The Mezze Table | April 2025
Welcome to this edition of The Mezze Table, Ananta’s insights on West Asia and the Gulf. From diplomatic strategies to business breakthroughs, this bulletin captures the trends, insights, and stories shaping this vibrant region.
US Tariffs Test West Asian Economies
The US’s new tariffs announced in April hit several nations in West Asia and the Gulf, with varying degrees of impact depending on each country’s trade relationship with the US. Gulf Cooperation Council (GCC) nations, such as Saudi Arabia and United Arab Emirates (UAE), are now subject to a 10% tariff on exports to the US. Other countries face steeper rates — Jordan at 20%, Iraq at 39%, and Syria at 41%. Tariffs have already led to reduced export revenues and increased costs for exporters, posing new challenges for economies already navigating complex regional dynamics.
GCC members have been relatively insulated from the harshest measures, presumably because of the favourable trade balance member nations maintain with Washington. For instance, in 2024, the US exported $27bn worth of goods to UAE while importing only $7.5 billion, making for substantial trade surplus. This surplus has likely helped shield UAE and other Gulf countries from the higher “reciprocal” tariffs imposed on nations with significant trade surpluses against the US. In contrast, Iraq and Syria’s strained political and economic ties with Washington have made them more vulnerable to punitive trade measures.
Not just energy, other sectors are also feeling the pressure. Saudi Arabia’s ambitious Neom mega-project, initially estimated at $500bn — has seen projected costs balloon to $8.8tn. While internal mismanagement and economic instability are primary drivers of this surge, US tariffs have exacerbated the situation by disrupting supply chains and increasing costs of imported materials. Ironically, some sectors, such as construction, may benefit from the changing global trade dynamics. With the US imposing a 25% tariff on steel imports, major exporters like Turkey, previously sending over 400,000 tonnes of steel annually to the US, are now seeking alternative markets. Notably, the oversupply could lead to cheaper steel in West Asia, potentially lowering costs for regional infrastructure projects.
The tariffs have introduced uncertainty in the region, slowing infrastructure development, and shaking investor confidence – most evident in the signs of volatility in regional stock markets. The full extent of the economic fallout will depend on duration of the tariffs and how regional governments respond. Policymakers are seeking adaptive strategies to protect key industries, maintain economic stability, and safeguard long-term development goals.
Mohammad Bin Salman: The New Peacekeeper?
In recent years, MBS has spearheaded efforts to resolve tensions between regional rivals. His landmark agreement with Iran in 2023, brokered with China’s assistance, signalled a major shift in Saudi Arabia’s foreign policy. The restoration of diplomatic ties between Riyadh and Tehran was a crucial step toward de-escalating conflicts in Yemen, Syria, and Lebanon, where the two nations have historically supported opposing factions.
Building on this momentum, in 2024 and 2025, MBS has played a central role in brokering peace agreements across the region. His efforts have included facilitating further ceasefires in Yemen and aiding diplomatic negotiations between Israel and key Arab states. Additionally, Saudi Arabia has positioned itself as a neutral ground for dialogue between Russia and Ukraine — MBS engaging in diplomatic talks to mitigate global tensions.
However, these peacekeeping efforts unfold against the backdrop of the 2018 killing of journalist Jamal Khashoggi, an incident that significantly strained Saudi relations with the West. While MBS faced international condemnation he has since worked to rehabilitate his global image through diplomatic overtures, economic investments, and strategic alliances. His ability to navigate past controversies while shaping the future of West Asian diplomacy demonstrates both his resilience and the shifting power dynamics in global politics.
MBS has moved beyond political negotiations; he has actively used economic diplomacy to strengthen ties with former adversaries. Its Vision 2030, aimed at diversifying its economy, has led to increased investments in infrastructure, energy, and technology across the region.
The Saudi-led push for regional economic cooperation has helped improve its relations with Turkey, Qatar, and Egypt. GCC is witnessing renewed unity, with Saudi Arabia playing a central role in mitigating past disputes.
MBS has also strengthened ties with both the West and emerging powers like China and Russia. His ability to balance Saudi Arabia’s traditional alliances with the US while expanding partnerships with Beijing and Moscow underscores his strategic approach to diplomacy.
