Does The Long And Horrific War In The Middle East Foreshadow The Birth Of A Stable, Peaceful Regional Order? – Analysis

Eurasia Review  |  Mohamed Chtatou

United States and Israeli strikes under Operation Epic Fury and Operation Roaring Lion targeted Iranian nuclear and military infrastructure on February 28, 2026, triggering severe economic and geopolitical fallout. Tehran's retaliatory strikes across Gulf Cooperation Council states closed the Strait of Hormuz, costing the global economy twenty-five billion dollars while drastically reducing Kuwaiti and Qatari energy exports.

This acute escalation has generated a profound paradox of exhaustion, compelling Gulf monarchies to protect national diversification agendas by pursuing defensive hedging through instruments like the August 2026 Mecca Joint Defence Agreement. Although preliminary diplomatic negotiations produced a fragile peace framework at Versailles in June 2026, indefinite military positions in Lebanon, Gaza, and Syria undermine wider strategic retrenchment. Cross-border economic connectivity initiatives, exemplified by the India-Middle East-Europe Economic Corridor, offer alternative institutional avenues toward regional integration. However, durable transformation ultimately depends on whether regional powers can successfully convert temporary ceasefires into lasting political settlements for unresolved core grievances.

Comment

The economic disruption caused by the closure of the Strait of Hormuz during Operation Epic Fury exposes the severe fiscal vulnerabilities inherent in Gulf rentier diversification models. Gulf monarchies relying on foreign capital to fund domestic transformation programmes face immediate financial friction when critical maritime chokepoints are compromised. For Saudi Arabia, maintaining momentum toward Vision 2030 developmental targets becomes fiscally unsustainable when maritime security costs rapidly escalate. Consequently, the General Authority for Military Industries has accelerated defence spending localization to mitigate external supply shocks during regional military crises.

This fiscal pivoting redirects national capital from civilian giga-projects toward domestic defence manufacturing and localized supply chains. While localising nearly a quarter of defence procurement shields long-term national budgets from foreign embargoes, it simultaneously compresses short-term liquidity available for Saudi Arabia's non-hydrocarbon economic expansion.

Strategic Question for Discussion

Which factor will ultimately exert greater pressure on Riyadh's strategic posture — the immediate capital demands of defence procurement through the General Authority for Military Industries, or the long-term fiscal solvency required for Vision 2030?

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