Arabian Gulf’s resilience in time of regional tension

The Gulf states are providing German businesses with excellent prospects in an economically dynamic region, despite the regional tension. However, a distorted picture has emerged in the German public debate. Politics must not allow itself to be driven by this.

Oliver Hermes is President & Global CEO of the Wilo Group, Chairman of the Board of Trustees of the Wilo-Foundation, Honorary Consul of the Republic of Kazakhstan in North Rhine-Westphalia, Deputy Chairman of the Near and Middle East Association (NUMOV), Member of the Board of Trustees of the Foundation for Family Businesses, Member of the Board of Trustees of the Africa Association of German Business, and Member of the Executive Board of the Sub-Saharan Africa Initiative of German Business (SAFRI). He is an essayist with articles published in independent media.

Periods of geopolitical tension often bring heightened scrutiny to entire regions, sometimes blurring the distinction between areas directly involved in a conflict and those that are not. Recent developments in the broader Middle East have generated extensive commentary internationally, including in parts of Europe where the situation is frequently interpreted through a lens of heightened risk. However, such narratives do not always reflect the realities on the ground in the Gulf region.

Across the Arabian Gulf region, governments have responded to recent regional developments with a clear emphasis on stability, security, and de-escalation. Defensive measures have been implemented to safeguard infrastructure, populations, and economic activity, while diplomatic channels remain open and active. These responses by the GCC countries reflect a broader strategic approach that prioritises regional stability and continuity rather than escalation.

Yet in parts of the German public discourse, a different picture has sometimes emerged.

The German public sphere seems to know better. There is no other way to explain how, since the escalation began, the role played by all states in the Gulf region has been exaggerated in the public discourse where they have been portrayed as a party to the war. They are therefore depicted as a no-go area, or at least as an existential risk for German businesses.

This is an astonishing misjudgement, for two reasons:

Reason 1: Responsible businesses know their risks inside and out

The heightened tension in the region cannot seriously have come as a surprise to anyone, particularly in view of last year's Twelve-Day War. The figures also bear this out: German businesses only exported goods worth €963 million euros to Iran in 2025 – equivalent to 0.06% of Germany's total exports.

On the one hand, this negligible proportion reflects the sanctions. On the other hand, it also demonstrates that German businesses, although traditionally strongly export-oriented, are smart enough to know the risks they face abroad.

The same applies to their engagement with the Gulf region. Systematically analysing risks and translating them into business continuity management has long been an integral part of the strategy and culture of German businesses. In this way, potential risks are incorporated into investment decisions.

The simple fact is that global operations come with geopolitical risks. You can regret that or, as a responsible business, you can prepare for it. In concrete terms, this means constantly adapting contingency plans to geopolitical reality so that you can react prudently, strategically and with sufficient foresight if the worst-case scenario happens. The flip side of that is that if you keep an eye on the world around you, you will quickly discover when things are changing for the better.

Prospects for a rapid stabilisation in the region remains uncertain due to Iran’s complex internal dynamics. However, should conditions improve faster than expected, companies with robust risk management systems will be well positioned to supply and serve the market when the opportunity arises.

Reason 2: The Gulf states are economically dynamic and politically stable – and will remain so

For a long time, the Gulf states have been viewed by German businesses as foreign markets with enormous potential in many areas of the economy. Visionary infrastructure and urban development projects are testimony to this. As a dynamic environment for AI pioneers, the region has recently attracted even more interest from foreign investors. The region's considerable growth potential remains unchecked by the recent escalation – momentum in the region is high and remains so.

There are also other location-based advantages that make it easy for investors to get excited about the region: the geographic position with access to Asia and Africa, the excellent infrastructure, the low level of bureaucracy, the low tax burden, the appeal to skilled labour and the energy prices that are not comparable with European levels. Furthermore, these advantages are not jeopardised by the conflict in the Middle East.

German investors have long known that the Gulf states are politically stable. After all, this is a key condition for investment decisions. The response to the recent attacks described above – defensive, united, de-escalatory – have further demonstrated the stabilising role these countries play within the region.  

This prudent crisis management is felt by the economy, as well as the population: The state governments look after their security. In this sense, the current period may ultimately serve as a litmus test of the Gulf countries political resilience. If they maintain their current course, they will emerge from the situation with their reputation for stability further strengthened.

Maintain political dialogue and initiatives already underway

The task for the political decision-makers in Berlin, but also in Brussels, is therefore clear: Now is time to remain in dialogue and not to prematurely break off initiatives that have already begun on the basis of an erroneous understanding of the political situation in the region. One key example is the planned EU free trade agreement with the United Arab Emirates.

Germany and Europe should now be careful not to misinterpret the Gulf states as a war and crisis zone, as this completely fails to recognise the geo-economic reality. The future of both will be decided by their ability to form global partnerships that bring about consistent multilateralism – embedded in clear geo-economic and industrial policy guidelines originating from Berlin and Brussels.