The confrontation between the United States and Iran is increasingly exposing a vulnerability that extends beyond military bases, naval deployments and energy infrastructure. Beneath the Gulf’s economic transformation lies a vast digital network of cloud computing facilities, artificial intelligence infrastructure, telecommunications systems and submarine cables connecting West Asia to the wider global economy. Much of this infrastructure supports commercial activity, government services, financial transactions and technological development. Yet its concentration in a region exposed to military escalation means that a renewed conflict could produce consequences far beyond the battlefield. Iran’s warning that American linked data centres, AI facilities and undersea cables could face destruction if Washington launches another attack therefore raises a fundamental strategic question. Can the United States protect its regional military position without exposing the commercial and technological networks that have become essential to its economic influence?
On October 10, Major General Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, warned in an interview broadcast by Press TV that American assets across the region could become targets in the event of another US attack on Iran. His remarks specifically referred to data centres, artificial intelligence facilities and submarine cables, particularly in the United Arab Emirates and around the Strait of Hormuz. He placed the value of the infrastructure under discussion at more than $2 trillion and argued that Iran had not yet designated these assets as targets. He also warned that a future confrontation could provoke a broader response than the military actions Iran had previously undertaken. These statements should be understood as Iranian strategic messaging rather than independent confirmation that every asset mentioned has been designated for attack or that the entire estimated valuation represents American owned infrastructure. Nevertheless, the warning is significant because it explicitly places the digital economy within the broader framework of deterrence.
The strategic logic behind this message is relatively straightforward. American influence in West Asia rests on several interconnected foundations, including military partnerships, access to strategically important waterways, energy security, financial relationships and the commercial presence of major technology companies. The expansion of cloud computing and artificial intelligence has added another dimension to this network. American companies provide technologies on which regional businesses and public institutions increasingly depend, while Gulf governments invest heavily in data centres, digital infrastructure and AI development to diversify their economies beyond hydrocarbons. This creates a relationship in which American commercial interests, regional economic ambitions and wider strategic partnerships increasingly overlap. A serious conflict that damages this infrastructure could therefore impose costs on several parties simultaneously, including governments and businesses that have no direct role in military operations.
The importance of this vulnerability is no longer theoretical. In September, Amazon Web Services reported that it could not restore access to resources and data hosted exclusively in one damaged availability zone in the United Arab Emirates or in its Bahrain cloud region. The company attributed the disruptions to physical damage sustained during the conflict. Its earlier updates described structural damage, interruptions to power supplies and additional water damage associated with fire suppression. In Bahrain, the damage affected multiple availability zones and exceeded the resilience limits of the regional systems. AWS said that customers who had not migrated their workloads or preserved recoverable copies elsewhere could lose access to resources that could not be restored. Most affected customers were able to reestablish operations through alternative regions, remote backups or other recovery arrangements, but the incident demonstrated that cloud infrastructure can suffer serious disruption when physical facilities are damaged by military action.
This experience has transformed the discussion about digital infrastructure from an abstract concern into a practical issue for corporate risk management and national security. Cloud services are often understood as intangible products accessible from almost anywhere, but their operation depends on physical buildings, electricity, cooling systems, telecommunications links, specialised hardware and trained personnel. Data may be distributed across multiple facilities, yet the resilience of a service depends on how effectively those facilities, networks and recovery arrangements are designed to withstand simultaneous disruptions. A regional outage can affect applications, databases and business processes even when the companies using them are located thousands of kilometres away. The physical destruction of infrastructure can also create recovery problems that software updates alone cannot solve.
The AWS incident is especially important because it illustrates the difference between ordinary technical failure and damage caused by armed conflict. Cloud providers design systems to withstand many forms of disruption, including equipment failures, power interruptions and the loss of individual components. However, resilience has limits when multiple interconnected facilities are affected within the same region. Businesses that assume a provider’s regional architecture guarantees uninterrupted service may discover that their own backup arrangements are insufficient. The lesson is not that cloud computing is inherently unreliable, but that its resilience depends on deliberate planning by providers, customers and governments. Geographic diversification, independently maintained backups, tested recovery procedures and alternative communications routes become essential when operating in regions where military escalation can affect commercial infrastructure.
The Gulf states have particular reasons to take this risk seriously. The United Arab Emirates, Saudi Arabia, Qatar and Bahrain have invested in digital infrastructure as part of broader efforts to establish themselves as centres for finance, advanced technology, logistics and artificial intelligence. These ambitions require substantial electricity supplies, reliable telecommunications, secure data storage and confidence that businesses can continue operating during periods of regional instability. For governments seeking to attract international investment, digital continuity is not merely a technical requirement. It is part of the wider proposition that their economies can provide a stable environment for long term commercial activity.
The United Arab Emirates has become a major centre for this transformation, supported by investment from American technology companies and regional firms. Microsoft announced in November 2025 that its planned and completed spending in the UAE would total $15.2 billion between 2023 and 2029. The figure includes capital expenditure on AI and cloud infrastructure, its equity investment in G42, operating expenditure and other local costs. It should not be interpreted as a single investment in data centres or as money already spent in full. Nevertheless, the scale of the commitment demonstrates the depth of the commercial relationship between American technology firms and the UAE’s ambition to become an important centre for advanced computing.
