Business considerations of Iran crisis

Richard Thompson, editorial director at GlobalData, gave his thoughts about recent geopolitical tensions

Risk, Soleimani, GlobalData

The escalation in geopolitical tensions raises important questions for companies in the region about their exposure to increased political risk, and about what things they should be considering in order to ensure the safety and security of their business and people.

Companies should be aware of the implications of increased tensions between the US and Iran following Qasem Soleimani’s assassination.

There is a predictable increase in aggressive political rhetoric and talk of a slide into a third Gulf war. With an unpredictable US president and Tehran angered and frustrated, war could happen, but it is unlikely.

Personal security threat to westerners in the United Arab Emirates (UAE) and the wider gulf cooperation council (GCC) has not significantly changed. Iranian retaliation is most likely to be attacks against US military assets in Iraq, which we have seen on 8 January, or possibly against US individuals in Iraq.

There is the possibility of rocket attacks against Saudi Arabian and UAE oil installations or cities by Houthi militia in Yemen. This is a real risk, but not new. There is an increased risk of cyber-attacks.

Possibly the most significant risk to business in the region is the impact on investor appetite in regional projects and other investments. There is already evidence of the economic risk with bourses down and oil prices spiking.

With the slowdown in government spending, this could hit business growth in the region. Although strategic direction remains unchanged.

However, the Middle East is a region that will always have a high degree of political and commercial risk. Saudi, Egypt and Abu Dhabi are the strong growth markets. Iraq will struggle.

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