The ongoing Iran war is putting the United Arab Emirates’ long-standing reputation as a safe haven for business and tourism under growing pressure.
For decades, the UAE has promoted itself as a stable destination for international companies and investors in a region often marked by conflict. But the war has brought missile and drone attacks, disrupted oil exports and sharply reduced tourism, raising concerns about the resilience of its economic model.
The UAE, a close ally of the United States and Israel, has faced more Iranian missile and drone attacks than any other country during the conflict. Iran’s effective closure of the Strait of Hormuz, a vital route for global energy shipments, has significantly reduced the Emirates’ crude oil and natural gas exports.
The Gulf nation has responded by accelerating plans to build a second pipeline to bypass the strait and recently decided to leave the OPEC oil alliance to allow greater long-term production.
Although the United States and Israel launched the war, the UAE has become deeply involved because of its strategic location across the Gulf from Iran.
A drone strike on Sunday targeted the Barakah nuclear power plant in western Abu Dhabi, highlighting the security risks the country continues to face. Officials said there was no radiation leak and the plant remains operational.
Despite these challenges, the UAE’s large financial reserves have helped prevent major job losses and discouraged foreign companies from leaving. However, analysts warn that a prolonged conflict could damage the country’s carefully built image as a stable and reliable place to do business.
The UAE has taken an increasingly tough stance against Iran, accusing it of threatening regional security and warning that it reserves the right to respond diplomatically or militarily.
“The UAE will not tolerate any threat to its security and sovereignty,” the Foreign Ministry said in a statement on Sunday.
The country’s foreign policy has become more assertive in recent years under President Sheikh Mohammed bin Zayed Al Nahyan, whose leadership has shaped the UAE’s growing role in regional conflicts, including in Yemen.
The war has also hurt sectors beyond energy.
Tourism and business events, which account for more than 12% of the UAE’s economy, have been hit hard. More than 70 scheduled events have been postponed or cancelled since the conflict began in February, according to Northbourne Advisory, a Qatar-based communications firm.
Hotel occupancy in Dubai has fallen sharply, with some estimates suggesting rates could drop to as low as 10% in the second quarter, compared with about 80% before the war.
Dubai International Airport, one of the world’s busiest for international travel, has restored most of its flight schedule, but recurring missile and drone alerts continue to unsettle businesses and travelers.
Even so, Dubai is trying to project a sense of normalcy. The city hosted a shortened version of its annual Art Dubai exhibition over the weekend, where artists said cultural events remain important despite the surrounding conflict.
“Life doesn’t stop in a world war,” Beirut-based artist Alfred Tarazi said. “We can only counter a narrative of violence with culture.”