomacy.”

Second, where Gulf aid has been spent and in what forms it has taken are likely indicators of what to expect from the region’s philanthropies. In contrast to Western aid, as Abdulla N. Khoory at the Fiker Institute shows, the GCC strongly prefers bilateral giving over multilateral assistance, with only 1 to 6 percent of aid flowing through multilateral organisations in a general preference for faster deployment and direct engagement with recipients. The lion’s share of aid spending has also gone to Arab and Muslim countries, which received 62 percent of total aid between 1970 and 2008. As the Rihla Initiative’s Guide to Accelerating Gulf Climate Finance to the Global South details, Gulf states spent $15.1 billion of ODA to Global South countries in the four years from 2019 to 2022. Among the top ten GCC-supported ODA recipients, only Ethiopia and Serbia stand out as non-Muslim majority states.

Third, and much like official aid, Gulf philanthropies tend to fund issues that align with their own national development goals. Their focus has, as a result, been routinely inward, prioritising matters such as youth employment, skill building, and social protection - with more recent and growing interest in issues related to resilience and innovation. Transnationally, GCC philanthropists – often driven by broad definitions of “community” – have a larger footprint in Arab and Muslim countries and commit to issues that resonate at home as well. Emirati philanthropy, much like the UAE’s aid, has a deeper transnational reach and ambitions than many of its peers. For the UAE, which invested more than $118 billion in Africa just between 2020 and 2024, the country has set its eyes on becoming a key player in food security debates. We should have every expectation that its philanthropies will play a role in mobilising research and data to support that vision.

Networks of Trust, Tech, and Enterprise

Now that key economies in the Gulf have committed to ambitious net-zero initiatives and promise a pivot to sustainability and green investment, there are opportunities ahead for the region’s philanthropies to play a more central role in backing national agendas. Even if this transition appears slow and deeply challenging with the Gulf’s unquestionable reliance on hydrocarbons, the region is rapidly expanding its climate finance reach for many issues, especially those that shape the Gulf’s ability to feed itself. There appear to be some strategic opportunities.

“They walk the talk. Especially since COVID-19, the Gulf understands its own place in global supply chains, and they are interested in solving food and water issues,” Haifa Al Kaylani, Founder of the Arab International Women’s Forum, tells me. “Sustainability is a strategic security imperative for many countries in the region. Philanthropy is an important catalyst to support social priorities.”

Now, as the younger generation of philanthropists steps into leadership, a greater degree of enterprise is further likely to take deeper hold. Indeed, given the size of the youth demographic in the Middle East, the future of Arab philanthropy will not be determined solely by large foundations. As Naila Farouky put it years ago, we need to watch a “youth population with a sense of social purpose and the ability to create their own businesses that are both financially viable and able to resolve a social challenge at scale.” This ‘impact investing’ and philanthropy ‘continuum’ has tremendous and underdeveloped potential in the region, and has been formally endorsed by several of the Gulf’s leading and state-affiliated philanthropic funds. In straightforward terms, the picture of a few royal family-affiliated foundations will unlikely be the core and exclusive defining feature of how capital is deployed, and grants allocated.

Taking Saudi Arabia as an example, a continuum between investment, enterprise, and philanthropy is worth observing. Prosperity7 Ventures, one of Saudi Arabia’s leading funds – and part of Aramco’s $2 trillion portfolio, has a focus on energy, sustainability, and digital transformation. Most notable is the country’s National Industrial Development Fund with more than $28 billion in capital. With an emphasis on startup support aligned with the country’s Vision 2030, including renewable energy, these funds have skin in the game as the country works to transform its national and regional economies.

In other words, whether philanthropies play a more central role in supporting innovation and entrepreneurial ecosystems is worth watching – both in their own countries and abroad. There is tremendous untapped potential for patient capital to support innovation across sectors.

Another key connected space to watch is how far the GCC’s philanthropic sector may go in supporting the region’s rapid investment in AI infrastructure and green tech solutions. Predicted to soon emerge as the “new AI equator”, the Gulf has been aggressively working to expand its artificial intelligence capabilities and infrastructure. Saudi Arabia has committed $600 billion over four years, the UAE is adding $200 billion to its existing $1.4 trillion strategy, and Qatar is earmarking $1.2 trillion. While the market and skills are still lagging, the region is cautiously entering a new frontier, with 65 percent of organisations planning to increase their AI spending. Philanthropy should be playing a role in ensuring this AI transformation is more beneficial than harmful.

