Economic vulnerability is a security challenge for small states

Solly Rakgomo | Monday June 15, 2026 06:00

What does a missile exchange between Iran and Israel have to do with the price of a taxi ride in Gaborone? At first glance, very little. Botswana has no stake in the conflict and is not a major player in Middle Eastern politics. Yet when tensions rise between Tehran and Tel Aviv, many Batswana are eventually hit by price increases in imported products, transport fares, and fuel. So, an important question arises: Why do countries not directly involved in geopolitical conflicts bear part of the economic costs of those conflicts?

The answer offers insight into the broader picture of the politics of the present-day world. In an increasingly interconnected world, the consequences of conflict no longer stop at national borders. They can be found in energy markets, shipping lanes, financial institutions, and global supply chains. Small and import-reliant countries such as Botswana are particularly sensitive to geopolitical unrest elsewhere, as it can easily become a domestic economic issue. The recent confrontation between Iran and Israel is but the latest example of the new paradigm: small countries’ economic vulnerability is a key part of their national security.

When geopolitics travels through markets

The bulk of the international debate about the Iran–Israel conflict has been about military deterrence, regional stability, and the potential for escalation. It’s natural to have these concerns. However, one of the most significant, but not so widely talked about, parts of the crisis, though, is the economic consequences. The first one is due to the strategic location of the Strait of Hormuz. In 2025, about 20 million barrels of oil transited through the waterway, which was some 25 per cent of the world’s seaborne oil trade, according to the International Energy Agency (IEA). The IEA rates the Strait as one of the world’s most important energy chokepoints, and its disruption could have a major impact on the world’s energy markets. Markets can, in fact, often react before any disruptions occur. As uncertainty about the Gulf grew, tanker insurance costs, freight rates, and risk of shipping in general spiked sharply in reaction to recent flare-ups of tension in and around the Gulf, Reuters reported. Even if it is not actually unstable, the mere fear of instability can drive up the cost of shipping energy and goods in international markets and have repercussions that reach far beyond the Middle East. This can thus quickly turn into a global economic crisis, originating from a regional security crisis. This is increasingly how geopolitics works in the 21st century. International conflicts and their negative impact, not only through the use of military power but also through economic consequences, have become one of the main ways to affect a country far from the conflict.

Botswana’s vulnerability

to external shocks

While these are abstract fluctuations on the global markets, they nevertheless have concrete implications for Botswana. Botswana’s economy remains heavily reliant on imports of petrol, foodstuffs, and manufactured goods. The country continues to be highly dependent on external trade flows, tourism, remittances, and global market conditions, according to the World Bank. This makes the economy especially vulnerable to external shocks from beyond the frontier. This dependence gives rise to structural vulnerabilities.

When international fuel prices go up, transport costs increase. Businesses face higher operating costs. The cost of imported goods will rise, while household budgets will come under greater pressure as they become tighter. In the wake of this energy shock, and other commodity shocks that accompanied Russia’s invasion of Ukraine, many African governments, such as Botswana, have witnessed similar developments in their economies, a testament to how external shocks can rapidly turn into domestic economic miseries.

These impacts tend to be more than just on energy. Botswana’s supply chain to the European, Asian, and Middle Eastern markets can be impacted by shipping disruptions. When transportation costs for goods increase and/or there are delays, it can lead to higher prices for everyday items, regardless of whether those goods are directly related to the conflict itself. It’s not just about participating in the global markets. Virtually every country today is a part of the global economy. The more critical question is whether small states such as Botswana can withstand shocks if they happen.

The unequal distribution of vulnerability

One of the paradoxes of the present-day globalisation is here. Some states have more policy options available to them that can help mitigate the impact of an external crisis. These governments have options such as tapping strategic stocks, subsidising fuel prices, intervening in markets, or providing financial support to affected industries or households, whereas smaller economies have fewer options. External shocks, commodity price fluctuations, and regional tensions are cited in numerous previous International Monetary Fund (IMF) risk assessments as threats to the economic stability of small states. The IMF, in its recent assessment, has cautioned that disturbances in the trade, energy, tourism, and financial flows sectors could create economic pressures for fragile economies.

Beyond the Middle East

The importance of the Iran–Israel crisis is more than just about the current conflict.

The episode is a reminder that many of the security issues we face today are economic rather than purely military. Increasingly, the state’s ability to absorb external shocks, keep supply chains running, and protect households from market shocks is a measure of national resilience. This is especially the case in other Global South countries, such as those in Africa, that are heavily dependent on imports, where external developments can create rapidly escalating internal economic strain. For small states like Botswana, this could be an important policy issue. As countries like Botswana have shown, a new understanding of national security is needed to go beyond the conventional perception of military threat. For millions of people, what happens in the economy and how dependent they are on others are becoming realities of security.

Looking beyond the

traditional centres of powerInternational crises tend to be studied from the point of view of the states that are concerned. Naturally, the media should focus on military developments, diplomatic manoeuvres, and calculations of the big powers. But this only tells half the tale. The Iran-Israel crisis, therefore, when viewed from Botswana rather than Tehran, Tel Aviv, or Washington, reveals another facet of the world of politics.

It illustrates how economic systems are interdependent, how risk can be passed over long distances, and that the consequences of geopolitical competition can often be far-reaching. It is not just to teach that conflicts have global consequences.

Instead, it’s because the countries that are reverberating the most from the geopolitical economic shocks are the ones that have the least say in the economic decisions that are causing those shocks. In an era of deep interdependence, the defining divide in global politics may not be between states that possess power and those that don’t.

It may increasingly be between states that can withstand shocks and those that can’t. Therefore, the impact of geopolitical conflict is felt in a country like Botswana not through missiles, weapons, or troops, but through rising prices, trade disruptions, and economic uncertainty. Those costs don’t go away once the world’s focus moves on.