The key facts
- UN Assistant Secretary-General Al Dardari: 'transformations that used to take decades are happening in a matter of months'
- The region lost 7% of GDP in a year; 4 million people joined the ranks of the poor and another 4 million became unemployed (UN figures)
- The IMF previously called the oil and gas market shock deeper than the crises of 1974 and both Gulf Wars, but its impact on prices milder than before
UN warning amid the standoff in the Strait of Hormuz
The war with Iran and the standoff in the Strait of Hormuz have upended life across the entire Middle East: governments and residents are having to adapt to a rising cost of living at a pace that would normally take decades. This warning came from the UN Assistant Secretary-General and Director of the Regional Bureau for Arab States at the UN Development Programme, Abdulla Al Dardari in an interview with The National.
What is happening to the region's economy
Al Dardari spoke in Bahrain on the sidelines of the annual Manama Dialogue forum, which this year was devoted to the consequences of the US–Iran conflict amid growing fears of a new full-scale war. 'People now have to adapt to smaller subsidies, higher prices and bigger taxes — transformations that used to take decades are now happening in a matter of months,' the outlet quoted him as saying.
'Rich but fragile' and lost growth
According to him, the war with Iran has caused the deepest oil and gas market shock in modern history — deeper than the crises of 1974 and both Gulf Wars — although its impact on prices and markets has turned out milder than in earlier episodes; that assessment was previously made by the International Monetary Fund. Al Dardari introduced a new category of countries — 'rich but fragile': they are in a better position than Lebanon and Syria and still have financial reserves, but after the war they are forced to rethink their priorities and focus on their own problems rather than on injections into middle-income countries.
The cost of the crisis in numbers
A decade-long 'overdependence' on the Strait of Hormuz, through which a quarter of global shipping passes and which has been disrupted by a dual blockade by Iran and the US, has made the region's countries 'complacent,' Al Dardari believes. Overall, the Middle East has suffered an enormous shock, losing 7% of GDP annually: 'all of 2025's growth has been lost.' According to UN figures cited by the official, 4 million people in the region have fallen below the poverty line, and another 4 million have become unemployed. A return of the war, which he fears, would only sharply worsen these problems.
Reactions and attempts at workarounds
Fears of a new war between the US and Iran, despite attempts to bring diplomacy back, have already led the US State Department to issue travel advisories for almost every country in the region and to recall American officials, including from Saudi Arabia, which has in recent weeks been regularly attacked by the Houthis. US President Donald Trump, according to the outlet, said the war 'will be over soon.' In Al Dardari's assessment, the Gulf states have shown 'a high level of responsibility and seriousness' by developing regional connectivity to bypass the consequences of the strait's closure: in June the UN and the GCC held a round table in Riyadh, additional meetings took place on the sidelines of the UN General Assembly, the European Commission has expressed interest in the format, and Turkey has already agreed to join.
Palestine as 'the essence of the problem'
Despite the crisis in the strait, behind the closed doors of the General Assembly, Palestine and Gaza are invariably discussed as a priority — 'always, not sometimes, ahead of Hormuz,' according to Al Dardari. He said that the Arab Human Development Report, due out next year — the first in 25 years — will record that the region has been completely transformed after the war in Gaza, where, according to figures cited in the publication, 74,000 Palestinians have been killed and 80% of the territory lies in ruins while obstacles to aid deliveries persist. 'And that was before the war with Iran. I think recent events have only confirmed this,' he concluded.
