Did the United States Build Gulf Bases to Protect Arab Monarchies — or Israel?

The enduring American military presence across the Gulf — from Bahrain and Qatar to United Arab Emirates and Saudi Arabia — has long been justified under the doctrine of regional stability and collective defence. Successive US administrations have argued that these bases serve as a deterrent against external threats, particularly from Iran, portrayed as a revisionist power challenging the Gulf monarchies and the broader regional order. Defence agreements were signed, billions of dollars’ worth of advanced weaponry was purchased, and a security architecture was institutionalized under the American umbrella.

However, recent escalations — including coordinated US–Israeli strikes on Iranian targets in 2025 and 2026, followed by retaliatory attacks on American installations inside Gulf states — have reignited a fundamental question: were these bases primarily designed to shield the Gulf emirates, or to guarantee strategic depth for Israel? Critics argue that the pattern of engagement suggests a security arrangement in which Gulf territories function less as protected partners and more as forward operating platforms in a broader US–Israel strategic calculus. Supporters of the status quo counter that without American deterrence, Gulf capitals would face far greater vulnerabilities.

The debate, therefore, is not merely about military installations; it concerns sovereignty, threat perception, and the true beneficiaries of regional security alignments. Were Gulf leaders persuaded to view Iran as the primary existential threat while Israel remained outside their formal defence calculus? Or is this interpretation an oversimplification of a far more complex geopolitical reality?

I invite readers to reflect critically:
Are US bases in the Gulf fundamentally defensive shields for Arab monarchies — or strategic assets designed to preserve Israel’s qualitative military edge?
Has recent regional escalation validated long-standing security assumptions, or exposed their limitations?

Your considered views will enrich this debate.

Is Larijani Trump’s Likely Choice to Rule Iran?

The reported assassination of Ali Khamenei has pushed Iran into a moment of deep uncertainty. As Washington reassesses its objectives following joint US–Israeli strikes, speculation is mounting over whether the United States would quietly favor a particular figure to stabilize Tehran. Among the names circulating in policy discussions is Ali Larijani — a seasoned insider with deep roots in Iran’s national security establishment.

Larijani is no outsider. A former speaker of parliament, veteran nuclear negotiator and long-time power broker, he has operated at the heart of the Islamic Republic for decades. In the weeks before Khamenei’s death, he was reportedly entrusted with broader strategic responsibilities, reinforcing his standing within the system. That positioning makes him one of the few figures capable of navigating Iran’s complex factional landscape.

President Donald Trump, meanwhile, has sent mixed signals about Washington’s ultimate aims — oscillating between suggestions of regime change and more limited objectives focused on missiles, nuclear capability and regional proxies. Such ambiguity may be deliberate, allowing room for negotiation if outright systemic collapse proves too costly or destabilizing.

In that context, Larijani’s profile presents both opportunity and risk. Critics describe him as deeply embedded in the regime’s hard power structure, including close interaction with security institutions. Supporters argue that precisely because of his establishment credentials, he could command trust across competing factions — a prerequisite for any controlled transition.

Still, Iran’s constitutional framework cannot be ignored. The Assembly of Experts retains authority to select the next Supreme Leader, and any interim arrangement would remain internally driven. External influence, however significant, has limits.

The central question is not whether Washington can “pick” Iran’s ruler — it cannot. Rather, it is whether US policymakers would prefer dealing with a pragmatic insider capable of negotiation over a fractured and unpredictable power vacuum. If stability and containment become the priority, Larijani may appear to some in Washington as a workable, if imperfect, interlocutor.

In geopolitics, choices are rarely ideal, these are calculated.

Pakistan: Strait of Hormuz risk back in focus

According to a report by Inter Market Securities, the renewed escalation in US-Iran hostilities marks reversal from the constructive progress emerging from last week’s dialogue in Geneva, wherein both sides signaled towards a possible agreement. Early Saturday, the US acknowledged attacks on key Iranian targets, which was followed by waves of retaliatory attacks by Iran on US installations in the GCC region (UAE, Qatar, Kuwait, Bahrain, Jordan and Saudi Arabia). While the duration of the conflict is uncertain, geopolitical risks are likely to be repriced by markets of all asset classes via higher energy, commodity and freight costs, especially due to rising concerns of a potential disruption in the Strait of Hormuz.

The Strait of Hormuz – a narrow maritime corridor which links the Persian Gulf with the Gulf of Oman – is a critical route for the global energy trade, facilitating nearly one-fifth of global oil, petroleum and LNG trade, alongside nearly one-fourth of global seaborne trade. A partial disruption of the strait can materially lift oil prices and shipping freight. Beyond hydrocarbons, the strait is a key route for 25-30% of global seaborne minerals and 15% of chemicals/ fertilizer trade, among others, indicating worrisome implications on global growth and inflation. During the June 2025 US-Iran escalation (between June 13-24), Brent crude surged more than 10% DoD on June 13, before peaking later in the period north of US$77/bbl, before retracing as tensions dwindled. A similar situation played out early today when markets opened, with Brent crossing US$81/bbl (before retracing). If hostilities persist, oil could be pushed beyond US$80/bbl as well.

