Global Risk Indexes (09-02-2025)

Global 98 (+1 ▲)
MENA 98 ( —)
APAC 98 (+1 ▲)
Europe 97 ( —)
Africa 97 (+1 ▲)
AMERs 98 ( —)
Markets 99 (+1 ▲)
Farid al-Khaleqi, Middle East region analyst at Worldwise Analytica

Farid al-Khaleqi

Navigating the Sands of Time, Illuminating the Geopolitical Horizon

Gaza Crisis Deepens, Iran Retaliates Against U.S. Sanctions, and Israel-Hezbollah Tensions Push MENA Toward Further Instability

The Middle East is entering a critical phase of geopolitical uncertainty, as multiple crises converge to reshape regional dynamics. Over the past week, President Donald Trump's radical proposal to take control of Gaza has triggered an unprecedented diplomatic firestorm, with Arab states'led by Jordan, Egypt, and Saudi Arabia'strongly rejecting the plan. The crisis has damaged Washington's credibility in the Arab world and placed increased strain on its alliances, particularly as regional actors reaffirm their commitment to Palestinian statehood. Meanwhile, Iran has escalated its response to renewed U.S. sanctions by rallying OPEC members to counter Washington's economic pressure while unveiling new military assets to expand its naval power projection. The fragile Israel-Hamas ceasefire is also showing signs of collapse, as Hamas delays hostage releases and accuses Israel of blocking humanitarian aid. In parallel, Turkey has intensified its military operations against the PKK in Iraq, seeking to weaken Kurdish forces ahead of a potential political realignment. In Lebanon, a new government has been formed with heavy U.S. involvement, reducing Hezbollah's influence but also triggering internal unrest. Economic shifts, including Iran's moves in global oil markets and the UAE's AI investments, highlight the region's growing role in shaping global technological and energy landscapes. Taken together, these developments suggest that MENA is heading toward increased military tensions, economic confrontations, and diplomatic realignments in the coming weeks.

Trump's Gaza Takeover Proposal: A Diplomatic Earthquake

Trump's proposal to forcibly relocate Gaza's Palestinian population and place the enclave under U.S. control has been met with global condemnation. Jordanian King Abdullah has described the plan as an 'existential threat,' warning that Amman may reconsider its 1994 peace treaty with Israel. Egypt has intensified diplomatic efforts to rally Arab opposition, while Saudi Arabia has reaffirmed that normalization with Israel is impossible without a Palestinian state. This crisis has strengthened Iran's influence, as Tehran presents itself as the only actor genuinely defending Palestinian rights. If the U.S. continues to push this policy, it risks deepening regional instability, emboldening extremist movements, and further isolating Washington from its Arab allies.

Iran's Strategic Shift: Energy Warfare and Military Expansion

Iran has launched a dual-track response to U.S. sanctions: coordinating with OPEC to resist American economic pressure while expanding its military reach. Tehran has intensified discussions with Venezuela, Russia, and other oil producers to circumvent sanctions and create alternative trading mechanisms. Additionally, Iran's unveiling of a new drone and helicopter carrier warship signals an expanded naval posture, increasing its ability to disrupt maritime routes in the Gulf. If tensions with the U.S. continue to rise, Iran may escalate its military activities in the Strait of Hormuz or intensify proxy attacks against U.S. and Israeli interests in Iraq and Syria.

Israel-Hezbollah Confrontation: The Shadow War Intensifies

Israel's recent airstrikes on Hezbollah weapons storage facilities in Lebanon have escalated tensions significantly. Hezbollah has vowed retaliation, raising the risk of drone or rocket attacks targeting northern Israel. With Israeli domestic pressure mounting, Netanyahu's government may be forced into a more aggressive military posture, increasing the likelihood of a wider confrontation. If this escalation continues, Lebanon could be drawn into a regional conflict, exacerbating its already fragile political and economic crisis.

Lebanon's New Government: U.S. Intervention and Internal Unrest

Lebanon has formed a new government under Prime Minister Nawaf Salam, with U.S. influence shaping the cabinet's composition to minimize Hezbollah's role. This move has triggered protests from Hezbollah-aligned factions, accusing Washington of interfering in Lebanon's internal affairs. While the new government is expected to prioritize economic reforms, political gridlock remains a risk, especially if Hezbollah and its allies choose to obstruct decision-making processes. If tensions escalate, Lebanon could face renewed instability, delaying much-needed economic recovery efforts.

Strategic Outlook

The Middle East is entering a highly volatile period, with multiple crisis points converging. Trump's Gaza plan has sparked fierce resistance from Arab states, while Iran's retaliatory strategies signal an emerging economic and military confrontation with the U.S. The fragility of the Israel-Hamas ceasefire increases the risk of renewed conflict, and Lebanon's political landscape remains uncertain. Meanwhile, economic developments'such as Iran's energy maneuvers and the UAE-France AI investment deal'highlight shifting power dynamics in global markets. The coming weeks will determine whether diplomacy can contain these crises or if MENA is on the path to deeper instability.

Geopolitical Risk Assessment for the Middle East
(09-02-2025)

The MENA region remains highly unstable, with escalating geopolitical, military, and economic tensions. Over the past week, Trump's Gaza takeover proposal has become a full-scale diplomatic crisis, uniting Arab states against U.S. policy while straining Washington's alliances in the region. Iran has intensified its military and economic retaliation against renewed U.S. sanctions, rallying OPEC members while expanding its naval capabilities. Meanwhile, the fragile Israel-Hamas ceasefire is on the brink of collapse, with Hamas delaying hostage releases and accusing Israel of restricting humanitarian aid. Turkey has escalated its military operations against the PKK in Iraq ahead of a potential shift in Kurdish political strategy. At the same time, Lebanon has formed a new government after direct U.S. intervention to curb Hezbollah's influence, sparking domestic protests and raising fears of renewed internal tensions. Economically, the UAE's AI megadeal with France signals MENA's expanding role in global technology investment, while Iran's economic maneuvering threatens new oil market disruptions. With rising military confrontations, diplomatic realignments, and economic flashpoints, the region is entering a period of heightened volatility and potential conflict.

Geopolitical Risk Index

Developments to Follow for the Middle East (See All Global)

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