Renewed Conflict in the Middle East Sparks Concern Over Nepal’s Dependence on Remittances
Following the resumption of hostilities between the United States and Iran in the Middle East, concerns have emerged in Nepal regarding foreign employment, as key remittance destinations face instability.
According to the Department of Foreign Employment, the number of new Nepali workers obtaining labor permits to Kuwait, one of the countries most impacted by the Iran conflict, has decreased by two-thirds in the months of Baisakh and Jestha (April-May) compared to the same period last year.
Last year in Baisakh, 3,453 individuals secured labor permits to work in Kuwait, whereas this year only 1,041 new permits were issued. Similarly, in Jestha, the previous year saw over 3,000 workers obtaining permits for Kuwait, while this year only 1,100 permits have been granted.
Up until last Magh (January-February), 3,853 labor permits had been issued for Kuwait. However, following the outbreak of war involving Iran on Magh 16 (January 30), fewer than 2,000 new labor permits have been granted since then.
Not only Kuwait, but also other key labor destinations experiencing Iranian missile and drone attacks—including the UAE, Qatar, Saudi Arabia, and Bahrain—have seen a decline in the number of Nepali workers traveling there since Falgun (February-March).
In Falgun, a Nepali worker tragically lost his life due to an Iranian drone strike in the UAE.
The Nepali government had imposed a ban on labor permits for Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman, Iran, Yemen, Jordan, Lebanon, Turkey, and Israel starting from Falgun 17 (March 1), which was lifted after 50 days on Baisakh 7 (April 20).
Prior to a peace agreement reached in Jestha (May), Iran had launched attacks on US military bases, airports, and fuel facilities in the Middle East. With the ceasefire now broken, officials have expressed growing concern over renewed clashes between the US and Iran in the region.
What is the Current Situation for Nepalis?
Former General Secretary of the Foreign Employment Entrepreneurs Association, Meghnath Bhurtel, who has recently returned to Kathmandu after a week in Kuwait, says Nepali workers employed at US bases in Kuwait remain in a precarious situation.
“Currently, around 22,000 to 30,000 workers employed as cleaners, security guards, and other roles at US bases in Kuwait are stuck in holding centers,” he stated.
“Companies paid full salary for a few months, then half salary for some months, and if the situation does not improve within 15 days to allow workers to return, the companies might have no choice but to send them back, as I understand.”
Bhurtel explains that not only recently arrived workers but also those who have been working in the Middle East for years have been affected by the conflict.
He notes that major multinational companies, particularly those owned by American and European firms operating in the region, are nearly shut down due to the war, and preliminary estimates suggest around 30,000 Nepalis are employed in these companies.
“Some companies are holding workers in expectation that the conflict might stabilize and work can resume,” Bhurtel adds.
Although the immediate impact on remittances has not yet materialized, Bhurtel predicts significant economic consequences to Nepal’s economy could become apparent in the coming months.
Per a report published by Nepal Rastra Bank a month ago, remittances increased by 41% in the first ten months of the current fiscal year compared to last year.
In Baisakh last year, 165 billion NPR was received as remittances, which rose impressively to 257 billion NPR this Baisakh, the central bank stated.
The spokesperson of the central bank has noted no visible impact of the Gulf tensions on Nepal’s incoming remittances thus far.
However, the number of Nepali workers obtaining labor permits has declined compared to last year.
This year, 335,000 workers have received their first-time labor permits, lower than the 405,000 permits issued in the previous year.
‘Housing Facilities Are Not Safe’
Former Nepali Ambassador to Qatar, Narad Raj Bhardwaj, describes the future of Nepalis in the Middle East as worrisome.
“The largest Nepali populations reside in Saudi Arabia, UAE, and Qatar. Many work in construction and oil industries. Iran appears to be targeting energy sectors alongside US airports,” Bhardwaj explains.
Due to Iran’s missile capabilities, attacks on US allied Middle Eastern countries put Nepalis at increased risk.
“Underground shelters are not widely available in Middle Eastern countries, making it more challenging to protect against war risks,” Bhardwaj noted.
He also pointed out that holding centers where workers stay during job holding periods are not safe during attacks. Bhardwaj warns that if the conflict escalates further, Nepalis will not only lose employment and witness reduced remittances, but Nepal will face fuel shortages and double inflation.
“On one hand, the populace is suffering from inflation, while families dependent on workers’ remittances are at risk of losing their livelihood entirely. This is a serious matter,” he said.
He also cautions that Nepal might need to impose another halt on labor permits if the conflict deepens, which would significantly damage the national economy.
While the current remittance figures have not yet reflected the impact, experts say the effects will become directly visible in the coming months.
‘Our Concerns Are Beginning’
Director General of the Department of Foreign Employment, Mira Acharya, states the ongoing conflict in the region is beginning to cause tension in Nepal.
“Any changes in our foreign employment market directly impact the national economy,” Acharya said.
She pointed out that concerns about unemployment were already emerging during the period of conflict from February until June.
“Many youths have been demanding the reopening of labor permits and have expressed frustration, saying, ‘Let us go to work, we are willing to face death if necessary.’ Because the department monitors foreign employment, unemployment tensions become visible,” she added.
As Iran escalated attacks along the Hormuz Strait, Iran also targeted US military bases in Bahrain and Kuwait on Wednesday.
On June 17, US President Donald Trump announced the termination of the ceasefire agreement between the US and Iran.
The Department of Foreign Employment reports that in the previous fiscal year, the highest number of Nepalis obtained permits to the UAE (274,000), Saudi Arabia (152,000), Qatar (150,000), and Oman (86,000).
It is estimated that over the past four years, approximately three million Nepalese have sought employment abroad.