Unstable Lebanon under Israeli attack is on the brink of total collapse

The Israeli invasion of Lebanon has begun – and there are reports of heavy fighting between units of the Israel Defense Forces and Hezbollah in south Lebanon, accompanied by air strikes and shelling of Hezbollah positions.

For the past year many have feared that the war between Israel and Hamas would spill over into neighbouring countries and drag the Middle East into a devastating conflict. Now Israel has launched what it is calling a “limited ground operation”, which it claims is designed to clear Hezbollah out of south Lebanon.

In mid-September, Israel announced it was shifting its defence policy towards its northern border, where 70,000 people had been displaced over the past year by rockets fired by Hezbollah. Defence Minister Yoav Gallant said its war aims had shifted to include ensuring these civilians could return to their homes in safety.

After a fortnight of missile strikes into Lebanon, Israel claims to have eliminated much of the Hezbollah leadership as well as knocking out a great deal of its military infrastructure. This next phase of the conflict will pose more intense challenges for all involved and presents great risks to the region and beyond.

But perhaps lost in the debates about whether Israel can defeat Hezbollah (and Hamas in Gaza), how Iran (Hezbollah and Hamas’ main backer) will respond and who will ultimately win, is the possibility that Lebanon could fail as a state if this war escalates. And that serves no one’s interests.

Read more: Israel-Palestine War

Lebanon is a vulnerable country that has been plagued by devastating economic and political crises, corruption, human rights violations and a breakdown in trust between the government and society over the past decade. Its economy is fragile, having never recovered from the global financial crisis of 2008-9. The Covid-19 pandemic hammered the Lebanese economy when it was still reeling from the collapse of its financial system in 2019 and the default on its unbearably high levels of debt in 2020.

Global inflationary and cost-of-living pressures have further undermined the ability of ordinary Lebanese to provide for themselves and their families. The country has haemorrhaged capital in recent years and very few foreign investors have the stomach to risk their money there. Per capita incomes have declined substantially and remain very low at around $3,300 – down from about$9,000 in 2018.

Lebanon’s economy has gone into reverse since the crisis in 2019, with gross domestic product declining from $59-billion in 2018 to just $22-billion today. Coupled with a 95% depreciation of the Lebanese pound and inflation that has hit 200%, nearly half the population is now below the poverty line.

There has been a breakdown in waste disposal and electricity supplies (Lebanon’s state power company struggles to supply even two hours of electricity per day). Reserves of foreign currencies are exceptionally low and Lebanon runs a trade deficit that hovers around$9-billion annually. This has further strained the ability of ordinary Lebanese to access the goods and services they need to survive (let alone thrive).

War in prospect

Even short wars tend to have devastating economic effects that last long after the fighting ends. If history tells us anything about the current conflict we can expect a prolonged and intense fight between Israel and Hezbollah. This war could very easily destroy the Lebanese economy, bringing the entire country to the point of collapse.

It would not be the first time this has happened. There are parallels with the turbulent early 1970s and the outbreak of the 1975-1990 Lebanese civil war.

The influx of about 1.5 million Syrian refugees since the onset of the civil war there in 2011 has placed unbearable pressures on the provision of goods and services in Lebanon. The demand for healthcare, education, utilities and housing has far exceeded supply.

The international community has helped Lebanon to host Syrian refugees with a number of initiatives, including the 2016 EU-Lebanon Compact and financial aid amounting to several billion dollars. Yet the financial and material support provided has been insufficient. Lebanon has creaked and strained under the pressures of having the highest refugee-to-citizen ratio in the world.

Smoke rises from a damaged building following Israeli air strikes in the Hezbollah-controlled suburb of Dahieh in Beirut, Lebanon, on 3 October 2024. (Photo: EPA-EFE / Wael Hamzeh)

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.