But all these trends point to a future in which Gulf philanthropists may invest in technology development, research and innovation, with an emphasis on enterprise and a commitment to backing national agendas, where mutual interests for the Gulf and its partners are front and centre. What also seems likely is a continuation of regional philanthropic practices that favor networks, personal relationships, and where trust plays a key role in grantmaking decisions.

But several challenges need to be tackled. For instance, despite immense concentrations of wealth in the region, private philanthropic organisations and family offices have been fewer in number than the volume of regional wealth, in part due to legal conditions governing how charitable foundations are founded and operate. In several countries in the region, philanthropies are explicitly prevented from working in ways that “conflict with customs and traditions” or “violate public morals.” Laws prohibit philanthropic organizations from having public advocacy interests or ‘political goals’ – and that has meant that philanthropies across the region support more service provision efforts, over the building of civil society and policy networks. There is a long record in MENA of philanthropies favouring what they perceive to be low-risk engagements, such as scholarships, university infrastructure, or humanitarian relief, with minimal investment in social movement or field-building activities. The sustainability of that model is worth questioning.

For virtually every country in the region, cross-border donations and the receipt of funds must obtain government approval, and a host of policies condition transnational giving. All these regulations need to be streamlined if regional philanthropy’s full potential can be realized.

Gulf philanthropies have built their giving on mutual trust, not transactions. In this moment of global upheaval, they have a chance to lead not just with money, but with a fundamentally different model – one that prioritizes communities over donor control, and is rooted in a culturally relevant ethos of solidarity and shared strategy. But the challenges are real. As power shifts, so must the rules. We can cling to old paradigms, or we can learn together how to redefine our logic of engagement that shapes how both Gulf philanthropists and their partners determine their climate futures. The choice will define the next era of development.

Dr. Dina Zayed is an independent strategic policy advisor, researcher, communicator and facilitator with expertise in climate adaptation politics and finance, international development and climate governance. She is also a council member of the Rihla Initiative for Green Economic Growth.

Section: (rihla-initiative) Photo: Msheireb Museums

By Jessica Obeid

For decades, Central Asia’s power systems have been bound to Soviet-era legacies: outdated, inefficient, and heavily interconnected with Russian infrastructure. Today, governments are working to dismantle these dependencies and build new energy systems centered on sustainable technologies, financed and strategised largely with Gulf support.

This emerging partnership reflects a wider transformation. Central Asia is seeking fresh partners to modernize its energy sector amid rising geopolitical uncertainties. Countries such as Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan are attempting to shed the Soviet legacy by diversifying both their energy mix and their international partnerships.

The region faces mounting challenges: surging electricity demand, unreliable supply, and intensifying climate risks. In response, governments are pursuing scalable, low-cost, low-carbon energy solutions to reduce reliance on natural gas, coal, and hydropower—all while constrained by dependence on coal and limited fiscal space. Gulf-backed investments offer an attractive alternative. Through state-owned giants such as ACWA Power and Masdar, Gulf states are exporting megawatts of clean energy, deploying solar, wind, storage, and green hydrogen by leveraging oil revenues.

What is taking shape is a “Green Road” between the Gulf Cooperation Council (GCC) and Central Asia—echoing the Silk Road’s legacy, but powered by wind turbines and solar panels rather than wells. It is redefining trade linkages through climate-resilient infrastructure, technology transfer, and inter-regional cooperation. Clean energy here is not only a tool for decarbonization but also for economic growth, geopolitical influence, and development. This partnership is forging a new regional energy model, bolstering Gulf soft power while opening economic opportunities across Central Asia.

The GCC’s growing clean energy footprint in Central Asia signals a forward-looking strategy: a pivot from fossil fuel exporters to global enablers of the energy transition. By transforming hydrocarbon wealth into a diversified portfolio of clean energy assets, Gulf states are securing a place in the low-carbon future.

