UAE Wants to Obtain US Financial Lifeline as Iran War Batters Economy

(MENAFN) The United Arab Emirates is engaged in active discussions with the Trump administration over potential emergency financial assistance should the war with Iran extend further, the Wall Street Journal reported Sunday.

According to the report, UAE Central Bank Governor Khaled Mohamed Balama traveled to Washington, DC last week, where he met with US Treasury Secretary Scott Bessent and Federal Reserve officials to float the idea of establishing a currency-swap line — a mechanism that would give Abu Dhabi affordable access to US dollars to stabilize its currency or bolster foreign reserves in the event of a liquidity crunch.

Emirati officials are seeking what the report described as a "financial lifeline" from Washington, driven by fears that a protracted conflict could deliver a severe blow to the oil-rich Persian Gulf state's economic standing. A prolonged war "could inflict major damage on its economy and its position as a global financial hub, depleting its foreign reserves and scaring away investors who once saw it as a stable and secure place for their money," the Wall Street Journal added.

The economic strain on the UAE is already tangible. Iranian airstrikes have damaged critical oil and gas infrastructure within the country, while Tehran's blockade of the Strait of Hormuz — in place since late February — has effectively severed the UAE's oil export pipeline, cutting off a vital artery of government revenue.

No formal request for a swap line has yet been submitted by Emirati officials. However, the proposed arrangement would serve as a precautionary backstop, with UAE officials privately acknowledging that President Donald Trump's decision to enter the war alongside Israel has "entangled their country in a destructive conflict," the report said, citing US sources.

The prospects of Washington approving such an arrangement remain uncertain. US officials have noted that the Federal Open Market Committee "usually reserves them for relieving severe funding-market pressures that could spill back into the US economy" — a threshold the UAE's situation may not yet meet. The US currently maintains standing currency-swap agreements with the central banks of the United Kingdom, Canada, Japan, Switzerland, and the European Union.

The UAE is meanwhile hedging its bets on multiple fronts, having already secured a roughly $5 billion swap line with Bahrain earlier this month to help shore up near-term financial stability.

Regardless of whether Washington or other partners step in, regional officials are tempering expectations of any rapid economic rebound. Saudi Arabia's Finance Minister Mohammed Al-Jadaan offered a sobering assessment Thursday, warning that the logistical damage alone will take months to unwind.

"The basic logistics of scheduling tankers and bringing them back after the chaos we have seen, that will take possibly to the end of June," Al-Jadaan said. "Anyone who's counting for a quick recovery, even if there is a total end of hostilities, will need to recalculate that."

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