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Tressa Guenov

Senior director, programs and operations, and senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security 

With the war’s end in sight, the questions it raised demand answers 

Even as the world is still learning the details of the agreement between the United States and Iran, Europe and the Gulf states find themselves with a common problem to solve: how to recapitalize defense capabilities in a time of production scarcity and delivery timelines that do not necessarily comport with the speed of the evolving threat. Coupled with massive depletion of US munitions and other military stocks from the Iran war, this creates a complex global defense landscape with questions that are far from resolved. 

The Gulf states’ advanced air defense systems have provided important protection from Iranian drones and missiles aimed at civilian and military infrastructure. For its part, Europe has faced the dual challenge of providing military support to Ukraine and, for NATO allies, starting the climb to spending 5 percent of GDP on defense as was agreed at The Hague summit in 2025. 

Currently, munitions do not appear to be a major focus of cooperation between the Gulf states and Europe, although there are growing relationships in areas such as naval shipbuilding, radars, and sensing equipment. The two regions may see pragmatic space for expanded cooperation—but also potential competition—as their strategic relationships change with the United States. Washington recently approved more than $17 billion in “emergency” interceptor missile sales to Kuwait, the United Arab Emirates, and Bahrain. Meanwhile, European countries have reportedly experienced delivery delays for preexisting orders as the US has prioritized Gulf needs due to the Iran war. 

European and Gulf countries have been seeking new defense partnerships and expertise with countries such as South Korea, Ukraine, and Israel for some time, but for both regions the United States remains the primary source of the most advanced weaponry for the foreseeable future. It is unclear how and whether the administration will seek to match expanding production demands with strategic priorities for European and Gulf partners, plus the burgeoning needs of allies in the Indo-Pacific. What is clear is that now Europe and the Gulf have a converging moment to reassess their changing defense futures. 

THE LATEST

via REUTERS 

Diplomacy

Has Gulf security thinking reached an inflection point?

The United States and Iran reached an agreement to extend their fragile ceasefire and set the stage for reopening the Strait of Hormuz—though significant questions remain. Iran has insisted any deal must encompass an end to the Israel-Hezbollah conflict, while Israel’s defense minister ruled out withdrawing from territory seized in Lebanon. The sixty-day window allotted for nuclear negotiations also raised doubts, given that the 2015 Joint Comprehensive Plan of Action (JCPOA) required years to finalize. Gulf states welcomed the development, Saudi Arabia urging that any permanent settlement account for regional states’ security interests and uphold the principle of non-interference. G7 leaders, meeting in Evian-les-Bains, similarly praised the agreement and called for an immediate ceasefire in Lebanon.  

Expert take

Danny Citrinowicz

Nonresident fellow with the Atlantic Council’s Rafik Hariri Center and Middle East Programs

“The conflict exposed vulnerabilities that regional leaders cannot afford to ignore. While maintaining channels of communication with Iran will remain an important component of Gulf diplomacy, the war also raised fundamental questions about the reliability of the United States as a security guarantor and the need to diversify strategic partnerships. Despite differences among Gulf countries, particularly between Saudi Arabia and the United Arab Emirates regarding the preferred approach toward Iran—all share a common conclusion: The pre-war status quo is unlikely to return. Their overriding objective is to ensure that they are never again placed in a position where a conflict between outside powers threatens the stability and prosperity they have spent decades building.” 

Defense and security

Will conflicts between businesses threaten defense cooperation between nations?

German Chancellor Friedrich Merz and French President Emmanuel Macron have agreed to scrap a landmark project to ​develop and build a next-generation fighter jet, previously Europe’s most ambitious defense program. Months of deadlock between European aerospace group Airbus and France’s Dassault Aviation prompted the two leaders to abandon the project, which comes at a time when European officials are growing increasingly concerned over the threat from Russia and the US is pressuring Europe to take on more responsibility for defending itself. The breakdown echoes France’s decision to withdraw from the Eurofighter project in the 1980s. Merz has publicly questioned the program, saying that Germany did not need a sixth-generation nuclear-capable jet that could ​land on an aircraft carrier.

Expert take

Philippe Dickinson

Deputy director at the Atlantic Council’s Scowcroft Center for Strategy and Security and Transatlantic Security Initiative 

“European powers are increasingly aligned in their shared assessment of the threat that Russia poses, and the need for Europe to develop its own cutting-edge capabilities as the United States pulls back defense assets from the continent.

But this episode highlights just how difficult it will be for Europe to build its own defense industrial base that is greater than the sum of its parts. European leaders have so far failed to show the kind of leadership needed to overcome narrow national and industrial interests. The result is a more fragmented and inefficient European defense industrial ecosystem.”

Energy

Does the end of the war mean more stable energy markets?

The US-Iran peace agreement has eased immediate concerns over energy supply disruptions and raised expectations for the reopening of the Strait of Hormuz, which carried roughly one-fifth of global crude before the war. The UK and France have led planning for a multinational maritime mission to protect and restore commercial navigation, with more than fifteen countries reportedly committing personnel and equipment pending implementation of the agreement. Analysts warn the Gulf energy restart will be slow, as five hundred commercial vessels remain bottlenecked in the Persian Gulf, and mine clearance may take six months. Capital Economics expects energy flows to recover to only 80 percent of prewar levels by September.

Expert take

 Eric Fine

Nonresident senior fellow with the Atlantic Council’s Rafik Hariri Center for the Middle East’s MENA Futures Lab

 “Maybe. Maybe not. The market has been shell-shocked by divergences in the information space. What should be basic facts aren’t trusted as they were. From this angle, perhaps the Iran war will not be as resolved by year’s end as the market is saying; the market is not willing to think too far down the road as a result. That technical setup—that the market is still positioned as bullish—is probably the best thing for Europe. If the war appears paused, oil can decline as can pressure on the European Central Bank to hike rates.”

Economy

How high will inflation and interest rates get?

While the US-Iran memorandum of understanding has eased immediate concerns over energy supply disruptions, European policymakers remain focused on the economic fallout from recent volatility in energy markets and shipping routes. The International Monetary Fund has lowered its 2026 eurozone growth forecast and raised its inflation outlook, while the European Central Bank recently increased interest rates to address energy-driven price pressures, underscoring the continued vulnerability of Europe’s economy to external energy shocks.

Launched in September 2025, the Europe Gulf Forum is a platform bringing together the highest level of political and business leadership in Europe and the Gulf to advance greater strategic and economic engagement between the two regions.