Can Lebanon's Economy Handle the Costs of War with Israel?

Eighteen years after a war that imposed destruction, displacement, and economic troubles on Lebanon, the country is once again on the brink of entering a comprehensive regional conflict. While the increased military power of Hezbollah may have enhanced Lebanon's deterrent capability, the numerous missiles could turn the war into a full-blown crisis across the region. According to Hassan Nasrallah, the leader of Hezbollah, these Iranian-backed Lebanese Shiite militants have been engaged in conflict with Israel since the day after the extremist group Hamas attacked Israel on October 7 last year; a group that the United States and the European Union consider a terrorist organization. During this period, Israel and Hezbollah have repeatedly attempted to strike each other through rocket fire and drone attacks. Additionally, Israel has successfully carried out several targeted operations, assassinating several senior Hezbollah commanders, including the most recent, Fouad Shukr. In response to the escalating tensions between Israel and Hezbollah, Israel rejected Nasrallah's claims. Leila Al-Amin, head of the international relief organization Mercy Corps, one of 60 organizations assisting Lebanon, stated that the Israeli attack in southern Beirut, which resulted in the death of a senior Hezbollah commander, has led to multiple meetings between humanitarian organizations and the Lebanese government. Following these meetings, the government and international bodies have outlined a comprehensive plan with two scenarios. The first scenario: escalation of tensions similar to the 33-day war. According to this scenario, such a conflict could result in approximately 250,000 new displaced persons for Lebanon. A crisis of this magnitude would cost Beirut about $50 million monthly. The second scenario: all-out war. This scenario suggests that an uncontrolled conflict could lead to the displacement of at least one million people in Lebanon. Furthermore, if a comprehensive war occurs in the region, it would cost the Lebanese government about $100 million every 30 days, while only half of the funds needed to respond to the conflict and humanitarian needs are available to the Lebanese government. These figures weigh heavily on Lebanon's economy, which is already spending $24 million monthly to care for 100,000 displaced persons and 60,000 people living in conflict areas. Additionally, Lebanon is in debt and is continuously seeking financial assistance from global institutions. Decades of systemic corruption have paralyzed Lebanon's economy. Public service institutions rely on international aid, and Lebanese citizens, who once lived in relative comfort, now receive food and financial assistance to survive. Events such as the COVID-19 pandemic, the explosion at the Beirut port, waste management issues, and the intensification of tensions with Israel have also harmed Lebanon's tourism. It is also unclear whether the Beirut port, which has not been fully rebuilt since the devastating explosion in 2020, will have sufficient capacity in the event of a broader war. Grain silos have reached their lowest levels, and it appears that the country has food and fuel reserves for only two to three months. Leila Al-Amin stated, 'Lebanon has only one airport, and goods cannot be brought in through land borders. In this situation, if the Beirut airport is targeted in airstrikes like in 2006, it will be even more difficult to transfer necessary items to the Lebanese people.' As Hezbollah's military power increases, many Lebanese have experienced poverty firsthand in recent years while simultaneously fearing the emergence of an all-out war in the south with Israel, where Hezbollah has managed to complete its weapons stockpile. Reports indicate that the approximately 1,500 missiles that this Lebanese group possessed in 2006 have now increased tenfold, and more advanced Iranian, Chinese, and Russian weapons have also been added to the group's arsenal. In such circumstances, many are concerned that Hezbollah's increased military capability could escalate the exchange of fire between the two sides beyond the current level, paving the way for a broader regional conflict. Following the recent and unprecedented exchange of fire between Hezbollah and Israel on Sunday morning, September 4, and the inconclusive end of ceasefire negotiations in Gaza that evening, the shadow of a broader regional war looms over Lebanon and the Middle East more than ever; a war that Lebanon's economy is unlikely to withstand.