The Trump administration has proposed $5 billion in U.S. money to seed a Gulf energy reconstruction fund, asking regional partners to match it for a potential $10 billion total. The fund would rebuild war-damaged energy sites and finance new export routes that bypass the Strait of Hormuz. The plan still faces one obstacle: the war with Iran has not ended.
President Donald Trump has proposed $5 billion in U.S. money to start a fund for rebuilding Gulf energy infrastructure damaged in the war with Iran, the Wall Street Journal reported, citing unnamed sources in Washington and Gulf states.
PACT fund targets $10 billion
The plan is dubbed the Partnership for Allied Trust and Construction, or PACT, and would draw the U.S. together with Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Iraq, Oman and Jordan, with the U.S. asking these states to contribute toward a total size of $10 billion. Most of these states have seen their energy infrastructure targeted by Iranian strikes because of the U.S. military bases on their territory. Beyond rebuilding, the fund would also help finance new crude oil export routes that bypass the strait.
Gulf states weigh alternatives to Hormuz
Iraq already ships oil through a pipeline to Turkey, though its capacity is well below Iraq's Hormuz route. Saudi Arabia's East-West pipeline once let the kingdom reroute oil to Bab el-Mandeb, but that line is under repair, so Saudi Arabia is now moving crude on small boats toward the Gulf of Oman. The UAE, meanwhile, announced plans earlier this year to double the capacity of its pipeline to Fujairah, which sits outside the strait.
War remains the main obstacle
Pipelines carry their own risk, however: Yemen's Houthis have struck pipelines in Saudi Arabia before, showing that no export route is fully safe from attack. Commentators cited by the Journal called the reconstruction plan premature since the war, which the United States started alongside Israel at the end of February, has not ended. Traders are watching this week's UN General Assembly session for any sign of bilateral talks between Washington and Tehran, though Iran has repeatedly said it does not trust the United States to keep its promises.
Regardless of new routes or rebuilt facilities, the report notes that peace with Iran remains the primary condition for lasting security in the Gulf.
Source: The Wall Street Journal
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