After another weekend of strikes involving the United States and Iran, the resumption of diplomatic efforts on Monday eased immediate fears of escalation, but the economic fallout is already being felt hard in some of the poorest countries in the world.<\/p>\n\n\n\n
After another weekend of strikes involving the United States and Iran, the resumption of diplomatic efforts on Monday eased immediate fears of escalation, but the economic fallout is already being felt hard in some of the world’s poorest countries.<\/p>\n\n\n\n
According to the United Nations Development Programme (UNDP), developing economies are forced to spend hundreds of billions of dollars to shield households from soaring energy costs, which reduces the resources available for schools, hospitals, and fighting climate change.Their new report, “Military Escalation in the Middle East: Mitigating the Global Shock,” notes that governments have turned to fossil fuel subsidies, price caps, and tax relief to protect families from rising oil prices caused by instability in the Middle East.<\/p>\n\n\n\n
While these measures provide short-term relief, they come at a high long-term cost, says the UNDP.<\/p>\n\n\n\n
The UNDP predicts that global fossil fuel subsidies will reach $1.1 trillion in 2026, which is about $410 billion more than in 2025 if the average oil price is $88.60 per barrel. In a more pessimistic scenario, with the price reaching $110 per barrel, these subsidies could climb to $1.43 trillion.<\/p>\n\n\n\n
Delays in development
The report warns that rising energy costs are putting a serious strain on the already fragile public finances of low- and middle-income countries.”The money that should be used to build schools, hospitals, and clean energy systems is simply being used to keep economies afloat,” said Alexander De Croo, UNDP administrator.<\/p>\n\n\n\n
Many developing countries have faced the current crisis already burdened by growing debt. Nearly half of the world’s poorest countries are either in debt distress or at high risk of it, while interest payments continue to take up an increasing share of public budgets.<\/p>\n\n\n\n
This year, developing countries are expected to spend an average of 9.5% of their public revenues on debt service, double the share recorded ten years ago and the highest level in 25 years.The UNDP warns that diverting limited public funds to fossil fuel subsidies could slow progress toward the 17 Sustainable Development Goals (SDGs) while locking countries into higher-carbon energy systems.<\/p>\n\n\n\n
Call for international support<\/p>\n\n\n\n
Mr. De Croo said that developing countries shouldn\u2019t have to sacrifice their long-term development to deal with a crisis beyond their control.<\/p>\n\n\n\n
“No country should have to sacrifice its future development to manage a crisis it didn\u2019t cause,” he said.He advocated for easier access to international funding and an increase in investments in renewable energy, arguing that the development of clean energy would strengthen energy security and reduce vulnerability to future geopolitical shocks.<\/p>\n\n\n\n
“The crisis has highlighted one key point,” he said. “Energy security and the energy transition are no longer two separate things. They are inseparable.”<\/p>\n","protected":false},"excerpt":{"rendered":"
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