Military Escalation in the Middle East: Reversals in Global Development, Policy Response Options: A Review

While the acute impacts of escalation in the Middle East War between Iran and the US/Israel are reversing human development gains in directly affected countries, the enduring economic effects are projected to push tens of millions into poverty globally says a UNDP report reviewed by Shravani N.

A United Nations Development Programme (UNDP) Report entitled, “Military Escalation in the Middle East: Reversals in Global Development, Policy Response Options,” released on 13 April 2026 and authored by George Gray Molina, Lars Jensen and Eduardo Ortiz-Juarez examines how the military escalation in the Middle East — beginning February 28 — is generating development reversals well beyond the directly affected zone.

Written by UNDP's chief economists, it is a rigorous, data-driven report, combining CGE macroeconomic modelling with household income simulations across 162 countries. The report mainly focuses on the long-term consequences of rising fuel and oil prices, food inflation and slower economic development caused by the conflict. It includes economic simulations, poverty projections and policy analysis to demonstrate how global instability can undo years of development progress.

The report mainly highlights that the conflict is not just a regional security issue but it has become a global development crisis. According to the report, nearly 32.5 million people across the globe can fall below the upper-middle-income poverty line due to rising energy and food costs combined with economic slowdown. It also highlights that the developing countries which heavily rely on imports of oil and gas are especially susceptible to risk.

The report has an interesting explanation of “asymmetric impacts.” Developed economies have a stronger fiscal capacity, foreign reserves and mechanisms to withstand economic shocks but weaker economies suffer with debt and inflation. This highlights that the poorer countries often suffer more from the increases in fuel and food prices compared to the richer nations. They suffer even if they are geographically distant from the zone of conflict.

The report concentrates on 37 net energy-importing countries across Africa, Asia, the Gulf region, and Small Island Developing States (SIDS). Since the increase in the prices of energy imports puts pressure on the transportation sector, the agro-food sector, fertilizers and household expenses more directly, this heavy burden has been emphasized in the report. The report convincingly shows that inflation rather than economic collapse for real income reduction, has become the major factor pushing millions of people into poverty. This is an important insight because it shifts the discussion from traditional economic contraction toward the real-life burden of rising living costs.

Another contribution of the report is that, it highlights how women, informal workers and poor households are also severely affected as they spend a huge amount of their income on food and energy. The report therefore links economic policy with broader human development concerns such as education, health, gender inequality, and food security.

There are three main policies recommended. In place of universal, costly fuel subsidies that tend to benefit better-off households, the report suggests targeted temporary cash transfers and small-scale consumption subsidies for electricity or cooking gas; also drawing on lessons from the COVID-19 pandemic and the 2022 cost-of-living crisis. Avoid blanket fuel subsidies because they are costly and mostly benefit richer groups. It also calls for multilateral actions, in particular aid to developing economies facing balance-of-payment crises and the growing burden of debt.

The report shows a comparison between Thailand and Zambia. There is a huge difference on how both the countries react and implement policies. Both the countries have experienced a similar situation of fuel shock but Zambia’s weaker economy, higher poverty levels, and debt crisis make it far more vulnerable. This comparison shows that only exposure does not make a society vulnerable; resilience and state capacity are equally important.

The limitations of this model are that it mainly depends on simulation and projected scenarios. The conflict is still ongoing and things can be unpredictable. The assumptions made can be proved incorrect. In addition, although significant emphasis is laid on economically and developmental impacts throughout the report, the political and geopolitical causes of the conflict are given relatively less attention, and the publication perhaps places more focus on the economic than the political.

Nevertheless, UNDP policy brief is an important and timely contribution to understanding how regional conflicts may have global developmental consequences. It combines economic modelling with human development concerns successfully and provides policy recommendations that are realistic for vulnerable economies. Given the inter-connected nature of global crises in the contemporary world, the report is particularly valuable for students and researchers of international relations, development studies, economics and public policy.

Note - Shravani N is an intern with Security Risks Asia