--- title: "The Fragile Economy and the Devastating War | Ghazi Mahmoud" url: https://ghazimahmoud.com/en/articles/2023-12-06-3647a9/ lang: en description: "As the pace of Israeli attacks on southern Lebanon and the war of extermination against the Palestinians escalates, a sense of anxiety is spreading among the Lebanese that the Israeli war could expand to include Lebanon." --- [All articles](https://ghazimahmoud.com/en/articles/) # The Fragile Economy and the Devastating War [Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/) 6 Dec 2023 · 7 min read [The Lebanese economy](https://ghazimahmoud.com/en/articles/leb/)[The world economy](https://ghazimahmoud.com/en/articles/world/)[Politics and security](https://ghazimahmoud.com/en/articles/geo/) As the pace of Israeli attacks on southern Lebanon and the war of extermination against the Palestinians escalates, a sense of anxiety is spreading among the Lebanese that the Israeli war could expand to include Lebanon. This is especially true as the repercussions of the July 2006 war remain fresh in the minds of many of them, in terms of the devastation that could befall Lebanon in confronting a brutal enemy skilled at nothing but destruction. The fear is not of confronting the Israeli occupation army, which dreads facing the heroes of the resistance from Lebanon to Palestine, but rather of the scale of damage it could inflict on Lebanon, its people and its buildings. Tension is rising while Lebanon has been suffering for more than four years from one of the worst economic crises in the world, facing a financial and economic collapse that has caused its national currency to depreciate and lose around 98 percent of its value, at a time when gross domestic product recorded a contraction exceeding 40 percent, driving the inflation rate to unprecedented levels to reach 270 percent year on year in April 2023, while Banque du Liban's foreign currency reserves were being depleted to less than a third of the amount they once stood at. The national emergency plan prepared by the caretaker government in readiness for any potential expansion of clashes and military operations in the south, and to address the repercussions of any aggression the Israeli enemy might launch against Lebanon, has raised the question of funding at a time when the state treasury suffers from scarce resources and dried-up sources of borrowing and financing. Meanwhile, the plan's costs are estimated at more than 400 million US dollars, at a time when the acting governor of Banque du Liban refuses to finance the government in general, and not merely the emergency plan, even if the Lebanese parliament moves to pass a law legalizing borrowing from the bank. The objectives of the plan, prepared with the participation of a number of international organizations and non-governmental organizations working in the humanitarian field in Lebanon, alongside representatives of the relevant ministries on the National Committee for Coordinating Disaster and Crisis Response, are limited to protecting citizens from the repercussions of any Israeli aggression and assisting them in the event of their displacement or forced expulsion from their homes, by securing safe shelters for the displaced, providing essential health and environmental supplies, and securing their basic needs of food, water and electricity to ensure the preservation of social stability and security, whereas return and reconstruction require another plan. The financial requirements of the national emergency plan place additional pressure on an already empty public treasury, at a time when Lebanon is unlikely to receive aid and financial support to implement its plan from international relief agencies, which since the outbreak of the Russian-Ukrainian war have directed their contributions to Ukraine and are today mobilized to bring relief to the Palestinians in Gaza. The same holds true for funding from international bodies and funds, after Lebanon failed over recent years to regain the confidence of the Arab and international community as a result of Hassan Diab's government failing to honor its obligations in 2020 and the caretaker government refraining from implementing any of the urgent, internationally required reform projects. All the funding Lebanon has obtained for the emergency plan is the loan that the Ministry of Health managed to secure from the World Bank, estimated at 11 million dollars, to finance its emergency health plan. Yet the fear lies in the inability of hospitals and clinics to cope with any security development, because this plan requires medicines and medical supplies that were unavailable even before the outbreak of the war. For Lebanon suffers from a collapse in its health sector, a dramatic decline in the foundations of its healthcare, and an exodus of its medical and nursing staff, in addition to a lack of coordination and follow-up in securing medicines and supplies. Most dangerous of all would be if the Israeli enemy deliberately carried out the wholesale destruction of vital infrastructure, including hospitals and clinics, seaports and airports, as well as roads and