The outgoing year, just the one preceding, was a time of war in the Middle East, but also of strategic realignment. 2026 should be the year when it becomes clearer whether the changes are permanent and a time of peace is coming. There are reasons to be optimistic, but it will require courage by the Arabs, a global firewall against Iran, Hezbollah, the Houthis and Hamas, and an electoral upheaval in Israel. Meanwhile, as 2025 winds down, there are signs of a breakdown in Yemen.
So after a year in which the Middle East featured prominently on the world stage, and in the wake of a bizarre meeting between Trump and Netanyahu (this one in Palm Beach, adding to the absurdity — see video above), it’s time for an AQL Special Report — a deep dive into a region that keeps on giving to journalists, but has been a lot less munificent to most of the people who have to live there.
Let’s start with a quick rundown.
Iran, once the confident maestro of the “axis of resistance,” ends 2025 diminished and unsteady. The June thrashing knocked out key elements of its nuclear and missile infrastructure and exposed the regime’s basic vulnerability: it can export mayhem, but it remains unable to defend its own turf against a determined coalition — or even provide water to its people. That has not produced regime change, but it has badly dented the aura of inevitability that the Islamic Republic had cultivated since the 1979 revolution – and it has driven the leadership even deeper into the arms of Russia and China, leaving its proxies more exposed.
Hezbollah is the prime example. The movement, after a year was firing rockets at Israel, was finally badly thrashed by the Jewish state in the fall of 2024, and now faces a globally-backed effort by the country’s wobbly government to fully disarm it. What’s left of Hamas, which still controls half of Gaza with most of the population, faces similar demands after Israel acceeded to Trump’s demand to wind down the two-year war in September.
All of this forms the backdrop to Netanyahu’s strangely triumphant year-end – and to the choices Israelis will face in 2026. In the meeting with Trump, Netanyahu got almost everything he wanted.
Trump not only backed potential renewed bellicosity versus Iran and Gaza (justified saber-rattling in my view in light of Hamas’ refusal to disarm and Iran’s insistence on rebuilding its nukes and ballistic missile program) but also called for Netanyahu to be pardoned in his bribery trial and asserted that Israel would not exist if not for the brave and heroic prime minister. So far, so absurd. Netanyahu hardly needs additional messaging for his reelection campaign in 2026 (he can leave out Trump’s nonsensical assertions, including that peace has come to the Middle East and that the war had lasted 3,000 years).
Before we get back to Israel, though, let’s dive into the news of the hour: A dangerous new front has opened up in Yemen.
For over a decade, Yemen’s war has been described as a contest between a Saudi- and UAE-led coalition and the radical, anti-Western Islamist Houthi movement aligned with Iran. That shorthand was always imperfect, but it has now broken down spectacularly with a Saudi airstrike on an alleged UAE shipment. The fallout threatens to deepen the chaos along one of the world’s most vital maritime corridors, and the United States needs to quickly get involved.
Both Riyadh and Abu Dhabi still oppose the Houthis, whose seizure a decade ago of the capital Sanaa and the key Red Sea port of Hodeidah has cost hundreds of thousands of lives through warfare, disease, and the collapse of basic services. For much of the past two years the Houthis have been attacking shipping headed for the Suez Canal, impeding global trade and contributing to a sharp fall in container traffic through the Red Sea, forcing ships to reroute around Africa and adding time, fuel and operational cost. That disruption is estimated to have affected goods worth roughly US $1 trillion in global commerce and pushed freight and insurance costs sharply higher.
The new flashpoint is the Southern Transitional Council (STC). It sits inside the internationally recognized Presidential Leadership Council (PLC) — essentially what remains of Yemen’s formal government — and controls much of the east and the historic port of Aden. But in practice the STC has been acting increasingly on its own: seizing territory, pushing for autonomy and even independence, and relying heavily on the backing of the UAE, to Saudi Arabia’s mounting fury.
That fury boiled over this week when Saudi warplanes struck targets in the southern port city of Mukalla. The Saudis say they hit weapons and armored vehicles unloaded from ships that had arrived from the UAE port of Fujairah and were destined for separatist forces. The vessels allegedly switched off their tracking systems as they approached Mukalla, offloaded combat vehicles, and those same vehicles then appeared in social-media footage rolling through the city under the protection of STC fighters. Abu Dhabi has not confirmed any of this, but Riyadh treated it as a smoking gun — and followed the strike with a call for UAE forces to leave Yemen.
The rift reflects two very different strategic maps. Saudi Arabia shares a long, vulnerable land border with Yemen and views the country first and foremost as a security buffer. Its preferred outcome is a unified Yemeni state — weak enough not to threaten Saudi territory, yet coherent enough to prevent militias, smugglers, and Iranian-backed forces from operating freely along that frontier. The UAE has no land border with Yemen and thinks about it primarily in maritime terms: ports, islands and sea lanes linked to the Red Sea, Bab al-Mandab and the Arabian Sea. Over time, Abu Dhabi cultivated strong ties with the STC, a powerful southern movement seeking autonomy or outright independence for what was once South Yemen, and invested heavily in southern ports and bases from Aden to Socotra.
