Can the Gulf stay open for business?

Summary

Business Daily (BBC World Service)

Episode Summary: Can the Gulf Stay Open for Business?

Date: March 5, 2026
Host: Sam Fenwick

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Overview

This episode of Business Daily examines how the Gulf states—including the UAE, Qatar, Saudi Arabia, and Bahrain—are navigating the economic, reputational, and operational shocks triggered by a major Middle Eastern conflict. With heavy fighting, missile and drone strikes, and airspace closures disrupting life across the region, the episode questions whether the Gulf’s image as a safe, open hub for finance, tourism, and investment can endure—and how quickly business confidence could recover.

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Key Discussion Points & Insights

1. The Gulf’s Economic Transformation (01:19–05:36)

• Diversification Beyond Oil:
  • Gulf countries have spent years and billions of dollars reshaping economies once reliant on fossil fuels.
  • Sectors like tourism, technology, aviation, and international finance have become strategic pillars.
• Attracting Global Talent and Wealth:
  • “Almost 90% of the UAE population are expats... it’s become really a playground for the rich.”
    — Samir Hashmi, Business Journalist (03:29)
  • “The UAE in the last five years was the number one country for the highest number of millionaire migration.”
    — Samir Hashmi (03:33)
• Saudi’s Mammoth Spending:
  • Saudi Arabia is channeling funds into tourism, global events, and relaxing social norms.
  • Major sports and entertainment investments have aimed at luring both Western businesses and tourists.
• Tech Ambitions:
  • Abu Dhabi is positioning itself as a global AI hub; Qatar focuses on quantum tech and made a big splash hosting the 2022 World Cup.
  • Sovereign wealth funds across the three states are estimated at $3–4 trillion. (05:00)

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2. Conflict Erupts: Immediate Impact on Business Environment (05:36–10:07)

• Key Trigger Event:
  • US President Trump and Israel announce strikes on Iran (05:36), followed by Iranian retaliation targeting several Gulf states.
  • Resulting impacts include airspace closures, suspended flights, heightened city security.
• Tourism Hit Hard and Fast:
  • “As soon as the airspace is open, we're on the next flight home. It's took the edge off it for us.”
    — Matthew McGinn (Hotel guest, Dubai) (06:56)
  • “We just want to get back to the UK... especially for our little boy. Terrifying, terrifying.”
    — Leila Hamoud (07:06)
• Hospitality Under Pressure:
  • Mohammed Awaladala (CEO, Time Hotels):
    • “People start to get nervous… Some even went to the airport. It was a bit panicking, but luckily the government… sent the circular to cool people down.” (07:35)
    • “We already started to receive cancellation. Either people scared to travel or because... most of the airlines are not traveling anymore.” (08:28)
    • Bookings dropped to “almost zero now,” with only domestic guests remaining. (08:54)
    • Immediate business offset by stranded passengers and oil industry staff relocated to hotels; not a total loss. (09:11)
• Economic Stakes for the UAE:
  • Tourism accounts for 13% of UAE GDP (~$70bn) and supports over 900,000 jobs. Ambitious goals set: 40 million hotel guests yearly by 2031.

Notable Quote:

“Since the Gulf War and then Covid happened, people are changed. They don’t really care. The only thing is it’ll take a month or two till they recover the situation.”
— Mohammed Awaladala (10:07)

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3. Business Disruption Extends to Tech, Energy, and Real Estate (11:29–16:41)

• Critical Infrastructure Affected:
  • Drone strikes damaged AWS (Amazon Web Services) data centers in the UAE and Bahrain.
  • Major banks shifting to remote work, cross-border deals paused.
• Energy Volatility:
  • Oil and gas prices jump; some infrastructure in Qatar, Iraq, and Saudi Arabia impacted.
  • “It’s just a matter of how long this lasts for.”
    — Serana Pavulescu, Partner at Control Risks (13:08)
• Real Estate Plunge in Bahrain:
  • Investors and landlords trying to sell; prices slashed but no buyers.
    — Karan Trahan, British businessman, Bahrain (14:36)
  • Deals and recruitment on hold; cautious confidence in eventual rebound, helped by low or zero taxes:

    “At the end of the day, we're one of the very few countries that are still tax free. …It’s just going to take a few months.”
    — Karan Trahan (15:20)

• Business Attitudes and Resilience:
  • Recent arrivals most likely to panic and flee; long-term expats see it as another episode.
  • “Truth is it's scary. I never thought I would be going to bed and then explosions going off outside… Now is the time to plan and be brave.”
    — Karan Trahan (16:15)

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4. Investor Sentiment and the Gulf’s Resilience (16:41–18:21)

• Reputation Under the Microscope:
  • Foreign direct investment (FDI) at record highs prior to conflict (UAE saw $45bn FDI, +45% YoY in 2024).
  • Bahrain promoted as a global business hub ($6.8bn FDI in 2023).
• Global Investment Perspective:
  • “Every crisis is a test, isn’t it? … It will take some time to come back to that [high deal flow].”
    — Serana Pavulescu (16:59, 17:43)
  • Resilience built with every new challenge—response differs between established expats and newcomers.

