Haven status of Dubai and Abu Dhabi tested by Middle East crisis

The United Arab Emirates has managed to thrive during global instability, drawing capital during the Arab Spring, opening up quickly during the Covid-19 pandemic, and attracting Russian money after Moscow's invasion of Ukraine.

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But the Iran-Israel confrontation, which involved the US, poses one of the most stringent tests yet to the country's neutral and open-for-business stance.

By the morning of June 24, just hours after Iran hit a US base in nearby Qatar and the UAE briefly closed its airspace, it was already business as usual in the financial centres of Dubai and Abu Dhabi.

An executive at one of Abu Dhabi's wealth funds said it was proceeding as planned with deals and investments, even encouraging foreign executives to visit for meetings. In Dubai, bankers were quick to relay optimism that the UAE would sidestep any major fallout.

But while a ceasefire announced by US President Donald Trump appears to be holding, some executives acknowledge an undercurrent of nervousness because the geopolitical risks of the Middle East have come so sharply to the fore.

The stakes for the global financial community are particularly high in the UAE, which has attracted international billionaires looking to safeguard their wealth as well as Wall Street banks and hedge funds looking to expand. Abu Dhabi has been on a dealmaking spree with its US$1.7 trillion (S$2.18 trillion) sovereign wealth pile. Meanwhile, Dubai's property prices have surged 70 per cent over four years, propelled by buyers from around the world.

"I think the current situation is contained. But what happened is significant — it's a signal that no action is off-limits any more," said Mr Hussein Nasser-Eddin, chief executive of Dubai-based security services provider Crownox, referring to the attack in Qatar, which like the UAE is a long-time ally of the US.