Recent events have turned that quiet divergence into open confrontation. STC-aligned forces have extended their control across parts of Hadramout and al-Mahra in southern and eastern Yemen, sidelining units aligned with Saudi Arabia and the PLC. These advances give the STC influence over key ports, territory and border crossings — expanding its leverage beyond Aden into areas central to Yemen’s remaining oil revenues and coastal access.
Meanwhile, Saudi-aligned Yemeni leaders denounced the STC’s unilateral territorial push, declared emergency measures and also demanded Emirati forces depart, while STC leaders rejected all of this and continued consolidating gains.
The implications for an end to Yemen’s suffering are bleak. The PLC was created in 2022 precisely to reconcile Saudi- and UAE-backed factions under one umbrella and unify the anti-Houthi camp. It now contains parties that are in open confrontation and even greater fragmentation with the Houthis entrenched in the north, an assertive STC dominating much of the south, and Saudi-aligned forces squeezed between them. Fighting among groups nominally on the same side could escalate, prolonging instability and complicating any future settlement. Security vacuums in borderlands and along the coast could enable jihadist and criminal networks to re-emerge – including Al Qaeda in the Arabian Peninsula. Moreover, a Saudi–UAE rivalry risks fragmenting maritime security arrangements in the Red Sea and Arabian Sea, increasing the chance of miscalculation in waters that carry a large share of the world’s trade and energy flows.
As if the chessboard were not crowded enough, Israel has now walked onto it from the opposite shore, becoming the first country to recognize Somaliland.
Strategically located along the access to the Bab-al-Mandeb, just across from the Houthis base for attacks on global shipping, Somaliland has governed itself since 1991. It looks very different from the failed-state stereotype associated with Somalia: it has its own currency, security forces, regularly held (if imperfect) elections and a measure of internal stability. That difference is partly rooted in history. The territory was once British Somaliland, a protectorate that gained independence briefly in June 1960 as the State of Somaliland before choosing to unite with the former Italian Somaliland to form the Somali Republic. But the north felt it never received its due and eventually walked away – and it is certainly better governed.
Most of the Arab and African world rejects Somaliland — as established countries often reject separatism. The African Union has long clung to the principle that colonial borders, however arbitrary, must not be redrawn, in part to avoid a cascade of secessionist claims across the continent. The Arab League and the Organization of Islamic Cooperation say Israel’s recognition of Somaliland is a grave breach of Somalia’s territorial integrity and suspect ulterior motives in the context of broader Middle East tensions.
They may be right. For Israel, which has endured Houthi missiles and drones for much of the past two years, Somaliland is an attractive forward position. It sits on the Gulf of Aden, directly across from Yemen; its main port of Berbera already hosts Emirati infrastructure and has long been eyed as a potential naval and intelligence hub. Recognition opens the door to exactly the sort of presence Israeli security planners dream about: listening posts, air and naval access, and quicker response options against Iran-backed Houthis and other hostile actors threatening Red Sea and Arabian Sea shipping.
In a moment when European states are rushing to recognize Palestine, it also allows Jerusalem to pose an uncomfortable question back to the world: why is a relatively stable, decades-old de facto state still invisible while another statehood project – arguably far more problematic – is fast-tracked?
But the downsides are formidable. Israel has managed to unite an impressive coalition against itself on this issue: Somalia, the African Union, the Arab League, the Gulf Cooperation Council and many Muslim-majority states have condemned the move and warned it could destabilize the Horn of Africa. Jihadist actors have been quick to respond: al-Shabaab has threatened to attack any Israeli presence in Somaliland, and Yemen’s Houthis have warned that Israeli facilities there would be legitimate military targets. Inside Somaliland itself, crowds have celebrated the recognition, but counter-protests have also erupted in some regions, often draped in Palestinian flags.
If Somaliland does one day host an overt or covert Israeli presence aimed at monitoring or striking Houthi assets across the water, the already complex Gulf of Aden theater will become more crowded still: Saudi and Emirati forces, Houthi missiles, Western naval patrols, Iranian advisers, and now Israeli operatives and hardware based on African soil. Even if all parties swear they are there to secure shipping, the risk of miscalculation rises with every additional actor.
Washington has already been forced into verbal contortions, defending Israel at the UN by likening Somaliland’s case to Palestine even as it formally maintains support for Somalia’s territorial integrity. If the Western alliance wants to prevent this part of the world from blowing up entirely, it needs to quickly get the Saudis, the Emiratis and probably also the Israelis into one room with padded walls and locked doors – until they agree on a plan.