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Notable Quotes & Moments with Timestamps

• Diversity and Population Shifts:
  • “Almost 90% of the UAE population are expats... In the last five years, number one country for the highest number of millionaire migration.”
    — Samir Hashmi (03:29–03:33)
• Shock for Tourists:
  • “As soon as the airspace is open, we're on the next flight home. It's took the edge off it for us.”
    — Matthew McGinn (06:54)
  • “We just want to get back to the UK... especially for our little boy. Terrifying, terrifying.”
    — Leila Hamoud (07:06)
• Hospitality Sector Response:
  • “People start to get nervous and they don't know what's going on. Some even... went to the airport... but luckily the government here sent the circular to cool the people down.”
    — Mohammed Awaladala (07:35)
  • “It's almost to zero now... All the cancellations are within the next month or month and a half.”
    — Mohammed Awaladala (08:54)
  • “I don't think it will hit too much. Some of our hotels are running 85% because a lot of guests we get from the airport who cannot fly.”
    — Mohammed Awaladala (09:11)
  • “Since the Gulf War and then Covid happened, people are changed. They don't really care... It’ll take a month or two till they recover the situation.”
    — Mohammed Awaladala (10:07)
• Real Estate and Investment Drop:
  • “On the real estate side, already investors are trying to sell, landlords are trying to sell, but then no one is buying and that's just driving the prices down.”
    — Karan Trahan (14:36)
  • “You hit the nail on the head. Yes. Truth is it's scary. I never thought I would be going to bed and then explosions going off outside.”
    — Karan Trahan (16:15)
• Investor Viewpoint:
  • “Every crisis is a test, isn’t it?... It's also been very interesting to watch how people who've been around here for a while have had no doubts that they're here to stay... People who've been here for a very short while were the first to panic.”
    — Serana Pavulescu (17:43)

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Key Segment Timestamps

| Segment | Timestamp | |------------------------------------------|---------------| | Setting the Stage: Gulf’s Modernization | 01:19–05:36 | | Conflict & Initial Economic Shock | 05:36–10:07 | | Infrastructure & Real Estate Disruption | 11:29–16:41 | | Investment Attitudes & Long-Term Impact | 16:41–18:21 |

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Conclusion

Business Daily highlights that while the Gulf’s economies have built up strong credentials for openness and innovation, the current conflict is a real stress test for both perception and reality. Recovery is likely—thanks to deep resources, low taxes, and established resilience—but reputations and deal flows are set to undergo serious, albeit probably temporary, scrutiny.

As Serana Pavulescu notes, “Every crisis is a test,” and it remains to be seen how quickly stability and investor confidence return amidst ongoing turbulence.

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This summary was prepared for those seeking a detailed yet accessible understanding of the episode’s main themes and insights, complete with attributions and precise timestamps for follow-up listening.

Transcript

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[Sam Fenwick]

Hello and welcome to Business Daily from the BBC World Service. I'm Sam Fenwick. As war breaks out in the Middle east, the Gulf states find themselves caught in the middle. For years, countries like the uae, Qatar and Saudi Arabia have worked to present themselves as stable hubs for finance, tourism and technology. But when conflict erupts, markets react fast. Oil prices jump, flights are rerouted and investors begin to reassess risk.

[Karan Trahan]

We've seen people backing out from a five star project for investors and people have paid just deposits and already those have been cancelled.

[Sam Fenwick]

So today we're asking, can the Gulf maintain its reputation as a safe place to invest? Or does every new conflict put that reputation to the test? Over the past two decades or so, countries across the Gulf have poured billions into reshaping their economies. Hey, you are not crazy. The world is changing, but you have a dream. Glitzy adverts like this featuring Hollywood actors have been used to entice global investors. Cities like Dubai, Doha and Riyadh have tried to reinvent themselves, attracting global capital, hosting international events and building industries far beyond oil. Bring your impossible to the Emirates. Tourism, aviation, finance and technology have all become central to that strategy, alongside efforts to draw in foreign workers, investors and entrepreneurs from around the world. Samir Hashmi is a Business journalist who has covered the region for decades and has seen that transformation firsthand.

