Whether they want it or not, the Gulf states now play a vital and pervasive role as investors across the Middle East. As the Gulf states themselves are dominant in investment vehicles — rather than private outflows — foreign policy and economic interests are bound to collide.
Intra-Gulf conflicts affect investment flows within the region. Their fiscal vulnerabilities and pro-cyclical domestic economic growth tied to oil prices will continue to affect their ability to create growth abroad. And their political interests will create priorities abroad for both foreign investment flows as well as aid and financial intervention in the form of central bank deposits. With the coronavirus pandemic, political collapse in places like Yemen and Lebanon, and weak domestic demand at home, there is good reason to fear a lapse in investment outflows and remittance flows from the Gulf to the wider Middle East.
