Faculty Insights: What's Next in U.S - Israeli War in Iran

With the ongoing U.S.-Israel war on Iran, News@AUC spoke with Ibrahim Awad, research professor in global affairs and director of AUC’s Center for Migration and Refugee Studies, to examine the migratory, economic and political consequences of the conflict in the region.

Growing Refugee Crisis

A large mass displacement of international refugees depends on how long the conflict lasts, the level of violence and whether both seriously affect Iranian society, Awad noted. 

Nevertheless, he signaled that internal displacement is already occurring in Iran and Lebanon. According to a UNHCR estimate, between 600,000 to 1 million Iranian households are temporarily displaced due to the conflict, which has killed 1,400 people in Iran and 826 in Lebanon. Initial estimates of 100,000 people fled Tehran in the first two days of the war. With Israel announcing a ground incursion into Lebanon, 815,000 people from Beirut and southern Lebanon have also been displaced. 

Awad noted that Gulf states have a large population of migrant workers from the Arab World, Southeast Asia, Africa and Europe whom work in  all the sectors of their economies and send remittances home. For countries that receive large amounts of remittances, this could hurt economies abroad.

“If economic activity is affected in the Gulf for a long period of time, the enterprises that hire migrant workers might not be able to keep them,” he said. “This affects employment because some workers may return to their countries of origin, constituting pressures on their labor markets. It will also affect remittances that they send to their countries of origin, and these remittances are important sources of foreign exchange in most cases.”

Economic Repercussions 

Stopping the war and finding a solution acceptable to both parties in the conflict is the only way to avoid a severe economic impact, Awad declared.

“If the war continues, the economic repercussions will be heavier and heavier,” he said. “So there’s no way to mitigate these repercussions while the war is going on.” He listed rising oil,  gas, food prices and inflation more generally as well as a slowdown of international trade as factors that will impact the global economy.”

Awad explained that the closure of the Strait of Hormuz will spark repercussions in the Suez Canal and regional economies, noting how the Egyptian pound fell from EGP 47 to 52 against the dollar in the past week. On March 10, the price of gasoline rose from EGP 10 to EGP 13 per cubic metre. “These are the economic reasons why the region, including Egypt, wanted to avoid this war at all costs,” he stated.

About one-fifth of the world’s oil production is shipped through the Strait of Hormuz, which has been effectively closed by the war. Oil prices are currently volatile, with the price of crude surging to $110 a barrel on Monday, still higher than the pre-war price of $73. 

Awad emphasized that a closed Strait of Hormuz could make Europe’s opposition to importing Russian oil and gas increasingly difficult if the war continues, causing pressure for large oil-importing countries in the European continent and beyond. The closure sparked the United States to ease sanctions for countries purchasing Russian oil and petroleum, a move rejected by Germany, France, Norway and the United Kingdom. A closure of the strait could also raise the price of foodstuffs worldwide, Awad explained, as it will prevent shipments of natural gas used to manufacture fertilizers. 

Awad also noted that regional tourism is likely to drop sharply, while the closure of airspace across Gulf states has disrupted international travel, causing financial strain for airlines and economic pressure on tourism-dependent countries like Egypt. These shifts reflect how regional instability can quickly translate into rising inflation, strained household budgets and challenges to local economies.

“Instability in the region has consequences, even if instability is, in fact, far from Egypt,” Awad affirmed.

Political Repercussions

“No one currently knows how the war will progress or end,” Awad said, laying out three scenarios for the lasting impact of the conflict:

1. The fragmentation of Iran: “A fragmented Iran could have dire repercussions. Dealing with several small political units is difficult because they have different interests, and this could have very destabilizing effects on the region.”
2. Israel rising as a regional superpower: “Israel wants to end Iran’s nuclear and missile capabilities as well as weaken non-state actors that are close in the region. But this could all come under a broader objective of being the superpower in the region, which could also have a destabilizing effect because Middle East countries will not accept that.”
3. The Iranian government stays intact and acquires a nuclear weapon: “One possibility is that the current Iranian regime remains in power but decides to acquire a nuclear weapon, despite having repeatedly stated that it has not done so. Of course, the bombardment and war will certainly weaken Iran in the region if it stays in power.”

Awad argued that if the war ends with Iran intact and a regime change that accommodates U.S. interests, the situation can still be volatile because “it isn’t only the United States that has objectives to realize out of this war. Israel has its own objectives that might not be in step with the United States.” 

Conflict Resolution

Awad emphasized the importance of a joint solution to end the conflict and not a unilateral declaration of victory. For example, if President Donald Trump did declare victory, the Iranian government may not accept an end to the conflict without a guaranteed change to the pre-war status quo, Awad noted.

“They do not want to go back to the status quo when they were suffering from sanctions for decades and decades,” he said.

Awad expressed skepticism about the ability of the United Nations Security Council to pass a vote to end the war due to the structural veto power of member states. “International organizations are paralyzed by their most important members,” Awad said, citing the United States issuing six vetoes of UN Security Council resolutions demanding a ceasefire in Gaza as an example of this limitation. “The UN General Assembly is just a way for member states to apply pressure by expressing the will of the international community.”

The U.S. and Israel-Iran war has raised criticisms of violations of international law. The United Nations called for an investigation into the February 28 U.S. strike on an Iranian school in Minab, which killed at least 165 schoolgirls. “This provoked a response from Iran, which couldn’t reach the United States, so it launched missiles toward its neighbors in the Gulf,” said Awad. 

“All of these actions contradict international law, but unfortunately, international organizations cannot take effective action because of the flaw in how such organizations were conceived,” he added. “They gave decision-making power to the most powerful countries, who will not act against themselves.”

Awad believes the war could end through intervention or collective action by a coalition of regional powers from around the world. 

“Europe would not like to have another flow of refugees, so you can imagine that a coalition of countries may cautiously intervene,” he said.