Saudi Arabia is pursuing a similarly ambitious transformation through investments in cloud services, data centres and AI infrastructure. Qatar and Bahrain have also developed cloud and telecommunications capabilities, while Oman has sought to strengthen its position in international connectivity. These projects are not identical in scale, ownership or maturity, and announced investment figures do not necessarily translate immediately into operational capacity. Taken together, however, they reflect a broader regional strategy of converting financial resources, energy availability and geographic position into long term participation in the global digital economy.
This strategy creates a complex relationship between economic opportunity and geopolitical exposure. Gulf governments benefit from the presence of international technology providers, but the resulting infrastructure also connects their economic prospects to the security environment surrounding the region. An attack that disrupts an American company’s facilities could damage local businesses, interrupt public services and undermine confidence among international investors. The losses would not necessarily fall on the technology company alone. Telecommunications operators, financial institutions, suppliers, cloud customers and regional governments could all bear part of the cost. In this respect, the digital economy differs from a conventional military asset. Its disruption can affect parties that are commercially and politically distinct from the state against which an attack is directed.
That distinction is central to understanding Iran’s warning. By identifying American linked digital infrastructure as a potential target, Tehran is signalling that the consequences of renewed US military action might extend into the economic networks supporting Washington’s regional presence. The intention may be to increase the perceived cost of escalation by highlighting assets that are expensive to replace and important to regional economic development. Yet the effectiveness of such signalling depends on how the warning is interpreted by the United States and the Gulf governments. If it encourages greater caution and renewed diplomacy, it may contribute to deterrence. If it leads to additional attacks against commercial infrastructure, it could instead widen the conflict, damage regional economies and create pressure for further retaliation.
There is also a distinction between American ownership, American technology and American strategic influence. A data centre operated by a US company within a Gulf state may host commercial workloads belonging to local businesses, foreign companies or government institutions. The presence of American technology does not automatically make every service or facility a military asset. Some infrastructure may support government or defence related functions, while other facilities primarily serve ordinary commercial and civilian needs. Their legal status and strategic significance must therefore be assessed according to their actual use and the circumstances involved, rather than inferred solely from corporate nationality. The same principle applies to submarine cables, which are essential to international communications and carry traffic for a broad range of users.
The distinction matters under international humanitarian law as well. Civilian infrastructure does not become a lawful military objective merely because it is valuable to the economy of an adversary or operated by a company based in an opposing country. Any attack must satisfy the applicable rules governing distinction, military objectives, proportionality and precautions. Even where an object qualifies as a military objective, the expected incidental harm to civilians must be assessed. Digital infrastructure can support both civilian and military functions, but dual use alone does not remove these legal requirements. The consequences of disruption to hospitals, financial systems, emergency services and other civilian functions must be considered alongside any claimed military advantage.
The submarine cable network adds a further dimension to the strategic problem. These cables form the physical foundation of international digital connectivity, carrying data between regions and supporting services ranging from banking and cloud computing to communications and government operations. Their importance is often overlooked because the services they enable appear seamless to users. Yet damage to a major route can reduce capacity, increase latency and force traffic onto alternative systems. The resulting effects depend on the location of the damage, the availability of spare capacity and the speed with which repair vessels can reach the affected section.
The Strait of Hormuz is particularly sensitive because of its importance to global energy transport and its location within a wider regional security confrontation. The geography of the strait has also encouraged misleading claims about the legal status of submarine cables. The fact that the territorial seas claimed by Iran and Oman overlap across much of the narrow passage does not establish that Iran possesses exclusive legal authority over every cable passing through the strait. Nor does coastal sovereignty automatically confer unrestricted power to impose arbitrary transit fees or prevent the maintenance of international cables.
The United Nations Convention on the Law of the Sea provides a more complicated framework. Article 2 recognises coastal state sovereignty over the territorial sea, its seabed and its subsoil, subject to the convention and other applicable rules of international law. Article 79 establishes important freedoms concerning submarine cables on the continental shelf and limits the circumstances in which coastal states may impede their laying or maintenance. The legal position also depends on whether a cable enters a state’s territory or territorial sea, whether it crosses the continental shelf, and which rules govern the relevant maritime passage. International straits used for navigation are subject to additional provisions. Consequently, the geometry of Hormuz alone cannot settle every legal question concerning cable routes, permits, repairs or the authority of coastal states.
This legal distinction has strategic significance because submarine cables are not simply extensions of national territory. They form part of an international communications system on which many states depend. Their protection requires cooperation among coastal governments, telecommunications operators, cable owners and the countries whose economies rely on uninterrupted connectivity. Iran has legitimate interests in the security of its maritime environment and in activities taking place within its territorial waters, but such interests must be exercised within the applicable legal framework. Any attempt to turn cable access into a tool of unrestricted political coercion could damage confidence in regional connectivity and encourage operators to develop alternative routes that bypass areas considered too risky.
