For decades, the Lebanese economy has been battered by wars and invasions, but the financial fallout and social damage from Hezbollah’s current battle with Israel is set to leave the biggest scar of all.
In large part, this is due to the timing. Israel’s large-scale bombing of Lebanon this week only adds to the country’s accumulated losses from decades of conflict followed by its complete financial collapse in 2019.
The cross-border fighting covers a productive area. The Lebanon-Israel border stretches for 81km from the coastal city of Naqoura to Mount Hermon, encompassing numerous villages and towns plus hundreds of thousands of hectares of fertile land. For Lebanon to lose this land or the productive use of it would be disastrous, but the shelling in recent weeks has expanded rapidly, and the old ‘rules of engagement’ seem to have been thrown out the window.
It is too early to calculate the growing losses for both the Lebanese and Israeli economies or to provide any accurate assessment of the effects and consequences of fighting that began almost a year ago, on 8 October 2023, but both sides are clearly hurting.
Lebanese losses
Hezbollah members and leaders have been injured and killed, whether by exploding communication devices or by drone strikes, yet the group’s losses pale in comparison to the losses that Lebanon has been left counting. Although some rockets have been fired into northern Israel, the level of damage and destruction is disproportionately larger on the Lebanese side due to the immense firepower of the Israeli army. Some villages in south Lebanon have been all but destroyed.
In Lebanon, daily losses from closed businesses are conservatively estimated at around $10m, while direct and indirect damage from Israeli air raids is estimated at $7bn. As the bombing continues, this figure will climb.
Nearly half a million Lebanese from the south and Beirut's southern suburbs have been displaced, finding shelter in schools, community centres, or rented homes. Many wonder what they will return to.
More than 6,000 acres of agricultural land have been scorched by Israeli phosphorus (the use of which is banned internationally). Lebanon's agriculture minister, Abbas Al-Haj Hassan, told Al Majalla that the Israeli assault has severely damaged southern Lebanon. Over 60,000 olive trees have been burned (some were over 300 years old), while thousands of hectares of vegetation have been destroyed.
Agriculture in the south normally constitutes 30% of Lebanese agricultural output, but this has now all but halted. More than 10,000 homes have been partially or completely destroyed, as have around 3,500 industrial or agricultural units.
Schools across Lebanon have closed. Hospitals require additional funding. Tourists have disappeared, as have foreign expatriates. The money that the central bank and government relied on to support currency stability may soon vanish.
Israeli losses
Israeli losses are also mounting. Government sources estimate total losses at around $20bn, which includes reconstruction costs. Israel's economy is around 30 times the size of Lebanon's, which magnifies the losses.
In addition, many Israeli industrial groups are concentrated in northern Israel, near the Lebanese border, and they have been forced to close as the fighting intensifies. Further costs come from the Israeli government's commitment to cover all war-related expenses, including military and logistical needs, compensation, and housing aid for around 200,000 Israelis displaced from northern villages and settlements.
