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Home / Insights

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OIC Economies

Three years on: Assessing the impact of the Gaza conflict

28 Sep 2026
Insight

OIC Economies
How the tri-defence pact is promoting the concept of collective security
07 Sep 2026
Insight

OIC Economies
The Gulf’s green hydrogen wager
29 Jul 2026
Insight

OIC Economies
Top 10 largest OIC capitals by population in 2025
21 Jul 2026
Insight

OIC Economies
How a Türkiye–Saudi rail corridor could redraw the Islamic world’s economic map 
15 Jul 2026
Insight

OIC Economies
How Gazans are navigating the tech shortage crisis with creative solutions
07 Jul 2026
Insight


All Other Insights
OIC Economies
Three years on: Assessing the impact of the Gaza conflict

The Gaza conflict that erupted in October 2023 and caused irreparable human devastation has since become one of the world’s more dire humanitarian crisis. Loss of lives and livelihoods, economic degradation, infrastructural destruction, and the enduring consequences of displacement and dispossession have compounded already challenging socioeconomic conditions.

For all the defiance and struggle of its residents, Gaza continues to function as a barren wasteland, war-torn, isolated and in need of acute and protracted rehabilitation. 

Below are a few vital observations on the deepening crisis that has submerged the besieged enclave, threatening to alter its fate and future, perhaps forever. 

Human devastation has spread beyond the battlefield 
In the three years since the attack on October 7, the conflict has morphed into a catastrophic crisis that has resulted in close to 74,000 fatalities and has left nearly 175,000 injured, according to TechforPalestine. Countless lie buried, unclaimed and missing under the rubble. 

The war did not discriminate between civilian lives, professionals and military personnel, with frontliners such as medical staff and media workers facing the brunt. Nearly 262 press personnel and 1,701 medical professionals have been killed during the three-year war. 

Israel was responsible for two-thirds of all journalist and media worker killings in 2025, driving the total number killed worldwide last year to 129, according to the Committee to Protect Journalists. More than 60% of the 86 members of the press killed by Israeli fire last year were Palestinians reporting from Gaza. 

According to UN estimates, human development in Gaza has been pushed back by 77 years, caused by the scale and extent of deprivation across living conditions, livelihoods/income, food security, gender equality, and social inclusion.

The economic costs are stratospheric and staggered across sectors  
The Gaza Strip has suffered widespread damage across several sectors, resulting in crippling financial needs for rehabilitation and recovery. The conflict resulted in economic losses of $22.7 billion, including loss estimates projected for up to three years in the future, according to the Gaza Rapid Damage and Needs Assessment (RDNA) report by the World Bank, the European Union, and the United Nations. 

The report identified healthcare as the sector accumulating the highest estimated loss of $6.8 billion, followed by employment with $2.8 billion, commerce and industry with $2.5 billion, education ($2.4 billion) and social protection ($1.6 billion). 

Gaza Strip Rapid Damage and Needs Assessment 2026 Report 

 

Education is a lost-generation issue
A staggering 745,000 students in the Gaza enclave have been deprived of formal schooling since the outbreak of the conflict, while 88,000 higher education pupils have been forced to put their academic degrees on indefinite hold, according to UN agency UNESCO. 

Palestinians live among the rubble of their homes destroyed by the Israeli army (Shutterstock) 


Meanwhile, over 95% of school buildings require rehabilitation or reconstruction with 79% of higher education campuses and 60% of vocational training centres damaged or destroyed, according to UNESCO-UNOSAT satellite damage assessments. 

But beyond the shattered infrastructure, tipped-over desks, dangling wood beams and splintered glass, another crisis has unfolded: a catastrophic shortage of digital equipment.

“Gaza is facing an extreme, system-wide shortage of digital devices,” Maha Alfarra, managing director at the Galilee Foundation, a UK-registered charity focused on Palestinian education and humanitarian initiatives, told Salaam Gateway in July 2026.

An acute shortage of educational materials and the destruction of infrastructure have placed an entire generation’s education under severe strain.

“In the immediate aftermath of the genocide, the people of Gaza already found themselves suffering from a shortage of electronic supplies. Second-hand tablets, phones, and laptops were being sold at insane rates. 10x what you’d expect,” Kathrine Nicolaisen, founder and CEO of Olives & Heather, told Salaam Gateway.  

Literacy stood at almost 98% across Gaza in 2023, up from 94.3% in 2007, according to the Palestinian Central Bureau of Statistics. No data has been recorded for the past two years. 

The Gaza conflict and the subsequent device shortage have affected children from day one, adds Nicolaisen.

“One of my employees launched an online school where she managed to mobilise displaced Gazan teachers and had them deliver government-approved curriculum across all age groups. Within a few months the school had over 500 students, and their main obstacle turned out to be access to devices. Parents would reach out to her and ask if classes could be shifted, because they had multiple kids sharing one device.” 

Healthcare infrastructure is in ruins and could take years to rebuild 
Four of the largest hospitals in Gaza - Al-Shifa Hospital, Nasser Hospital, Al-Quds Hospital, and the Indonesian Hospital - have suffered severe destruction and widespread damage, leaving them largely or completely out of service.  

The World Health Organization (WHO) has reported 971 attacks on healthcare in Gaza from the start of the conflict up until June 2026, affecting 804 health facilities, including hospitals and clinics and 268 ambulances.

Only 19 of the Gaza Strip′s hospitals and 73 of its 158 health centres are partially operational, according to a UNWRA report. Meanwhile, around 2,200 inpatient beds and just 107 ICU beds remain available across Gaza health services to serve its over two million population.

Palestinians injured during the war are inside the orthopedic department of Nasser Hospital in Khan Yunis (Shutterstock)

Furthermore, in excess of 172,400 conflict-related injuries have been reported, of which around 25% have resulted in life-altering disabilities requiring urgent specialised treatment, rehabilitation, and long-term support.

“Widespread forced displacement, coupled with the destruction of more than 83% of the Gaza Strip’s buildings and infrastructure, has created profound challenges in ensuring healthcare services are available and accessible where they are most needed,” the UNWRA report read. 

Displacement has become an absolute constant
More than 1.9 million people have been displaced, often repeatedly, according to the Gaza assessment report, while more than 1.2 million people - around 60% of Gaza's population - have lost their homes. 

Around one million out of Gaza’s total population of 2.1 million were residing in 862 displacement centres, as of November 10, 2025. The majority of the existing schools have been repurposed as shelters for internally displaced people while damage to water, sanitation, and waste management infrastructure has put the entire population at risk of disease outbreaks.

Displaced Palestinians live in shelter tents next to sewage water, near the sea in Deir al-Balah (Shutterstock)

The United Nations Office for the Coordination of Humanitarian Affairs said that more than 80% of displacement sites assessed in April reported frequently visible rodents or pests, while skin infections or rashes were reported in nearly two-thirds of sites, lice in over 65%, and bedbugs in more than half. 