The risk of disruption also extends beyond the immediate physical damage. International technology companies assess political stability, insurance costs, power reliability and the availability of secure transport links when deciding where to invest. A sustained threat to data centres and submarine cables could increase the cost of insurance, raise the cost of financing new facilities and delay projects that depend on long term confidence. Some investors might demand stronger guarantees from host governments, while others could spread their investments across additional jurisdictions. Such decisions would not necessarily mean abandoning the Gulf, whose energy resources, capital and growing technology markets remain important advantages. They could, however, make future expansion more expensive and force regional governments to devote additional resources to protecting infrastructure.
The consequences would be particularly serious if digital disruption occurred alongside interference with energy production, shipping or other essential services. Gulf economies remain closely connected through trade, finance, logistics and energy markets. A prolonged crisis could simultaneously raise transport costs, disrupt business operations and weaken investor confidence. Technology companies might be able to move some workloads to facilities in Europe or Asia, but relocation would not eliminate every problem. Some customers face data residency requirements, latency constraints or regulatory obligations that limit their ability to move information freely. Others may lack the financial or technical capacity to maintain a fully independent recovery system. The ability to redirect workloads therefore varies considerably across businesses and services.
For this reason, the Gulf states have an interest in treating digital resilience as a component of national economic security rather than leaving it exclusively to private operators. Governments can encourage independent backup arrangements, stronger physical protection, tested continuity plans and cooperation among telecommunications providers. They can also require critical service operators to demonstrate how they would maintain essential functions during prolonged outages. Such measures should be proportionate to the risks and should not become an excuse for unnecessary restrictions on legitimate commercial activity. The objective is to reduce the likelihood that a regional security crisis can turn into a wider economic emergency.
The United States faces a parallel challenge. Its military relationships across West Asia provide strategic access and influence, while its technology companies have become important participants in regional development. These two forms of presence reinforce one another in some respects, but they are not identical. Commercial investment depends on predictable conditions and the confidence that infrastructure will remain available to customers. Military escalation can undermine those conditions even when the immediate objectives of a conflict concern a different issue. Washington must therefore consider the economic consequences of its regional decisions, particularly when the potential costs could fall on partners that have invested heavily in building relationships with American companies.
This does not mean that the existence of valuable digital infrastructure should determine every decision about military action. Governments must weigh security threats, diplomatic alternatives and the consequences of inaction as well as the economic risks of escalation. It does mean that the costs of conflict have become more interconnected. A military campaign can affect the commercial systems supporting an entire region, while damage to those systems can create political pressure far beyond the immediate area of fighting. The relationship between military objectives and economic exposure has become harder to separate as cloud services, AI computing and international communications have expanded.
Iran’s warning also carries risks for Tehran. An attack on commercial infrastructure could damage the economies of neighbouring states, disrupt services used by civilian populations and weaken the prospects for regional investment. Gulf governments may respond by strengthening security cooperation with Washington or by increasing their own military and protective measures. Such responses could deepen the very regional tensions that Iran seeks to influence through deterrence. Tehran must therefore account for the possibility that threats against digital infrastructure could encourage additional cooperation among its regional rivals rather than persuading them to distance themselves from the United States.
The broader lesson is that digital interdependence can create both restraints on conflict and new sources of vulnerability. The enormous cost of damaging critical infrastructure may encourage governments to avoid escalation, but the concentration of valuable assets can also tempt states to use them as instruments of pressure. Deterrence becomes particularly unstable when threats are directed at systems whose ownership, users and economic functions cross national boundaries. The destruction of a single facility may have consequences for businesses and individuals who have no direct connection to the political dispute that triggered the attack.
The strategic response should therefore combine credible defence with sustained diplomacy and a serious commitment to infrastructure resilience. The United States and Iran have strong reasons to avoid a wider conflict that could damage civilian economic systems across the Gulf. Regional governments, meanwhile, need practical arrangements for protecting communications, restoring essential services and limiting the spread of disruption. International cable operators and cloud providers must recognise that resilience cannot depend solely on the assumption that major facilities will remain physically untouched. Redundancy, geographic distribution, independent backups and effective recovery procedures are now central requirements for operating in a region exposed to military escalation.
The Gulf’s digital transformation was built on the expectation that the region could use its capital, energy resources and geographic position to become a major centre for global technology. That ambition remains economically significant, but it also creates responsibilities for the governments and companies involved. Digital infrastructure must be treated as an essential part of the regional economic system, with its protection grounded in sound security planning, legal clarity and international cooperation. The answer to growing vulnerability cannot be to assume that every commercial asset is a military target or that every threat will inevitably be carried out. It must be to understand the risks accurately, reduce the potential for miscalculation and ensure that critical services can survive disruption.
Iran’s warning has brought these questions into sharper focus. The value of the Gulf’s digital infrastructure lies not simply in the billions of dollars invested in buildings, servers and computing equipment, but in the economic relationships and public services that depend on their continued operation. A renewed US Iran confrontation could place those relationships under severe pressure, with consequences extending far beyond the countries directly involved. The decisive strategic question is therefore not only how much infrastructure could be damaged, but whether the region’s governments can prevent military rivalry from undermining the economic transformation they have spent years trying to build.