The Arab Economy Between Challenge and Growth. Who sets the policy of economic interests?
Afrasianet - Yahya Al Sadeq - Will the countries of the region remain mere arenas bearing the consequences of U.S. and Israeli decisions, or will they finally begin to use their economic weight and mutual interests to defend their right to determine their own future?
After the results of the midterm elections in the United States, and the political messages carried by the Donald Trump administration, all eyes are turning to the future of the war on Iran, in light of three scenarios that are being circulated in political circles.
The first is the renewal of American and Israeli attacks on strategic Iranian targets, as part of a time-limited military operation.
The second is the success of diplomatic efforts to reach an agreement that ends the war and opens the door to a broader settlement of the region's crises.
The third is based on maintaining the status quo by continuing the economic blockade on Tehran and trying to restore the flow of oil and Gulf exports through the Strait of Hormuz, without reaching a final political settlement.
With the apparent disagreement within the administration on how to deal with the Iranian file, none of these scenarios seem to be ruled out.
Trump may find in the renewal of the military offensive a way to show that his previous decision to go to war was not a political mistake or a response to outside pressure, as well as his desire to respond to Tehran and hold it responsible for some of the political and economic fallout his party faced in the elections.
On the other hand, another trend within the administration is pushing for a diplomatic settlement, driven by the rising costs of war, domestic pressures, and a desire to avoid the continuation of an open Iranian file that weighs on Republicans' electoral calculations in the future.
But beyond the U.S. domestic calculations, there is a more pressing question for the countries of the region: Who will take their economic and security interests into account when making decisions about the future of this war?
So far, experience does not provide cause for optimism. The countries of the region have shown their limited ability to influence the American decision, despite the economic and political tools they possess, which was evident during the war on the Gaza Strip. Moreover, in American calculations, regional interests do not receive the same weight as the strategic interests of Washington and Tel Aviv.
If the repercussions that the countries of the region will bear were truly considered, it would be difficult to justify a war that puts their economies, security, and stability at such risk.
Political Scenarios and the Cost of the Economy
Since the outbreak of the war at the end of February, the region's economies have been experiencing one of their most turbulent phases in recent years.
The repercussions are no longer limited to the disruption of oil markets or the disruption of navigation, but have extended to macroeconomic indicators, from growth, inflation, and unemployment to public budgets, investment, and foreign trade.
Economic estimates suggest that restoring the region to its pre-war performance levels will not be an easy task, even if military operations cease soon.
A cessation of fighting does not automatically mean a return to normal economic activity, nor does it mean that damaged facilities will resume operations immediately, or that tourism, investment, and shipping will return to their previous levels once an agreement to stop the war is announced.
There is damage that will take years to remediate, particularly in oil and gas facilities that have been destroyed or damaged, while other sectors will need to rebuild the confidence of investors, insurance companies, and air and sea carriers.
This means that the war bill will not stop at the scale of the direct losses, but will continue through the lost production, investment, and growth opportunities for the region's economies.
The latest IMF and World Bank reports released last October provide a clear picture of the scale of the pressures facing the region's economies.
According to World Bank estimates, economic output in the Middle East, North Africa, Afghanistan and Pakistan is expected to contract by 2.1 percent in 2026, after growing by 3.3 percent last year, while contraction in the GCC economies is likely to reach 4.3 percent.
In contrast, the Bank expects oil-importing developing economies to grow by 4.3 percent, up from 3.9 percent last year. Although these figures reflect a disparity in the performance of economies according to the nature of their ties to the energy sector, they do not necessarily mean that oil-importing countries have been immune from the repercussions of the war, as they bear a large part of the cost of rising prices for energy, shipping, insurance, and food.
Given the scenarios presented, the region's economies find themselves facing two main paths: either continue to bleed the economy and accumulate losses, or begin the journey of recovery and rebuild what was destroyed by the war.
The first path is not necessarily related to renewed military operations. Even if Washington decides to maintain the status quo and maintain economic pressure on Iran rather than launch new attacks, the region will still pay a heavy price.
Continued tension in the Strait of Hormuz means that energy supplies and trade remain at the mercy of security risks, with the accompanying high costs of shipping and insurance, disruption of delivery schedules, and the reluctance of companies to commit to long-term contracts.
