Amid ongoing regional volatility sparked by the U.S.-Israeli campaign against Iran, the United Arab Emirates and Israel have established a joint investment fund dedicated to the co-acquisition and development of advanced defense systems, multiple current and former U.S. officials confirmed to Middle East Eye in exclusive reporting. This new initiative marks the deepest level of defense cooperation between Israel and an Arab nation to date, cemented during a visit to Abu Dhabi by Israeli Prime Minister Benjamin Netanyahu amid active hostilities against Iran.
The current U.S. official, who spoke on condition of anonymity due to the sensitivity of the arrangements, outlined that the partnership will center on joint weapons procurement, with the UAE poised to inject capital into the advancement of Israeli air defense technologies. Specific areas of focus include Counter-Unmanned Aircraft Systems (C-UAS) and other integrated air defense platforms, and the former U.S. official added that a substantial sum of capital has already been committed to the fund, with future purchases expected to expand beyond air defense into other defense sectors.
Notably, Netanyahu’s office publicly confirmed the visit, but Abu Dhabi issued a rare denial of the trip, and as of publication, neither the UAE nor Israeli embassies in Washington had responded to requests for comment from Middle East Eye.
The new fund builds on already unprecedented security coordination between the two countries that unfolded after Iran launched a massive wave of drone and missile strikes across the Gulf in response to the February U.S.-Israeli attack on Iranian targets. The UAE bore the brunt of this retaliation, with nearly 3,000 Iranian projectiles targeting its territory, and U.S. Ambassador to Israel Mike Huckabee confirmed in May that Israel deployed Iron Dome air defense batteries and operating personnel to the UAE during the conflict to bolster its defensive capabilities.
Regional security analysts describe the joint defense fund as a natural next step in the deepening bilateral relationship, which was normalized under the 2020 Abraham Accords — a deal whose supporters long cited expanded defense cooperation as a core strategic benefit. “Israel will need UAE money. We have the technology, but we lack the resources. The UAE has the resources, but lacks the technology,” explained Yoel Guzansky, a senior Gulf-focused fellow at Tel Aviv’s Institute for National Security Studies.
Unlike multi-national defense procurement projects in Europe that have faced significant bureaucratic and political headwinds in efforts to coordinate spending against Russian threats, funding is far more straightforward for the UAE, an absolute monarchy that does not publicly disclose its full defense budget. Independent estimates place the UAE’s 2026 defense spending at approximately $27 billion, equal to 5% of its total gross domestic product, and diplomats and defense industry sources expect all Gulf Cooperation Council states to ramp up defense outlays in the wake of Iran’s large-scale strikes. Abu Dhabi, the UAE’s wealthiest and most powerful emirate, alone controls nearly $2 trillion in assets through its sovereign wealth funds and holds the majority of the country’s oil reserves, giving it vast capital to deploy for defense investment.
The joint initiative also follows a string of already growing defense-industry ties between the two nations: in June 2025, UAE defense conglomerate Edge Group acquired a 30% stake in Israel’s Thirdeye Systems, an AI-powered drone technology firm. Princeton University Near Eastern studies professor Bernard Haykel called the new fund a logical continuation of existing defense cooperation, noting that it addresses shifting strategic financial realities for Israel. For decades, Israel has relied heavily on U.S. military financing, receiving roughly $3 billion in annual foreign military aid plus an additional $21 billion in defense funding through September 2025, according to Brown University’s Costs of War Project. But support for unrestricted U.S. military aid to Israel has plummeted among American voters, particularly younger generations across the political spectrum, and Netanyahu himself has publicly acknowledged Israel may need to phase out U.S. aid over time.
“The UAE has money. This is a time when US money is being threatened, so why not switch to the UAE? [Israel] needs to diversify,” Haykel told Middle East Eye.
The closer defense alignment between Abu Dhabi and Jerusalem comes amid divergent post-conflict strategies among Gulf nations, even as all three major Gulf states — the UAE, Saudi Arabia, and Qatar — initially opposed the U.S. war on Iran. After hostilities began, Saudi Arabia and the UAE both granted expanded basing and overflight access to U.S. forces and joined in limited strikes against Iran, per Reuters reporting. But Saudi Arabia has since pivoted to backing Pakistani-led mediation efforts to end the conflict, while the UAE has actively worked to derail peace talks and lobbied heavily for the U.S. to continue its military campaign against Iran.
Firas Maksad, Middle East and North Africa managing director at Eurasia Group, explained that Abu Dhabi fears any nuclear-focused peace deal struck by the Trump administration with Tehran will leave Gulf states facing an emboldened Iran without addressing the core threats the UAE prioritizes: Iran’s regional proxy networks, ballistic missile program, and long-range drone capabilities. “The Gulf states believe they are going to be left holding the bag on any deal the Trump administration strikes with Iran, which is focused on the nuclear file and Strait of Hormuz. The Gulf states need to address Iran’s proxies, ballistic missiles and drones,” Maksad said.
Unlike Saudi Arabia, which has responded to growing uncertainty over the long-term reliability of the U.S. security umbrella by deepening security ties with Pakistan, Turkey, and Egypt — a move that included Pakistan deploying 8,000 troops, a fighter jet squadron, and a Chinese-built air defense system to the kingdom in recent weeks — the UAE has taken a vastly different approach.
“The Emiratis will not be part of that construct,” Maksad said. “Their means of leverage with the Iranians is their relationship with Israel. The more adversarial the relationship is with Iran, the closer the UAE will draw to Israel and develop those security ties.”