An open-prison environment has created unprecedented mental health challenges 
Children have faced the brunt of the war leaving an entire generation scarred, maimed or orphaned, leaving indelible psychological and emotional wounds.

A huge chunk of children is left wounded with no surviving family, while almost all children require mental health and psychosocial support, according to the RDNA report. 

Formal education for children with disabilities has been suspended, while an estimated 7,000 young people have lost limbs, with 62% of rehabilitation facilities in the Gaza Strip destroyed or rendered non-functional.

 

28 Sep 2026
Insight
OIC Economies
How the tri-defence pact is promoting the concept of collective security

What happens when three economic or military heavyweights sign up to protect each other’s sovereignty?

It heralds a new regional order and a recalibration of existing security guarantees that soundbites and viral photo-ops perhaps fail to convey.  

The Mecca Joint Defence Agreement between Türkiye, Saudi Arabia and Pakistan signed on August 7, was curated to strengthen collective deterrence against aggression and to regard an attack against any of the members as an attack on all. It mirrors the pledge signed between Pakistan and Saudi Arabia signed last year.

Read: Can Saudi-Pakistan defence pact serve as a template for similar agreements?

In the new multipolar world with emerging regional middle powers, the concept of absolute security - a zero-sum game - appears to be sunsetting. Which is perhaps why the wording of the pact is particularly significant, promoting the notion of collective security, an idea gaining momentum and support across sensitive regions.

The concept of security in the Middle East has gradually shifted from a pursuit of absolute security - where individual states seek to maximise their own military capabilities - to a greater emphasis on collective and cooperative security, says Leonardo Jacopo Maria Mazzucco, a Gulf defense analyst. 

“This does not mean that regional states have abandoned traditional deterrence or self-help; rather, there is growing recognition that many of the region's security challenges, from maritime threats and missile proliferation to terrorism and transnational instability, cannot be effectively managed by individual states alone,” adds Mazzucco. 

“The Mecca agreement fits into this broader evolution. It reflects an emerging preference for flexible, overlapping security partnerships rather than waiting for a single, region-wide security architecture to emerge.”

Turkish Foreign Minister Hakan Fidan also endorsed the notion of collective security over absolute security, adding that the defence pact is technically similar to Article 5 of the NATO Treaty. 

"Saudi Arabia, Pakistan and Türkiye, when you look at their foreign policy positions, are not countries that have expansionist policies. They are countries concerned with their own borders, their own problems and their development, and, if possible, they want to contribute positively to their environment through good relations and good neighbourliness," Fidan told Anadolu Agency.

Regional middle powers 
Türkiye, Saudi Arabia and Pakistan are distinct states yet share similarities as middle powers - Muslim-majority populations, regional influence and a desire for playing a greater role on the world stage. 

Their strengths complement each other, too – Türkiye has a million-man NATO army and serious defence-industrial capabilities; Pakistan, a nuclear armed state, has a battle-hardened force; and Saudi Arabia, the Arab world’s largest economy, is an energy and financial heavyweight.

But what does agreement - which states that an ‘attack on one is an attack on all' - actually commit the three countries to in practical terms? 

“At the higher end of military cooperation, the joint statement confirms that an armed attack against one signatory will be considered an attack against all three, broadly echoing the logic of NATO's Article 5. This clause, however, warrants some caution. It does not necessarily mean that the other two signatories would automatically enter a war against the aggressor. Rather, it creates a framework for different forms of assistance, potentially including active military support, with the precise nature of any response likely to depend on political decisions and domestic legal requirements,” adds Mazzucco.  

“At the lower and middle ends of the spectrum, the agreement appears to provide a framework for deeper defence cooperation, including greater defence-industrial engagement, joint exercises, military-to-military contacts and intelligence sharing. The real test will be whether these commitments develop into regular, institutionalised forms of cooperation rather than remaining largely declaratory.”

Privilege of proximity
Türkiye, Saudi Arabia and Pakistan form a fairly large triangle across the Middle East and South Asia, occupying strategically important locations.

Turkey straddles Europe and Asia, Saudi Arabia sits at the crossroads of the Gulf and the Red Sea region and Pakistan at the junction of South Asia, Central Asia and the Arabian Sea.

Collectively, they form a security architecture that spans from the eastern Mediterranean to the Arabian Sea. 

“Geography is arguably one of the agreement's greatest strategic assets. The three members form a broad arc stretching from Türkiye and the Black Sea and Mediterranean region, through the Gulf, to South Asia and the Indian Ocean,” adds Mazzucco.  

“The recent Hormuz crisis once again demonstrated how central maritime chokepoints are to regional and global security. The three members are positioned around, or have strategic access to, three critical chokepoints: the Bosphorus, the Strait of Hormuz and the Bab el-Mandeb. This gives the partnership potential strategic relevance not only on land, but also across the maritime space connecting the Mediterranean, Red Sea, Gulf, and Indian Ocean.”

Accession or attrition
The accession of additional countries could significantly increase the agreement's strategic weight, but it could also complicate consensus. More members would bring additional, even complementary strengths such as military capabilities, geographic reach and political legitimacy, converting the pact into a broader security framework.

“The pact focuses on the principle of regional security which offers room for expansion, keeping the alliance open to the participation of countries that share a similar tenet and distinct strengths that could add value to the agreement. The current signatories possess complementary strengths which position them as viable contributors to enduring peace across the Middle East,” says Betül Doğan Akkaş, an assistant professor at Ankara University. 

However, each new member has its own strategic priorities, territorial obligations and challenges as well as threat perceptions. More so, it is very possible for each member to view a particular crisis with varying levels of urgency. Hence, critical concerns are not on how many countries seek to share the security corridor but whether they share compatible strategic interests. 

Dr Rabia Akhtar, Dean Faculty of Social Sciences at the University of Lahore, opines that the measure of the alliance will be whether its members can protect one another, discourage further attacks and manage escalation together for its credibility will emerge from those decisions. 

“The hardest test of the Makkah Defence Alliance will be a crisis that matters unequally to its members. Its credibility will depend on whether unequal exposure can still produce a shared willingness to bear costs,” Akhtar wrote on a Substack post. 

07 Sep 2026
Insight
OIC Economies
The Gulf’s green hydrogen wager

Oil-producing economies of the Gulf are rapidly emerging as global centres for green hydrogen production, propelled by pioneering decarbonization strategies, abundant solar energy and substantial capital reserves. The momentum is encouraging regional governments to successfully transition from hydrocarbon dominance to a post-oil era with long-term sustainability and comparable financial returns. 

The GCC nations are positioning themselves as key players in the global hydrogen economy, said Atif Rehman, Director Energy Infrastructure Solutions, EMEA at Enerflex Ltd said in a LinkedIn post. 

With abundant renewable energy resources and ambitious sustainability goals, these countries are investing heavily in hydrogen production, particularly green hydrogen derived from renewable energy sources, he added. 

