UAE discusses US financial backstop as Iran war threatens deeper economic crisis

Lead

The United Arab Emirates has held talks in Washington about a potential US financial backstop should the war with Iran deepen and destabilise its economy, Middle East Monitor reported on 20 April 2026 citing The Wall Street Journal. UAE Central Bank Governor Khaled Mohamed Balama met US Treasury Secretary Scott Bessent and Federal Reserve officials last week and raised the possibility of a currency-swap line to secure rapid access to US dollars in an emergency.

Direct quote

Emirati officials described the proposed arrangement as a financial “lifeline” and US sources told the report that “The Federal Open Market Committee generally reserves swap lines for severe funding-market pressures that risk spilling back into the US economy.”

Context and details

The discussions reflect concern in Abu Dhabi that a prolonged conflict with Iran could erode investor confidence, deplete foreign reserves and damage the UAE’s status as a global financial hub. Middle East Monitor’s summary of the Wall Street Journal report says Iranian air strikes have damaged oil and gas infrastructure inside the UAE and that Iran’s blockade of the Strait of Hormuz since late February has disrupted the country’s oil shipments to buyers, cutting off a major source of revenue.

• Khaled Mohamed Balama met US Treasury Secretary Scott Bessent and Federal Reserve officials in Washington to raise the swap-line idea.
• US officials reportedly believe such an arrangement “may not be approved,” given the Federal Open Market Committee’s practice of reserving swap lines for stresses that could spill back into the US financial system.
• The UAE has already secured regional support, establishing a swap line worth around $5 billion with Bahrain earlier in April to reinforce financial stability.
• US sources cited in the report said UAE officials view President Donald Trump’s decision to join Israel in the conflict with Iran as having “entangled” the UAE in a destructive war.

Saudi Finance Minister Mohammed Al-Jadaan warned that recovery in the region is likely to be slow even if hostilities end soon, saying disruption to tanker scheduling and shipping would probably continue “until the end of June” and that anyone expecting a quick recovery would need to “recalculate”.

Outlook

With US officials signalling that an American swap line may be unlikely, the UAE appears to be pursuing a mix of regional and international options to shore up liquidity and reassure markets. The $5 billion swap with Bahrain demonstrates immediate regional-level contingency planning, while the Washington meetings indicate Abu Dhabi is seeking broader, precautionary measures should the conflict widen or persist. How quickly oil flows and investor confidence recover will depend on security developments in the Strait of Hormuz and whether hostilities abate; in the near term, finance ministers and central bankers in the Gulf are preparing for a drawn-out economic impact rather than a rapid rebound.