The Antonio Guterres warns that the crisis in the Sea of Hormuz threatens the global economy, supply chains and energy and food prices.
The new geopolitical tension at the “heart” of global energy flows brings the risk of a chain crisis with international dimensions back to the forefront, as the UN, Antonio Guterres warns that any prolonged disruption to transit through the Strait of Hormuz could cause serious disruption to energy, navigation, industry and food markets, intensifying inflation and putting particular strain on the most vulnerable economies, at a time when global growth remains fragile and supply chains continue to be tested.
UN Secretary General Antonio Guterres is sounding the danger bell for the strangulation of the global economy due to the disruption of all activity in the Strait of Hormuz, the vital seaway mainly for trade in oil and fertilizers.
Concerns
“I am very concerned about the restriction of navigation rights and freedoms in the Strait of Hormuz region, which is blocking the distribution of oil, fertilizers and other vital raw materials by disrupting energy, transport, industrial production and food markets and strangling the global economy,” he told reporters.
“As in any conflict, all of humanity pays the price, despite the fact that some reap huge benefits. The suffering will be felt for a long time to come,” he said, calling on “all sides” to let ships pass.
He noted that even in the most favourable scenario, if restrictions are lifted immediately, supply chains will take months to recover, which will prolong lower economic returns and higher prices.
The scenarios
In this case, global growth would fall from 3.4% to 3.1%, global inflation would rise from 3.8% to 4.4%, and global goods trade growth would be limited to about 2%, down from 4.7% last year, with noticeable disruptions to supply chains. Mr Guterres stressed that this is “the best possible scenario”.
In the second scenario, if the disruption continues until mid-year, global growth would fall to 2.5%, inflation would rise to 5.4%, 32 million people would be pushed into poverty, fertilizer shortages and reduced agricultural yields would be recorded, while another 45 million people would face extreme hunger, reversing years of development gains overnight.
In the worst-case scenario, if severe disruptions persist through to the end of the year, inflation will exceed 6 per cent, growth will fall to 2 per cent and, he warned, while the spectre of a global recession looms, with dramatic consequences for people, the economy and political and social stability, especially in the most vulnerable societies.
The clear message
The UN Secretary-General stressed that these consequences are not cumulative but exponential, noting that the longer this critical artery remains blocked, the harder it will be to reverse the damage and the higher the cost to humanity.
Developing countries in particular, he said, will be disproportionately affected, as suffocating debt limits their ability to respond to the impact, with job losses, deeper poverty and greater hunger.
Guderes sent a clear message to all sides, stressing that navigation rights and freedoms must be restored immediately, in accordance with Security Council Resolution 2817, essentially calling for the Straits to be opened, to allow the passage of all ships and to allow the global economy to breathe again.
He also stressed that reopening is not only physical, but requires conditions of security, predictability and insurance coverage for shipping, while calling on all parties to avoid actions that could undermine the ceasefire.
He said he remained in close contact with a number of parties involved, as did his personal envoy Jean Arnaud, noting that all interlocutors, regardless of their different approaches, recognized the need for a peaceful, comprehensive and lasting resolution of the conflict.
Framework for safe removal of ships
In terms of operational preparation, IMO Secretary General Arsenio Dominguez is developing a framework for the safe removal of ships and seafarers from the conflict zone, should this become safe, while the Head of the United Nations Office for Project Services, Jorge Moreira de Silva, is travelling to the region to continue consultations on a possible humanitarian corridor should the worst-case scenarios materialise.
He concluded by stressing that now is the time for dialogue, solutions that will take the region away from the brink of crisis and measures that can pave the way for peace, noting that the whole world expects results.
