In a dramatic reversal of its long-held hardline stance toward Iran, the United Arab Emirates has reached a landmark agreement that includes billions of dollars in payments to Tehran in exchange for a permanent halt to Iranian attacks on Emirati territory, multiple international news outlets have reported. The development marks one of the most significant geopolitical realignments in the Persian Gulf in recent years, reshaping long-standing regional power dynamics in the wake of the US-led conflict against Iran.
Details of the agreement remain fragmented across multiple anonymous sources, but the core framework has been confirmed by reporting from Reuters, Bloomberg, and Middle East Eye. According to two regional insiders cited by Reuters, the UAE has already transferred $3 billion to Iran as an initial installment, with the total value of the deal projected to reach as high as $10 billion. Two other anonymous sources, however, put the eventual total payout at $20 billion. It remains unclear whether the funds were drawn from frozen Iranian assets held in Emirati financial institutions or from the UAE’s own sovereign wealth funds, a question Reuters did not pursue in its initial reporting.
The shift comes after years of the UAE positioning itself as one of Iran’s most vocal critics in the Gulf. Abu Dhabi once led regional lobbying efforts in Washington to push for continued aggressive US policy toward the Islamic Republic, and joined the US and Israel in launching dozens of strikes against Iranian targets during the recent regional war. It even took punitive measures against Pakistan when Islamabad hosted mediation talks aimed at ending the conflict, calling in outstanding debt obligations that forced Saudi Arabia to step in with a new emergency loan to stabilize Pakistan’s economy.
In recent weeks, however, the rapid reversal of this policy has been impossible to ignore. Just days after Israeli Prime Minister Benjamin Netanyahu made a high-profile wartime visit to Abu Dhabi that resulted in a new joint defense acquisition deal between the two countries, the UAE’s powerful national security adviser and Abu Dhabi Deputy Ruler Sheikh Tahnoun bin Zayed al-Nahyan hosted senior officials from Iran’s US-sanctioned Islamic Revolutionary Guard Corps at his private guest house. This meeting was followed by a new round of face-to-face diplomatic talks between Emirati envoys and senior Iranian leaders this week, held to further de-escalate cross-border tensions, Bloomberg confirmed. A Gulf diplomat told Middle East Eye that the discussions were aimed explicitly at securing guarantees that the UAE would not be targeted in Iranian retaliatory attacks.
The new arrangement has already played out in regional security dynamics: as Iran has launched retaliatory strikes against smaller Gulf states including Bahrain, Kuwait, and Jordan in recent weeks amid a fragile US-Iran ceasefire, the UAE has faced no attacks, and has refrained from joining new strikes against Iran. Analysts say the deal signals that Iran has emerged from the recent conflict in a strengthened regional position, despite coordinated pressure from the US, Israel, and Gulf allies.
For decades, the UAE has served as a key financial and trade hub for Iran, with deep economic ties that have often outlasted periods of geopolitical tension. Iranians hold major stakes in the UAE’s lucrative real estate sector, and even after the outbreak of the US-Israeli war on Iran, when Abu Dhabi publicly considered freezing billions of dollars in Iranian-linked assets, it never followed through with a public implementation of that threat. Esfandyar Batmanghelidj, chief executive of the Bourse & Bazaar Foundation, noted on social media platform X that the agreement is likely the first step toward revitalizing these cross-border economic bonds. “Everyone needs to remember that the UAE is Iran’s most important trading partner. By ‘releasing’ funds to Iran, the UAE ensures those funds will be spent in the Emirates,” Batmanghelidj wrote. “Both countries will double down on economic interdependence and the multiplier effects of bilateral trade.”
The deal also carries implications for US diplomacy in the region. One source told Reuters that the arrangement allows Iran to secure the financial concessions it demanded for a ceasefire, while enabling the Trump administration to publicly claim it did not directly pay Iran for the agreement. A former US intelligence official told Middle East Eye that it is nearly impossible that Washington was unaware of the IRGC meeting hosted by Sheikh Tahnoun, given the extensive US intelligence footprint in the Gulf. The shift in UAE-Iran ties comes as the US and Iran are on the verge of finalizing a 60-day memorandum of understanding to negotiate over security in the Strait of Hormuz and Iran’s nuclear program.
The Reuters report follows a similar recent development reported by the Washington Post, which claimed Qatar agreed to shut down its Ras Laffan refinery in exchange for Iran halting attacks on Qatari territory. Qatar has since denied any such coordination with Tehran.