While the Middle East may seem distant from Sri Lanka on the map, the realities of our interconnected world mean that turmoil in that region can quickly create ripple effects for smaller nations like ours. As a country still finding its footing after years of economic and political instability, Sri Lanka cannot afford to ignore what’s unfolding in the Gulf and beyond. The recent escalation of conflict involving key players such as Iran, Israel, Yemen, and Saudi Arabia has the potential to shake global oil markets, disrupt shipping routes, and destabilize labor markets—all of which carry direct consequences for us.
Fuel prices are one of the most immediate channels through which the conflict reaches our shores. Sri Lanka depends heavily on imported petroleum, and even a minor disruption in Middle Eastern oil supply can send domestic prices soaring. This isn’t just about paying more at the pump. When fuel prices go up, transportation, electricity generation, and food distribution costs also increase. The result is inflation that eats into household budgets, especially for low- and middle-income families already struggling with high living costs. The government, which is currently navigating a fragile IMF-backed recovery program, may find it harder to keep subsidies in place or manage the fiscal targets required under international agreements.
Beyond oil, the conflict threatens global trade routes, particularly through the Red Sea and Suez Canal. These waterways are critical for global shipping, and any threat to their security—such as the recent Houthi attacks—can delay or reroute cargo vessels, leading to higher freight costs. For an island nation like Sri Lanka, which relies on imported raw materials, consumer goods, and machinery, delays can disrupt manufacturing and construction. On the export side, it makes it more expensive for Sri Lankan products to reach European and Middle Eastern markets, undermining the competitiveness of sectors like garments and tea that are vital for our foreign exchange earnings.
There’s also a human dimension to this crisis that hits much closer to home. Over a million Sri Lankans work in the Middle East, sending billions of rupees in remittances back to their families each year. These earnings form one of the top sources of foreign currency for Sri Lanka. If the conflict worsens, migrant workers could face layoffs, wage cuts, or even forced repatriation. For families dependent on that money to survive, the consequences would be devastating. And for the country, a drop in remittances would strain the balance of payments and make it harder to stabilize the rupee, pushing up the cost of imports and debt servicing.
Diplomatically, Sri Lanka is walking a tightrope. We have friendly ties with both Iran and the Gulf Arab states. At the same time, we maintain strategic relationships with major global powers like China, India, and the US—all of whom have competing interests in the Middle East. In times of global tension, countries like ours must tread carefully to avoid alienating one side or becoming collateral in someone else’s geopolitical strategy. A misstep could cost us critical trade agreements, development aid, or political goodwill.
Security is another underappreciated dimension of the Middle East crisis. While Sri Lanka has enjoyed relative peace since the end of the civil war, global extremist ideologies can still find their way into local communities, especially in moments of regional or religious tension. The tragic Easter Sunday attacks in 2019 were a painful reminder of how foreign ideologies can have devastating local consequences. If instability in the Middle East leads to a resurgence of radical narratives, Sri Lanka must be prepared to strengthen its intelligence apparatus, community engagement, and border controls.
Tourism and foreign investment could also suffer from the ripple effects. If global uncertainty leads to reduced travel or tightened investor sentiment, Sri Lanka’s efforts to rebuild its economy through tourism and FDI could stall. Tourists from Middle Eastern countries, who are increasingly exploring Sri Lanka, may avoid international travel if their home regions are in crisis. Investors, meanwhile, tend to shy away from small economies during times of global tension, fearing supply chain risks and political instability.
Another overlooked factor is our dependence on Middle Eastern food and fertilizer imports. From rice to lentils to urea, Sri Lanka imports a significant share of its essential goods from that region. Any disruptions to shipping routes or trade embargoes could reduce supply and push up prices. For a country still recovering from the effects of past fertilizer bans and food shortages, this is not a risk we can afford to ignore.
Ultimately, what’s happening in the Middle East is not just a distant war—it’s a test of Sri Lanka’s resilience in a globalized world. As a small country, we don’t have the luxury of staying neutral or detached. Instead, we must take proactive steps to shield ourselves. Diversifying our energy sources, strengthening trade ties with South and Southeast Asia, creating social safety nets for migrant workers, and staying diplomatically agile are just a few strategies we must pursue.
The global order is changing fast. For Sri Lanka to thrive, we must think beyond our borders and respond smartly to every shockwave that reaches our shores.
