Indo-Pacific confronted with the war in the Middle East: between concern and resignation

The Indo-Pacific region has been profoundly disrupted, both economically and diplomatically, by the war in the Middle East. Highly dependent on trade routes and external energy supplies, the region is facing increased pressure on its economies. This crisis also reveals the complexity of alliance dynamics in the region, torn between economic interests, attachment to respect for international law, and rivalries between major powers. Finally, it reveals the loss of American influence in the region, whose involvement in the war is affecting its credibility among its partners. To what extent have Indo-Pacific economies been affected by the war in the Middle East? What diplomatic responses have countries in the region adopted in relation to this conflict? Finally, how are these positions likely to weaken the balance of alliances with the United States in the region? An analysis by Marianne Péron-Doise, Director of Research at IRIS, co-head of the Asia-Pacific Programme and Director of the Indo-Pacific Geopolitical Observatory.

To what extent has the war in the Middle East affected the economies of Asian countries? What measures have been taken to respond to this external shock?

The Israeli-American strikes on Iran and Tehran’s retaliatory attacks against Israel and several Gulf countries, combined with the blockade of the Strait of Hormuz, have resulted in a major external economic shock for countries across the Indo-Pacific region. The long-term socio-political consequences of the conflict carry significant destabilising potential for many governments, particularly in South-East and South Asia. The cost of transport and food products is already weighing heavily on the daily lives and well-being of populations.

As is well known, the Strait of Hormuz is a strategic chokepoint through which around one fifth of global oil production and one quarter of liquefied natural gas (LNG) trade transit, and upon which many Asian countries depend. Japan and South Korea import more than 70% of their crude oil from this region and have faced an immediate increase in energy costs, making industrial production more expensive and weighing on corporate competitiveness. India, also highly dependent on Middle Eastern hydrocarbons, has seen its trade deficit worsen, placing considerable pressure on the rupee and domestic inflation. In non-producing Association of Southeast Asian Nations (ASEAN) countries such as Thailand and Philippines, fuel price rises have directly affected household purchasing power and public finances. Australia, which has largely outsourced its energy security and depends heavily on international maritime routes, has been particularly affected. The immediate macroeconomic consequences have included accelerating imported inflation, slowing growth, deteriorating current account balances, and rising social tensions linked to the increasing cost of living.

Conflicts in the Middle East are also affecting the vast Indo-Pacific region through the disruption of air transport, rising kerosene costs, and an anxiety-inducing geopolitical climate, all of which constitute obstacles to mobility and regional exchanges as well as international travel. Economies heavily dependent on tourism such as Thailand, Indonesia, Vietnam and the Maldives are experiencing a decline in international arrivals. Asian airlines are facing a double constraint: rising costs (fuel, insurance) and falling demand. Economic effects are heterogeneous and include job losses in services, hospitality and catering, where the informal sector (undeclared employment and occasional activities) is significant, as well as a marked decline in foreign currency revenues. Some analysts are referring to a slowdown in growth and difficulties in recovery, even in the short term, similar to the post-pandemic effects recorded after Covid-19 in certain countries.

Asian governments have implemented several short- and long-term measures to mitigate the amplifying effects of soaring prices. A first response, which nevertheless requires a minimum level of planning, has been the mobilisation of strategic reserves: Japan, South Korea and India possess stocks that they can temporarily release to smooth the impact of fuel and gas expenditure. Another initiative has consisted of subsidies and targeted assistance to preserve purchasing power, as in Taiwan and Thailand. Other, more fragile economies have had to resort to strict rationing, such as the Philippines and Bangladesh. Lacking reserves, Australia is facing a worrying energy shortage. The situation has revived policies aimed at diversifying supplies in order to reduce dependence on the Middle East. Indonesia and India quickly turned towards Russia. One can also observe an acceleration of the energy transition. Japan is investing in hydrogen, South Korea is developing nuclear and renewable energy, and India is accelerating its shift towards domestic solar and wind power. As for the tourism sector, it is attempting to reorganise itself by adapting to regional and domestic demand, notably in China, Thailand and Japan.

What diplomatic reactions has the war in the Middle East provoked among Indo-Pacific countries?

The war in the Middle East has provoked contrasting diplomatic reactions from countries in the region. This can be explained by divergent geopolitical interests, notably energy dependence, strategic alliances, positioning vis-à-vis major powers (China, the United States), and the desire to preserve regional stability and international trade.

Overall, diplomatic reactions have proved cautious. Many countries have adopted a wait-and-see attitude, avoiding taking a clear side in the conflict in order to preserve their relations both with Middle Eastern countries and with their Western allies. India has called for de-escalation and dialogue, while avoiding explicitly condemning certain parties to the conflict. This caution can be explained by its energy relations with Gulf countries and its strategic cooperation with the United States and Israel. Sri Lanka intends to maintain strict neutrality. Several ASEAN countries (Singapore, Indonesia, Malaysia and Vietnam) have insisted on respect for international law and the protection of civilians, favouring a multilateral and consensual discourse.