Saudi Arabia granted local utility giant ACWA Power the exclusive right to export green hydrogen and its derivatives to global markets, confirming its ambition to establish an intercontinental renewable energy export value chain. 

Dr. Samir J Serhan, ACWA CEO, said that the mandate defines the next architecture of Saudi Arabia’s energy export strategy.

"Green hydrogen and renewable electricity exports represent the next chapter in the kingdom's energy leadership, creating new opportunities for economic growth while contributing to global energy security and the energy transition."

The under-construction NEOM Green Hydrogen Project, billed as the world’s largest, is another strong indicator of the kingdom’s clean energy ambition.

The initiative which will produce 600 tonnes per day of clean hydrogen and up to 1.2 million tonnes per year of green ammonia upon completion next year, will help mitigate the impact of five million metric tonnes of carbon emissions annually.

Green hydrogen is generated through the process of electrolysis using electricity from renewable sources. Ammonia is an efficient way to transport hydrogen and after reaching its destination, it can be used as is or converted back to hydrogen. 

The kingdom is simultaneously developing a multi-billion-dollar green hydrogen and ammonia production facility at the Red Sea port city of Yanbu, which will produce 400,000 tonnes of green hydrogen or up to 2.2 million tonnes of green ammonia annually. Its developer ACWA Power signed a MoU with several German counterparts to create a green ammonia corridor, stretching from its origin to the German port of Rostock. 

Neighbouring UAE’s green hydrogen strategy targets producing 1.4 and 15 million tonnes per annum by 2031 and 2050, respectively. The country mirrors Saudi Arabia’s ambition to segue from a conventional oil giant to a dominant supplier of clean fuel to Europe and Asia, looking to targeting 25% market share of low-carbon hydrogen key export markets by 2030.

The country’s first solar-driven green hydrogen facility at the Mohammed bin Rashid Al Maktoum Solar Park was commissioned in 2021. Meanwhile, Abu Dhabi’s ADNOC is developing large-scale green hydrogen projects in partnership with Mubadala Investment Company, and formed the Abu Dhabi Hydrogen Alliance along with sovereign wealth fund ADQ back in 2021 to construct a substantial green hydrogen economy in the country.

However, multiple countries are vying for a slice of the global export landscape amid rising demand for low-carbon fuels.  

S&P Global analysts Brian Murphy, Matthew Hodgkinson and Katherine Leydon said in a November 2024 report that with the Middle East region having become a large producer of low-carbon fuels, there was a possibility of a competition between the US and Middle East for export markets in Japan and South Korea. 

Meanwhile, Oman is looking to plough $50 billion in total investments to establish itself as a pre-eminent hotspot for green hydrogen and ammonia. The sultanate established Hydrom in 2022 as the main entity tasked with developing its green hydrogen sector – two years later, Hydrom signed two new green hydrogen projects for Dhofar worth $11 billion. Indian renewables developer Acme has also committed $4.2 billion to Oman’s hydrogen and ammonia project in the Special Economic Zone at Duqm this year.   

Qatar and Kuwait have taken a more measured approach to green hydrogen – state-owned Kuwait Oil Company contracted engineering firm KBR in 2024 to develop a strategy for building out 25GW of green hydrogen production capacity, as well as 17GW of renewables, by 2050.

The Qatari government has committed over $1.5 billion to develop green hydrogen projects in future, while a pilot hosted at the Qatar Science and Technology Park successfully produced green hydrogen directly from wastewater and sunlight. 

29 Jul 2026
Insight
OIC Economies
Top 10 largest OIC capitals by population in 2025

The Organisation of Islamic Cooperation’s 57 member states are home to some of the world’s fastest-growing urban centers, and their capitals capture much of the demographic weight of the Muslim world.

From South Asian megacities absorbing millions of rural migrants to Gulf capitals transformed by labour migration and petrostate investment, these cities illustrate how population and power are increasingly concentrated in large urban agglomerations. Taken together, the ten largest OIC capitals account for well over 100 million people in their contiguous built‑up areas.
 

1. Jakarta, Indonesia — 41.9 million


Jakarta ranks as the largest capital city in the OIC and the most populous city in the world in the UN’s 2025 dataset. Its huge urban footprint reflects the long-term concentration of population, investment, and government activity on Java, as well as the growth of the wider Jabodetabek metropolitan region.

2. Dhaka, Bangladesh — 36.6 million


Dhaka is the second-largest OIC capital and one of the fastest-growing large cities in the world. Its expansion has been driven by rural-to-urban migration, garment-sector employment, and the city’s role as Bangladesh’s political and economic core.

3. Cairo, Egypt — 25.6 million


Cairo is the largest city in Africa and the only non-Asian city among the world’s top ten urban areas in the UN’s 2025 release. Its scale reflects long-running demographic concentration along the Nile corridor and persistent migration from other parts of Egypt into the capital region.

4. Tehran, Iran — 9.2 million


Tehran remains one of the largest capitals in Western Asia and a major administrative, financial, and cultural center. The city’s growth has been shaped by internal migration, centralization of state functions, and the pull of the national capital on surrounding regions.

5. Kuala Lumpur, Malaysia — 8.4 million


Kuala Lumpur is one of the most economically significant capitals in the OIC and a major hub for trade, finance, and the Islamic economy. Its urban growth reflects Malaysia’s sustained urbanization and the wider expansion of the Klang Valley metropolitan region.

6. Riyadh, Saudi Arabia — 6.9 million


Riyadh has grown rapidly from a small desert settlement into a major metropolitan capital. Oil-driven development, labor migration, and large-scale state investment have transformed the city into one of the fastest-expanding capitals in the OIC.

7. Khartoum, Sudan — 6.8 million


Khartoum’s urban agglomeration, which includes Khartoum, Omdurman, and Khartoum North, is the largest capital area in sub-Saharan Africa within the OIC. Its population estimate should be treated cautiously because Sudan’s conflict has likely altered settlement patterns and displacement flows since 2023.

8. Amman, Jordan — 6.4 million


Amman’s growth has been shaped by successive waves of displacement, including Palestinians, Iraqis, and Syrians, alongside natural increase. The city’s size is unusually large relative to Jordan’s overall population, giving the country a strong concentration of people and services in the capital.

9. Baghdad, Iraq — 6.4 million


Baghdad remains one of the largest Arab capitals in the UN dataset and has long been a major center of political power and urban settlement. Its current size reflects historic centrality, post-2003 migration, and ongoing reconstruction and demographic pressure.

10. Kabul, Afghanistan — 5.6 million


Kabul’s rise into the upper tier of large capitals has been driven largely by internal displacement and the concentration of opportunity and services in the capital. Despite political uncertainty, the UN’s 2025 estimate still places Kabul among the largest OIC capitals.

Methodology
This ranking uses the United Nations World Urbanization Prospects 2025 capital-city file, which reports mid-2025 population estimates for capital cities defined by the Degree of Urbanization. That means the figures describe densely populated urban areas and are not limited to administrative city boundaries.

