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Neoclassical Realism Drives the UAE Response Towards Iran: Perception Dominated the Ideology

Picture of Dr Tauseef Javed

Dr Tauseef Javed

Policy Brief Series

Policy Brief/002/June/2026/London-Dialogue. 16 June 2026

Introduction

The recent war between Iran, America, and Israel in the Middle East has uncovered several reality checks to overhaul the response and approach of foreign policy among the affected countries. The region, once known for economic stability, American security, and booming tourism, has come to the brink of all-out regional war, with cautious estimates that it could escalate into World War III. The unprecedented Iranian attacks on regional countries, particularly on the United Arab Emirates, have sparked diplomatic backlash among the regional states against Iran. In response to the attacks on the United Arab Emirates, Abu Dhabi’s official approach remained within the bounds of self-defense and aimed at de-escalation. Though some media reports claimed that the UAE secretly attacked Iran, it was denied by the UAE government. It is therefore pertinent to analyze the United Arab Emirates’ orientation during the crisis. The UAE’s affirmed posture towards Iran should not be viewed solely through the lens of perceived geopolitical alignment with Israel or solely with the United States, either. Rather, the response reflects the measured approach to perceived threats against the economic foundation of Emirati power. During the active war days, the UAE was the only country hardest hit by the Iranian missiles. According to some estimates, Iran has launched almost 3000 missiles and drones towards the UAE. The political understanding morphed into a seething perception about Iran and triggered a foreign policy change towards Tehran. The policy brief is intended to examine the pre-war economic engagement between the two countries and assess the impacts of the current conflict on their strained bilateral relations.

Pre-War Times Economic Engagement

The bilateral relations have been quite active between the two capitals. The economic pillar was gradually furthering, and Abu Dhabi was building a strong economic base with Tehran. Despite economic sanctions and Iran’s international isolation, the UAE’s economic and diplomatic stance proved fruitful, particularly with Tehran. The economic engagement led to an upward trajectory in trade between the two countries, with trade volume between Tehran and Abu Dhabi increasing from $11 billion in 2020/21 to $24 billion in 2023/2024. In addition, the UAE became the largest source of imports in fiscal year 2024, with goods worth $20.8 billion from Abu Dhabi. During the same period, the UAE had become the third-largest export destination, with $6.6 billion in goods. The UAE and Iran reached a pinnacle when they convened a joint economic commission after 10 years in 2024. The UAE has become Iran’s second-largest trading partner after China. With such an economic profile and scope, it could be assessed that bilateral realities were heading in the right direction. The  UAE has maintained pragmatic economic engagement with Iran despite political differences for decades. However, when Iran’s war turned regional and began targeting critical economic assets, investor confidence, trade routes, and the UAE’s reputation as a global commercial hub, Abu Dhabi’s strategic calculations shifted from economic engagement to economic protection.

Neoclassical Realism and the UAE’s Response

To further ponder the current state of affairs, only economic numbers cannot fully explain the diplomatic picture. It is therefore imperative to bring in some analytical lens that explains the state behavior.  Therefore, Neoclassical realism guides the UAE’s state behavior in the current scenario, where external threats and internal vulnerabilities serve as driving variables in a calibrated foreign policy response. The Iranian-directed attacks on the UAE were the sole external factor spurring an emergent revisionist response in bilateral relations between the two countries. These attacks on the UAE have disrupted its financial markets, causing losses of $120 bn, and benchmark indexes in Dubai and Abu Dhabi dropped 16 percent and nine percent, respectively, during the early days of the war. It has triggered uncertainty about foreign investment internationally and shaken investors’ confidence in the future. Therefore, an abrupt internal economic disruption prompted the UAE’s political intelligentsia to assess foreign policy towards Iran assertively. As a result of Tehran’s posture toward the UAE, the very foundation of a trade-based economy has been shaken, causing ripple effects on the tourism industry as well. Therefore, the UAE’s behavior can be explained as a response to both external and domestic economic concerns. These external threat perceptions and the interrelated domestic factors have played an integral role in forming the UAE’s stance during the recent war.

