President Donald Trump has proposed a $5 billion U.S. fund to rebuild energy infrastructure damaged in the war with Iran, according to the Wall Street Journal. The plan, dubbed PACT, aims to involve Gulf states and develop alternative oil export routes bypassing the Strait of Hormuz.
The proposed fund highlights the significant economic stakes for Middle Eastern allies in the ongoing conflict with Iran, aiming to secure energy export routes and stabilize regional economies by mitigating the impact of infrastructure damage and potential disruptions to the Strait of Hormuz.
U.S. President Donald Trump has proposed the creation of a $5 billion fund, to be matched by contributions from Gulf states, to rebuild energy infrastructure damaged during the ongoing war with Iran. The initiative, dubbed the Partnership for Allied Trust and Construction (PACT), also aims to help these nations develop alternative oil export routes that bypass the Strait of Hormuz, according to a report by The Wall Street Journal, which cited unnamed sources from Washington and Gulf states.
The plan acknowledges the adverse economic impact the war has had on key Middle East allies. The United States is seeking contributions from Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Iraq, Oman, and Jordan, with a total fund size target of $10 billion. Many of these countries have seen their energy infrastructure targeted by Iranian strikes due to the presence of U.S. military bases.
However, some commentators suggest the plan may be premature as the war has not yet concluded, and prospects for a lasting peace remain uncertain. There is some hope for bilateral talks between Washington and Tehran during the UN General Assembly session, but no certainty. Iran has expressed distrust in the U.S. upholding any agreements.
Furthermore, not all Gulf states may be equally inclined to participate. Iraq, for example, has an alternative oil export route via a pipeline to Turkey, albeit with smaller capacity than the Hormuz route. Saudi Arabia has its East-West pipeline, which can switch flows to the Bab el-Mandeb strait, though it is currently under repair. The UAE has also announced plans to increase the capacity of a pipeline to Fujairah, outside the Strait of Hormuz. However, pipelines themselves can be targets, as demonstrated by Houthi attacks in Saudi Arabia.
A Persian Gulf security researcher from the UK told The Wall Street Journal that there is a realization among Gulf states and Iraq that the Strait of Hormuz's status may not return to pre-conflict levels in the short to medium term, necessitating the creation of viable, secure, and dependable bypass routes. However, the end of the war remains a prerequisite for such developments.
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