For consistency, the list includes capitals of all 57 OIC member states and uses the UN’s capital-city designation as the basis for comparison. In conflict-affected cases such as Khartoum and Kabul, the figures should be treated as modelled estimates rather than precise counts because population movement and damage to administrative systems can affect accuracy.

Why it matters
The list underscores a central fact about the OIC world: political capitals are often also giant demographic magnets. In South Asia and parts of the Middle East, capital-city growth is tied not only to national governance but also to labor migration, regional inequality, displacement, and the concentration of infrastructure and services.

It also shows that the Islamic world’s largest urban centers are overwhelmingly Asian, with Cairo standing out as the only African capital in the global top ten. That pattern matters for understanding everything from housing pressure and transport demand to labor markets and urban policy.

Source note
This article is based on the UN World Urbanization Prospects 2025 capital-city dataset and the UN’s summary release on the 2025 revision. The ranking should be cited as: United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects: The 2025 Revision, Online Edition.

21 Jul 2026
Insight
OIC Economies
How a Türkiye–Saudi rail corridor could redraw the Islamic world’s economic map 

Since the early 20th century, the Ottoman-built Hejaz Railway has stood as a monument of Middle Eastern history and a symbol of imperial reach. What was once a vital pilgrimage route from Damascus to Madinah is now inspiring a vastly different modern vision.

The newly signed railway cooperation agreement between Türkiye and Saudi Arabia could pave the way for one of the most ambitious geo-economic corridors in the Islamic world. Designed to connect the two countries via Jordan and Syria over the next three to four years, the architecture promises to secure regional supply chains and reduce dependence on volatile maritime chokepoints by ultimately establishing an overland trade route linking the Gulf to Europe.

While the memorandum of understanding is still in its early stages, analysts agree that the project's significance extends far beyond transportation. It reflects a changing Middle East where infrastructure is increasingly seen as a source of geopolitical influence, strategic resilience, and regional integration.

Source: Anadolu Agency

This rail pact is part of a larger trend of growing collaboration between the two nations, arriving on the heels of a recent MoU between the Saudi Food and Drug Authority and the Turkish Halal Accreditation Agency to advance joint research, training, and development in the halal sector.

Born from geopolitical shifts, morphed into economic resilience 

The timing of the initiative is no accident. Years of conflict across Middle Eastern countries, coupled with repeated disruptions to global shipping and growing anxieties over the Strait of Hormuz, have accelerated interest in alternative overland trade routes.

According to Turkish Transport Minister Abdulkadir Uraloğlu, the proposed network is designed to create a flexible logistics web capable of adapting to regional instability, rather than relying on a single, vulnerable trade artery. 

Geopolitical analyst James M. Dorsey notes that this announcement reflects a broad Middle Eastern transformation: "A Turkish-Saudi agreement to revive the Ottoman-era Hijaz Railway tells the story of geopolitical realignment in the wake of the wars in Gaza, Lebanon and Iran."

However, despite comparisons to the original Hejaz Railway, experts argue that the similarities end with geography. While the Ottoman system primarily transported pilgrims along a north-south axis, the new corridor is designed to move manufactured goods, industrial inputs, agricultural products, and investment capital across Europe, the Middle East, and Asia.

Majed Elmedawar, a strategic adviser specializing in Middle Eastern economic integration, emphasizes that modern railways should be viewed as economic institutions. 

He stresses that the bilateral initiative is part of a sweeping regional infrastructure push that includes the planned 2,177-kilometer GCC Railway, Iraq's $17 billion Development Road project connecting the Gulf to Türkiye, and the India-Middle East-Europe Economic Corridor (IMEC) announced in 2023.

"The Türkiye-GCC railway should be understood not as a revival of the historic Hejaz Railway but as a fundamentally different category of infrastructure,” Elmedawar notes. 

“Infrastructure does not only connect economies; it creates economies. A railway corridor generates industrial clusters, logistics hubs, manufacturing links, labor mobility, investment concentration, and urban growth."

What does it mean for OIC countries & the broader Islamic economy 

Perhaps the project's greatest promise lies in what analysts call cooperative sovereignty. Rather than diluting national independence, shared infrastructure can strengthen it. By managing transnational flows of goods and capital, states can participate in the global economy from a position of strength.

For members of the Organization of Islamic Cooperation (OIC), this means replacing reliance on vulnerable shipping routes with robust, localized supply chains. Countries located directly along the corridor - including Türkiye, Saudi Arabia, Jordan, and eventually Syria - would likely see the greatest immediate benefits through expanded logistics industries, manufacturing investment, and tourism, according to Elmedawar.

Longer-term, the network could extend commercial opportunities to Egypt, Pakistan, Central Asia, and Southeast Asian nations through wider Eurasian transport links.

One of the most transformative impacts of the corridor could be on the rapidly expanding halal economy, which now encompasses pharmaceuticals, cosmetics, finance, and tourism. Currently, fragmented transport systems inflate costs and bottleneck trade between OIC markets.

A modernized rail network has the potential to change this by offering reduced transit times for perishable halal goods, providing temperature-controlled freight movement combined with digital tracking, and encouraging harmonized certification systems across borders.

"A halal-certified product is only as competitive as its ability to reach consumers at a reasonable price and in a timely manner," Elmedawar notes. 

Integrated rail would turn isolated national markets into a massive, interconnected halal industrial cluster. Beyond trade, the project carries significant cultural and diplomatic implications. Ahmet Akalin, assistant director at the Iran-based Economic Cooperation Organization Cultural Institute, sees transportation as a crucial tool for international influence.

By reducing logistical barriers, Akalin argues, the corridor would reinforce Türkiye's role as a strategic bridge between Europe, Asia, and the Arab world while bolstering regional cooperation. Furthermore, he believes the railway may become the backbone of a trusted halal logistics network.

Drawing on insights from his book, The Appeal of Nations - International Cultural Institutes in Türkiye in the Context of Soft Power, he notes that the halal industry extends beyond mere religious compliance. “Halal also represents hygiene, quality, traceability and consumer confidence. Hygiene itself is a source of soft power because it builds trust.”

Reconnecting pilgrims at its core 

The original Hejaz Railway was built chiefly to serve Muslim pilgrims traveling to Islam's holiest sites. Although freight and logistics dominate today's discussions, experts believe the passenger dimension could eventually become equally significant.

As Elmedawar notes, expanded connectivity could make Hajj and Umrah substantially more affordable, accessible, and environmentally sustainable. 

"Easier rail travel would enable millions of Muslims from different countries to meet more frequently during Hajj and Umrah. In this way, the railway would connect not only cities but also people, cultures and shared values.”

Stumbling blocks 

For all the optimism surrounding the initiative, the project faces enormous practical challenges. Bringing this vision to life requires synchronizing cross-border customs, digital freight systems, regulatory frameworks, and technical standards across multiple sovereign nations. The physical and financial obstacles are formidable. In Syria, rebuilding costs exceed $200 billion, with reconstruction focused on basic utilities rather than international rail, alongside ongoing security concerns. 

