$5 Billion Fund Proposed to Rebuild Energy Infrastructure Damaged in Iran War
U.S. President Donald Trump has proposed a $5 billion fund to rebuild energy infrastructure damaged in the war with Iran, according to unnamed sources from Washington and Gulf states cited by the Wall Street Journal.
The Partnership for Allied Trust and Construction (PACT) fund will also be used to help Gulf states develop alternative oil export routes bypassing the Strait of Hormuz. The U.S. is seeking a total size of $10 billion, with contributions expected from participating countries including Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Iraq, Oman, and Jordan.
Most of these countries have seen their energy infrastructure become targets for Iranian strikes due to the presence of U.S. military bases on their territory. The plan acknowledges that the war is having an adverse effect on the economies of key Middle East allies.
Some commentators note that some Gulf states may be reluctant to participate in a reconstruction fund because not all of them are equally dependent on the Strait of Hormuz to move their oil. Iraq, for instance, has an alternative route via a pipeline to Turkey, while Saudi Arabia has its East-West pipeline which allowed it to switch from Hormuz to Bab el-Mandeb.
However, pipelines can also become targets for attacks, as the Yemeni Houthis demonstrated in Saudi Arabia. The realization within Gulf states is that the status of the Strait of Hormuz will not revert back to what it was before the conflict and they need to work on creating viable, secure and dependable routes and corridors that can bypass the strait.