Dr. Hamad Kasasbeh

These days, diplomatic efforts between the United States and Iran are intensifying to avoid sliding into a direct military confrontation, at a time when the Middle East stands at a critical crossroads. The issue is no longer about the possibility of a limited clash or a temporary escalation, but about a deeper question concerning the region’s future: will it continue to rely on military solutions, or can it break this costly cycle through a realistic political settlement? Experience shows that the cost of conflict is not paid only on the security front; it is drained economically and socially long before that. Military solutions do not offer sustainable exits. Instead, they produce adverse economic, social, and political consequences and revive debates about reshaping the region, opening the door for external powers that thrive on instability.

From an economic perspective, war does not begin with the first shot, but with the loss of confidence. Rising tensions increase risk premiums, delay investment decisions, and raise financing costs. According to International Monetary Fund estimates, severe geopolitical tensions can reduce global economic growth by between 0.3 and 0.5 percentage points within a single year, even without a full-scale war. This reflects the scale of the silent losses imposed by the absence of political solutions.

In this context, the Middle East appears as the weakest link in this equation. Many countries in the region already suffer from structural economic imbalances, high unemployment, and accumulated social pressures. According to UNCTAD data, the region attracts only about 5% of global foreign direct investment flows, a figure that falls far short of its real potential. As tensions persist, these inflows decline further, widening the cost of missed opportunities in growth, jobs, and development.

Oil markets lie at the center of these repercussions. Around 20% of globally traded seaborne oil passes through the Strait of Hormuz, making the region extremely sensitive to any political escalation. Yet higher oil prices do not represent a genuine gain for Middle Eastern economies. Instead, they deepen volatility and increase economic fragility, limiting the ability of governments to plan and stabilize their economies.

The impact does not stop at energy markets; it quickly reaches households. Rising oil prices fuel inflation and increase the cost of food, transport, and services, weakening purchasing power and putting pressure on social stability. Geopolitical tensions thus move from distant headlines to daily burdens felt in incomes and living standards. At the same time, resources diverted toward escalation are effectively withdrawn from education, infrastructure, and job creation.

At the level of major powers, the effects vary but lead to a similar outcome. China, which relies on the Middle East for about 40% of its oil imports, is directly exposed to any prolonged disruption in supplies. This affects production costs and supply chains, underscoring that instability in the region weakens China’s economic position rather than isolating it from global shocks.

The United States, despite its geographical distance from the region, is not immune to these effects. Volatility in energy markets and financial conditions feeds directly into inflation trends, monetary policy decisions, and financing costs, making any military escalation in the Middle East an internal economic pressure that cannot be ignored.

Some actors may achieve short-term gains from heightened tensions, but these gains are neither lasting nor sufficient to offset broader losses. Military approaches do not resolve crises; they postpone them and make them more complex, keeping the region in a permanent state of uncertainty. As a result, investment declines, development projects are delayed, and governments become crisis managers rather than growth planners.

Reaching a credible political settlement is therefore no longer a secondary option, but an economic and social necessity imposed by the high cost of conflict and its direct impact on growth, employment, and living standards. Resorting to military solutions does not bring stability. It deepens economic fragility, strains societies, and reopens debates about reshaping the region, expanding the space for external actors that benefit from turmoil. The responsibility lies with Middle Eastern countries to push seriously toward political solutions that spare their societies further disruption and open the door to sustainable stability, transforming the region from a theater of recurring crises into a productive development path.