Even before the war between Israel and Gaza, Lebanon was suffering from an economic crisis: since 2019, the country's GDP has fallen by 50 percent, and 80 percent of the population is now suffering from poverty.
A broader war, long feared amid ongoing skirmishes between Israeli forces and Iran-backed Hezbollah along Lebanon's southern border, would be disastrous.
Lebanon is no stranger to disaster, having survived a 15-year civil war and a conflict between Israel and Hezbollah in 2006. But this time, according to Simon Naim, a professor of economics at the American University of Beirut, the Lebanese are exhausted.
“The situation is completely different today. In 2006, during the last war with Israel, we had a fully functioning economy, we had an effective banking system that provided credit to the private sector and contributed to growth, we had a government, and we had a president.”
Signs of disintegration are everywhere. The country remained without a president for a year, The government has been in operation for nearly two years, and the currency has lost more than 90% of its value since 2019.
Bankrupt banks in Lebanon will not allow depositors to withdraw all their money, which rating agency S&P Global described as selective default. The Association of Banks in Lebanon said that institutions do not have sufficient liquidity to repay depositors.
On January 8, passengers traveling through Beirut airport saw the arrival and departure screens suddenly flash with a new message directed at Hezbollah’s powerful leader: “Hassan Nasrallah, you will have no supporters if Lebanon is dragged into a war that you will endure.” responsible.”
The letter stressed the deep fear that the current confrontation between Hezbollah and Israel could explode into a new war, and demonstrated how easily vital transportation systems could be compromised.
Naima says that in 2006, Lebanon received support from Arab countries, especially the oil-rich Gulf countries, for reconstruction after the end of that war. But this is not the case today, as relations with the Gulf monarchies have been strained by Hezbollah's growing regional presence, and tensions are exacerbated by a general lack of interest in Lebanon among younger Gulf leaders.
In fact, one of the only remaining elements of the traditional formula for survival in Lebanon is the Lebanese themselves – or rather those living abroad. A 2023 United Nations study estimated that remittances from expatriates, which average $6.5 billion annually, represent more than a third of the gross domestic product.
“This is what kept the economy going; This is the main source of foreign exchange today, along with meager tourism revenues. Naima said: “We do not export much, but rather import a lot.”
But if an all-out war breaks out, he said, “it will become very difficult for Lebanese expatriates to continue sending remittances from abroad.”
According to the Domestic Policy Research Center, foreign investment indicators have been trending downward since the war began in October, reflecting a lack of investor confidence in the country. The fighting has also damaged the country's tourism and agricultural sectors, most of which are based in the south and account for a large portion of exports.
Public services and the people who work in them have borne the brunt of the financial crisis, with salaries rendered almost worthless as the currency lost most of its value. Many of these services, such as hospitals and emergency response, will be crucial in the war.
“We do not have the necessary equipment to rescue anyone from under the rubble. We do it manually, using our hands and with primitive tools,” said Hussein Faqih, head of civil defense in the south. A GoFundMe page was created in January to support the organization, which includes firefighters and emergency medical teams – on Although it denied any connection, he added: “A broader potential war with Israel would certainly affect our work with our limited capabilities.”
Lebanon's overburdened health care system will not be able to cope if war spreads. Due to the high costs of private health care, most people are forced to seek treatment in underfunded public hospitals in a country where health care was once a source of pride for the region.
According to Doctors Without Borders, the rates of individuals relying on treatment from aid agencies are rising. In areas near the country's border with Syria, the organization noted a 67 percent increase in clinic visits since the start of the financial crisis.
Talent is also in limited supply. According to Kalin Rahim, MSF Lebanon medical coordinator, “With the overlapping crises, a number of healthcare workers – doctors and nurses – have left the country.”
“The war could be devastating to the country’s medical services due to the small number of staff and the lack of medical supplies and equipment,” said Lorda Helo, a nurse in a Beirut hospital, whose salary is $500 a month, barely enough to last a week.
Then there's the military, where increasing numbers of soldiers are working overtime to pay the bills. The United States is pushing Hezbollah to move its forces north of the Israeli border to calm tensions, and this depends on the presence of a strong Lebanese army in the region.
The army already relies on significant foreign funding to pay, feed and treat soldiers. Although it has received military aid from the United States totaling more than $3 billion since 2006, the needs remain enormous.
The United States sent $72 million in 2023 alone for temporary financial support for salaries. In the same year, Qatar donated $30 million in fuel, and in 2022, it sent $60 million for salaries, in addition to 70 tons of food. France has provided medical equipment.
“I couldn't feed my family. I used to earn $1,500 [a month] From the Army, and suddenly it was only $60, and I had a daughter who was only 2 years old – and she was still on diapers and formula. “I had to work nights,” said one former soldier, who drove for Uber while still reporting for duty during the day.
“We joined the army so we could raise our children, but it got to the point where we could no longer afford it,” he added, who spoke on condition of anonymity due to the sensitivity of the issue. He eventually took early retirement and left the army, saying soldiers were being humiliated.
Naima said that even if war does not eventually break out, economic and financial collapse is still possible.
“No reforms have been implemented since the outbreak of the financial crisis in 2019. And nothing has been done to deal with the crisis. Not to mention what is happening in the south, the economy is still on a collision course with complete collapse.”
