Trump's Return: MENA Reactions, Regional Dynamics, and Economic Outlook

By the Basilinna MENA Team

Donald Trump speaking to his supporters in a victory speech at his campaign headquarters in West Palm Beach, Florida. November 6, 2024.

Key Talking Points

• Middle East leaders have reacted pragmatically to Trump's win, signaling openness to cooperation while balancing concerns over his unpredictable policies.
• U.S. Democrats and Republicans are widely viewed with skepticism in the Arab world, especially due to the handling of the Gaza crisis, diminishing hope for meaningful change regardless of the administration in power.
• President-elect Trump’s approach may lead to reduced U.S. involvement in ongoing conflicts in the region, such as Israel’s conflicts with Hamas and Hezbollah, which will complicate the path to peace.
• On Iran, a Trump Administration is expected to restore harsh sanctions that could further destabilize Iran's economy but are unlikely to lead to a new nuclear deal.
• On trade, Trump’s proposed protectionist policies, including possible tariffs, could drive MENA economies toward China and BRICS as alternative economic partners.

The Middle East Reacts

For much of the Arab world, the U.S. election brought little anticipation for meaningful change in policy and direction, with both parties widely viewed through a lens of skepticism due to the unequivocal support of Israel. The current administration’s stance on Gaza has further exasperated these issues and left many feeling betrayed, and has eroded trust in American leadership, making it hard for people in the region to see the election as a beacon of hope.  

In the MENA region, leaders reacted to Trump’s win with cautious optimism and pragmatism, signaling both hope for continuity and wariness about Trump’s unpredictability. Key figures like UAE President Sheikh Mohamed bin Zayed and Israel’s Prime Minister Benjamin Netanyahu congratulated Trump on his return, seeing opportunities for closer ties, especially in security and regional stability. 

Netanyahu and far-right figures, including National Security Minister Itamar Ben-Gvir, welcomed Donald Trump’s return, anticipating a reinforced U.S.-Israel alliance. Conversely, Hamas urged Trump to consider Biden's errors, reflecting broader Arab skepticism toward U.S. policy on Palestine. Many in the MENA region see both U.S. parties as complicit in Palestinian suffering, limiting hopes for substantive change. 

Saudi Arabia’s King Salman congratulated Trump, expressing hopes for his success and for continued prosperity for the American people. The Crown Prince also called Trump, highlighting the strong historical ties between Saudi Arabia and the U.S. and expressed the Kingdom’s aspiration to further strengthen these bonds across various sectors. 

Turkish President Recep Tayyip Erdogan congratulated Trump, calling him a “friend” and expressing optimism for U.S.-Türkiye relations, particularly on Palestine and the Russia-Ukraine issue. Erdogan’s message reflects Türkiye’s intent to strengthen U.S. ties while balancing its alignment with China and BRICS nations. 

Egyptian President Abdel Fattah al-Sisi also congratulated Trump, emphasizing Egypt-U.S. strategic ties. Sisi’s response suggests a readiness to continue bilateral cooperation, highlighting Egypt’s pragmatic focus on regional stability over ideological alignment. 

Geopolitical Impact 

While Trump’s proposed policies could present significant challenges for Arab refugees seeking resettlement in the United States, he is not necessarily seen as a greater supporter of Israel than self-proclaimed ‘Zionist President’ Joe Biden. Kamala Harris’s campaign offered little to suggest a departure from this status quo, instead presenting lackluster promises in campaign ads with varied messages depending on whether they ran in areas with Jewish or Arab voters, underscoring her alignment with an administration whose policies have alienated Arabs in America and around the world. 

A return of Trump to the Presidency is expected to impact Israel’s conflicts with Hamas in Gaza and Hezbollah in Lebanon, potentially leading to a shift away from active military campaigns without necessarily bringing peace. The likely focus will be on allowing Israel to address its security concerns and counter resistance movements, with little movement toward a political solution that addresses Palestinian rights. 

Middle Eastern nations, both allies and adversaries to the U.S., will closely monitor U.S. policy adjustments, particularly on issues of conflict and diplomacy. Trump is also expected to reintroduce a “maximum pressure” strategy on Iran, aimed at curbing its regional influence, although this may not lead to a new nuclear deal or regime change. His first term saw sanctions that severely impacted Iran’s economy by curbing oil exports and raising inflation, a strategy likely to resume. 

Furthermore, Trump is likely to expand the Abraham Accords, building on previous moves that cemented U.S.-Israel relations, including recognizing Jerusalem as Israel’s capital, relocating the U.S. Embassy, and acknowledging Israeli control over the Golan Heights. This trajectory would continue efforts to normalize relations between Israel and Arab states, a feat that has grown increasingly unlikely with the ongoing genocide in Gaza. 

Economic Implications

The election of Donald Trump as U.S. president has caused significant shifts in financial markets, with positive responses in U.S. equities, a rising dollar, and record highs for Bitcoin, while oil and gold prices decline. Investors remain uncertain about medium-term impacts but observe historical trends of a strong S&P 500 performance under Republican-led Congresses. Short-term gains may benefit sectors favoring deregulation, like energy and finance, but experts caution against medium-term risks to portfolio growth. GCC markets also saw initial boosts, with Saudi Arabia’s index up 0.9% and Dubai’s up 0.5%, and analysts advise GCC investors to diversify with high-grade bonds and international assets. Bond yields are rising, partly due to anticipated tax cuts and limited spending restraint, while crude prices decline amidst dollar strength and high U.S. inventories. Meanwhile, gold and crypto markets fluctuate, with Bitcoin hitting $75,000 on pro-crypto sentiment. Analysts forecast a "high-octane" U.S. economy under Trump, with sectors like financials, tech, and defense expected to perform well despite potential challenges from rising debt and higher interest rates.  

Trump has proposed implementing a tariff of 10% or more on all goods imported into the U.S., claiming it would eliminate the trade deficit. However, critics argue this could result in higher prices for American consumers and increased global economic instability. For the MENA economies, which are intricately connected to the dollar, this shift presents both opportunities and challenges. 

For oil-exporting nations like Saudi Arabia and the UAE, Trump’s pro-domestic oil stance could introduce new pressures, especially if the U.S. boosts its energy production. However, given Trump’s promises to roll back environmental regulations, it is likely to increase demand. Additionally, some Gulf countries may find new opportunities for defense contracts and security partnerships under a Trump administration that favors bolstered military alliances. 

As MENA economies face a shifting global landscape, many may pivot more toward China, especially with the Belt and Road Initiative fostering significant investment and infrastructure development in countries like Saudi Arabia and Egypt. This trend offers MENA nations a means to counterbalance U.S. economic pressures by integrating more deeply with BRICS, providing alternative development paths outside Western influence. 

Trump's protectionist stance alongside China’s increasing influence signals a transformative period, with China capitalizing on new alliances in MENA and BRICS, emphasizing energy, infrastructure, and economic cooperation. China's "no strings attached" approach, focused on respecting regional autonomy, contrasts sharply with U.S. interventionist policies, making it an attractive partner for MENA nations. Consequently, as the U.S. looks inward, it risks losing influence in the region to China, which is positioning itself as a stable and supportive partner aligned with MENA's aspirations.