Saudi Arabia’s peacekeeping efforts have extended to Africa, where it has mediated in conflicts and provided humanitarian aid. MBS’s diplomatic engagements demonstrate a shift from a purely oil-driven foreign policy to a more comprehensive and diversified approach to international relations.
Despite all efforts, MBS faces challenges in cementing his role as peacekeeper. The war in Yemen, human rights concerns, and ongoing tensions with certain regional actors pose obstacles to his broader vision. Concerns over his controversial past, particularly the assassination of Khashoggi, makes critics question the authenticity of his peacekeeping efforts.
That said, his diplomatic successes indicate a willingness to adapt and position Saudi Arabia as the region’s stabilising force. Whether bin Salman’s initiatives lead to lasting peace remains to be seen, but his shift toward diplomacy and conflict resolution marks a significant evolution in Saudi leadership on the world stage.
Iran: Talks, Sanctions, Mismanagement
The U.S. and Iran have conducted three rounds of indirect negotiations, beginning in Muscat, Oman, on April 12, followed by sessions in Rome on April 19, and returning to Muscat on April 26. These discussions have transitioned from high-level diplomatic meetings to technical talks, indicating a move toward detailed negotiations. Both sides have described the talks as “serious and productive,” suggesting that a general framework may have been agreed upon, with teams exchanging more detailed and expert-level information .
France has expressed readiness to reimpose United Nations sanctions on Iran if the ongoing negotiations fail to produce a new agreement. French Foreign Minister Jean-Noel Barrot emphasized the importance of European security interests and indicated that the E3 group (France, Britain, and Germany) might initiate the “snapback” mechanism to restore sanctions as early as August if no substantive progress is made.
Domestically, Iranian leadership, including Supreme Leader Ayatollah Ali Khamenei — has cautiously supported ongoing negotiations, though conservative factions warn against relying too heavily on diplomacy to solve the country’s economic woes. This caution was underscored by the recent dismissal of Finance Minister Ehsan Khandoozi, a move that highlights the severity of Iran’s economic crisis but is unlikely to resolve the deep-rooted structural issues at its core.
Currency’s struggling, inflation’s rising, unemployment’s widespread. In the increasing public dissatisfaction, Iran leadership’s decision to reshuffle top economic personnel is more a political manoeuvre than genuine economic reform. Khandoozi’s ousting highlights not just policy failure but also the immense internal pressures the Iranian government faces as it grapples with mounting domestic instability.
At the heart of Iran’s economic woes lies the persistent devaluation of the rial. Over the past few years, the currency has lost significant value against the US dollar, exacerbated by a combination of sanctions, poor fiscal management, and geopolitical tensions. While the government has tried to implement currency stabilisation measures, including multiple exchange rates and interventions in the forex market, these efforts have largely failed to instil public or investor confidence. The finance minister’s dismissal signals discontent with such failed strategies, but without comprehensive policy changes, a leadership tweak is unlikely to stem the decline.
Inflation remains a pressing issue. Inflation rate has remained dangerously high, often over 40%, leading to rising food and housing costs. For ordinary Iranians, this means shrinking purchasing power and deteriorating quality of life. The inflationary spiral is not only a result of currency depreciation but also of excessive government borrowing and subsidy mismanagement. Khandoozi’s blamed for failing to rein in inflation, but economic isolation due to sanctions and lack of transparency limit the effectiveness of any finance minister.
Iran’s unemployment rate is high with few jobs in private sector and a bloated, inefficient public sector. This has fuelled emigration and brain drain, compounding the country’s long-term economic challenges. Lack of meaningful labour reforms or investment incentives has stymied job creation.
Khandoozi’s exit also exposes internal rifts between reformist and hardline factions. President Ebrahim Raisi, who rose to power on the promise of economic recovery, finds himself under mounting pressure to deliver. Critics argue Khandoozi’s dismissal was more optics than solution, and could further erode public trust in the government’s competence.
