For families and businesses across Europe, the consequences of a widening investment gap are not abstract. When the money needed to modernize energy systems, rebuild defense capacity, and develop new technologies fails to arrive, the effects show up in daily life: slower transitions away from imported fossil fuels, thinner defenses in an unstable neighborhood, and economies that fall behind in the industries of the future. A new Atlantic Council policy brief argues that Gulf sovereign wealth funds could help close that gap, and it frames the case in terms that ultimately touch ordinary people on both sides of the Mediterranean and the Gulf.
The brief, by Jeff Lightfoot, senior director for strategy and impact at the Center for International Private Enterprise (CIPE), lays out a strategic rationale for closer investment ties between Europe and the Gulf. Lightfoot, who led CIPE’s Europe office in Bratislava from 2021 to 2025 and is a nonresident senior fellow with the Atlantic Council, writes that geopolitics and regional insecurity are pushing the European Union and the Gulf Cooperation Council toward alignment. Both Europe and the Gulf states, he notes, face a sharp deterioration in security in their immediate neighborhoods, and both share an interest in mutual investment in defense and dual-use technologies as well as energy and digital resilience.
The human stakes of that insecurity are visible in the examples the brief highlights. To counter Iranian aggression, the Gulf states aim to learn from Ukraine’s prowess in unmanned systems and to invest in Europe’s wider re-armament. Europe, for its part, has been deeply affected by the shutdown of the Strait of Hormuz, a disruption that ripples through energy supplies and prices far from the waterway itself. The brief argues Europe stands to benefit from investments that bypass the strait and support a transition away from imported fossil fuels, changes that would make households and industries less exposed to shocks originating far from their borders.
Meanwhile, rapid shifts in global trade dynamics and US foreign policy, Lightfoot writes, accentuate the urgency for Europe and the Gulf states to take greater responsibility for their own defense and to rebalance global trade and investment flows to ensure supply chain resilience and economic security. For workers and consumers, that language translates into a practical question: whether the goods, energy, and security their daily lives depend on can be sourced and protected closer to home.
The investment case rests on a stark arithmetic. Europe faces an investment and competitiveness gap, and turbocharging industrial and digital competitiveness sits alongside defense at the top of the agenda for Brussels. Former European Central Bank head Mario Draghi’s 2024 report for the European Commission identifies a gap of 750 to 800 billion euros per year required to support Europe’s energy transition, defense reinvestment, and technological development. Those are the sums that determine how quickly power grids, factories, and defense industries can be renewed, and by extension how quickly the benefits reach the people who rely on them.
What makes the Gulf a plausible partner, the brief argues, is complementarity. Gulf sovereign wealth funds need to diversify and hit investment targets in the very sectors where Europe most needs capital. Each of the three segments Draghi identifies (energy transition, defense reinvestment, and technological development) offers areas of overlap with sectors in which Gulf sovereign wealth funds are currently investing or where the Gulf states have growing industrial expertise. Gulf sovereign wealth fund capital, Lightfoot contends, can fill the gap at a speed Europe’s own stalled reforms cannot. Only 11 percent of Draghi’s recommendations have been implemented so far, a figure that underscores how slow official action has been compared with what outside investment could deliver.
The brief is candid that success is not guaranteed. Investments in the strategic sectors most in need are subject to extra screening, and the US market remains a powerful draw for Gulf capital. Those caveats matter for anyone hoping the partnership will translate into tangible change on the ground. The full policy brief, available at https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/the-strategic-rationale-for-closer-investment-ties-between-europe-and-the-gulf/, sets out the argument in detail. The views expressed are Lightfoot’s own. Whether Gulf capital can move faster than Europe’s stalled reforms, and reach the households waiting on the other end, remains the open question.