bridges, preventing the implementation of the plan and leaving the Lebanese to face their fate. This also prevents the implementation of measures to raise the readiness of the health sector in anticipation of any military escalation, according to announcements by the Lebanese Minister of Health, bearing in mind that the Ministry of Health's budget does not exceed 35 million US dollars, whereas it stood at nearly 400 million US dollars before the crisis in 2019. How can Lebanon bear the repercussions of war if the Israeli enemy widens its scope to include Lebanon, at a time when it is unable to meet the requirements of a national emergency plan limited to a few tens of millions of dollars? Especially as the situation in Lebanon today differs from what it was on the eve of the July 2006 aggression, when it enjoyed Arab and international sympathy, whereas the opposite is the case today, as the priorities and calculations of those countries differ and Lebanon no longer has enough reserves to provide basic humanitarian needs, so where will it get the funds to rebuild what the war might destroy? What is happening in the south today is a sufficient indicator of Lebanon's involvement in the war with the Israeli enemy, even if it has not escalated to encompass the entirety of Lebanese territory and remains confined thus far to the southern villages. The negative repercussions of the escalating pace of Israeli attacks on the national economy are manifest on multiple fronts, perhaps most visibly in the blow dealt to the tourism sector, particularly hotels and restaurants, with the departure of tourists and the cancellation of reservations on the eve of the Christmas and New Year holidays, and there are fears that the negative effects could worsen if the war expands. It should be noted that the negative repercussions of military operations along the southern border are not confined to the tourism sector, but extend to all economic activities as a result of the declining inflow of hard currency. They have an adverse impact both in terms of households' reduced propensity to consume in anticipation of the risk of war breaking out, and in terms of the halt in capital inflows to Lebanon and its repercussions on investment projects, since capital, commonly described as cowardly, automatically shies away from areas of tension and unrest. Consequently, the negative repercussions of the military confrontations span Lebanon from end to end, restricted neither geographically to a particular region nor in human terms to a specific segment of the Lebanese population. In developed and affluent countries, wars serve as an opportunity to spur technological innovation and deepen research and development, acting as a stimulus for their economic activities, whereby industrial production expands and diversifies to meet wartime demands, from weapons and ammunition to other supplies. Conversely, in developing countries, wars deal a blow to the economic cycle, disrupt activities that bring foreign exchange into their national economies, and depress gross domestic product, leading to rising indebtedness and an inability to make up their losses for decades. While the resistance is capable, and indeed truly is capable, of inflicting heavy losses and widespread damage on the Israeli enemy's facilities and institutions, Israel's allies stand ready in return to compensate it for its losses and help it shoulder the cost of what the war might destroy. Especially since they have not hesitated to grant it the right to wage its devastating war on the Palestinians, and indeed to supply it with weapons and ammunition to carry out its crimes against the Palestinian people. As for Lebanon, whose officials evade resolving its political crisis, with each party clinging to its own conditions and interests instead of heeding the country's interest, it has found no one to help it recover from a financial and economic crisis whose repercussions have surpassed the damage that could be wrought by war between sworn enemies. This calls for reconsidering the methods of confronting the Israeli enemy and means that true victory over it lies in avoiding being dragged into war with it, rather than plunging into the fray and bearing its heavy cost. Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2023-12-06-3647a9/) ## Published in - [Channel 23](https://ch23.com/Article/125557/الاقتصاد-الهش-والحرب-المدمرة) - [Radar News](https://www.radar-news.net/الاقتصاد-الهش-والحرب-المدمرة/) - [OZ Arab Media](https://ozarab.media/الاقتصاد-الهش-والحرب-المدمرة/) - [Lebanon Files](https://archive.lebanonfiles.com/2023/articles/باقلامهم/الاقتصاد-الهش-والحرب-المدمرة/) ## More on the Lebanese economy [All articles on this subject](https://ghazimahmoud.com/en/articles/leb/) [22 Nov 2023 · More Than Mere Monetary Stability Is Needed · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2023-11-22-de319e/) [22 Nov 2023 · Monetary Stability and a Sad Independence · Radar News ](https://ghazimahmoud.com/en/articles/2023-11-22-867c3f/) [1 Nov 2023 · Lebanon's Crises and Al-Aqsa Flood · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2023-11-01-d10880/)