Gulf

1. Peace talks on pause?
2. Mecca building boom
3. Saudi film ambitions stumble
4. e& reverses from super app
5. Bahrain buys French smelter

Dubai is still #careergoals.

Ships under attack as talks falter

Iran hit a container ship in the Gulf with a cruise missile, in retaliation for a recent US attack on another ship heading to an Iranian port, as both sides test the limits of a ceasefire that has broadly held since April 8. Against that backdrop, the process of trying to end the war looks ever more fragile.

Iran threatened to suspend peace talks because of Israel’s military campaign in Lebanon, prompting US President Donald Trump to make an expletive-filled call to Israeli Prime Minister Benjamin Netanyahu and reach out to Hezbollah. Trump claimed both sides promised to stop fighting, but the attacks have continued, and Netanyahu said the Israeli military will “operate as planned in southern Lebanon.”

Iran has warned it could try to close down shipping through the Bab el-Mandeb Strait, at the southern entrance to the Red Sea, if Israel doesn’t end its operations. Iran’s negotiating style has been described as “continuous and tireless bargaining” designed to test the patience of its adversaries. That may be working on Trump, who told CNBC that the peace talks had “started to get very boring.” US Secretary of State Marco Rubio is due to answer questions from Congress today, which may provide insights into how others in Washington view the current impasse.

— Dominic Dudley

Saudi builds up Mecca

The Saudi government may be paring back spending on some megaprojects like The Line, but the ambitious expansion of Mecca is continuing, with the kingdom’s Royal Commission for Makkah City and Holy Sites awarding contracts worth 13.3 billion riyals ($3.5 billion). The six sites, covering more than 2.7 million square meters in total, will include homes, hotels, shops, and offices in the holy city. The largest single award, worth around 6 billion riyals, went to a consortium of three local developers — Umm Al Qura, Makkah Construction and Development, and Al Rajhi United Real Estate — and covers two sites adjacent to the Masar mixed-use project, which is also underway.

The contracts are part of Saudi Arabia’s push to triple Hajj and Umrah visitor numbers to more than 30 million annually by 2030. Despite the war, the number of Hajj pilgrims was up this year. The kingdom opened its property market to foreign ownership in January, though Mecca remains subject to additional restrictions, with non-Muslims unable to own property in the holy city. 

— Manal Albarakati

Saudi’s rich movie rebates aren’t enough

Saudi Arabia’s ambition to become a global filmmaking hub is facing headwinds, and not just because of one recent high-profile flop. The kingdom last month raised production rebates to as much as 60% — among the most generous in the world — to attract filmmakers to its coastlines, deserts, mountains, and rapidly transforming cities. But producers say collecting those funds can be difficult, and confusion about the process has slowed the industry’s development. One producer launched a Saudi-based company to help foreign studios navigate the system and get paid, according to a report in Puck.

Film production is unlikely to become a pillar of the Saudi economy, but it supports a broader entertainment strategy spanning cinemas, streaming, gaming, and media, as well as creating desirable jobs, and helping to burnish the kingdom’s international image. There will be some takers, given the incentives, but for the industry to flourish the government will need to make the business of show business easier.

— Mohammed Sergie

e& steps back from super app

UAE telecoms giant e& has agreed to sell 12.5% of Careem Technologies back to Uber for $100 million, reducing its majority holding to 37.5% as it retreats from its super app ambitions. When e& paid $400 million for the stake in Careem Technologies in 2023, the bet was on an app that could do it all for a certain kind of city dweller, with food and services delivery, digital wallets, and bike rentals on a single platform. That idea has long been popular in China, but the vision looks harder to execute in the UAE. Abu Dhabi government-backed TAMM consolidates hundreds of public services onto a single platform — it can even marry you — and the emergence of AI agents that can order food deliveries, book services, and process payments threatens to render the super app concept obsolete.

The deal provides for a full exit: e& holds a put option allowing it to force Uber to buy its remaining stake, exercisable from late 2031, with Uber holding a mirroring call option over the same period.

— Kelsey Warner

Bahrain spreads its aluminum bets

Aluminium Bahrain is pressing ahead with a plan to buy France’s Aluminium Dunkerque, but the price has risen sharply since the idea was first mooted earlier in the year. Alba said the deal to buy the smelter was valued at around $2.2 billion. The plant — the largest of its kind in the European Union — is currently owned by American Industrial Partners. French public investment bank Bpifrance will acquire a minority stake alongside Alba; the two signed a memorandum of understanding on their partnership at an investment summit in Paris this week.

When the deal was first floated in early March, Aluminium Dunkerque was valued at around $1.2 billion. Since then, prices for the metal have hit a four-year high, as the Iran war disrupted supplies from several big plants in the Gulf. Alba itself suffered several direct hits on its facilities in March, causing its first quarter sales to fall 17% year-on-year. The French deal will sharply reduce its dependence on its home plant.

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Real Estate

• Tenants may have more room to negotiate as Abu Dhabi has frozen rent increases indefinitely for residential, commercial, and industrial properties. Price hikes were already capped at 5% per year on existing contracts. — The National

Deals

• UAE conglomerate IFFCO Group has attracted takeover interest from International Holding Co, chaired by Sheikh Tahnoon bin Zayed, and Dubai-based property and retail tycoon Mohamed Alabbar. The company, which operates the London Dairy ice cream brand, has been hit by the impact of the Iran war. — Bloomberg
• Kuwait online beauty and fashion retailer Boutiqaat hired Goldman Sachs to advise on its planned IPO that could value the business at more than $1 billion. The deal is the US banks’ first IPO mandate in Kuwait, where it has been looking to expand. — Bloomberg

Power

• Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed has been taking a more prominent role in the emirate’s financial and diplomatic affairs in recent months, in a sign of how he is being prepared for even greater responsibilities in the future. — FT

Telecoms

• The Kuwaiti government awarded a 50-year contract to Bahrain’s Beyon Group to modernize its fixed telecoms network and prepare it for the AI era. The deal involves an investment of 825 million dirhams ($2.7 billion), with Beyon to provide high-speed fiber connectivity to 90% of sites within five years. — AGBI

Andrés Iniesta, the man who scored Spain’s 2010 World Cup winning goal, is taking his first coaching job at Gulf United FC, a second-division club in Dubai where he has been based since retiring. It’s a sign that, despite the war, the region can still attract star talent, at least in the form of a 42-year-old ex-player still studying for his Pro license. Iniesta will work with what the club describes as the league’s youngest squad, with players representing more than 80 nationalities. It is a humble posting for one of the greatest midfielders of his generation, but a continuation of the theme of beloved has-beens beating a trail to the Gulf for a second act.