[Samir Hashmi]

Well, the Gulf economies have relied heavily on fossil fuels. That has been the driving force of this region. But over the last decade or so, the countries have realized that they need to diversify their economies, and that's why they pivoted towards tourism, aviation, and position themselves as a financial hub.

[Sam Fenwick]

And if you look at the population, you can sort of see what you're talking about there, because expats make up a huge percentage, don't they?

[Samir Hashmi]

Yeah, that's right. Almost 90% of the UAE population are expats. So is the case in Qatar. But what's changed for the UAE over the last few decades is that it was primarily the South Asian community that really constituted a large part of the population that. But since COVID we have seen an influx of Western expats coming in, and especially the rich expats. It's become really a playground for the rich. The amount of billionaires and millionaires have come in is humongous. In fact, the UAE in the last five years was the number one country for the highest number of millionaire migration.

[Sam Fenwick]

Let's look at Saudi Arabia then. It is spending at an extraordinary scale, isn't it? What's it spending on?

[Samir Hashmi]

The main sectors are tourism. They're investing a lot in global events. They're investing a lot in sports. They're hosting some of the biggest global sporting events, Formula one being one. They've got one of the biggest golf tournaments now happening in the country. So sports is a big driver, which in turn is fueling in tourism. And they're also relaxing social norms so that they become more attractive for Western tourists, for example. Now, if you're a non Muslim expat living in Riyadh, earning over a certain threshold, you can buy alcohol.

[Sam Fenwick]

Explain to us then, where Qatar and Abu Dhabi fit into this picture.

[Samir Hashmi]

Abu Dhabi is a very interesting story because they really want to position themselves as a major player when it comes to AI. They've signed these massive deals with the United States during President Trump's visit last year. They're building the largest AI campus outside the United States. Qatar has been really punching above its weight when they decided to bid for the 2022 Football World Cup. I think that was a big game changer for them. And since then, Qatar has been trying to attract foreign investors, but their strategy is way different compared to the Saudis, the uae. So they, for example, are looking at quant technology. They're not focusing so much on AI. All these three countries, the uae, Saudi Arabia and Qatar are also using the sovereign wealth funds to invest billions and billions of dollars. And these wealth funds between these three countries, they are worth billions of 3 to 4 trillion dollars.

[Sam Fenwick]

But even as the Gulf has worked hard to project stability and confidence, that image can be tested in an instant. Over the weekend, US President Donald Trump, alongside Israel, announced strikes on Iran.

[Mohammed Awaladala]

The United States and its partners have

[Sam Fenwick]

launched Operation Epic Fury, one of the largest, most complex, most overwhelming military offensives. The move triggered retaliation across the region with missiles and drones fired from Iran, targeting several Gulf states. Some of them host major US Military bases and are home to critical energy and transport infrastructure, making them vulnerable as the conflict escalates. Airspace restrictions followed. Flights were suspended and security was tightened across cities that have built their economies around being open, connected and safe. For those economies, the disruption was immediate and nowhere was it felt more quickly than in tourism. The impact became very real for some visitors when a fire broke out at the Fairmont, the Palm Hotel in Dubai's Palm Jumeirah area during an air attack. Matthew McGinn and Leila Hamoud from Liverpool in the United Kingdom were staying there at the time.

[Karan Trahan]

As soon as the airspace is open,

[Sam Fenwick]

we're on the next flight home. It's took the edge off it for us.

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People are telling us just to relax,

[Sam Fenwick]

stay calm, but, you know, after what

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we've witnessed and, you know, especially for

[Sam Fenwick]

our little boy and I've got two, another two little boys at home. Terrifying, terrifying.

[Karan Trahan]

And we just want to get back to the uk.

[Sam Fenwick]

For guests like Matthew and Leila, the experience was frightening. But for hotel operators across the Gulf, incidents like this also raise urgent business questions about safety, confidence and bookings. Mohammed Awaladala is the Chief Executive of Time Hotels, a Dubai based hospitality group with 17 hotels across the region, including three in Dubai.

[Mohammed Awaladala]

To be honest, the people start to get nervous and they don't know what's going on. Some even people went to the airport. It was a bit panicking, but luckily the government here sent the circular to cool the people down. Next day was much better. To be honest, we just got annoyed with the bumping. Sometimes you hear it and you feel

[Sam Fenwick]

it and that must be very disconcerting not only for you and your staff, but for people who are on holiday.

