U.S. proposes US$5 billion fund to rebuild damaged infrastructure across Middle East from Iran war

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The Trump administration has proposed a US$5 billion fund to help rebuild critical infrastructure across the Middle East damaged in the war with Iran even though the seven-month conflict continues.

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The so-called Partnership for Allied Construction & Trust would be led by the U.S. Development Finance Corporation with the goal of encouraging investment, reconstruction and economic expansion, according to a document outlining the idea.

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The document from the DFC, the contents of which were seen by Bloomberg News, says the region has suffered substantial physical damage and rising risk premia, driving a period of heavy critical-infrastructure need. Its contents were reported earlier by the Wall Street Journal.

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Whether or not its proposals come to fruition, the document appears aimed in part to assuage concern from U.S. allies in the region about the Trump administrations plans for after the war ends.

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Iran and its proxies have adopted a strategy of targeting U.S. allies including the United Arab Emirates, Bahrain and Saudi Arabia in response to months of U.S. attacks. Those countries economies have also been roiled by Irans move to choke off commercial shipping traffic through the Strait of Hormuz.

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Four types of projects are highlighted in the document as priorities for the platform: investments to help bypass the Strait of Hormuz, restoration of energy flows and critical material exports, hardening assets against future attacks, and rebuilding essential domestic infrastructure and import flows.

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The document outlines sample target investments that include a multi-phase expansion of Hormuz bypass in Saudi Arabia, involving pipeline and port work.

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Also listed are an expansion of the Port of Duqm in Oman, an effort to rebuild a defunct pipeline from Iraq to the Mediterranean Sea via Syria and repair of aluminum smelter refineries in the United Arab Emirates and Bahrain.

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The DFC, created in 2019 under President Donald Trumps first term, typically makes loans and investments in overseas development projects critical to U.S. interests.

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