BEIRUT: The ongoing war between Hezbollah and Israel is happening at a time when Lebanon’s is experiencing great financial and political crises, thus it runs the risk of spiraling into full-scale war which could be disastrous for this fragile nation.
Since the beginning of Gaza conflict in October, the Lebanese Shiite group Hezbollah backed by Iran has been exchanging fire with Israel. Both sides say they are ready to increase hostilities with mediators struggling to broker a Gaza truce.
While so far the fighting has not spread beyond small areas, its impact on a country which has suffered from five years of internal crisis is tremendous.
Lebanon’s was hit by an economic collapse in 2019, which left it unable to recover since then.
This was caused by decades of extravagant spending and graft by an elite that drained the currency, forced masses into poverty, shut banks and triggered the largest exodus since the 1975-1990 civil war.
According to World Bank estimates this is one of the steepest depressions in modern times. The Lebanese economy fell from $55 billion in 2018 to $31.7 billion in 2020. There have been no reforms enacted yet by government so as to ensure that it recovers.
A World Bank report issued in May showed how prolonged crisis had pushed up poverty rate more than three times over that period to reach 44% of all people.
Five governorates including Beirut had almost one third (32%) living under poverty line by 2022 while new restaurants for affluent class opened their doors there; however, food cuts affected every other family out of five according to data found at worldbank.org website.
In May this year, IMF said lack of action on necessary economic reforms continued to take its toll on both economy and population. It stated also there was no sustainable strategy for banks that would work out financially.
The tourism industry along with remittances essentially helped Lebanon’s economy hit bottom for a short time in 2022 and early 2023, pointed out the World Bank. Before the Gaza war started, in 2023 economy was projected to grow slightly by 0.2%. However, after hostilities broke out, it is now seen as contracting between 0.6% – 0.9%.
Lebanon has been without a president or fully-empowered cabinet since Michel Aoun’s term ended on the last day of October in 2022.
Since that date Prime Minister Najib Mikati has led an interim government. But to fill the presidency and create an empowered government means reaching agreement among Lebanon’s deeply fractured factions.
At one level this stalemate is tied into Maronite Christian rivalry which designates them as presidents under Lebanon’s sectarian power sharing system.
On another level it reflects a struggle between Hezbollah, the Iran-backed Shiite movement that propelled its ally Aoun into office in 2016, and opponents who have long opposed its possession of weapons and say it dragged Lebanon back into war unilaterally.
Without any sign of politicians compromising over control of the state, such compromise over presidency could need external mediation similar to that which previously saved Lebanon from such crises.
For thirteen years since the outbreak of conflict in Syria, Lebanon has hosted the world’s highest number of refugees relative to its population size: about one and half million Syrians – a half being UNHCR registered refugees living within a Lebanese population of around four million.
Donor funding for the Syrian crisis is reducing as it mirrors disinterest by those who are giving funds towards different conflicts. Despite differences, all sides from across Lebanon’s political spectrum concur that Syrians should be returned back home.