At the centre of this shift are state-backed developers. ACWA Power, half-owned by Saudi Arabia’s Public Investment Fund, and Masdar—jointly owned by Mubadala, TAQA, and ADNOC—are rapidly expanding their international presence. ACWA Power holds 52 GW of renewable capacity across 15 countries, while Masdar’s portfolio exceeds 51 GW in 40 countries spanning Asia, Africa, and Eastern Europe.

These firms bridge business and diplomacy, advancing national strategies through high-impact investments in renewables, storage, and green hydrogen. They export expertise, technology, and a replicable model for utility-scale clean energy deployment. In doing so, they are laying the foundations of a new energy corridor built on sustainability.

Central Asia is a natural frontier. Vast, underutilized land, rising electricity demand, and its strategic position at the crossroads of China, Russia, and South Asia make it a low-risk, high-reward opportunity. Gulf states are extending their geopolitical influence in a region once dominated by great power rivalries—now increasingly oriented toward the energy transition. In Uzbekistan, for instance, ACWA Power is developing a 1.5 GW wind farm worth $2.4 billion, while Masdar has completed the 500 MW Zarafshan wind farm, the largest in Central Asia to date.

Despite their hydrocarbon reserves, Central Asian countries face severe electricity challenges. Demand is rising due to population growth, urbanisation, and industrialization—particularly in Uzbekistan and Kazakhstan, where demand increased by 4 percent year-on-year in 2024. This surge collides with limited generation capacity and aging infrastructure.

The regional energy mix remains dominated by natural gas (43 percent), coal (30 percent), and hydropower (24 percent). Yet gas faces mounting pressure: domestic consumption is rising, leading Uzbekistan to restrict exports. Turkmenistan depends almost entirely on gas, while coal is entrenched in Kazakhstan, where it supplies nearly 70 percent of power generation.

Hydropower, meanwhile, is increasingly unreliable. Kyrgyzstan and Tajikistan depend on it for 80 to 90 percent of electricity, but droughts, climate volatility, and cross-border tensions undermine output. New hydropower projects are fraught with political obstacles and regional disputes. Much of the sector still relies on Soviet-era plants—inefficient, outdated, and beyond their intended lifespans.

Electricity systems also suffer from inefficiencies and subsidies. Grid losses reach 22 percent in Kazakhstan and Tajikistan, while tariffs cover only 65 percent of generation costs across the region. This contributes to fiscal deficits ranging from 4 percent of GDP in Tajikistan to 6 percent in Uzbekistan. Imports help fill gaps, but regional trade is limited, fragmented, and politically sensitive.

By contrast, Central Asia’s solar and wind potential remains largely untapped. Vast land and abundant resources stand against weak project pipelines, policy uncertainty, and limited institutional capacity.

In this context, Gulf-backed clean energy investments act as a catalyst. With low-cost capital, proven delivery capacity, and competitive generation costs (2.5-3.5 cents per kWh), developers like ACWA Power and Masdar bring not only finance but also execution, engineering expertise, and capacity-building.

For Central Asia, this translates into more reliable power, a diversified mix, and greater climate resilience. For the Gulf, it supports economic diversification while elevating its energy champions as credible global actors. Clean energy exports both shield Gulf economies from fossil fuel volatility and expand their geopolitical influence.

These partnerships bridge financing gaps, stimulate regional development, and strengthen political stability through modernized infrastructure.

The Gulf-Central Asia alliance marks a new phase in both regions’ energy trajectories—anchored in mutual interests and a shared vision of a low-carbon future. For the Gulf, it brings economic and diplomatic dividends beyond oil. For Central Asia, it offers a pathway to modernize power systems and reduce long-standing vulnerabilities.

The “Green Road” under construction is more than a metaphor. It is an emerging infrastructure and investment corridor that symbolizes a new model of South-South cooperation, grounded in clean energy.

Its success will depend on sustained political commitment, cross-border coordination, and scalable innovation. If these align, the GCC-Central Asia energy corridor could become a landmark in the global energy transition—turning risk into opportunity.

Jessica Obeid is an energy engineer and strategist. She is the Founding Partner of New Energy Consult.