[Mohammed Awaladala]

Yes, of course. You find a lot of people worrying. They don't want to go out, they're just stuck in their room. And on the other hand, I went to the mall and Saturday, it was actually a life. Restaurants, coffee shop, people shopping, I shop myself.

[Sam Fenwick]

The travel Advice. Now, the Foreign and Commonwealth Office in the UK is all but essential travel. If you look across most economies, across Europe, across the us they're saying all but essential travel to the uae. What does that do for your bookings? Over the next few months we already

[Mohammed Awaladala]

start to receive cancellation. Either people scared to travel or because they cannot come because most of the airline are not traveling anymore. The good things which is we received already from Qatar and Emirates here that anybody cannot travel or doesn't have money to stay till they open the airline or till he get a flight, they are covering his stay, which is fantastic.

[Sam Fenwick]

What about your future bookings? What's happened to those future booking?

[Mohammed Awaladala]

It's almost to zero now or few rooms. If it's a domestic, yes, you will get them coming, but internationally nobody's coming. All the cancellations are within the next month or months and a half. Not for the future, not in three, four months. We did receive that yet.

[Sam Fenwick]

What kind of a hit is that for your hotel chain? Though?

[Mohammed Awaladala]

I don't think it will hit too much. I'll tell you what, some of our hotels we are running 85% because a lot of people stayed. A lot of guests we get from the airport who cannot fly. So the airline or the government cover their stay. And also the third thing is the oil companies because a lot of people in the oil company ring in the sea. So all this team or staff, they have been evacuated to hotels to stay in hotels to be safe. So on the other hand you get some business.

[Sam Fenwick]

Tourism has become a cornerstone of the UAE's economy. Last year the industry contributed around 13% of GDP, roughly US$70 billion and it supports more than 900,000 jobs. The government set ambitious targets aiming to attract around 40 million hotel guests a year by 2031 as part of its long term growth strategy. But growth on that scale depends on one confidence.

[Mohammed Awaladala]

Since the Gulf War and then the COVID happened, people are a change people, they don't care. We are not like 20, 30 years or 15 years ago. We are totally different now. They said, okay, if the bomb here can happen in England, can happen in Germany, it can happen in Egypt. So they don't really care. The only things it will take like a month or two till they recover the situation.

[Sam Fenwick]

There are drones and bombs dropping out of the sky, hitting, you know, really plush, really posh hotels.

[Mohammed Awaladala]

No, but they catch them. They said more than 700 drones with flight above Emirates and they catch them with this anti muscle system.

[Sam Fenwick]

Do you worry that tourists will lose confidence in the region and that this could actually impact future bookings?

[Mohammed Awaladala]

No, it will. Two, three months maximum, I guarantee you. And we can talk again about it once it's over. And what they see in Covid that you can die from a little disease, you just want to live your life.

[Sam Fenwick]

Do you worry though that maybe Dubai and the wider Gulf are seen differently by travelers and even investors now compared to other parts of the Middle East?

[Mohammed Awaladala]

It's a good question. I mean, to be honest, I don't know. But what they see that they keep coming and investing here, I don't think they will leave that easy.

[Sam Fenwick]

Beyond tourism and travel disruption, the conflict is now touching critical business infrastructure. Amazon's cloud computing arm, Amazon Web Services says drone strikes have damaged data centres in the UAE and neighbouring Bahrain. A number of major investment banks have also adjusted operations in the Gulf, advising staff to postpone travel and work remotely. And some cross border deal making has been put on hold. At the same time, energy markets are volatile. Oil and gas prices have jumped, prompting investors to reassess inflation risks. Serana Pavulescu is from Control Risks. It's a global consultancy that advises companies and investors on political and security risks and she leads the firm's work in the Middle East.

[Serana Pavulescu]

For people on the ground, the first question is around what's happening now and how long this will take in terms of operational disruption in the first place. But also sort of starting to get questions about how does this look in the medium to long term for our business or for our planned deals.

[Sam Fenwick]

What sectors do you think are most exposed to the tensions?

[Serana Pavulescu]

The tourism sector is going to take a hit and we know from previous episodes that tourism is the first one that suffers. Both obviously now, immediately in the midst of the crisis, but also it takes a while for tourism travelers and tourists to come back. Also shipping, Jebel Ali Port in Dubai here is one of the largest transshipment points between east and West. It's a global impact. Same with cargo and air traffic. So these are by far the most affected and will take a toll for the next few weeks, maybe months. Energy, of course, is the next big question and probably the biggest question for the global economy. And right now we have seen quite significant disruption in the hormones and with production FAC in Qatar, in Iraq, potentially in Saudi as well. Some strikes on oil and gas infrastructure. It's fine for now. There is storage around both in the Gulf and outside the Gulf. It's just a matter of how long this lasts for.