Additionally, significant infrastructure gaps remain, including a missing 400-kilometer segment between Syria and Jordan that requires construction, and a $100 million restoration project needed to link Türkiye to Aleppo and Damascus, according to Elmedawar.

Financing these gaps presents another major hurdle. The total investment is estimated at $5.5 billion. While the Asian Infrastructure Investment Bank has committed $750 million to Turkish rail lines, a comprehensive cross-border funding model is still lacking.

As Elmedawar observes: "The principal constraint is no longer engineering. It is institutional coordination."

He suggests the Islamic Development Bank (IsDB) - a consistent backer of regional transport projects across the OIC - could provide the institutional framework necessary to unlock the corridor's full potential through direct financing, technical assistance, or institutional support.

Whether the project can be completed within the optimistic timeframe suggested by Turkish officials remains to be seen. But even at the memorandum stage, the railway signals an important change in regional thinking. 

Governments increasingly view mobility projects as instruments for expanding geopolitical influence, fostering regional integration, and strengthening economic resilience. If political will and financial backing align, the Türkiye - Saudi corridor could catalyze a newly connected, economically resilient Islamic world.

15 Jul 2026
Insight
OIC Economies
How Gazans are navigating the tech shortage crisis with creative solutions

A staggering 745,000 students in the Gaza enclave have been deprived of formal schooling since the outbreak of the conflict in October 2023. 

Among them are 88,000 higher education pupils who have been forced to put their academic degrees on indefinite hold, according to UN agency UNESCO. Furthermore, north of 95% school buildings either require extensive rehabilitation or total reconstruction, according to the agency’s satellite damage assessments. 
 


But beyond the shattered infrastructure, the tipped over desks, the dangling wood beams and broken glass, another crisis has unfolded: a catastrophic shortage of digital equipment.

The conflict has decimated institutions, disrupted logistics, and triggered a strict blockade that predicates on the harsh understanding of labelling laptops, smartphones, and their spare parts as ‘dual-use’ military items. Securing tech in this new reality has become virtually impossible.

The context is both instructive and overwhelming: For millions around the world, a broken laptop is an inconvenience. In Gaza, it can mean the sudden demise of a university education, the loss of a family's primary income, or complete isolation from the outside world.

By cutting off access to technology, the blockade has suffocated daily life, disproportionately impacting students, remote workers, and a broader workforce desperate to link up with and serve the global economy.

“Gaza is facing an extreme, system-wide shortage of digital devices,” Maha Alfarra, managing director at the Galilee Foundation, a UK-registered charity focused on Palestinian education and humanitarian initiatives, tells Salaam Gateway. 

Image Courtesy: Shutterstock 

“Most laptops, tablets, and smartphones were destroyed during the war, and no new electronics have been allowed into Gaza since October 2023.”

The few devices that survive or slip through the blockade are priced astronomically. A basic laptop that once cost $400 now commands $1,000 or more. If a student's laptop breaks, they face an impossible choice: purchase a replacement at a hyper-inflated price or drop out entirely.

“Prices for the few remaining devices have risen to more than five times their original cost, far beyond the reach of most families and institutions,” Alfarra adds. 

“At Al-Azhar University-Gaza, a recent $10,000 support fund was only enough to purchase five laptops, illustrating the scale of scarcity.”

Human capital, skillset at risk

The hardware shortage is triggering a much broader crisis: the erosion of Gaza's talent base and the demise of entire livelihoods. 

Before the escalation, Gaza had fostered a resilient digital workforce. Through local incubators and university programs, young Palestinians built careers in software development, graphic design, and digital marketing, bypassing physical borders through the Internet. Today, those professionals are struggling to remain visible to global employers.

“Losing a laptop means losing an immediate economic lifeline or halting university progress entirely,” Wisam Elswerki, a Gaza-based content developer who works with humanitarian organizations, tells Salaam Gateway.

After losing his own equipment, Elswerki was forced to manage his workload entirely from a mobile phone. “Trying to handle professional documentation, join virtual meetings, and review files on a small screen - while dealing with erratic power and network coverage - turns standard work into a daily test of endurance.”

“A simple task takes four times longer than it should.”

Without the ability to work consistently, client relationships wither, and hard-earned technical skills inevitably decline.

“The greatest long-term risk is not the loss of laptops or smartphones - it’s the gradual loss of the human capital that took years to build,” Mohammed Abu Hassira, a development professional based in Gaza, tells Salaam Gateway.

Abu Hassira notes that before October 2023, remote work was one of the few accessible pathways to financial independence, particularly for women.

“Digital work depends on continuity,” he explains. “One of Gaza's greatest strengths has always been its people. Preserving digital talent and reconnecting professionals with global markets should therefore be viewed not only as humanitarian support, but as a strategic investment in Gaza's long-term economic recovery.”

In the face of these extreme restrictions, Palestinians are engineering makeshift solutions using damaged equipment and pre-digital adaptations.

When laptops and computers are unavailable, students use mobile phones to access course materials on platforms like Moodle or Google Classroom, relying on WhatsApp as their primary tool for peer-led engagement.

Families frequently pool their resources, sharing a single rented laptop among multiple siblings just to keep their education alive. Tech workers and freelancers travel through destroyed neighborhoods to reach makeshift, solar-powered co-working hubs. There, they share access to electricity to charge devices, rotating in shifts to maintain their income streams.

“Despite severe logistical restrictions, several organizations have launched creative initiatives to restore digital access,” Elswerki notes. 

He highlights entities like Gaza Sky Geeks and Taqat Gaza, which have been instrumental in setting up community tech spaces, as well as Academic Solidarity with Palestine, an initiative distributing free e-SIMs to help Gazan students and professors re-establish basic connectivity.

“While the gap between supply and demand remains massive, these efforts keep Gaza's workforce and student body connected,” he says.

Integrated ecosystems are the sole way forward

Standard charity models are no longer viable in an environment stripped of basic power and connectivity.

“Companies can play a meaningful role, but only if support goes beyond simply donating devices,” warns Alfarra. “In Gaza’s current conditions, digital access depends on three things simultaneously: devices, power, and connectivity. Effective programs therefore need to be integrated and resilient.”

To build these ecosystems, international bodies are shifting their focus from individual distribution to shared resources. Rather than dropping single laptops into an infrastructural vacuum, they are now equipping collective workspaces.

Investing in decentralized, solar-powered computer labs and coworking spaces allows hundreds of people to use reliable equipment through shift schedules. UN agencies such as UNESCO and the UNDP have already piloted similar approaches.

“UNESCO has provided laptops through Temporary Learning Spaces, supporting more than 10,000 students, while UNICEF continues to procure ICT equipment for Palestinian education systems," Alfarra says.

