Growing tension between the US and Iran threatens to hinder the entire region's economic development. The GCC has good reason to be fearful...

Washington's choice to deploy anti-missile defences off the coast of Iran, and in a number of its neighbours in the Arab Gulf, is certain to place a number of states on edge and heighten an already tense atmosphere between the US and a strategic region that supplies over a third of the world's oil.

President Barack Obama is responding to what he believes is a genuine threat from an ever more controversial Iranian nuclear programme and its advancing missile capabilities. "This will make Iran more nervous," said Mustafa Alani, head of security research at the Dubai-based Gulf Research Centre.

Gulf Cooperation Council (GCC) member states already have good reason to be wary of Iran after President Mahmoud Ahmadinejad has repeatedly warned against its neighbours taking part in US moves against the Islamic republic.

According to Middle East Online the US administration is reportedly placing specialised ships with missile-targeting capabilities off Iran's coast, and anti-missile systems in at least four Gulf states - Bahrain, Kuwait, Qatar and the United Arab Emirates.

Countering US "imperialism"

As tensions rise in the region and the threat of regional conflict with western powers increases, GCC members will become increasingly frustrated with being sandwiched in the middle of Iran and the US. This is even more the case at a time when the Middle East are stepping up efforts to attract foreign direct investment (FDI), which for the time being will stay low as the world recovers from a recession. The last thing the GCC needs is for political tensions to give foreign investors another reason to stay out of the region.

Last year the relationship between the US and the Middle East was not helped by the strengthening political ties between Iran, Syria and America's long-time adversary - Venezuela.

In October, Syria boosted its ties with Venezuela by signing five trade, agricultural and energy cooperation agreements.

Then, in November, Ahmadinejad vowed to counter US "imperialism" alongside strong support from Venezuela, Bolivia, Brazil and Cuba's Fidel Castro. In Caracas, Venezuela's capital, Ahmadinejad sat next to Venezuelan President Hugo Chavez at a televised press conference and vowed to "stand together until the end" against the US.

"Opening shot"

At the end of his tour of Iran's South American allies, Ahmadinejad praised his "brave brother" Chavez, saying: "Today the people of Venezuela and Iran, friends and brothers in the trench warfare against imperialism, are resisting."

The latest developments will be perceived by Iran as an "opening shot in the intensification of US military agenda," according to Professor Anoush Ehteshami, Iran and Gulf expert at Durham University in the UK.

"Tehran will see this as America putting indirect pressure on Iran by extending the security umbrella over Iran's neighbours," he added.

One has to suspect that the move comes as an effort to deter Iran from further nuclear development whilst reassuring its neighbouring states, such as Israel and the GCC in particular, that they do not have to go nuclear themselves.

Untold damage to FDI

However Riad Kahwaji, the head of the Dubai-based Institute for Near East and Gulf Military Analysis, agreed that the move escalates regional tensions. "It reminds everyone that the option of war continues to stand," he said.

US attempts to contain Iran could settle the region making it feel less threatened by the nations nuclear ambitions. However, as seems to be the case, it could serve to drive Tehran closer to breaking point as they try and prove to the world they are not America's subordinates - hence Ahmadinejad's 'hand-shake and hug' tour of South America last year.

This could do untold damage to the regions FDI prospects and ruin the GCC's chances of becoming a major, stable economic power within the next decade.

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