Strait of Hormuz crisis costs Gulf economies over $50B

Added: 2026-05-19

[00:00:00]joined by Favad Gargas from London.

[00:00:03]Favas, great to have you, professor, here on TRT World. It's always good to talk to you. Uh, so as we just said, obviously uh many Gulf States uh have suffered enormous economic losses as a result of the war between the US and Iran. To what extent do you think the economic factor, the economic losses that these countries have faced are contributing to President Donald Trump holding off on the military strike against Iran?

[00:00:34]>> I doubt it very much. Uh I doubt it very much that somehow President Trump uh is convinced by the police uh and the urging of Saudi Arabia and Qatar and other states uh to pause his attacks on Iran. Uh I think President Trump is desperate to get out. um he improvises uh on daily basis uh mixed messaging um contradictory statements and the fact uh it's absolutely correct that Saudi Arabia has been trying to really mediate uh indirectly between the United States and Iraq and the Iranian foreign minister has been in direct contact with Saudi uh counterparts after Iran uh economists estimate that the Gulf state, the Arab economies in the Gulf state uh have suffered a great deal. They estimate that uh the Arab losses are up to 190 billion. The Iranian economy suffered about $270 billion in losses.

[00:01:42]The Arab economy is up to $200 billion.

[00:01:46]So I am not surprised that the Gulf states have been urging President Trump not to renew hostilities but I don't think that's why uh Donald Trump has basically paused his uh attacks on Iran at this particular moment.

[00:02:03]>> And you know one thing that I struggle to understand President Donald Trump uh has no problem in acknowledging that he's pausing military strikes on Iran on behalf of foreign powers. But when it comes to starting the war, he would never acknowledge that uh he allegedly launched this war on behalf of Israel.

[00:02:26]>> Well, here is the dilemma that President Trump faces now. He is in a strategic bind.

[00:02:33]He wants out, but he wants to declare victory, but he also wants Iran to surrender, to submit to his demands. And Iran won't let him have it. And that's why I think for our viewers the big picture. The big picture is the following decision time. President Trump has two stock choices. Either to renew hostilities against Iran and achieve only tactical gains or basically meet Iran halfway and reach a settlement with Iran that bridges the divides between Iran and the United States. And it's a win-win strategy if he really decides to engage in a genuine diplomatic path with Iran that Donald Trump continues. He wants Iran to surrender. He thinks he has won. He has not won. And then my big question uh for our viewers, what could a new round of hostilities against Iran achieve that 37 days of relentless bombings of Iran has failed to achieve?

[00:03:43]Of course, the United States and Israel could basically inflict major tactical pain on Iran, but Iran is resilient.

[00:03:52]Iran will push back. and Iran's position has hardened as a result of the two wars that Israel and the United States attacked. So here we are. President Trump is desperate. I mean the word desperate does not really reflect where he is. 64% of Americans oppose the war.

[00:04:13]Inflation is very high. Americans really view Donald Trump's uh decision to attack Iran and handle the economy in negative terms. So he wants out but yet at the same time he wants Iran to surrender and that's what Iran will not allow him to to get away with it.

[00:04:33]>> Right. And uh obviously the latest remarks from from President Donald Trump's the ones he made where he said that uh I'm stopping I'm pausing rather the military strike on Iran because I've been requested by Gulf countries not to do so. So if Gulf nations are involved in peace negotiations right now let me ask you professor what do you think they have to offer to Iran?

[00:04:59]I think you're asking a very difficult question and I think no one could really answer your critical question because Iran wants ironclad guarantees that neither the United States nor Israel will attack Iran as they have done twice in the past one year or so. And Iran wants guarantees, ironclad guarantees from of course either China or Russia. China preferably. I think what the Gulf state could do is to basically uh reach a particular deal with Iran and what Iran wants from the Gulf States is to get rid of American military bases in Saudi Arabia, in Qatar, in Kuwait, in Bahrain.

[00:05:46]And I think that's almost impossible, an impossible mission. Even though the Gulf States really are skeptical about the American military protection umbrella, I doubted very much that they are willing now to get rid to get rid of the American military bases. So, I don't see what the Arab Gulf could really offer Iran at this particular moment. Even though they do not really want the United States to attack Iran because if we see another round of hostilities, the Arab Gulf state will suffer a great deal because Iran has threatened to attack its neighbors, oil fields, refineries, ports, strategic assets. And this will really devastate not only the Gulf economies but also inflict more pain on the world economy and of course on Donald Trump's uh domestic situation at home.

[00:06:43]>> Professor Favas Gargas from London School of Economics. Thanks very much for joining us here on TRT World. As always, Professor, really appreciate you taking out the time.