 "Furthermore, a major initiative led by Education Above All and UNDP distributed 10,000 tablets and built 100 digital learning centres equipped with reliable power and internet access.”

Other NGOs - including US-registered HEAL Palestine, West Bank-headquartered Teach for Palestine and US-based GiveInternet - have contributed crucial hardware, connectivity tools, and remote learning assistance. These initiatives prove that progress is possible when device distribution is paired with infrastructure and training.

Preserving the future

The Galilee Foundation raised around £106,000 in a campaign to fund laptops and tablets for Gaza. However, with electronics barred from entering the Strip, the charity is pivoting toward high-impact, locally informed strategies.

“We’re now assessing where our support can be most effective within this ecosystem,” says Alfarra. “We’re comparing three interventions: device handouts, shared access hubs, and digital classroom platforms. Early evidence suggests that shared hubs combined with digital platforms offer the greatest impact under current constraints.”

To truly unlock online access, Alfarra asserts that stakeholders must coordinate hardware grants alongside low-cost rental models. This framework should offer communities flexible ways to secure refurbished computers from the secondary market, such as borrow-and-return schemes or installment plans.

Citing mechanisms outlined by Al-Azhar University, she argues that organizers must keep distribution targeted, prioritizing financially disadvantaged students and professionals whose specialized fields - such as engineering or software development - simply cannot be managed on mobile devices.

Meanwhile, international clients and academic institutions must adapt to the constraints facing these professionals, adds Elswerki. This requires optimizing platforms to be low-bandwidth and mobile-first, ensuring essential web tools run smoothly on basic mobile browsers. 

Ultimately, overcoming the technological blockade is less a logistical challenge than a humanitarian imperative to preserve an entire generation’s future.

“Rebuilding Gaza's digital economy goes beyond replacing damaged devices,” notes Abu Hassira. 

“It’s about protecting decades of human capital and empowering skilled individuals to reconnect with education, employment, entrepreneurship, and global markets. Investing in digital access today is an investment in Gaza's most valuable asset - its people.”
 

07 Jul 2026
Insight
OIC Economies
China's 15th Five-Year Plan: What it means for OIC countries

Against a backdrop of heightened geopolitical tensions and supply-chain uncertainty, China's 15th Five-Year Plan (2026–2030) signals continuity with earlier policy priorities while sharpening its focus on industrial strength, technological self-reliance, energy security, and high-standard opening up.

For the 57 member states of the Organisation of Islamic Cooperation, the plan matters because it points to where China is likely to buy, build, and compete through 2030. That makes it relevant not only as a domestic policy blueprint, but also as a guide to China’s external economic behaviour.
 

What the plan prioritises

Compared with its predecessor, China’s 15th Five-Year Plan appears to place even greater emphasis on advanced manufacturing, innovation, domestic demand, green transition, and high-quality ‘Belt and Road’ cooperation. It also highlights emerging technologies such as semiconductors, artificial intelligence, biotechnology, and energy-related innovation, while reinforcing the importance of technological self-reliance and supply-chain resilience.

The plan sets several specific measurable targets. On technology and innovation, it targets R&D spending growth of at least 7% annually. On energy, it targets a 17% reduction in carbon intensity relative to the 2025 baseline, and a 16 to 20% increase in energy production capacity, driven mainly by renewables. 

On agriculture, the plan targets grain production capacity of 725 million tonnes by 2030, alongside greater seed self-sufficiency and more integrated digital farming systems. On the digital economy, it targets value-added output reaching 12.5% of GDP by 2030, with AI given significantly greater prominence than in the previous plan.

This resilience push also reflects broader geopolitical and supply-chain instability. As Dr Yu Jie, Senior Research Fellow on China at Chatham House, observed: “Conflicts, geopolitical rivalry and the COVID-19 pandemic have exposed the fragility of global supply networks. And intensifying technology restrictions by advanced economies have underscored how dependence on foreign inputs can constrain national development.”

She added that the turmoil in the Gulf would only reinforce Beijing’s conviction. “Instability in several of the world’s most important energy suppliers illustrates how quickly geopolitical crises can ripple through global markets. For a country like China, which remains the world’s largest energy importer and a central hub in global manufacturing networks, the war is a stark reminder of the risks inherent in overreliance on external conditions beyond its control.”

The plan also reflects China’s effort to align economic development with national security. In practical terms, that means reducing vulnerability to external shocks, strengthening industrial chains, and ensuring that energy, technology, and manufacturing policy are more tightly integrated.

This has implications for OIC countries. China’s push for resilience and self-sufficiency may sustain demand for energy, minerals, and industrial inputs, but it will also increase competition for countries that are trying to move up the manufacturing ladder themselves.

The OIC foundation that already exists

The ‘Belt and Road Initiative’ has already created a substantial infrastructure footprint across several Muslim-majority economies. Chinese-linked economic zones, agricultural cooperation centres, transport corridors, ports, and industrial parks already exist in parts of Africa, the Middle East, South Asia, and Southeast Asia.

The scale of this existing base is documented. Ten Chinese-linked economic zones are recorded across OIC countries — in Algeria, Egypt, Mauritania, Nigeria (two zones), Djibouti, Pakistan, Oman, Saudi Arabia, and the UAE — covering industries from textiles and automotive assembly to petrochemicals and clean energy.

Four Chinese agricultural technology centres are operational in OIC member states in Africa: Sudan, Cameroon, Mauritania, and Senegal, covering crop cultivation, rice, irrigation, and subsistence farming. Cumulative BRI engagement since 2013 has reached $1.399 trillion, comprising roughly $837 billion in construction contracts and $561 billion in non-financial investments. In 2025, the Middle East was the second-largest recipient of BRI engagement globally, receiving $39.4 billion.

That existing base matters because the 15th Five-Year Plan does not start from zero. Its emphasis on quality, integration, and innovation can be read as an attempt to upgrade and better coordinate the infrastructure and partnerships China has already built.

This creates both opportunity and risk for OIC states. Countries that can align their industrial strategies with China’s priorities may attract more investment, technology transfer, and market access. Countries that remain passive may find themselves more deeply embedded in Chinese supply chains without gaining enough value-added production in return. 

Identifying where the opportunities are

Agriculture: China’s focus on food security, smart agriculture, and seed innovation creates room for agricultural cooperation, machinery exports, and value-chain integration. OIC countries with strong agricultural sectors could position themselves as suppliers of food, inputs, and processing capacity.

Manufacturing: China’s continued industrial upgrading will intensify competition in labour-intensive and mid-tech manufacturing. OIC economies seeking industrialisation will need to specialise, improve productivity, and target niches where they can compete effectively.

Green energy: The plan’s green transition agenda supports new opportunities in renewables, batteries, green hydrogen, grid infrastructure, and energy-efficient manufacturing. This is especially relevant for OIC countries with solar, wind, or critical mineral potential.

Connectivity and trade: High-quality Belt and Road cooperation may continue to support ports, railways, logistics corridors, and digital trade systems across OIC regions. That could improve trade efficiency, but only if projects are commercially viable and fiscally sustainable.

