An escalation of tensions between Saudi Arabia and Iran could lead to “challenges,” particularly with regard to jobs, for overseas Filipino workers (OFWs) in the Middle East, a senior Bangko Sentral ng Pilipinas (BSP) official said.
“My concern is that if the Saudi-Iran conflict extends beyond their respective borders and affects all the contiguous jurisdictions, then we will have some challenges,” central bank Deputy Governor Diwa Guinigundo told reporters.
Sunni-led Saudi Arabia severed diplomatic ties with Iran earlier this month after protesters ransacked its embassy in Tehran following the execution of a Shiite cleric. Iran, which is predominantly Shiite, declared that Saudi Arabia would face “quick consequences” for the execution.
Earlier this week, Saudi Arabia accused Iran of “spreading sedition, unrest and chaos in the region” just days after a historic nuclear deal—which Tehran claims was being blocked by Riyadh—lifted economic sanctions against its rival.
While war between is said to be unlikely, the conflict has reportedly extended into the oil arena, with Iran ramping up output following the lifting of sanctions and Saudi Arabia maintaining its production pace even as global oil prices plunge due to an oversupply.
Other countries are urging a “de-escalation” given continued tensions between the religious and economic rivals. This week, the president of China—a major buyer of both Saudi and Iranian oil—visited Riyadh and is also scheduled to make a stop in Iran as part of a tour of the oil-rich Middle East.
The oil price plunge has hurt economies in the region, which has raised fears about the availability of work for OFWs, whose remittances help prop up the Philippine economy.
Pointing to the likely impact on jobs in the Middle East, Guinigundo said, “In the past we had the 1991 Gulf War and the 2003 the second Gulf War. But ou r OFWs were able to move elsewhere and find alternative employment.”
Earlier this month, central bank Governor Amando Tetangco Jr warned that remittances could be affected by tensions in the Middle East.
“As for overseas Filipino remittances, we may see some temporary setback because of logistical difficulties and deployment may slow,” Tetangco said in a text message to reporters.
“But based on experiences from past regional conflicts, our overseas workers are able to find ways of sending back money to their families here and also work in other areas that may be safer from conflict,” he added.
Two Middle East countries—Saudi Arabia and the United Arab Emirates (UAE) — were among the major sources of cash remittances in the first 11 months of 2015 based on latest central bank data.
Funds coursed through banks for the January to November period grew by 3.6 percent to $22.83 billion, mainly coming from Saudi Arabia, the UAE as well as the United States, Singapore, the United Kingdom, Japan, Canada and Hong Kong.
Middle East countries were also among the primary destinations of OFWs based on data from the Philippine Overseas Employment Administration (POEA).
The POEA said 771,635 job orders were approved during the period. Of these, 44 percent were for service, production, and professional, technical and related positions in Saudi Arabia, Kuwait, Qatar, Taiwan, and Hong Kong.
The central bank has trimmed its cash remittances outlook for 2015 to 4 percent from 5 percent. In value terms, cash remittances are projected to have reached $25.3 billion last year from $24.3 billion in 2014.