Political Analyst: The Ongoing War is Pushing Lebanon Towards Collapse

The pace of Lebanon’s economic slowdown has accelerated due to the ongoing fighting, which has lasted for more than ten months, between Hezbollah and the Israeli army, alongside the war in Gaza. At the same time, the acting governor of the Central Bank of Lebanon, Wassim Mansouri, explained on Thursday that the bank continues to work diligently to prevent Lebanon from being placed on a “grey list” of countries under special scrutiny by a financial crime monitoring group.

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Reports have indicated that being placed on the Financial Action Task Force (FATF) grey list would be another severe blow to the country, which has been suffering from financial deterioration since 2019. Depositors still cannot access most of their savings, and many correspondent foreign banks are avoiding the Lebanese financial system.

Economic Crises

In this context, Dr. Mohamed El-Raz, a Lebanese political analyst, painted a bleak scenario of a catastrophic war that Lebanon is trying to brace for in the event the conflict between Israel and Hezbollah escalates into a full-scale war. He explained that these events have significantly affected Lebanon’s economy due to various cumulative factors over the years, making the country incapable of bearing the costs of another war.

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He added that the war is driving Lebanon towards collapse. The crises have been mounting since the COVID-19 pandemic, leading to economic collapse, currency depreciation, and the collapse of the banking system. Following that came the Beirut port explosion and the war in Gaza, which worsened the situation. Additionally, the country is dealing with the consequences of more than 30 years of corruption, including the squandering of public funds, and most recently, the loss of depositors’ money in the banks. All of this has led Lebanon to the brink of total collapse, according to the Minister of Economy.

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Impact on Tourism

El-Raz pointed out that Lebanon’s tourism sector has been heavily affected by the current situation. This means Lebanon is unlikely to witness a significant influx of tourists and expatriates during the upcoming end-of-year holidays. Consequently, all economic activities and the inflow of foreign currencies are expected to be impacted in the coming period, along with a capital flight.

Losses Since the Gaza War

Lebanon has incurred substantial losses across several sectors during the ten months since the conflict between Hezbollah and Israel began, coinciding with the war in Gaza. The total damage is estimated to be around 10 billion dollars.

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Approximately 100,000 people have been displaced from the south due to Israeli shelling. Between 7,000 and 10,000 housing units have been partially or completely damaged in border towns, with 1,940 homes completely destroyed, 1,700 severely damaged, and 7,000 affected to varying degrees. Additionally, 220 commercial and industrial enterprises have been destroyed.

Tens of thousands of hectares of agricultural land in the south have been damaged by phosphorus bombings, creating a scorched earth appearance. In the first six months alone, 10 million square meters of agricultural land were burned by white phosphorus. These soils will require years of treatment. Furthermore, the war has prevented farmers from cultivating 17 million square meters of farmland.