Source: UN News: Saturday, 04 July 2026 00:00 AM
Developing countries, grappling with the violent conflict and its effects in the Middle East, are being forced to pay the heaviest costs of the current crisis, leaving them with fewer resources to invest in education, health and other development priorities. The United Nations Development Program (UNDP) has shared this conclusion in a new analysis. The UN program’s report released on Monday comes at a time when Iran and the United States have again launched attacks over the weekend, although diplomatic efforts have reduced the risk of conflict re-igniting. But the current tension is having a deep impact on the poorest countries in the world. Tweet URL
UNDP The report shows that low- and middle-income countries have tried to protect their populations to some extent from the oil price surge through fuel subsidies, price caps, tax breaks and efforts to regulate demand. Funds now being invested in schools, hospitals and clean energy systems are now being diverted to the economy, UNDP Administrator Alexandre de Croix said. Somehow, expenses are being incurred to keep things running. These measures have provided some relief in the short term, but may have to bear a huge cost in the long run. Subsidies to fossil fuels, which were showing a declining trend at the global level, are now likely to increase to $1,100 billion. This represents an increase of $410 billion over 2025 levels, assuming an average oil price of $88.6 per barrel. However, if oil prices continue their upward trend and reach $110 per barrel, these subsidies could exceed $1,400 billion. The UN Development Program says that developing economies Governments are being forced to spend hundreds of billions of dollars to protect households from rising energy prices, reducing funding for schools, hospitals and climate action. On February 28, after the US and Israel’s aerial bombardment on Iran and then Iran’s retaliatory drone and missile attacks, the movement of ships passing through the Strait of Hormuz came to a halt. This situation has had a greater impact on those countries that are dependent on imports of fuel and food items. Hurt on development Many developing countries have been hit by this crisis at a time when they were already facing the burden of high debt costs. About 50 percent of the countries in the world are either facing the challenge of debt repayment or are at risk of it. Interest payments are eating up a huge chunk of the government budget. The UN Development Program has warned that diverting already-strapped public funds towards fossil fuel subsidies would hamper progress towards the Sustainable Development Goals and make countries more dependent on carbon-based energy systems. In view of this, the UN agency said that developing countries should not be forced to sacrifice long-term development to deal with a crisis for which they are not responsible. The head of the UN Development Program stressed the importance of easier access to international financial resources and investment in renewable energy, noting that expanding clean energy will strengthen energy security and also reduce vulnerability to geopolitical shocks.