The war on Iran, which has sent energy and fertilizer prices soaring, could plunge more than 30 million people into poverty, the head of the UN Development Program said Wednesday.
“It’s development in reverse,” Alexander De Croo told AFP on the sidelines of a G7 development meeting in Paris.
“It took decades to build stable societies, to develop local economies, and it took only several weeks of war to destroy that,” he added.
“We did a study after six weeks of war and estimated that even if the conflict ended at that point, 32 million people would be pushed into precarity in 160 countries,” said De Croo.
The war has led to disruption in the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas flows in peacetime.
Gulf nations are also important suppliers of oil products and feedstocks used in fertilizer production.
A shortage of supplies and high prices has led to countries in Africa and Asia imposing measures including fuel rationing and reduced working weeks to lower consumption. Other countries have reduced fuel taxes to cushion the impact on consumers.
The UNDP says the war will have a profound impact on Sub-Saharan African countries as well as certain countries in Asia such as Bangladesh and Cambodia. Developing island nations are also expected to be particularly hard hit.
High energy costs and fertilizer shortages will have an “enormous impact in the months to come” on people in these countries, said De Croo, a former prime minister of Belgium.
He also warned of political instability and a drop in remittances from abroad, as many workers in Gulf countries send money home.
To avoid poverty worsening, the UNDP estimates that around $6 billion is needed in subsidies to support those most vulnerable to high food and energy prices, he added.
De Croo said discussions were already underway within the IMF and World Bank.
“You can say that six billion dollars is a lot — the war cost nine billion dollars per week,” he added.
The crisis comes as development aid is at a historic low, having dropped by more than 23 percent last year, primarily due to cuts by major donors led by the United States.
AL24NEWS/AFP
