The United States faces major challenges in dealing with Iran, the threat of terrorism, and the tide of political instability in the Arabian Peninsula. The presence of some of the world’s largest reserves of oil and natural gas, vital shipping lanes, and Shia populations throughout the region have made the peninsula the focal point of US and Iranian strategic competition. Moreover, large youth populations, high unemployment rates, and political systems with highly centralized power bases have posed other economic, political, and security challenges that the Gulf states must address and that the United States must take into consideration when forming strategy and policy.