Naturally, positions have been more or less pronounced depending on political and military proximity. Countries allied with the United States in the region have generally expressed moderate political support, while seeking to avoid escalation. Japan, which has always favoured a stable relationship with Iran, has strongly emphasised the need to protect commercial and energy maritime routes, which are vital to its economy. South Korea aligned itself with calls for regional security, but without direct engagement, in order to remain focused on the North Korean threat. Seoul notably viewed with concern Washington’s withdrawal of certain missile defence equipment from its territory for deployment in the Middle East. Neither Tokyo nor Seoul responded to Donald Trump’s call to participate in a naval operation securing the Strait of Hormuz. Pakistan has skilfully managed the situation by presenting itself as a mediator between Iran and the United States. It has thus strengthened its role as guarantor of the security of Gulf monarchies (deployment of troops in Qatar, deployment of F-16s in Saudi Arabia), with which it maintains extensive defence cooperation. As for India, which has just signed a special strategic partnership with Israel during Narendra Modi’s visit to Tel Aviv in February 2026, it remains silent, trapped by its policy of multi-alignment.

Unsurprisingly, China has denounced the instability caused by American military initiatives and has presented itself as an alternative diplomatic actor, calling for political solutions. Beijing is thus seeking to strengthen its image as a mediating power and consolidate its relations with countries of the Arab world. This posture is not without ambiguity. A partner of Iran within the Shanghai Cooperation Organisation, which Tehran joined in 2021, China has regularly participated in joint naval exercises with the Russian and Iranian navies in the Indian Ocean since 2022, thereby contributing to strengthening the latter’s capabilities.

In any case, the security of energy supplies and maritime routes has strongly influenced diplomatic reactions. Several Asian countries, such as South Korea and Pakistan, have strengthened their diplomatic and security cooperation with Gulf states. They have also supported initiatives, including those of the International Maritime Organization, aimed at guaranteeing freedom of navigation and the security of international commercial flows. In practice, the war in the Middle East is pushing Asian countries to adopt economic diplomacy centred on stability rather than ideological or normative considerations.

The attack against Venezuela, the crises in the Middle East and the Israeli-American strikes on Iran are part of a broader dynamic of transactional diplomacy and a hardening of foreign policy conducted by an unrestrained Donald Trump. To what extent is this position likely to weaken the alliances and strategic partnerships of the United States?

The conflictual dimension of current American diplomacy illustrates a deliberate return to a hard power policy, with Donald Trump expressing himself and acting above all as a “commander in chief”. This belligerent approach on all fronts, presented as the defence of the primacy of immediate American national interest, America First, can only weaken the strategic confidence of traditional Indo-Pacific allies, a region nonetheless at the heart of the systemic rivalry between China and the United States. Faced with the growing interventionism of American foreign policy, Japan, South Korea and Australia have felt marginalised. The strikes against Iran were decided without in-depth consultation with them, even though they have direct effects on their energy and economic security. Japan expressed concerns regarding the lack of strategic coordination, while formally supporting the alliance with Washington. South Korea fears that American military engagement in the Middle East could divert essential resources away from the Korean peninsula in the face of the North Korean threat. Taiwan is concerned about the continuation of American arms deliveries intended for its benefit.

This situation weakens the fundamental principles of the alliance: the predictability and reliability of the American protector. Under Donald Trump’s new presidency, alliances are increasingly perceived as conditional relationships, dependent on financial contributions or the political alignment of partners. American discourse on “burden sharing” is causing considerable concern in Tokyo, Seoul, Manila and Canberra, all of which fear variable protection and support depending on Washington’s priorities. The possible reduction or redeployment of American military assets towards the Middle East has revived fears of a gradual disengagement from the Indo-Pacific.

This is fuelling a logic of strategic doubt among certain allies, encouraging them to diversify their partnerships and engage more deeply in a process of strategic autonomisation through substantial increases in defence budgets and arms procurement programmes. Japan is strengthening its cooperation with Australia, European states (the United Kingdom, France), and North Atlantic Treaty Organization (NATO), while accelerating its military build-up. Debates are emerging in South Korea regarding the taboo surrounding the acquisition of military nuclear capabilities. ASEAN countries, traditionally non-aligned, are exercising even greater caution and avoiding openly associating themselves with American actions in the Middle East, favouring dialogue and multilateralism.

It should be emphasised that this American hardening is also creating geopolitical opportunities for Beijing, which presents itself as a more predictable power favourable to stability. China has condemned the Israeli-American strikes while calling for a political solution, reinforcing its image as a responsible mediator, particularly among countries of the Global South. Certain Asian states, without breaking with Washington, are adopting a posture of strategic hedging between the United States and China. In the long term, this weakens the ability of the United States to rally a united Asian front against Beijing.

Despite these tensions, it would be excessive to speak of a questioning of America’s Asian alliances, whether by Washington or by its partners. American security guarantees remain indispensable in the face of the shifting front represented by China, North Korea and Russia. Large-scale military manoeuvres and joint training exercises such as Balikatan, Cobra Gold in South-East Asia, or Ulchi Freedom Shield in North Asia conducted under American leadership continue on the same scale. Security forums and dialogues, including those organised around ASEAN, and cooperation frameworks such as the Quadrilateral Security Dialogue (Quad), bringing together the United States, Japan, India and Australia, continue to exist, albeit in a more pragmatic form. Nevertheless, the war in the Middle East acts as a revealing indicator of the limits of American leadership and is accelerating a shift towards more transactional, less ideological and more conditional partnerships and formats. Ultimately, the principal threat for Washington is therefore not the end of alliances, but their normative erosion and strategic disenchantment.