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The United States is considering committing $5 billion to a new multinational fund aimed at repairing Gulf energy facilities damaged during the war with Iran and helping regional states develop export routes that bypass the Strait of Hormuz, The Wall Street Journal reported.
According to the newspaper, Washington is seeking a matching $5 billion contribution from eight Middle Eastern partners: Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, Oman, Iraq and Jordan. The proposed fund would therefore total $10 billion.
The initiative, known as the Partnership for Allied Trust and Construction, or Pact, would be administered by the US Development Finance Corporation, the report said. The agency has mainly focused on projects in developing countries rather than wealthy Gulf monarchies.
Plan remains under discussion
US officials said negotiations were ongoing, that the terms could change and that it was still unclear whether any of the countries would participate.
Some regional officials reportedly viewed the proposal as an attempt to reduce the perceived importance of the Strait of Hormuz and demonstrate unity against Tehran. Others said reconstruction funding would be premature before a peace agreement, warning that Iran could target newly rebuilt facilities.
“This strategy has risk written all over it,” said Bilal Saab of consulting firm “TRENDS US”.
Damage estimated in tens of billions
Dozens of refineries, oil fields and gas export terminals have been hit by Iranian missiles and drones since the seven-month war began, according to the report.
A drone attack earlier this month also disabled Saudi Arabia’s bypass pipeline. The incident redirected more crude through the Strait of Hormuz and pushed tanker rates to record levels.
Umer Karim, a Gulf security researcher at the University of Birmingham, warned that the proposed arrangement could make some participants dependent on others and place strain on bilateral relations.
The Wall Street Journal estimated that the cost of repairing the damage could reach tens of billions of dollars.
