Devex Newswire: Global south feels the pain of the war in Iran

The war in the Middle East won’t stay in the Middle East. Already, the global south is feeling the repercussions — with potentially far worse yet to come.

Also in today’s edition: The Inter-American Development Bank relies heavily on private sector contractors to deliver services. We unpack who they are.

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The Iran ripple effect

The U.S. and Israeli attack on Iran just over two weeks ago quickly and unsurprisingly metastasized, drawing in Lebanon and Gulf states; triggering oil price spikes, which in turn is causing pain at the pump and scrambling global energy politics; killing and maiming thousands; and sparking questions over what, if anything, is the endgame.

That endgame is critical not just to those directly involved in the war, but also to countries around the world, especially in the global south, which are feeling the economic and humanitarian ripple effects of the conflict. Those effects range from displacement and food shocks to long-term investments at risk and short-term humanitarian funding drying up.

On the latter, rising oil and transport costs mean higher operating costs for humanitarian agencies whose budgets are already strained by years of donor retrenchment.

“When fuel prices increase, it becomes more expensive to transport food, deliver water, and move humanitarian supplies to the communities who need them most. In practical terms, that means a single intervention costs more,” Mercy Corps Vice President for Africa Melaku Yirga tells my colleague Ayenat Mersie.

“This is already affecting WFP operations,” says Jean-Martin Bauer, director of food security and nutrition analysis at the World Food Programme. Insurance for each container moving through the region now costs between $2,000 and $4,000, he says, while longer shipping routes are pushing transport costs even higher.

Countries that rely heavily on imported food — from Gulf states to fragile economies across Africa and Asia — find themselves particularly exposed.

The threat of mass displacement is also rising. Up to 3.2 million people in Iran have been uprooted since the conflict began. Many are Iranian, but many are also refugees, including millions of Afghans believed to be living in the country without documentation.

Now, many are attempting to return to Afghanistan — a country that can barely handle the humanitarian needs of its own population.

The war has also drained bandwidth for the U.S. and Gulf states to mediate other conflicts, namely, Sudan. And as Ayenat writes, history suggests moments of global distraction can create openings for escalation in hostilities elsewhere, fueling a tinderbox that extends far beyond one region.

Read: Beyond the battlefield — the global ripple effects of the Iran war

Research and development

There are many other less-obvious, trickle-down effects of a war that’s causing energy prices to skyrocket. One seemingly obscure but crucial area: biomedical research and development, including for neglected diseases that disproportionately affect people in low- and middle-income countries.

“This is a particularly energy-hungry sector in general,” writes Céline Aerts, a senior analyst at Impact Global Health, in an opinion piece for Devex. “The average [R&D] lab consumes five to 10 times more energy than an average office building.”

“Global funding for neglected disease R&D is relatively small,” she adds, “making it particularly vulnerable to external shocks, as the system has limited capacity to absorb rising costs.” Add to that post-COVID-19 drops in funding and the recent “seismic” aid cuts from the United States.

“These compounding and destabilizing shocks reduce the resources available to scientists developing lifesaving products and create uncertainty that risks slowing or stalling investment in neglected diseases, as well as other critical areas such as medical countermeasures for pathogens with pandemic potential,” she argues. “The energy price shock resulting from the war in Iran is another wake-up call for the fragility of the neglected disease R&D pipeline and the need to protect it.”

Opinion: War in the Middle East will impact neglected disease R&D globally

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Jarring figures

That’s the estimated daily cost of the Iran war and the spreading conflict in the region. The International Rescue Committee sought to put that into perspective. It pointed out that for about $90, the IRC and humanitarians can diagnose and treat a child suffering from acute malnutrition. This means that for the cost of two days of war — $4 billion — every one of the 43 million children worldwide currently suffering from acute malnutrition could be treated.

That’s the cost for the first six days of the Iran war and the spreading conflict in the region, costing nearly $2 billion a day. The International Rescue Committee sought to put that into perspective. It pointed out that for about $90, the IRC and humanitarians can diagnose and treat a child suffering from acute malnutrition. This means that for the cost of two days of war — $4 billion — every one of the 43 million children worldwide currently suffering from acute malnutrition could be treated.