Renewed Violence and Humanitarian Crisis: Collapse of the Gaza Ceasefire
On March 18, 2025, the fragile ceasefire between Israel and Hamas collapsed, triggering a dramatic escalation that plunged the Gaza Strip back into violent conflict. Israeli airstrikes targeted what the military described as Hamas command centers, weapons stockpiles, and underground tunnels. More than 400 Palestinians were killed in just 24 hours, marking the deadliest day since the conflict began in October 2023.
The unprecedented scale of destruction and civilian casualties drew widespread international condemnation, with questions raised over the proportionality of Israel’s response and its adherence to international humanitarian law. With the ceasefire now defunct, Gaza has effectively been sealed off. The flow of food, medical supplies, and fuel has halted, exacerbating an already dire humanitarian crisis.
The breakdown of the ceasefire also sparked rare public unrest within Gaza. On March 25, hundreds of residents in Beit Lahiya and other areas protested both the ongoing war and Hamas’s leadership. Chants such as “Hamas out!” and “We refuse to die” reflected growing frustration with the militant group’s governance and the worsening humanitarian conditions. These grassroots protests, which lacked centralized leadership, spread to neighborhoods in Gaza City and Khan Younis, where demonstrators voiced anger over power outages, poverty, and insecurity. Hamas, which has governed Gaza since 2007 and is designated as a terrorist organization by Israel, the US, and the European Union, did not immediately suppress the demonstrations, an unusual move likely linked to its weakened operational state.
Diplomatic efforts to end the violence continue. In early March, Arab leaders met in Cairo to propose a post-war reconstruction plan for Gaza, rejecting a previous US proposal that implied potential population relocation. The new initiative emphasizes rebuilding Gaza without displacing its residents.
Tensions intensified further on April 9, when an Israeli airstrike hit a residential building in Shuja’iyya, Gaza City, killing at least 35 Palestinians and injuring more than 70. The densely populated area, home to many refugees, saw eight homes destroyed in the strike.
Gaza’s humanitarian situation continues to deteriorate. Reports indicate that the number of operational community kitchens has fallen from 170 to as few as 70 – 80, with many facing imminent shutdowns due to a lack of supplies. Over 10,000 children are reported malnourished, and at least 52, 50 of them children have died from hunger. Spain has intervened at the International Court of Justice, urging Israel to ensure humanitarian aid access to Gaza, citing its obligations as an occupying power. The court is now reviewing the legality of Israel’s actions, including the blockade.
Healthcare services are nearing collapse. Only 12 of 17 hospitals are partially functioning, severely constrained by shortages of supplies and staff. The World Health Organization has reported that 180,000 doses of routine childhood vaccines have not been permitted entry into Gaza.
Meanwhile, the plight of hostages remains a deeply sensitive issue. Families of 35 deceased hostages fear the deteriorating conditions in Gaza may render their loved ones’ remains unidentifiable. The Hostage Families’ Forum’s medical division has warned that extreme environmental factors could damage remains beyond forensic recovery. Currently, 59 hostages remain in Gaza, with only 24 believed to be alive after nearly 600 days in captivity.
Wait, What?
Blood Rain Sparks Curiosity
In a striking natural event, heavy rainfall on Iran’s Hormuz Island transformed the Silver and Red Beach into a vivid red spectacle, captivating locals and tourists alike. This phenomenon, often referred to as “blood rain,” occurs when rainwater mixes with the island’s iron oxide-rich soil, leading to the crimson coloration observed along the shoreline.
Videos on social media depict torrents of red water flowing down the island’s mountainsides and into the sea, creating an otherworldly scene. The island, often called the “rainbow island” due to its 70 colourful minerals, offers mesmerising sights especially during sunset or sunrise.
The island’s soil, known locally as “gelak,” contains high levels of iron oxide. When heavy rains hit the region, the water interacts with this mineral-rich soil, resulting in the red runoff that stains the beach and nearby waters. The unique geological composition not only contributes to visual spectacles but has economic and cultural significance too. The red soil is utilised in various industries, including dyeing, cosmetics, glass, and ceramics. Additionally, locals incorporate the edible soil into traditional dishes. Scientists assure blood rain is a rare and harmless meteorological event — a vivid reminder of nature’s intricate and sometimes surprising interplay of elements.
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