Sri Lanka must prepare, not polarise

Middle East escalation demands economic foresight and social discipline

- By Mahil Dole

ESCALATING hostilities between Iran and Israel, alongside instability along the Afghanistan-Pakistan frontier, have introduced fresh uncertainty into the global security environment.

Missile exchanges, retaliatory strikes, and heightened military alerts are already influencing energy markets and strategic calculations.

For Sri Lanka, this is not a distant geopolitical drama. It is a potential external shock with economic, diplomatic, and social implications. The island cannot shape events in the Middle East. But it can and must manage its exposure.

This conflict is best categorised as:

A sovereignty-counterterror hybrid confrontation within a historically disputed frontier, intensified by domestic security pressures rather than external orchestration.

It is not currently a great-power proxy war. It is a regional security collision with potential secondary ripple effects.

Sri Lanka’s vulnerability to Middle Eastern instability is grounded in three realities: remittances, energy, and trade routes.

A substantial share of Sri Lanka’s foreign exchange earnings originates from workers in Gulf states. Any prolonged regional instability affecting aviation, labour markets, or commercial confidence in the Gulf could disrupt remittance flows.

Even marginal declines would exert pressure on reserves and currency stability at a time when macroeconomic consolidation remains fragile.

Sri Lanka’s petroleum imports are closely linked to Gulf supply chains. If tensions threaten maritime routes particularly around the Strait of Hormuz the consequences would be immediate:

■Higher global oil prices

■Increased freight and insurance costs

■Domestic inflationary pressure

Fuel, electricity generation, transport, and food distribution costs would all rise. For households and businesses already navigating economic recovery, the pass-through effect could be significant.