Lebanon’s economy, infrastructure battered: Can it afford war with Israel?

FILE – Black smoke rises from an Israeli airstrike on the outskirts of Aita al-Shaab, a Lebanese border village with Israel as it is seen from Rmeish village in south Lebanon, Nov. 21, 2023. (AP Photo/Hussein Malla, File)

BEIRUT — The ferocious exchange of fire by Hezbollah and the Israeli military is raising fears of a regional war beyond the tense border.

The risks for Lebanon are far greater than in 2006, when a monthlong war with Israel ended in a draw. Lebanon has struggled with years of political and economic crises that left it indebted, without a stable electricity supply, a proper banking system and with rampant poverty.

READ: Israel’s economy is struggling: Economists say ending war would help

And with Hezbollah’s military power significantly greater, there are concerns that a new war would be far more destructive and prolonged.

Can Lebanon afford any of it?

Planning for a 2006 war repeat — or worse

Since Hezbollah and Israel began firing rockets and drones at each other a day after the start of the Israel-Hamas war in Gaza on Oct. 7, the conflict has been mostly limited to border towns. But with the threat of a wider war, Lebanon has scrambled to equip hospitals with supplies and prepare public schools to open up to people seeking shelter.

A rare Israeli airstrike in southern Beirut last month that killed a top Hezbollah commander set off a flurry of meetings between humanitarian organizations and the Lebanese government, said Laila Al Amine, who heads the Beirut office of international relief organization Mercy Corps. It’s one of some 60 organizations helping the government with its relief efforts.

READ: Israel strikes Lebanon, says thwarted large-scale Hezbollah attack

The government and U.N. agencies prepared a comprehensive response plan this month outlining two possible scenarios: a limited escalation that would resemble the 2006 war, with an estimated 250,000 people displaced, and a worst-case scenario of “uncontrolled conflict” that would displaced at least 1 million people.

The U.N.-drafted plan, a copy of which was obtained by The Associated Press, projects a monthly cost of $50 million in case of a limited escalation and $100 million if an all-out war breaks out.

The Lebanese government said that funding for the emergency will come from creditors and humanitarian aid organizations. But the authorities have struggled to find money to care for 100,000 currently displaced and an estimated 60,000 people living in conflict areas, which is costing about $24 million a month.

Environment Minister Nasser Yassin, who is spearheading relief operations, told reporters after an emergency government meeting Sunday that the morning attacks won’t change the plan.

“It already presents scenarios of all the possibilities that could happen, among them is an expansion of the hostilities,” said Yassin.

Indebted and cash-strapped Lebanon desperate for aid money

Decades of corruption and political paralysis have left Lebanon’s banks barely functional, while electricity services are almost entirely in the hands of private diesel-run generator owners and fuel suppliers. Public service institutions rely on aid groups and international donors to function at a barebones level. Lebanese who once lived in relative comfort are receiving food and financial aid to survive.

READ: Hezbollah launches wide-scale attack against Israeli positions

In 2020, the COVID-19 pandemic further battered the economy, and the Beirut port explosion flattened several neighborhoods in the heart of the capital. Lebanon’s banks and the ruling elite have resisted painful reforms as a condition for an International Monetary Fund bailout while the infrastructure continued to wither and living conditions worsened.

Tourism, which officials had relied on to help rebuild the economy, has also taken a hit since the border conflict with Israel.

And unlike in 2006, Lebanon is hosting more than 1 million Syrian refugees who fled the conflict in their country. Health Minister Firas Abiad told the AP earlier this month that the Lebanese health system is ill-equipped to treat the additional population in the event of an all-out war, as international funding for Syrian refugees continues to decline.

In April, Yassin said the country had only half the money needed to respond to the conflict and ensuing humanitarian needs.

Lebanon faces tougher logistics

In 2006, Israel bombed the runways of Lebanon’s only airport, putting it largely out of commission, and imposed an air and sea blockade. Its bombardment crippled critical infrastructure and flattened neighborhoods, with damage and losses worth $3.1 billion, according to the World Bank.

But aid groups eventually were able to send supplies through the country’s ports and at times through the airport using the remaining limited runway space. In their assessment of the war, the U.N. said that their relief efforts was not in response to a humanitarian crisis. “People did not die from poor sanitation, hunger or disease. They died from bombs and shells,” U.N. OCHA said in a report a month after the war.

Many Lebanese were able to flee to neighboring Syria, where an uprising in 2011 plunged the country into a civil war. It’s unclear how easy crossing the border would be this time, both for civilians and aid groups.

It is also unclear whether the Beirut port, still not fully rebuilt after the devastating blast in 2020, would have sufficient capacity in case of a wider war. Its damaged grain silos collapsed in 2022, and the country relies on minimal food storage due to the financial crisis.

“Lebanon apparently has stocks of food and fuel for two-three months, but what happens beyond this duration?” Al Amine said. “We only have one airport and we can’t transport things through our land borders. It would be difficult to bring items into the country.”

An empowered Hezbollah

In 2006, Hezbollah reportedly had some 15,000 rockets in its arsenal, “but more recent unofficial estimates suggest this number has multiplied by almost 10 times,” said Dina Arakji, associate analyst at U.K.-based risk consultancy firm Control Risks.

The group has also “acquired more advanced weaponry, including precision missiles and variants of Iranian arms, as well as Chinese and Russian weaponry,” she said.

Hezbollah, which relies on a network of Iran-backed allied groups that could enter the conflict, has also substantially expanded its drone arsenal and capabilities, against which Israeli air defenses are less effective.

Lebanese officials and international diplomats hope that an elusive cease-fire agreement in Gaza will bring to calm in southern Lebanon. Hezbollah has said it will halt its attacks along the border if there is a cease-fire in Gaza.