Section: (rihla-initiative) Photo: ACWA Power

By Shakhlo Kamaladinova

In November last year, during the parliamentary meeting of the Oliy Majlis, Uzbekistan’s legislature, Uzbek President Shavkat Mirziyoyev proposed that 2025 would be the “Year of Environmental Protection and the Green Economy.” He emphasized that the strategic goal of “New Uzbekistan” is to achieve environmental sustainability and economic growth by transitioning to a resource-efficient, green development model.

Each year since gaining independence, the Uzbek president has issued a decree on the eve of Constitution Day, observed on 8 December, setting the strategic priority for his administration for the coming year. These decrees generally reflect development priorities, as reflected in the Year of Support for Youth and Business (2024), Year of Development of Science, Education and the Digital Economy (2020), Year of Active Investments and Social Development (2019), and so on. While not all goals are fully achieved within a given year, these decrees provide a foundation for advancing the country’s socioeconomic development by setting out a framework for further legislation and policy formation at various levels of government.

As the most populous country in Central Asia with 37 million inhabitants, Uzbekistan faces pressing environmental challenges, including water shortages, soil erosion, desertification, and air pollution. The ongoing Aral Sea crisis, for instance, remains the country’s most significant ecological disaster, affecting not only Uzbekistan but also its neighboring countries. While Uzbekistan has made strides in economic modernization in recent years, environmental policy has often lagged behind.

Declaring 2025 as the Year of Environmental Protection and the Green Economy signals a shift toward making sustainability a central development priority. A successful implementation of this year’s decree will determine whether the country can transition to a low-carbon economy, improve resource efficiency, and enhance climate resilience—aligning with global commitments such as the UN Sustainable Development Goals and the Paris Agreement.

The 2025 program aims to improve the country’s environmental situation by focusing on several areas of intervention. The main objectives of the decree are community-level initiatives, such as creating green spaces, encouraging technical assistance to reduce emissions, and attracting financing for large projects.

In terms of community-level initiatives, the decree emphasizes public engagement by linking health and lifestyle improvements to its environmental vision. For example, the programme promotes a national movement for “green families,” encouraging environmental stewardship alongside healthy eating, daily physical activity, and the use of eco-friendly transportation. This holistic approach aims to cultivate an eco-conscious culture, ensuring that residents actively participate in and benefit from the country’s environmental transformation efforts.

Equally important is technical assistance to reduce emissions, which is critical given Uzbekistan’s current reliance on fossil fuels and outdated industrial practices; these factors exacerbate air and water pollution, undermine public health and economic productivity.

Complementing these efforts, securing funding for large-scale projects is essential for modernising infrastructure and expanding renewable energy technologies. This, in turn, supports sustainable economic growth, generates new job opportunities, and reduces vulnerability to environmental shocks. Together, these initiatives form a comprehensive strategy that balances immediate community-level improvements with the broader systemic changes necessary for a resilient and sustainable future.

Small projects have also been underway, spurring forward the goals outlined in the state programme. This has included a tree-planting campaign organized by the Ministry of Ecology, Environmental Protection, and Climate Change in cooperation with the Zamin International Public Foundation, held on 19 March 2025. The Oxygen Park Project was developed as part of the national Yashil Makon (”Green Space”) initiative to enhance Tashkent’s greenery, create a favorable environmental setting, and improve recreational spaces for residents and visitors. Projects like this one demonstrate how the decree seeks to mobilize support for grassroots projects while also securing investment for wide-reaching impacts, such as advancements in renewable energy.

If administered successfully, the initiative will not only continue to expand urban green spaces but also enhance the overall ecological aesthetic of neighbourhoods through improved street landscaping and the development of “shaded walking streets” where trees and greenery are strategically planted. These measures aim to provide residents with accessible recreational areas, reduce urban heat, and improve air quality.

In recent years, Uzbekistan has already been actively working to reduce its carbon footprint by developing green energy and implementing energy-saving technologies in cooperation with companies such as Masdar and ACWA Power. As part of the state program, the share of renewable energy sources out of total electricity generated is set to increase significantly to 26 percent. To achieve this, 16 new green power plants with a total capacity of 3.5 GW will be launched, alongside the construction of hydroelectric power stations with a combined capacity of 160 MW.