Notably, the KSE100 has historically reacted negatively to such events, due to Pakistan’s heavy reliance on imported crude oil and other commodities, giving rise to concerns of a potential deterioration of macroeconomic indicators. The KSE100 corrected 7% between the period before rebounding alongside de-escalation (market halted at the start of the day today). Therefore, a comparable risk-off episode cannot be ruled particularly if oil prices persistently remain elevated (negative for both inflation and the external account).

In the event of a prolonged oil price shock, the near-term macro implications for Pakistan would primarily be inflationary in absence of a swift de-escalation. For every US$5/bbl move in oil prices above with base case of US$65/ US$60/ bbl raises the next 12-month CPI estimates by an average 40bps. Additionally, given Pakistan’s structural reliance on energy imports, primarily crude related imports, 18% of overall import bill FY26 to date, higher oil prices would also weigh on the country’s external account, as a percent of GDP increasing by 20bps each for every US$5/bbl increase. That said, geopolitical oil spikes tend to be temporary, with prices retracing rapidly as tensions ease, limiting the impact on macro estimates.

Despite immediate macro risks, the brokerage house continues to remain constructive on Pakistan equities. The recent market correction has opened up valuation upside, while the earnings outlook and broader macro backdrop remain largely intact. Unless oil prices sustain higher for longer, the brokerage house sees the current market valuations as an attractive entry point.

 

Khamenei: A Leader Par Excellence

The passing of Ali Khamenei closes a defining chapter in the contemporary history of Iran. For more than three decades, he stood at the helm of a nation navigating relentless sanctions, diplomatic isolation, covert pressures, and open hostility led primarily by the United States and its regional ally, Israel. Yet, through turbulence and uncertainty, he projected continuity and resolve.

Khamenei’s leadership was forged in adversity. He inherited a revolutionary system still consolidating itself after war and internal transition. Over time, waves of economic sanctions and strategic containment sought to exhaust Iran’s capacity. Instead, the state apparatus endured. Institutions functioned, elections were held within constitutional timelines, and political processes — however debated externally — continued without systemic collapse. For his supporters, this was proof of institutional resilience under pressure.

He was neither a conventional politician nor merely a symbolic figure. He combined ideological steadfastness with calculated pragmatism. Negotiations were pursued when deemed necessary; resistance was emphasized when sovereignty was perceived to be at stake. His posture was often uncompromising, yet it reflected a consistent strategic doctrine: survival through endurance.

It is no secret that immense military, intelligence, and economic power was mobilized over decades to challenge the system he led. The geopolitical environment surrounding Iran was rarely neutral. Regional realignments, shifting alliances, and calculated silences frequently shaped the strategic space in which external pressure operated. Historians will debate the extent to which global and regional dynamics influenced the course of events. What is beyond dispute, however, is that Iran did not fracture under sustained coercion.

Leaders depart, but legacies are measured by institutional durability. Those who believed that sustained pressure alone could bend Iran’s trajectory repeatedly encountered a more complex reality. Nations shaped by adversity often internalize resilience.

Ali Khamenei’s era will be remembered for confrontation, endurance, and continuity. His critics may question his methods; his followers will celebrate his steadfastness. Yet history is likely to record one central fact: despite extraordinary external pressure, Iran remained intact — and its future will now test whether the structures he fortified can carry that legacy forward.

Israel launches attack against Iran

According to Reuters report, Israel has launched attack against Iran on Saturday, pushing the Middle East into a renewed military confrontation and further dimming hopes for a diplomatic solution to Tehran's long-running nuclear dispute with the West.

The New York Times, citing a US official, reported that US strikes on Iran were underway. A source told Reuters that Iran's supreme leader, Ayatollah Ali Khamenei, was not in Tehran and had been transferred to a secure location.

The attack, coming after Israel and Iran engaged in a 12-day air war in June, follows repeated U.S.-Israeli warnings that they would strike again if Iran pressed ahead with its nuclear and ballistic missile programs.

"The State of Israel launched a pre-emptive attack against Iran to remove threats to the State of Israel," Defence Minister Israel Katz said.

Explosions were heard in Tehran on Saturday, Iranian media reported.

The US and Iran renewed negotiations in February in a bid to resolve the decades-long dispute through diplomacy and avert the threat of a military confrontation that could destabilize the region.

Israel, however, insisted that any US deal with Iran must include the dismantling of Tehran's nuclear infrastructure, not just stopping the enrichment process, and lobbied Washington to include restrictions on Iran's missile program in the talks.

Iran said it was prepared to discuss curbs on its nuclear program in exchange for lifting sanctions but ruled out linking the issue to missiles.

Tehran also said it would defend itself against any attack.

It warned neighbouring countries hosting US troops that it would retaliate against American bases if Washington struck Iran.

