Muslim ASEAN nations concerned about Syria (scenarios)

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Syria rebelsIslamic-majority nations in ASEAN, namely Malaysia and Indonesia, have expressed worries about how a crisis in Syria and the Middle East that could affect them and the wider region in Southeast and East Asia.

Defense chiefs from Southeast Asian nations agreed with the White House that a failure to punish Syria’s president Bashar Assad for reportedly conducting a chemical attack on his own people could give license to other leaders in the region to do the same, according to Pentagon officials.

Allegedly, Syria might have received chemical and other weapons from North Korea, which has raised concerns about the implications for the pariah state and the political stability in East Asia if the US and their allies kick off an intervention in the Syria.

Apart from that, the Philippines expressed particular fears for Syria, where they have sent as many as 9,000 citizens for work.

Another issue is a possible spike in oil prices that could broaden Indonesia’s and Malaysia’s fiscal troubles, even more in the case if Iran, Russia and various key Middle East oil producers are drawn into an expanded military conflict.

In one scenario, a short-lived oil spike to between $120 and $130 per barrel could occur with a contained military strike against Syria that lasts only a few days. But in a worst-case scenario, where Syria turns into a protracted Vietnam-style boots-on-the ground proxy war, oil could see a $50 barrel price swing up $160 per barrel over several months.

Rising global oil prices would increase fuel subsidy costs and strain the fiscal deficits for Indonesia and Malaysia the most, with a raise of just 10 per cent in the oil price leading to a surge in inflation of 30 to 40 basis points, according to the Bank of America. Thailand, the largest net oil importers in Asia, would also be hit hard and face a further decline in GDP growth of up to 45 basis points.

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Reading Time: 2 minutes

Islamic-majority nations in ASEAN, namely Malaysia and Indonesia, have expressed worries about how a crisis in Syria and the Middle East that could affect them and the wider region in Southeast and East Asia.

Reading Time: 2 minutes

Syria rebelsIslamic-majority nations in ASEAN, namely Malaysia and Indonesia, have expressed worries about how a crisis in Syria and the Middle East that could affect them and the wider region in Southeast and East Asia.

Defense chiefs from Southeast Asian nations agreed with the White House that a failure to punish Syria’s president Bashar Assad for reportedly conducting a chemical attack on his own people could give license to other leaders in the region to do the same, according to Pentagon officials.

Allegedly, Syria might have received chemical and other weapons from North Korea, which has raised concerns about the implications for the pariah state and the political stability in East Asia if the US and their allies kick off an intervention in the Syria.

Apart from that, the Philippines expressed particular fears for Syria, where they have sent as many as 9,000 citizens for work.

Another issue is a possible spike in oil prices that could broaden Indonesia’s and Malaysia’s fiscal troubles, even more in the case if Iran, Russia and various key Middle East oil producers are drawn into an expanded military conflict.

In one scenario, a short-lived oil spike to between $120 and $130 per barrel could occur with a contained military strike against Syria that lasts only a few days. But in a worst-case scenario, where Syria turns into a protracted Vietnam-style boots-on-the ground proxy war, oil could see a $50 barrel price swing up $160 per barrel over several months.

Rising global oil prices would increase fuel subsidy costs and strain the fiscal deficits for Indonesia and Malaysia the most, with a raise of just 10 per cent in the oil price leading to a surge in inflation of 30 to 40 basis points, according to the Bank of America. Thailand, the largest net oil importers in Asia, would also be hit hard and face a further decline in GDP growth of up to 45 basis points.

scenarios

oil-impact-gdp-cpi

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