It doesn’t take an expert in international relations to know that tensions are high in the Persian Gulf. There is a lot of speculation over the possibility of war, and how such a war may break out. Some believe that the United States or Israel will strike first in attempt to knock out Iran’s nuclear facilities. Others think that Iran might act preemptively if it believes Israeli or American action to be imminent. According to InTrade*, an online prediction market, there is a 40% chance that Israel or the United States will strike Iran’s nuclear facilities by year’s end. Moreover, Iran has indicated that a strike against its nuclear facilities would provoke a massive retaliation that could engulf the entire region in war. As such, the risk of war in the region is very real and perhaps, very near.
Yet, the Persian Gulf is not the remote and culturally isolated place it once was. The countries of the region have been attempting to diversify away from oil and are courting corporations from all over the world. Indeed, places like Dubai, Abu Dhabi, and Doha are the media and commercial centers of the Middle East. In fact, 25% of Fortune 500 firms have a presence in Abu Dhabi while 80% have a presence in Dubai. This rapid commercialization has resulted in the creation of massive expatriate communities in these countries. For example, a whopping 85% of the people living in Dubai are foreigners.
There is the possibility that an Iranian war could break out with little or no warning. If this occurred, many businesses and their employees would be stuck in a very dangerous situation. Firms with installations and/or employees in Qatar, Bahrain, Oman, Kuwait, Saudi Arabia, and United Arab Emirates would all be at risk.
A regional conflict could result in the closure of the straight of Hormuz. Moreover, air traffic would likely be interrupted. It is also possible that Iran could conduct attacks on the Gulf States themselves, catching many expatriates in the crossfire. Electricity could be cut, communications could be blocked, and resources could run short. A conflict may also lead to civil and/or political unrest. Bahrain, for example, has a large Shiaa population that may prove susceptible to Iranian agitators. In such an environment, Westerners could become targets of terrorism and kidnapping. Moreover, Western militaries may be too preoccupied confronting the Iranian threat to protect and evacuate civilians. It is unclear how long such a conflict could last but several months does not seem to be an unreasonable estimate.
Given the risks, companies with a presence in the Gulf would be well advised to start preparing crisis and evacuation plans as soon as possible. Constructing well thought out plans now, can prevent catastrophic losses in the future. In order to do this, firms should be consulting security specialists, travel risk managers, and political risk analysts. These specialists can help firms identify potential threats, develop plans, and take appropriate precautions in order to ensure the safety of employees, installations, equipment, and investments.
*As of 1900 EST, March 20, 2012.
