Israel-Hezbollah tensions escalate: What will be socio-economic impact of full-blown war? | EXPLAINED

Tensions between Israel and Lebanon have soared over nearly a year and are now reaching their peak with intermittent attacks and counter-attacks on both sides of the border. The recent events escalated matters further as at least 37 people, including Hezbollah militants, were killed and over 3,000 were injured in back-to-back pagers and walkie-talkie explosions across Lebanon on September 17 and 18 last week, which the country alleged was carried out by Israel. The latter has, however, not accepted or denied its responsibility.

Hezbollah’s leader vowed to retaliate, and on Friday the militant group launched a wave of rockets into northern Israel. Later in the day, the commander of Hezbollah’s most elite unit was killed in a strike in Beirut. In a retaliatory attack, early on Sunday, the cross-border attacks ramped up in which Hezbollah launched over 100 rockets deeper into northern Israel, with some landing near the city of Haifa, prompting Israel to launch hundreds of strikes on Lebanon.

Recent events have raised the fear of an all-out war between Israel and Hezbollah which is the Iranian-backed armed group and Lebanon’s most powerful armed force. A war in the near future between the two nations threatens to bring devastation in Lebanon, heavy missile fire into Israeli cities, and will further destabilise a region that is already shaken by the war in Gaza.

During more than 11 months of exchanging fire over the Lebanese-Israeli border, both sides have repeatedly pulled back when the spiral of reprisals appeared on the verge of getting out of control, under heavy pressure from the US and its allies. But in recent weeks, Israeli leaders have warned of a possible bigger military operation to stop attacks from Lebanon to allow hundreds of thousands of Israelis displaced by the fighting to return to homes near the border.

What is the situation on the border?

Hezbollah fired 140 rockets into northern Israel on Friday, saying it was targeting military sites in retaliation for overnight Israeli strikes into southern Lebanon. No casualties were reported.

The exchanges have killed around 600 people in Lebanon – mostly militants but including around 100 civilians — and about 50 soldiers and civilians in Israel. It has also forced hundreds of thousands of people to evacuate homes near the border in both Israel and Lebanon.

Hezbollah leader Hassan Nasrallah vowed to retaliate for the electronic device bombings, raising fears of an escalation from the group. But Hezbollah also has proved wary of further stoking the crisis. The group faces a difficult balance of stretching the rules of engagement by hitting deeper into Israel in response to its brazen attacks, while at the same time trying to avoid the kind of large-scale attacks on civilian areas that can trigger a full-scale war that it would rather not start and take the blame for.

Hezbollah says its attacks against Israel are in support of Hamas. Last week, Nasrallah said the barrages won’t end — and Israelis won’t be able to return to homes in the north — until Israel’s war in Gaza ends.

As fighting in Gaza has slowed, Israel has fortified forces along the border with Lebanon, including the arrival this week of a powerful army division that took part in some of the heaviest fighting in Gaza. It’s believed to include thousands of troops, including paratrooper infantry units and artillery and elite commando forces specially trained for operations behind enemy lines.

What is Israel planning?

According to Israeli officials, they have yet not made an official decision to expand military operations against Hezbollah. Earlier, the head of Israel’s Northern Command was quoted in local media as advocating for a ground invasion of Lebanon.

A UN-brokered truce to their 2006 war called on Hezbollah to pull back 29 kilometers (18 miles) from the border, but it has refused to, accusing Israel of also failing to carry out some provisions. Israel is now demanding Hezbollah withdraw eight to 10 kilometers (five to six miles) from the border – the range of Hezbollah’s anti-tank guided missiles.

Israel demands Hezbollah pull back

In 2006, Israel and Hezbollah engaged in a devastating month-long fight which was triggered after the militants kidnapped two Israeli soldiers in a cross-border raid.

In that war, Israel heavily bombarded southern Lebanon and Beirut and sent a ground invasion into the south. The strategy, later explained by Israeli commanders, was to inflict the maximum damage possible in towns and neighborhoods where Hezbollah operated to deter them from launching attacks.

What would be the impact of a full-blown war?

The fighting in the 2006 war had killed hundreds of Hezbollah militants and nearly 1,100 Lebanese civilians and left large swaths of the south and even parts of Beirut in ruins. On the other side of the border, Over 120 Israeli soldiers were killed and hundreds were left wounded. Hezbollah fired missiles at the Israeli cities, bringing the war to people’s doorsteps, and killing dozens of civilians.

Israel estimates that Hezbollah possesses about 150,000 rockets and missiles, some of which are precision-guided, putting the entire country within range of Hezbollah fire. Israel has beefed up air defenses, but it’s unclear whether it can defend against the intense barrages expected in a new war.

Socio-economic impact

A sharp rise in geopolitical risks, with the Israel-Gaza war potentially expanding into a regional conflict involving Iran and Hezbollah, would severely harm the economic outlooks of both Lebanon and Israel, further stalling Tehran’s sanctions-hit economy, analysts warn.

Lebanon, already struggling with years of political instability, would face the worst impact, with its GDP projected to shrink significantly if a full-scale war reaches its borders.

If tensions escalate, broader Middle Eastern and North African economies will also suffer. Israel’s economic growth, already slowing due to the Gaza conflict, is now projected to rise by just 1.5% in 2024 and 4.2% in 2025.

Analysts predict that the conflict extending into Lebanon and Iran will undermine investor confidence across the region, impacting industries such as tourism, shipping, retail, and real estate.

In Lebanon, tourism and agriculture have suffered severe setbacks due to the ongoing fighting. Several countries have issued travel advisories, warning their citizens to avoid travel to Lebanon, Israel, and neighboring areas such as Jordan and Egypt.

(With AP inputs)

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