Perception Dominates Ideology

The analysis of the current war reveals that Tehran’s approach is to ‘hit the potential  US targets’ in the region, likely shaping perceptions among regional states that Tehran is trying to push others to enter the war directly. The perception of all stakeholders during the crisis played an important role. Therefore, Iran’s chosen approach of targeting targets in the region, particularly in the UAE, has created a perception in the UAE that Tehran has crossed the limits and created new lines of bilateral relations based on deception and mistrust, but the pertinent angle on current UAE-Iran relations could be that the UAE was not historically anti-Iran. The UAE has long hosted the Iranian diaspora and Iranian businesses.  Iranian trade had been carried out through Dubai, which served as a commercial gateway; even during the sanctions period, economic interaction continued, despite the UAE having faced the most attacks before the cease-fire in April 2026. The UAE still preferred de-escalation to confrontation, stressing the full implementation of the US-Iran deal announced on June 15, 2026. So, what has changed in this regional crisis? What changed was not the Iranian ideology over Iran. It is the perception that regional instability has begun to erode the UAE’s economic foundations.  One has not forgotten that the UAE’s greatest asset is not its military power, but rather its reputation as a stable and predictable economic hub. Therefore, anything that threatens that reputation becomes a strategic concern for the UAE.  The UAE’s Ideology has entrenched deeply into the understanding of Iran’s culture, history, and Islamic culture, entailing geographic proximity into consideration. Therefore, the US-Israel war has pushed perception to dominate over ideology. However, optimistically, it is hoped that the recently announced deal would help bring the war to an end and that diplomacy would strengthen the friendly, historic ideology over the belligerent perception that emerged during the crisis between Iran and the UAE.

Recommendations

The analysis put forward recommendations to help foresee a peaceful and sustainable future between Iran and the UAE.

  • To assess and analyse the UAE’s positioning and posturing during this regional conflict, one should move beyond traditional military-centric interpretations of Gulf security and recognize that for the UAE, economic security is an integral component of national security. Any threats to trade, investments, logistics networks, and financial stability are likely to trigger policy responses similar to those generated by conventional military threats.
  • Moreover, interpreting every UAE’s policy decision through the prism of ideological alignments or its relations with Israel would be misleading. As mentioned earlier, its foreign policy is increasingly shaped by economic pragmatism and the imperative of preserving its position as a global commercial and financial hub.
  • Therefore, future regional security architecture should place greater emphasis on protecting economic infrastructure, maritime trade routes, energy corridors, aviation networks, and investment environments. The Gulf’s prosperity depends as much on economic resilience as on military deterrence.
  • Iran should reconsider its approach of going against potential US targets in the regional states, particularly in the UAE. Such an approach has more risks involved in spilling over the war to other regional Muslim countries.

Conclusion and Assessments

In light of the current geopolitical tensions, the UAE should maintain limited diplomatic and economic interactions with Iran as a stepping stone for future progress. The historical context of economic interdependence between the UAE and Iran illustrates that such engagement can function as an effective tool for crisis management and de-escalation, even amid heightened rivalry. This approach may prove beneficial in maintaining stability and promoting constructive dialogue in the region.

The ongoing conflict has highlighted a critical reality. In the modern era, economic prosperity is not just a benefit but a strategic asset, and economic hubs are now seen as key targets in geopolitical maneuvers. As a result, nations like the UAE are increasingly recognizing the necessity of safeguarding their economic ecosystems as a fundamental national security concern, rather than just a matter of commercial interest. This shift in perspective is vital to understanding the UAE’s current policy decisions and will significantly influence the future geopolitics of the Gulf region. Moreover, it is concluded that any conflict, such as in the Middle East, can escalate to the point where perception sometimes plays a critical role in decision-making. Therefore, it is imperative to have a crisis management mechanism in place between states to seek help from ideology among states rather than a belligerent perception.

Picture of Dr Tauseef Javed

Dr Tauseef Javed

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