IDB positive

Last week saw the Inter-American Development Bank hold its annual meetings in Paraguay. Our own Jesse Chase-Lubitz was there and covered it from every angle. Her overall impression? It was a positive gathering that reflected the largely positive trajectory of IDB and the potential of Latin America, from its critical mineral wealth to an ambitious transcontinental infrastructure project.

One big bright spot for IDB was concrete movement toward unlocking a long-awaited capital increase for its private sector arm, which could significantly ramp up lending to businesses across Latin America and the Caribbean.

Taking a step back, we analyzed the data to determine the top contractors that received IDB funding in 2024.

One of IDB's principal means of engagement involves supporting governments in the region to deliver services via private sector contracts. In total, IDB awarded 7,000 contracts; 655 of these, worth $103.5 million, were described as “exited.” The rest, worth around $2.3 billion, are active.

In terms of the economic sectors that these IDB contracts span, the top-funded was health systems strengthening, amounting to almost $169 million. The next was urban drainage, receiving $160.1 million, urban water supply with $145.8 million, major highways with $143 million, and rural roads with $113.8 million.

Read: Who were IDB’s top contractors of 2024? (Pro)

ICYMI, here are takeaways from the IDB annual meetings: Latin America has what the world needs

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Mine your own business

Latin America is not the only region home to critical minerals; Africa is a prime hot spot as well. It’s also a continent with a tragic history of extractive colonialist exploitation.

This time around, as the mineral rush consumes the world, experts such as Michael Larbie, CEO of Ecobank Corporate and Investment Banking, say the continent needs to benefit from its resources, not have them siphoned away by wealthier players. The potential is there.

“Because Africa holds a significant share of the world’s reserves of these materials, its mining sector carries a generational opportunity to deliver lasting economic impact,” Larbie writes in an opinion piece for Devex, outlining ways that value-added mining can bind the continent together.

“Mining’s value extends far beyond extraction. It lies in the infrastructure, energy systems, institutions and economic linkages that form around mining ecosystems,” he writes. “In this sense, it is emerging as one of Africa’s most powerful levers for regional integration.”

Opinion: Mining can become Africa’s most powerful engine of regional integration

Related: Does the development world need to worry about critical minerals? (Pro)

On a mission

Africa is hungry for electricity. Mission 300 is a bold plan to help. The joint initiative was set up by the World Bank Group and the African Development Bank Group to connect 300 million people in sub-Saharan Africa to electricity by 2030. But many other partners have come on board.

One example is CoAction Global, which announced that the Mission 300 Fellowship program will grow from 14 fellows to 22, with support from The Rockefeller Foundation.

CoAction Global is a new nonprofit focused on connecting governments with technical expertise and partnerships. It’s led by founding Executive Director Elizabeth Campbell, a former State Department humanitarian official, and includes several former USAID officials among its ranks, including Chief of Staff India Boland and Marcia Wong, a former deputy assistant administrator in USAID’s Bureau for Humanitarian Assistance.

Separately, The Rockefeller Foundation — which has played a central role in getting Mission 300 off the ground — also announced a $10 million investment to fund technical assistance aimed at improving coordination, monitoring, reporting, and implementation capacity in at least 15 African countries.

Read: Mission 300 sends energy fellows into governments across Africa

Background reading: Half of Africans don’t have electricity. Can Mission 300 change that? (Pro)

In other news

The Giving Pledge, once signed by over 250 billionaire families, is losing momentum as pro-Trump tech billionaires increasingly turn away from philanthropy in favor of for-profit impact [The New York Times]

As the United Kingdom plans to detail where its aid cuts will fall, some sources say budget slashing may mean shutting down its aid watchdog, the Independent Commission for Aid Impact. [Politico]

The World Health Organization has released $2 million in emergency funds to sustain health services in Lebanon, Iraq, and Syria as the widening war in Iran strains already fragile health care systems across the region. Half of the allocation is earmarked for Lebanon. [Reuters]

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