The risks to manage

The biggest structural risk for many OIC countries is increased competition from Chinese firms in manufacturing and exports. As China moves further up the value chain, it may become harder for emerging industrial economies to build export capacity in sectors where Chinese firms already have scale, efficiency, and policy backing.

A second risk is technological dependence. Chinese firms may expand exports of digital infrastructure, automation, and industrial software, but these partnerships can also create dependence on Chinese standards, platforms, and data governance systems.

For oil- and gas-exporting OIC states, the energy transition is another medium-term challenge. China will continue to need hydrocarbons, but its demand mix may gradually shift toward cleaner energy, strategic minerals, and inputs linked to electrification and advanced manufacturing.

Hong Kong’s possible role

Hong Kong may also become a more important bridge between China’s industrial base and OIC markets. Its strengths in finance, legal services, trading, and international connectivity could make it a useful platform for firms trying to reach Muslim-majority markets.

That said, the halal and certification gap should not be overstated. Hong Kong can help facilitate market access and trust-building, but any claim that it can single-handedly solve the challenge would be too strong. The more realistic view is that it can support a wider ecosystem of trade, certification, and service provision.

This view was echoed by Sharifa Leung, Managing Director, 3 Hani Enterprises Ltd when speaking to Salaam Gateway. She said: “By bridging rigid regulatory frameworks with modern ecosystem safety, Hong Kong and Macau can translate China’s Belt and Road vision into tangible economic trust, unlocking multi-trillion-dollar OIC markets through standardised, premium halal and tourism experiences.”

How OIC countries should respond

China’s 15th Five-Year Plan is best understood as a framework for selective engagement, and not automatic alignment. For OIC countries, it creates opportunities in trade, investment, energy transition, infrastructure, and industrial upgrading — but only if they negotiate carefully and build stronger domestic capabilities.

OIC governments are likely to do best if they engage China selectively rather than passively. That means negotiating sector by sector, insisting on local value addition, and ensuring that projects include technology transfer, maintenance capacity, and realistic financing terms.

It also means coordinating more regionally where possible. States with complementary strengths — in energy, logistics, agriculture, or manufacturing — can improve their bargaining position if they act with greater coherence.

The central point is simple: China is moving up the ladder, and OIC countries will benefit most if they do the same. Those that focus only on commodity exports or debt-heavy infrastructure risk becoming more dependent on Chinese supply chains without capturing enough of the value.

05 Jul 2026
Insight
OIC Economies
Gulf nations bet big on post-Assad Syria  

The Gulf nations have pledged tens of billions of dollars in partnership and investment deals in post-war Syria as they seek to become primary financial anchors, helping rebuild a country battered by economic disparities, political upheaval and social unrest. 

The GCC nations, particularly the UAE, Saudi Arabia and Qatar, were the among the first countries to endorse the new Syrian president Ahmad Al Shara when he succeeded Bashar Al Assad in December 2024. These same countries are now primary capital providers that partook in approximately $28 billion in capital inflows in the first six months of 2025 to seek early-mover advantages in a country characterized by extensive development and infrastructure needs. 

Saudi Arabia has inherently focused on Syria’s macro stability and strategic infrastructure development. In February, the two countries signed a slew of agreements valued at roughly $5.3 billion, covering investments across aviation, telecommunications and utilities.

The financial commitments will cover the development and operation of airports in Aleppo, establish a low-cost national carrier and launch a telecommunications initiative to build a 4,500-kilometre fiber-optic network, positioning Syria as an inter-continental digital corridor. The new agreements add to previously signed memorandums and deals between the two countries worth about $10.66 billion, bringing total Saudi investments in Syria to about $16 billion.

Saudi Arabia, alongside Qatar, also paid off approximately $15.5 million in arrears to the World Bank Group last May, enabling the lender to extend a $146 million grant to Syria for the reconstruction of the national grid infrastructure. Jean-Christophe Carret, World Bank Middle East division director stated that this project represented the first step in a planned increase in World Bank support to Syria. Saudi Crown Prince Mohammed bin Salman also played a widely appreciated role in US President Donald Trump’s decision to lift Syrian sanctions last May. 

Qatar has focused on reviving and developing Syria’s utility and aviation landscape. Last year, Syria signed a $7 billion deal with Qatar's UCC Holding-led consortium to add 5,000 megawatts to the national grid. The United Nations Development Programme estimates that Syria’s energy production has fallen by more than 80% from pre-war levels and that more than 70% of plants and transmission lines are damaged. Syria also inked a $4 billion deal with a consortium of companies led by UCC Holding to redevelop Damascus International Airport. 

The UAE is also viewing Syria strategically to strengthen trade networks beyond the Strait of Hormuz and secure a greater regional role. Mohamed Alabbar, the co-founder of e-commerce platform Noon, is planning to invest up to $18 billion in Syria in addition to launching an e-commerce platform, he announced in May.

Local port authorities are increasing their investment and operational footprint to support enhanced trade flows and long-term economic growth. Dubai’s DP World signed an $800-million preliminary agreement to develop the port of Tartous, while Abu Dhabi's AD Ports Group purchased a $22 million stake in a container terminal in Syria's main commercial port, responsible for 95% of the country’s container volumes. 

From January 2025 through February 2026, the GCC used a calibrated program of financial and political support that helped stabilize the Levant, writes Middle Eastern expert Norman Roule. 

“Saudi Arabia actively shaped the political and economic architecture of Syria’s reintegration into the Arab world; the UAE’s investment will enhance the Levant’s future as a strategic shipping center; Qatar combined solvency support with energy-centric statecraft.” 

However, despite all the money pouring in, the country’s reconstruction costs are disproportionately high, tenfold the size of its 2024 nominal GDP, according to World Bank’s last October estimates.

Moreso, the country will need $215 billion to reconstruct what thirteen years of conflict have destroyed, including $75 billion for residential buildings, $59 billion for non-residential structures, and $82 billion for infrastructure, according to the World Bank's Syria Physical Damage and Reconstruction Assessment 2011-2024 report. 

Best estimate for reconstruction costs by governorate as of December 31, 2024 (US$m)
Source: Syria Physical Damage and Reconstruction Assessment 2011-2024 report

Real GDP declined nearly 53% between 2010 and 2022 while nominal GDP contracted from $67.5 billion in 2011 to an estimated $21.4 billion in 2024. 

“The estimates of reconstruction costs are about 10 times nominal 2024 GDP, reflecting both the extensive damage caused by the conflict as well as the years of massive economic contraction. The disruptions due to the conflict and to economic sanctions have also led to a reliance on imports, depletion of foreign reserves, and heavily constrained fiscal resources,” the World Bank report read. 

Furthermore, despite the surge in investment interest, regional and international investors agree that the investment and regulatory regime need to be improved, Beth Morrissey, managing partner at Kleiman International Consultants, Inc., tells Salaam Gateway.  

