A return to the nuclear deal is unlikely to lead foreign businesses back to Iran in 2023. This is due to the persistence of non-nuclear related sanctions and Iran’s complex and almost non-accessible business environment. A nuclear deal would probably lead to a reduction in regional tensions, especially in Yemen, Iraq and Gulf waters. But Iran’s missile threat will persist in 2023, and Gulf countries along with Israel will probably continue to integrate their air defence systems to
counter it.

Growing competition between Saudi Arabia and the UAE is likely to define their economic strategies in 2023. A genuine strategic rupture in relations would probably bring further protectionist or nationalist laws such as tariffs or import quotas. These would have an operational impact on supply chains. But it would also heighten the risk of a wider foreign policy divergence between the two. Although unlikely for now, this would most likely play out in Yemen where they have differing objectives.

Grievances against failing public services are very likely to increase feelings of state absence across the region. This will be most pronounced in Lebanon, Iraq, and Yemen where worsening living conditions are likely to lower public thresholds for the use of violence to solve personal problems. This includes increased crime, but also activist and militia activity aimed at state institutions. This will in turn drive up the risk of civil unrest and cycles of breakdowns in law and order.