ASEAN Leaders Grapple With the Fallout From the Iran War

Alarmed ASEAN leaders adopt crisis plan to mitigate backlash from Middle East war. Photo: PH Presidential Communications Office/Facebook

The 48th ASEAN Summit, hosted by the Philippines on the central island province of Cebu, was stripped of its traditional fanfare at the order of President Ferdinand Marcos Jr., a reflection of the economic strain gripping the region. Rising fuel costs, disrupted trade routes and the threat of mass evacuations from the Middle East have cast a shadow over Southeast Asia since the United States and Israel launched military strikes against Iran on February 28.

The plan adopted by the Association of Southeast Asian Nations calls for coordinated emergency fuel sharing, the development of a regional power grid and fuel stockpile, and a diversification of crude oil sources away from the Middle East. It also includes measures to accelerate the adoption of electric vehicles and to study the feasibility of civilian nuclear energy as a long-term alternative.

Marcos cautioned that while some steps would move forward immediately, others, particularly the fuel stockpile and power grid, would take considerably longer to materialise.

"Let's talk about the fuel reserve. Is it going to be in one single place? Is it going to be scattered through the whole of ASEAN?" he said at a press briefing after the summit. A regional power grid connecting member states had been under discussion for years but had only been realised at a limited scale, he noted.

Despite the complexity, he said leaders remained united in their resolve. "They are committed to making this succeed because everyone is suffering and everyone wants to get out of this situation."

The Philippines is among the countries hardest hit by the fuel price spikes triggered by the conflict with 98% of its oil are being imported from the Middle East.

A central concern at the summit was the safety of more than a million Southeast Asian nationals living and working across the Middle East. Domestic workers, construction labourers, healthcare professionals and engineers from across the region form a significant part of the Gulf's workforce, and their remittances are a vital source of income for countries including the Philippines, Indonesia, and Viet Nam.

Several Southeast Asian citizens have been killed since hostilities began. Sporadic exchanges have continued despite a ceasefire that has now been in place for a month, particularly around the Strait of Hormuz, through which a significant share of the world's oil supply passes.

The threat of renewed large-scale conflict and the logistical challenge of evacuating large numbers of workers remained an unresolved issue for leaders at the summit.

A joint declaration issued by the bloc called on member states to share information and strengthen coordination with international organisations to ensure the safety and welfare of their citizens in affected areas. Leaders acknowledged, however, that a rapid large-scale evacuation would stretch the region's capacities.

Marcos told fellow leaders the war had exposed deep vulnerabilities in Southeast Asia's economic architecture and warned that the damage would outlast the conflict itself. "Even if the tensions de-escalate in time, the damage to critical infrastructure, to vital systems and trust in general will continue to be felt for years to come," he said. Southeast Asia would remain in a state of limbo until the fighting stopped entirely, he added. "Until the fighting ends, until the bombing ends, then it is very difficult to put together any kind of solution."

Marcos still 'aspiring' for South China Sea Code of Conduct before year ends. Photo: PH Presidential Communications Office/Facebook

Thailand's Foreign Minister Sihasak Phuangketkeow was among the most direct in his criticism of the ongoing conflict, calling for the ceasefire to be extended and for the safe passage of ships through the Strait of Hormuz to be guaranteed by all parties. "This war should not have occurred in the first place," he told reporters on the sidelines of the summit. He added that the conflict's aims remained opaque to the region's governments. "We don't know what the objectives are, right?" he said, noting that all ASEAN member states shared his alarm.

Despite the Iran war dominating the summit agenda, ASEAN leaders also turned to several longstanding regional concerns, including tensions in the South China Sea. Territorial disputes involving China and several ASEAN member states, Brunei, Malaysia, Vietnam, and the Philippines, were discussed during the meetings, with the bloc issuing a separate statement reaffirming its commitment to concluding a long-delayed Code of Conduct (COC) with Beijing.

Negotiations over the framework have stretched on for more than a decade, even as confrontations between Chinese and Philippine coast guard vessels have intensified in recent years.

Marcos stressed the importance of establishing a legally binding ASEAN-China Code of Conduct in the South China Sea, describing it as one of Manila’s key priorities as it prepares to chair ASEAN in 2026. Marcos also signalled that meaningful progress on maritime tensions would be important before ASEAN considers pursuing deeper economic cooperation with Beijing.

All ASEAN member states were represented at the summit, with Myanmar standing as the sole exception in terms of head-of-state participation, sending its Permanent Secretary of Foreign Affairs instead, an arrangement reflecting the bloc's continued refusal to recognize Myanmar's recent election, which installed former junta leader Min Aung Hlaing as president.

The summit also marked a historic milestone with the formal integration of Timor-Leste as the 11th ASEAN member, with leaders set to consider the Cebu Protocol to Amend the ASEAN Charter, the first revision to the charter since 2007, to support Timor-Leste's full institutional membership.

The summit also marked a milestone for Timor-Leste, which only officially became the 11th ASEAN member in October 2025, with Prime Minister Xanana Gusmão attending as a full member for the first time. Photo: PH Presidential Communications Office/Facebook

The next ASEAN leaders’ summit, alongside related meetings including the East Asia Summit, will be held in Manila in November, with leaders from key regional partners such as Japan, China, the United States, Australia, Canada, Russia, South Korea, and New Zealand expected to attend, underscoring Southeast Asia’s growing strategic importance amid rising geopolitical and economic uncertainty.

For New Zealand, the region carries significant economic and strategic weight, with Southeast Asia serving as Wellington’s fourth-largest trading partner and two-way trade exceeding NZ$29 billion annually. New Zealand has also consistently supported a rules-based international order in the South China Sea, a contested waterway through which roughly half of the country’s trade passes.

Against the backdrop of oil and shipping disruptions linked to the Iran conflict, New Zealand Prime Minister Christopher Luxon visited Singapore last week for the inaugural Singapore-New Zealand Annual Leaders’ Meeting with Prime Minister Lawrence Wong, building on the Comprehensive Strategic Partnership launched between the two countries in October 2025.

The centrepiece of the visit was the signing of the Agreement on Trade in Essential Supplies (AOTES), described as the world’s first legally binding bilateral supply chain resilience agreement, under which both governments committed to avoiding unnecessary export restrictions on essential goods, including food, fuel, healthcare products, and construction materials, even during times of crisis.

The agreement carries added significance amid continued instability around the Strait of Hormuz, with Singapore preparing for reduced shipping flows through the strait for at least the remainder of 2026, while New Zealand remains heavily reliant on Singapore for refined fuel imports. About a third of New Zealand’s fuel is refined there, including diesel supplies critical to the country’s farming, freight, and food distribution networks.

-Asia Media Centre