UN Official Urges Adaptation to Soaring Prices Amidst Middle East Tensions and War Threats

The escalating conflict involving Iran and the ongoing standoff in the Strait of Hormuz have profoundly disrupted life across the Middle East, compelling governments and populations to rapidly adjust to a significantly higher cost of living. This adjustment, which would typically span decades, is now occurring at an unprecedented pace, according to a United Nations official. Abdullah Al Dardari, UN Assistant Secretary-General and Director of the Regional Bureau for Arab States at the UN Development Programme, detailed to The National how the conflict has dramatically reshaped regional priorities. His remarks were made in Bahrain during the annual Manama Dialogue forum, which this year centered on the extensive ramifications of the US-Iran conflict and rising fears of a full-scale war.

Mr. Al Dardari emphasized that people throughout the region must adapt to swift changes as their governments endeavor to reconstruct damaged infrastructure and navigate the complexities of the standoff in the vital Strait of Hormuz. "People now have to adapt to less subsidies, higher prices and more taxation -- transformations that take decades are now happening in a few months," he explained. The conflict with Iran has triggered the most severe oil and gas shock in contemporary history, surpassing the crises of 1974 and both Gulf Wars. Despite this, the International Monetary Fund noted that its impact on prices and markets has been considerably milder than in previous instances.

However, Mr. Al Dardari elaborated on a new categorization of nations as "rich but fragile." These countries have re-evaluated their priorities following the repercussions of the Iran war. "We're used to the former classification of oil rich or oil poor... but now we have a new category called rich but fragile and that is a category which is still better situated than countries like Lebanon and Syria so they still have financial buffers," he stated.

Mr. Dardari attributed the decades of "over reliance" on the Strait of Hormuz, a critical chokepoint for a quarter of global shipping and recently disrupted by blockades from Iran and the US, to a sense of complacency. While some nations may have weathered the storm better than others, the Middle East as a whole experienced a substantial shock, losing an estimated seven percent of its GDP annually. "So the entire growth of 2025 was lost," he added.

This economic setback has prompted "rich but fragile" states to reconsider their strategies, shifting focus inward rather than supporting middle-income countries that depended on financial aid for survival. Lebanon and Syria were cited as examples of nations already facing significant challenges. "The problem is that the countries that used to have the money to inject have to worry about themselves and rebuild what was destroyed."

Fears of a renewed US-Iran war, despite diplomatic efforts, have led to US travel advisories for most countries in the region and the withdrawal of US officials from locations such as Saudi Arabia, which has recently faced regular Houthi attacks. US President Donald Trump, however, has expressed optimism that any conflict would be "wrapped up soon." Mr. Dardari echoed concerns about the potential return of war, warning that it would severely exacerbate existing problems, leading to four million more people falling into poverty and another four million becoming unemployed in the region, according to UN data.

The UN official noted that Gulf states have demonstrated "a high level of responsibility and seriousness" in enhancing regional connectivity to mitigate the effects of the Strait of Hormuz closure. In June, the GCC and the UNDP convened a roundtable in Riyadh to bolster resilience and coordination among states and their neighbors. Further discussions took place on the sidelines of the UN General Assembly (UNGA) last month, with interest expressed by the EU and agreement from Turkey to participate. "So we’re hoping more arteries open more opportunities, competition, productivity and technology."

Given the widening economic disparity fueled by the Iran war, technological advancements, and the lingering impacts of regional conflicts, the question arises whether some countries will be left behind. Mr. Dardari believes this is not the case, highlighting the persistent focus on Palestine and Gaza in high-level meetings. "During the UNGA (General Assembly), you’ll be surprised by the high importance of Palestine and Gaza in behind-closed-doors meetings – always, not just sometimes, ahead of Hormuz," he stated. "So, the region realises that the essence of the problem [in the Middle East] is still in Palestine."

Mr. Dardari alluded to the forthcoming Arab Human Development Report, scheduled for release next year, marking 25 years since its previous edition. The report is expected to detail how the region has fundamentally changed following the war in Gaza, where 74,000 Palestinians have been killed in Israel's war, with 80 percent of the territory in ruins and aid severely restricted. "And this is before the war with Iran. I think recent events just confirmed that," he concluded.