In June last year, the US joined an Israeli military campaign against Iranian nuclear installations, in the most direct American military action ever against the Islamic Republic.

Tehran retaliated by launching missiles toward the US Al Udeid air base in Qatar, the largest in the Middle East.

Western powers have warned that Iran's ballistic missile project threatens regional stability and could deliver nuclear weapons if developed. Tehran denies seeking atomic bombs.

Pakistan’s Western Front: Security First, Escalation Last

The latest flare-up between Pakistan and Afghanistan is not about ideology, nor about religion. It is about security — plain and simple. For Islamabad, the issue is whether militant groups hostile to Pakistan can operate from across the border with impunity.

Pakistan’s position is rooted in sovereignty. No state can allow armed actors to use neighboring territory as a launching pad for attacks. Islamabad has consistently maintained that elements targeting Pakistan have found operational space inside Afghanistan since the return of the Taliban government in 2021. Kabul rejects this claim, arguing that Pakistan is deflecting from its internal security challenges. This divergence is not new — but it is now sharper and more dangerous.

The recent Pakistani air operations inside Afghan territory must be seen through this security prism. Islamabad describes them as targeted actions against militant infrastructure, not as aggression against the Afghan state. The subsequent retaliation along the border elevated tensions to a level that Pakistan’s Defence Minister, Khawaja Muhammad Asif, termed “open war.” That phrase reflects gravity, not intent for prolonged conflict.

The response from the US Department of State — supporting Pakistan’s right to defend itself while expressing concern over casualties — adds geopolitical context but does not define Pakistan’s policy. Islamabad’s western border challenges are indigenous and longstanding. These predate Washington’s statements and will persist independent of them.

Strategically, Pakistan faces a classic security dilemma. If it acts, it risks escalation. If it does not act, it risks emboldening militant actors. Neither option is cost-free. However, sustained instability on the western frontier would divert resources from Pakistan’s primary priority - economic stabilization and internal reform.

It is also important to recognize what this confrontation is not. It is not a war for territory. It is not a regime-change project. And it is not in Pakistan’s interest to see Afghanistan destabilized. A chaotic Afghanistan historically produces security spillovers into Pakistan. Stability in Kabul, therefore, is aligned with Islamabad’s long-term interests — provided that stability does not come at the cost of Pakistani lives.

The way forward demands firmness without adventurism. Pakistan must continue to defend its sovereignty while keeping diplomatic channels functional. Structured border mechanisms, verifiable counterterrorism cooperation, and sustained political engagement are essential.

For Pakistan, the equation is straightforward: security first, escalation last. Strategic maturity lies in deterring threats without sliding into prolonged confrontation. The western border must not become a permanent battleground — it must become a managed frontier built on accountability and realism.

PSX benchmark index down 2.9%WoW

Pakistan Stock Exchange (PSX) continued to witness volatility during the week amid persistent geopolitical tensions between the US and Iran, alongside Pak-Afghan conflict, before staging a recovery on Thursday with a gain of 4,267 points. The benchmark index declined by 5,108 points or 2.9% during the week, closing at 168,062 on Friday, February 27, 2026. Market participation improved during the week, with average daily traded volumes rising by 25%WoW to 1.0 billion shares, from 831 million shares a week ago.

On the macro front, developments remained supportive, with the IMF review team currently in the country. In parallel, the Finance Minister’s remarks regarding the UAE’s US$2 billion loan rollover were also encouraging, providing comfort on the country’s external financing position.

Moreover, SBP’s net FX intervention reached US$11 billion over the last 18 months as of November 2025, while SBP held FX reserves increased by US$16 million to US$16.2 billion as of February 20, 2026, despite the repayment of a US$700 million loan to the China Development Bank.

On the currency front, PKR appreciated by 0.03%WoW against the greenback during the week, closing the week at 279.47 PKR/ US$.

Other major news flow during the week included: 1) Trump hikes US global tariff rate to 15%, 2) IMF hints at phased tax cut approach, 3) Prime Minister Shahbaz Sharif and Qatari Emir agree to deepen economic cooperation, 4) Profit repatriation rises to US$1.67 billion in 7MFY26, and 5) CCP clears Abu Dhabi-based Eve Holdings’ acquisition of First Women Bank.

Vanspati & Allied Industries, Fertilizer, and Automobile Parts & Accessories were amongst the top performing sectors, while Tobacco, Synthetic & Rayon, and Property were amongst the laggards.

Major selling was recorded by Individuals and Foreigners with a net sell of US$18.0 million and US$17.3 million, respectively. Banks absorbed most of the selling with a net buy of US$33.9 million.

Top performing scrips of the week were: SSOM, AKBL, THALL, POL, and BAFL, while laggards included: UNITY, SSGC, TRG, YOUW, and IBFL.

AKD Securities expects the market to recover as domestic and geopolitical uncertainties subside, with market trading at attractive valuations of forward PE of 7.2x and Dividend Yield of 6.6%. The brokerage house anticipates the benchmark Index to reach 263,800 by end December 2o26.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.