As for the renewed military attacks, it will put the region in front of more dangerous possibilities, especially if Iran carries out its threats to target American interests in the region, and the accompanying expansion of the confrontation to include energy facilities, ports, airports, and critical infrastructure.
More importantly, the continuation of the war, whether through direct military confrontation or a policy of economic attrition, will not leave the affected economies at a fixed point, but will compound the cost of recovery the longer the crisis drags on.
Every additional month of disruption means deferred investments, lost revenues, and financial resources that are drained in the face of emergencies rather than directed to development and services.
World Bank data reveals the extent of the shock to the Gulf energy sector. Average oil production in the Gulf region fell from about 26 million barrels per day before the war to about 16 million barrels per day in March 2026, a decline of nearly 38.5 percent, with Iraq and Saudi Arabia recording the largest declines in terms of quantities.
The repercussions have also extended to tourism, aviation, and services, with rising food and shipping costs and increasing inflationary pressures.
These sectors are not recovering as quickly as oil markets might rebalance, because the return of a tourist, investor, or airline to a market that has experienced widespread security disruption is linked to confidence and risk calculations, not just improved field conditions.
Another problem that has not received enough attention is that war does not hit all economies in the region equally, but it does transfer damage from one economy to another.
Energy exporters face losses in production, exports, and public revenues, while importing countries face higher energy, food, and freight bills. Countries that rely heavily on tourism, services, and transportation face a decline in activity and an erosion of revenues and jobs.
The second track is a permanent agreement that ends the war and reopens the way for the stability of navigation, trade, and energy supplies, allowing the countries of the region to move from crisis management to addressing their effects.
But stopping the war will be the beginning, not the end, of recovery. Rehabilitating damaged facilities, restoring production levels, restoring confidence in markets, and improving macroeconomic indicators will require time, financial resources, and significant investments. Lower oil prices, if they occur, will not be enough to address the effects of the crisis, with supply disruptions and transportation and insurance costs.
Nor will the region's inflation wave necessarily subside once the war stops, because rising prices are not linked to a single factor, but to a series of costs that have moved from the energy sector to transportation, production, distribution, and consumption.
The same is true of poverty and unemployment rates, which may continue to rise even after economic activity improves, as a result of declining real incomes, job losses, and erosion of savings.
Thus, the bet that the region's economies will quickly return to pre-war levels is highly optimistic. There is a difference between restoring positive growth rates and restoring what economies have actually lost in production, wealth, jobs, and investment.
A country may register economic growth next year, but it is still practically less productive and income-intensive than it was before the war.
Who will be held accountable for the losses?
In the United States, voters have shown their ability to express their rejection of policies that have negatively impacted their living conditions, and the results of the midterm elections have put the Trump administration in front of domestic political consequences that cannot be ignored.
But the irony is that countries that have borne a large part of the cost of the war and its repercussions do not have, or are not using, the same tools to hold accountable the parties that contributed to bringing the region to this situation.
Today, the countries of the region are facing direct and indirect economic losses, the depletion of their financial resources and reserves, damage to their infrastructure and investment and tourism reputation, as well as the risks that have surrounded their military, economic and social security.
These losses do not stop at the figures recorded in the reports of international institutions, but extend to years of lost growth, unrealized investment opportunities, and resources that could have been directed to improving the standard of living of the population and developing public services.
Accountability here is not meant to go to a military confrontation with Washington, or to sever diplomatic relations with it, as such options may entail additional costs that are no less than the existing damages.
However, the countries of the region have the right, and indeed their duty towards their economic interests, to reassess the nature of their relations with the parties that make the decisions of war without bearing the consequences alone.
This review can start from economic instruments, by reviewing mutual investments, reviewing trade agreements, assessing the extent of financial and economic exposure to markets and companies associated with the parties involved in the escalation, and linking any future expansion of economic relations to clear safeguards that protect regional interests.
The question that should occupy the region's capitals today is not limited to which of the three scenarios Washington will choose, but goes beyond that to a more important question: Will the countries of the region remain mere arenas bearing the consequences of American and Israeli decisions, or will they finally begin to use their economic weight and mutual interests to defend their right to determine their own future?.