Additionally, the program plans to install small solar panels in 35,000 households and 27,000 private and social facilities. By the end of 2026, 3,000 small hydropower plants with a combined capacity of 164 MW are set to be constructed. A key step in advancing the ‘green’ economy will be the introduction of special tariffs for electricity generated from solar and wind power, as well as waste utilisation, starting from 1 April 2025.

To support these efforts, significant investments are expected, with the state program explaining how the government plans to take measures from 2025 to attract concessional loans and grant funds to support green and low-carbon development projects from international financial institutions and investment banks. Up to EUR 200 million will be gradually attracted from the European Bank for Reconstruction and Development, while the World Bank will provide USD 10 million to help reduce methane emissions in the energy sector. Additionally, the Korea International Cooperation Agency, through the Global Green Growth Institute, will contribute USD 6.5 million in technical assistance to enhance green cooperation between Uzbekistan and Korea. Under the World Bank’s iCRAFT project, USD 7.5 million will be secured to support the reduction of 500,000 tons of greenhouse gas emissions. Furthermore, the German Society for International Cooperation will invest EUR 20 million to promote industrial greening and reduce harmful gas emissions from nitric acid production facilities.

Beyond the year-long government scheme, Uzbekistan is already taking noteworthy steps to position Central Asia as a key hub for the development of a green economy and clean energy, particularly in solar and wind power. Each year, Uzbekistan commissions about 2 GW of new solar and wind generation capacity, contributing to the region’s efforts to develop sustainable energy infrastructure. Though, additionally, one major initiative is the revival of the Great Silk Road through regional energy interconnectivity, linking Central Asia, the Caucasus, and Europe via a unified energy corridor. A recently signed multilateral agreement with Kazakhstan and Azerbaijan at COP29 will enable the export of renewable electricity through the Middle Corridor, with Azerbaijan constructing an undersea cable along the Black Sea to connect to Europe. This initiative will establish reliable transmission routes for environmentally friendly energy, further strengthening Uzbekistan’s role in the global energy transition.

Another major initiative is a large-scale environmental restoration project designed to mitigate the effects of climate change. This includes establishing 100,000 hectares of green zones on the dried seabed of the Aral Sea and expanding forested areas in the Aral region to 2.1 million hectares. Given the profound environmental and socio-economic impacts of the Aral Sea crisis on its littoral states, this initiative is a crucial step towards regional ecological recovery and long-term sustainability.

Yet, for a country rich in natural resources, significant challenges remain. This includes resistance from traditional energy sectors reliant on fossil fuels and concerns over the financial burden of large-scale green investments. Uzbekistan ranks 11th globally in natural gas production and 14th in reserves, making it crucial to balance fossil fuel export interests with energy transition efforts. The challenge lies in balancing the energy transition and green economy measures with its interests in the fossil fuel trade, where a strategic approach is needed to leverage existing energy assets while investing in renewable alternatives

Promisingly, previous decrees, such as the Year of Active Investments and Social Development, which took place in 2019, appear to have delivered tangible results. That year, the value of foreign direct investment reached $4.2 billion, more than tripling the previous year’s total. The share of investment in GDP rose to 37 percent, also reflecting substantial growth. Additionally, Uzbekistan secured its first international credit rating and successfully placed $1 billion in bonds on the global market. While the decree may not have been solely responsible for these economic outcomes, it nonetheless helped direct the focus of relevant government ministries and agencies.

Translating the 2025 ambitions into tangible results will require sustained political will and transparency, particularly from government agencies responsible for policy execution. President Mirziyoyev has been a key advocate for the green transition, backed by institutions such as the Ministry of Ecology, Environmental Protection, and Climate Change.

In this regard, the declaration of 2025 as the Year of Environmental Protection and the Green Economy may build a foundation for energy transition and sustainable development. By institutionalizing environmental priorities, the government is signaling its intent to balance economic growth with sustainable development.

Shakhlo Kamaladinova is Central Asia Coordinator for the Bourse & Bazaar Foundation, focusing on the Rihla Initiative for Green Economic Growth. She is a graduate of the Master of Arts in Global Risk program at the Johns Hopkins School of Advanced International Studies (SAIS). She is based in Tashkent, Uzbekistan.

Section: (rihla-initiative) Photo: Uzbekistan Presidential Administration