“At the moment, investors note lack of transparency and predictability, and Syria's neighbours are well-placed to help the country. We understand the existing legal/regulatory environment, judicial system and current investment laws were key discussions at the May UAE-Syrian business forum. Already, Saudi is assisting with a foreign investment protection framework and has indicated investment will begin to flow. Gulf investors have noted that decision-making is still centralized at the top of the government due to lack of existing institutions.” 

“There is also some concern about last June's Investment Law 114, which amended but did not replace an earlier law, as it grants permanent concessions to investors, preserves the centralized system and could, in the future, imperil Syria's finances as, for example, export-oriented industries receive income tax reductions of up to 80 percent.”

15 Jun 2026
Insight
OIC Economies
Can Iran economically sustain a protracted war? 

Iran’s fragile economy is under siege and at risk of significant economic deteoriation in case of a protracted conflict.  

The country’s projected growth for this year - which the International Monetary Fund placed at 1.1% last October - has now plunged into the red territory. According to the fund's latest regional economic outlook published in April, Iran’s GDP is expected to contract by 6.1% this year, together with an upward inflation revision of over 13 percentage points. 

Grim estimates and prophecies are pouring in from multiple quarters. Official figures suggest that the country has suffered around $270 billion in direct and indirect losses in the first few weeks of the conflict with the US and Israel – more than half of its 2024 GDP. Iran’s central bank has reportedly estimated that reconstructing the war-ravaged economy could take more than a decade.

Internet blackouts, which have continued since the start of the war, entered their 62nd day on April 30, according to NetBlocks, a digital governance and connectivity tracker. Back in January, Sattar Hashemi, Iran's Information and Communication Technology Minister, estimated that internet outages carry a daily cost of $38 million (50 trillion rials). By that measure, the shutdown alone has costed the economy at least $2.2 billion. 

Iranian rial has experience significant depreciation, declining from 1.35 million to $1 on January 1 to 1.72 million to $1 on February 28, the first day of the war, before rising to 1.46 million to $1 on March 12, according to Bonbast.com, a website that tracks live exchange rates in Iran’s free market.  

“The Iranian economy is under immense pressure. The conflict has heavily impacted productive capacity and Iran’s latest offer to open the strait and defer the conversation over the nuclear programme suggests that the US blockade is also causing real economic pain,” Vladimir Gorshkov, a macro policy strategist at State Street Investment Management told Salaam Gateway. 

The Muslim-majority country with around 90 million residents has been contending with grave economic challenges since before the conflict. Economic sanctions, political instability and fiscal deficit have exacerbated the country’s plight over several years. Prior to the conflict, the IMF had forecasted Iran’s gross government debt to spike to 36.4% of its GDP in 2026 and to 39.3% by the end of the decade. Meanwhile, inflation more than doubled from 20.6% in 1980 to 42.4% in 2025. 

“Iran entered this war after years of sustained economic pressure. Sanctions, isolation, and structural weaknesses have already produced a fragile economy. The war has intensified these pressures, but it has not represented a fundamentally new shock,” writes Alex Vatanka, a senior fellow at the Middle East Institute.

But Iran is now in unchartered economic territory, he adds. “Each additional month that the war continues could set the Iranian economy back by more than five years, reflecting the compounding impact on capital stock and productivity.” 

Mass layoffs have complicated Iran’s socio-economic landscape further with one million people having reportedly lost their jobs. Threat of privations linger as the war could push an additional 3.5 million to 4.1 million people below the poverty threshold, burgeoning the pool of 32.7 million people already surviving below the $8.3 poverty level per day, according to the United Nations development programme (UNDP). 

“Iran entered the crisis from a relatively narrow position within the upper-middle-income country category, with income levels only marginally above the World Bank threshold,” the UNDP said. 

“The additional impact of the current crisis is expected to intensify this downward trajectory and raise the likelihood that Iran could transition into lower-middle-income country status in the near-term.”

Iran war may cost Arab countries up to $200 billion, says UN

Iran declares US tech giants, American, Israeli banks in region as targets

The ‘toll’ reality 
An economically redeeming feature for Iran would be to gain control of and monetize the Strait of Hormuz, a reality which has begun to shape up, with Iranian officials confirming the receipt of the first toll revenue earlier this month. All ships transiting the route must pay the fee in Iranian rial, Iran’s Tasnim news agency cited Hamidreza Hajibabaei, the parliament’s deputy speaker, as saying. 

Global bodies have not validated Iran’s right to securing payment from transiting vessels. Arsenio Dominguez, secretary-general of the International Maritime Organization said that there was no legal basis for any country to introduce payments or impose tolls, fees or any discriminatory conditions on international straits. 

The Strait of Hormuz is a natural waterway which operates under the directives established by the United Nations Convention on the Law of the Sea, which prohibits charging vessels for passage. Article 26 of the convention suggests that charges may be levied upon a foreign ship passing through territorial sea as payment only for “specific services rendered to the ship”.

Gorshkov suggests that the transit toll would only work if there were an institutionalised system for collection in place as it could not operate on an ad hoc basis in peacetime. 

“A toll on ships transiting the Strait of Hormuz would be a new source of revenue but it doesn’t automatically follow that the overall government revenue would increase. Moreover, it’s likely to be the case that much of that flow will be captured by very narrow interests so it is hard to see how the economy at large would significantly benefit.”

The snag of storage 
Iran’s oil production and subsequent exports are also in the balance given the United Nation’s naval blockade. The country churned out approximately 3.68 million and 3.63 million barrels per day of crude oil in February and March, respectively, according to an International Energy Agency report published this month.

Iranian exports were also on a par with pre-war levels in March, accounting for over 70% of an average 2.3 million barrels of daily flows that transited the strait last month. However, the naval blockade enforced mid-April means that most of Iranian exports will now need to be stored. 

Scott Bessent, US Treasury Secretary, claimed in a post on X on April 21 that the storage capacity at Kharg Island would be full “in a matter of days” and that the “fragile Iranian oil wells will be shut in”. 

“Constraining Iran’s maritime trade directly targets the regime’s primary revenue lifelines,” he added.

Kharg Island is a small island northwest of the port of Bushehr and serves as a terminal for nearly all of Iran’s oil exports.  

Iran has also sustained significant damage to its petrochemical facilities, notably at Shiraz and Mahshahr. Israel struck Iran’s South Pars field, a critical energy asset that supplies 80% of Iran’s natural gas. Natural gas generates 79% of the country's electricity, primarily used for heating, cooking, lighting and other uses, according to IEA. 

“Israel’s attack on the South Pars Gas Field damaged infrastructure indispensable for the survival of Iranians,” said Joey Shea, senior Saudi Arabia and UAE researcher at Human Rights Watch.  

“Attacks on key oil and energy infrastructure have foreseeable knock-on economic impacts that could prove harmful to millions of people.” 

30 Apr 2026
Insight
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