Threats for UAE in US-Israeli war against Iran
By Golzar Aghaei
Economic policy specialist
The UAE is not a neutral observer but a vulnerable actor in the US-Israeli war against Iran. Once a mainly economic player, it has become an interventionist security actor. It faces a fundamental contradiction: as a US ally hosting American military bases, it is a target of Iranian retaliation; yet as Iran’s financial and commercial hub, it has strong economic interests in continued engagement with Tehran. The note examines the UAE’s resulting opportunities and threats across three levels: economic balance sheet, financial network, and strategic position.
Direct costs
According to LuxuryEstate, the Dubai Financial Market Real Estate Index fell about 30% from 16,910 points on February 27, 2026, to roughly 11,500 by March 14, 2026, after US-Israeli strikes on Iran triggered Iranian retaliation. Drone attacks on Dubai International Airport, the Burj Al Arab area, and the Dubai International Financial Centre forced a two-day market closure; Emaar led the sell-off. Separately, the UAE’s heavy reliance on the Strait of Hormuz became a critical wartime vulnerability, with its crude oil and natural gas exports through the strait effectively dropping to zero.
Structural threats
Risk of a financial “bubble” dependent on Iran: The US Treasury’s Financial Crimes Enforcement Network (FinCEN), in its 2025 report, estimated that about $9 billion in suspicious transactions in 2024 were linked to Iran’s banking network through the UAE. These figures show that part of the UAE’s “attractiveness” for Iran is precisely what puts it under US pressure.
Credit risk and flight of large-scale capital: The war challenged the assumption that the UAE is a “safe haven.” According to reports, wealthy investors are transferring their long-term assets to Singapore and Switzerland, although they maintain part of their operations in Dubai. This pattern erodes the country’s long-term tax and fee base.
Bottom line
Studies show that, on the opportunities side, the UAE’s reliance on one trillion dirhams in foreign exchange reserves, its current account surplus, and its decentralized financial structure have enabled it to withstand war shocks. More importantly, blocking Iran’s financial network can put Tehran in a foreign exchange squeeze. On the threats side, Dubai’s economic dependence on attracting capital has exposed it to doubled US pressure, and the decline in Dubai’s real estate index, capital flight to Singapore and Switzerland, and the suspension of Fujairah port operations show that being a “safe haven” has become a strategic liability under war conditions.
This paper is the fourth in a series on the political economy of the US-Israeli war against Iran. In the following issues, the series will examine in detail the role of each beneficiary country. Saudi Arabia will be the subject of the fifth report (Report 5).