Mideast Crisis: Battering’s far from over
It is projected that continued conflict in the Middle East could push an additional 20.9 million people into poverty across 20 developing countries.
Text size
It is projected that continued conflict in the Middle East could push an additional 20.9 million people into poverty across 20 developing countries.
What have been the costs since the US and Israel launched coordinated airstrikes across Iran in February? While global markets have rebounded and the doomsday predictions of a worldwide recession have yet to materialize six months into the conflict, this financial resilience masks a deeply uneven and brutal economic reality.
For the world’s most vulnerable nations, particularly in Southeast Asia like the Philippines, the war has triggered a full-blown socio-economic crisis, exposing the crippling cost of dependence on a single, volatile choke point: the Strait of Hormuz.
The Philippines, which sources over 90 percent of its crude oil from the Middle East, was left with no buffer when the Strait of Hormuz was effectively shut down, slashing vessel traffic to just five percent of its pre-war average.
This supply shock sent fuel prices skyrocketing and the crisis was so acute that the Philippines became the first country in the world to declare a national energy emergency. Economists warn that if the crisis persists, it could force Filipino families to pull their children from school and fall deeper into debt.
The International Food Policy Research Institute has projected that the Middle East conflict could push an additional 20.9 million people into poverty across 20 developing countries.
How much longer will this crisis go on? Who knows? There are indications that a resolution is actively being negotiated. Iran and Oman have reached an understanding on the outlines of an agreement to reopen the Strait of Hormuz, with Iranian President Masoud Pezeshkian announcing that a shipping route through the strait has been agreed upon.
Its implementation, however, is conditional. Iran has linked the full reopening to the fulfillment of several commitments by the US, including lifting sanctions and naval blockades, releasing frozen Iranian assets, and ending the war in Lebanon.
This agreement aims to return shipping to pre-conflict conditions, but requires final approval from Iran’s Supreme National Security Council. Even under a swift agreement, experts warn that it would take time for shipping volumes, oil flows, and production to return to pre-war levels, with energy prices likely to remain elevated through the second half of the year.
The ongoing G20 Finance Ministers and Central Bank Governors meeting in Asheville, North Carolina, is a focal point for discussing these very issues. The US is pressing fellow G20 members on two key fronts: prioritizing economic growth as the best remedy against rising global debt, which hit a record $353 trillion earlier this year, and isolating Iran through the threat of secondary sanctions to end the standoff over the Strait of Hormuz.
The meeting, however, is complicated by the geopolitical tensions. Russia’s finance minister made a rare in-person appearance, but was excluded from the official “family photo” after objections from European countries. Furthermore, the US launched new air strikes on Iran just hours before the meetings opened, underscoring the volatility of the situation.
While the G20 provides a crucial platform for coordination, immediate relief measures for the Philippines are unlikely. The focus is on broader macroeconomic stability, isolating Iran, and encouraging long-term growth, rather than direct aid to specific countries.
Meanwhile, is there any hope at all that Iran would agree to easing control over the Strait of Hormuz? There is hope, but it is conditional. Iran has clearly stated that it is willing to reopen the Strait, and it has made significant progress in negotiations with Oman to establish new shipping corridors. The critical variable remains the US. Iran insists the full restoration of traffic depends on the US ending its naval blockade and meeting other conditions.
For the Philippines and other nations dependent on the normalization of passage through the Strait, the hope lies in these negotiations succeeding. But the timeline and outcome remain uncertain and the economic suffering for the Philippines and Southeast Asia is expected to persist in the near term.
In the meantime, we Filipinos will have to hunker down and weather the storm until it abates. Pray tell, what other choice do we have?