[Sam Fenwick]

You're listening to Business Daily from the BBC World Service. I'm Sam Fenwick. Today we're looking at how the latest conflict in the Middle east is testing the Gulf states carefully built reputation as global hubs for investment, tourism and technology. And asking what happens to confidence we when tensions rise. The UAE has seen record levels of foreign direct investment over the past decade. In 2024 alone, it attracted around US$45 billion, a 45% increase on the previous year. But investment isn't just flowing into the uae. The small island state of Bahrain has also positioned itself as an open gateway for international businesses, with foreign investment reaching $6.8 billion in 2023, according to the United Nations. Karan Trahan is a British businessman based in Bahrain. He runs companies across real estate, recruitment and marketing. I asked him whether he's feeling optimistic about business in this current situation.

[Karan Trahan]

No, not great to be honest. On the real estate side already investors are trying to sell, landlords are trying to sell, but then no one is buying and that's just driving the prices down. We've got a very delicate balance here where I'm also seeing people have been leaving, people have been de registering from schools as well.

[Sam Fenwick]

You're seeing a cooling off in the market, I mean, almost immediately.

[Karan Trahan]

Absolutely. I've been in contact with over 200 to 220 other agents and I've been seeing that prices are being already slashed. So the real estate market is very, very fragile right now.

[Sam Fenwick]

Have you had experiences of business deals or transactions being put on hold over the past kind of week or so?

[Karan Trahan]

Yes, unfortunately we've seen people backing out from a five star project where they're offering like a ten year payment plan for investors and people have paid just deposits of like say 2 to 3,000 pounds and already those have been cancelled. And we've also seen recruitment, hiring gone on hold as well. I have no reason to believe that this will not bounce back. This economy. Certainly the uae, Qatar, Saudi, even Bahrain, because at the end of the day we're one of the very few countries that are still tax free. We are operating at 10% sales tax, VAT, 0% income tax, 0% dividend tax, 0% corporate tax, 0% property tax. So you're going to get investment in, it's just going to take a few months.

[Sam Fenwick]

Do you think this has been a bit of an eye opener for business people like yourself who have come into the region to set up a business that actually the region is pretty unstable.

[Karan Trahan]

You know, you hit the nail on the head. Yes. Truth is it's scary. I never thought I would be going to bed and then explosions going off outside. And then what you've just got to do is try and be brave. And what I'm trying to do right now as well is not only just taking care of my kids, but I'm also trying to plan and to see right, we're going to be in the trenches in the next few months. How do we navigate through that and then how do we come out of that?

[Sam Fenwick]

Listening to Karan Trahan, is Sarana Pavalescu a partner at Control Risks? Serana we just heard that from a businessman in Bahrain describing deals being cancelled, hiring being put on hold. From what you're seeing, how are global investors interpreting what's happening in the region?

[Serana Pavulescu]

I do think that every time one of these conflicts or crises has happened, we've seen renewed focus on becoming resilient to the next shock. So I would imagine that will happen again this time. The deals flows in the last few months or the last year have been increasing a lot into the region. I'm sure there will be a decrease and investor reassessing during these next few weeks. It will slow down for a very high level, historically speaking, and I'm sure it will take some time to come back to that.

[Sam Fenwick]

The Gulf has spent years, hasn't it, trying to reposition itself, trying to diversify away from oil. This, though, sounds like a real stress test for that new model.

[Serana Pavulescu]

Every crisis is a test, isn't it? When we started off here, people most expats would come for may rotation of three years. Now you have a lot of people say in my kids, school and everywhere who've been around for 10, 15 years and have made a home here. But it's also been very interesting to watch how people who've been around here for a while have had no doubts that they're here to stay. And this is just an episode. People who've been here for a very short while were the first to panic about the situation and maybe try to fly out. So it is a difference in perception between those who've been around for a longer time and those just a few months in.

[Sam Fenwick]

The Gulf has worked hard to present itself as a safe and stable place to do business. But as this conflict unfolds, investors will be watching closely to see whether that reputation can withstand the realities of a turbulent region. That's all for this edition of Business Daily. The producer with Sarah Rogers. I'm Sam Fenwick. Thanks for listening.

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