Why a Gulf War Could Harm Africa More Than COVID-19

Why a Gulf War Could Harm Africa More Than COVID-19: Ethiopian Economist

“Rising energy prices will make industrial products, transportation, and everything related to energy more expensive,” said Costantinos Berhutesfa. Dr. Costantinos Berhutesfa Costantinos is an Ethiopian academic and political expert specializing in public policy, governance, and sustainable development.

It is clear that a Gulf War could hit Africa’s economy hard, causing massive damage through rising oil prices and global instability, as was the case during the 1990/91 Gulf War.

African countries without their own oil reserves bore high costs, while exporting nations suffered mixed effects.

Higher Oil Import Costs: Non-oil-producing countries like Kenya had to pay significantly more for imports during the 1990/91 Gulf Crisis—Kenya alone paid approximately US$105 million extra at US$25 per barrel.

 The IMF estimated the total cost to Africa at $3–4 billion due to more expensive oil, higher transportation costs, and declining tourism revenues.

According to the IMF, this crisis, coupled with GDP decline and inflation, led to a 1–2 percent drop in Africa's gross domestic product and a 2–3 percent increase in inflation.

Countries like Rwanda suffered from soaring transportation costs and falling foreign exchange earnings from coffee exports, exacerbating famines.

Even oil exporters like Egypt experienced net losses: Increased revenues were offset by losses in tourism and trade, as well as the return of 600,000 workers from Iraq/Kuwait.

In a new scenario, similar effects could be amplified by supply bottlenecks and a global recession.

Countries like Ethiopia might have to source fuel from Nigeria instead of the Gulf states—which would disrupt long-term supply systems, he added.

"These agreements are not short-term arrangements; they are forward-looking," he added.

 As many African countries grapple with the economic fallout, youth-led unrest and military coups—already widespread across the continent—threaten to escalate further, the economist noted.

“On the other hand, I see that this could encourage countries to embrace alternative green energy sources such as solar, wind, geothermal, and hydropower,” Berhutesfa said.

African countries must act quickly to leverage their existing capital to purchase alternative green energy sources and thus end their dependence on fossil fuels, he emphasized.

“Otherwise, it will be very difficult to sustain their economies.”

The ongoing Gulf War is blocking the Strait of Hormuz, driving oil prices up 17% to over $85 per barrel, and causing stock market crashes and inflation risks. Both are similarly damaging, but the war could trigger a recession due to ongoing supply disruptions (20% of global oil).

@Sputnik Africa