The fallout

WHICHEVER way the Iran war ends, its consequences will be felt for a long time to come. Its security, economic and diplomatic fallout has global implications. This will urge countries to reshape policy priorities in the face of changing realities and a fragmenting international order. First, consider the economic fallout of the war. The economic toll will obviously be heaviest on the Middle East. But the damage to critical energy infrastructure and disruption in oil shipments and energy supplies have far-reaching global ramifications, affecting countries across the world. The price of oil and gas has soared, and international energy markets were thrown into turmoil by the war, from which the global economy will take time to recover. The International Energy Agency has described this as “the largest supply disruption in the history of the global oil market”. The world also confronts a shortage of natural gas. The destruction of gas facilities means full liquefied natural gas, or LNG, production capacity could take years to rebuild. The energy crisis has forced countries to raise prices, order rationing and adopt austerity measures to reduce demand. What this means is described by the IMF as an “abrupt darkening” of the outlook for the global economy dominated by downside risks and involving difficult trade-offs for countries. Its latest forecast in the World Economic Outlook warns of slower growth and higher inflation. The Fund estimates global growth at only 3.1 per cent this year, with headline inflation projected to rise, in what it calls a “sharp deviation” from the global disinflation trend of recent years. This could push the world into a recession. The adverse economic impact on countries, of course, varies, with those in the Global South and other net energy importers affected the most. A UNDP report warns the war’s fallout could drive over 32 million people worldwide into poverty. The triple shock involving energy, food and weaker growth will hit the poorest countries the hardest and mean ‘development in reverse’ for them. Meanwhile, the head of the IMF, Kristalina Georgieva, has said that even if a durable peace is achieved, the war will permanently “scar” the global economy and entail lasting damage to living standards. The security, economic and diplomatic consequences of the Iran war will be felt for a long time to come. As for the diplomatic fallout, this has many dimensions, but an immediate consequence is the unprecedented global isolation of Israel. Coming on the back of waning international support due to its two-year genocidal war in Gaza, Israel’s aggression against Iran has exposed it to worldwide condemnation and erosion of support from long-standing European allies. Spain emerged as the strongest critic of Israel, imposing an arms embargo on Tel Aviv. Italy suspended a defence agreement with Israel. France denied use of its airspace to the US to transport weapons to Israel. Even Israel’s biggest European backer, Germany, assailed Israeli policy in the West Bank. The electoral defeat of Viktor Orbán in Hungary deprived Israel of its closest European friend. Almost all European countries criticised Israel’s de facto annexation of the occupied West Bank. Meanwhile, a Citizens’ Initiative calling for suspension of the EU-Israel Association Agreement has reached one million signatures, across all 27 member states, which will trigger a response from the European Commission and European Parliament. In the US, public support for Israel has plunged dramatically. Successive opinion polls confirm the shift in opinion. In the latest survey by Pew Research Centre, 60pc of Americans say they have an unfavourable view of Israel, which was 40pc three years ago. Young voters have a particularly negative view of Israel. Prominent figures in Trump’s MAGA base have also turned against Israel. The Iran war reinforced the trend underway during Israel’s Gaza conflict when surveys found more Americans sympathised with Palestinians than with Israel. Plummeting public support for Israel has implications for future ties between Tel Aviv and its superpower backer and points to Israel’s reputational damage in the US. Also significant is the fallout of the Iran war on the transatlantic alliance. Relations between the US and Europe had already come under strain from Trump’s tariff war, his criticism of European countries as freeloaders and questioning of Nato’s value. The rift became more pronounced after the US-Israel attack on Iran. Despite Trump’s pleas to them for help in the conflict, including by sending warships to break Iran’s chokehold over the Strait of Hormuz, they declined. Frustrated by this, Trump lashed out at Nato countries, called them cowards and threatened to abandon Nato. Washington’s European allies were neither consulted when Trump decided to go to war nor did they want to enter a conflict they did not endorse and which several European leaders called “illegal”. Finally, there is the fallout on the region’s security architecture and power dynamics. The war has changed the strategic equation in the Middle East. Trust in the US security umbrella has been shaken as GCC countries have seen that in a crisis Washington is unable or unwilling to protect them and Israel’s security interests have primacy over theirs. This will force them to review their overreliance on a single power, re-evaluate their security assumptions, consider strategic repositioning, adopt hedging strategies and diversify their security arrangements. The Saudi-Pakistan defence agreement serves as an example of diversification by KSA. GCC states’ vulnerabilities laid bare in the war will urge them, albeit in the longer run, to mitigate these by evolving new security mechanisms, especially as the GCC’s collective security mechanism came up short. Members of ‘Quad’ — Pakistan, Saudi Arabia, Turkiye and Egypt — may in the future want to turn their informal group into a regional security arrangement. Iran, battered but undefeated, could emerge strengthened from the war with its control over the Strait of Hormuz giving it strategic leverage while it rebuilds its defence capabilities. Whatever the strait’s future status, it is now clear that Iran has the capacity to control the Middle East’s energy exports. Iran’s stronger position and enhanced leverage may encourage GCC states to seek a modus vivendi and normalisation of ties with Tehran. Saudi Arabia, after all, had sought a rapprochement with Iran before the region plunged into war. The war has also accelerated certain trends that were already in play. Among the most significant is the decline in America’s regional dominance and global standing. The writer is a former ambassador to the US, UK and UN. Published in Dawn, April 20th, 2026

Go to News Site