War in ME would deal heavy blow to SL’s economy

Sri Lanka yesterday urged Israel and Iran to engage in diplomatic efforts to de-escalate the situation. In a statement issued by the Ministry of Foreign Affairs, Sri Lanka said it is deeply concerned by the recent developments between Israel and Iran and urged both countries to exercise restraint, engage in dialogue and pursue diplomatic initiatives to de-escalate the tense situation. 

The Ministry added that the Sri Lanka Missions in both countries are closely monitoring the situation and remain in contact with the Sri Lankan nationals in the respective countries.

Sri Lanka is not alone in urging for restraint as a widening war in the Middle East would reverberate across the world and for countries such as Sri Lanka, which are still struggling economically, the impact would be devastating.

Sri Lanka has had friendly ties with Iran for decades with strong economic and cultural ties and while Sri Lanka’s relations with Israel are newer, they have grown closer over the years and thousands of Lankans are now employed in Israel while many of its nationals choose Sri Lanka as a tourist destination. Hence Sri Lanka’s concerns over the situation are understandable given that rising oil prices will impact the country badly while loss of employment will also be a concern.

Several Sri Lankan economists have already voiced concern over the possible economic fallout of a further escalation of hostilities between the two countries warning that the impact would be dire while former President Ranil Wickremesinghe has expressed concern over what he perceived as a lack of preparedness in the country.

There is no doubt the Sri Lanka Government like many others are watching with dismay at the situation because whatever happens many miles away will have domestic implications. It is also the nature of voters to blame the Government in power for any economic fallout due to a war that is being fought elsewhere. A war in the Middle East will certainly drive oil prices high and this will be felt in many countries including Sri Lanka.

Due to Iraq’s invasion of Kuwait in 1990 and the subsequent escalation of the war, many thousands of Lankans lost their jobs and had to return to the country. With the Middle East being the largest provider of employment for Lankans outside the country, escalation of a war is deeply concerning. Not only will their livelihoods suffer, but there are concerns for their personal safety. The Government which is also struggling to meet targets set by the International Monetary Fund (IMF) to receive the next tranche of Sri Lanka’s bailout program will have to struggle with repatriating Sri Lankan nationals while foreign remittances dwindle.

The Government will have to ensure that it takes all possible measures to minimise the impact on the economy even though what a country like Sri Lanka can do in such a situation is limited. It will have to reassure the public that it’s doing its best under the circumstances. This will be one situation when blaming the Opposition will not help. In fact, the best would be to sit down with all parties and look at a joint effort to face future challenges if the situation escalates.

The old saying that when elephants fight, it’s the grass that gets trampled is true of the escalating situation in the Middle East. Sri Lanka and other small countries are mere bystanders in wars fought by those with military might, but such wars impact countries located many thousands of miles away. Hence what we can hope is that sanity prevails and that world leaders choose dialogue over war and resolve problems in an amicable manner, so that no human lives are lost and no countries are destabilised due to the economic fallout of such conflicts.