War in the Middle East – the stifling energy crisis hits the most fragile countries

With Brent crude still trading at levels exceeding $100 per barrel, many workers and families have returned to using oils and coal, raising concerns about permanent environmental damage. While many countries have already announced the implementation of a system to rationalize fuel consumption and the shift to holding meetings online.

More than a month after the start of the Israeli-American bombing of Iran, and subsequent Iranian attacks that ignited a broader regional conflict, the almost immediate disruption of oil tanker traffic in the vital Gulf waterway caused an interruption in oil shipments to all parts of the world, followed by an interruption in shipments of natural gas, coal, transportation services, food, and fertilizers.

In this context, Junior Davis, Head of the Policy Analysis and Research Branch of the Africa, Least Developed Countries and Special Programs Division of the United Nations Conference on Trade and Development (UNCTAD), said: “Only a small group of least developed countries are net energy exporters: South Sudan, Angola, Chad, Mozambique, Lao People’s Democratic Republic, Myanmar and Yemen.”

The vast majority of these countries are “net energy importers,” according to Mr. Davis, and include: Niger, Zambia, Rwanda, Ethiopia, Tanzania, Madagascar, Togo, Sudan, Uganda, Nepal, Eritrea, Benin, Bangladesh, Cambodia, and Senegal.

Limited gains for oil exporters

Highlighting the case of Angola, Davis pointed out that developing oil-exporting countries may only gain “Limited gains” From this export; And that “Because many of them lack local oil refining capabilities, forcing them to re-import refined petroleum products at higher prices.”

Neighboring Zambia faces “more severe difficulties.” Due to its dependence on refined fuel imported from the Middle East, especially from the United Arab Emirates. At the same time, the least developed countries remain “Highly approved” On fertilizers produced abroad, since the fertilizer manufacturing process relies heavily on natural gas (methane) – as explained by the UNCTAD economist.

According to the Food and Agriculture Organization of the United Nations (FAO), 17 of the world’s poorest countries need to import more than 30 percent of their grain needs. Even more worrying is that the same number of least developed countries spend more than half of their export earnings simply to buy food.

Mr. Davis stressed that “The implication of this is that rising energy prices will quickly impact food prices, which will exacerbate the risks of hunger facing households.”

Limited space to maneuver

Finding quick solutions to the energy crisis will not be easy, given the heavy burden of debt payments on many of the world’s poorest countries. It is an issue that United Nations Secretary-General António Guterres has repeatedly criticized, urging financial sector reform to achieve equity, competitiveness and growth.

The UNCTAD official said that given the huge amount of indebtedness that many developing countries bear to foreign lenders, and the pressures they have faced on public spending for many years, “It is very likely that households will have to pay more for energy, food and fertilisers, while consuming less of them; the outlook ahead will not be very pleasant.”

Emergency measures

Some countries have put in place emergency measures to confront the crisis, including:

🔹Bangladesh: Taking binding measures that include rationing fuel consumption and imposing restrictions on electricity. Including setting maximum ceilings on the use of air conditioning, refrigeration and lighting devices, as well as closing universities.

🔹Cambodia: Reducing energy consumption in the public sector, holding meetings online, limiting government travel, reducing taxes on fuel to help consumers, and tightening price controls at gas stations.

🔹Ethiopia: Encouraging the rational use of fuel.

🔹Myanmar: Legalizing fuel consumption, implementing an alternating driving system (specific days for each category of vehicle), and imposing mandatory remote work on government employees.

🔹Lao People’s Democratic Republic: Implementing a remote work system and a shift system for civil servants, launching public campaigns to promote the use of public transportation, rationing fuel consumption, imposing restrictions on transportation, reducing taxes on fuel and providing financial support for it.

🔹Senegal: Appeals to families and companies to rationalize energy consumption.

In light of this worrying situation, UNCTAD indicated that 15 of the world’s least developed countries have not yet recovered from the years of turmoil left by the “Covid-19” pandemic, as their economies remain in a worse position than they were in 2019.