Lebanon's economy is at risk of total collapse due to conflict

In recent days, governments and embassies of Arab and Western countries have called on their citizens to leave Lebanon immediately due to concerns about a dangerous escalation of the conflict.

The risk of wider conflict in the Middle East has also prompted many airlines to suspend flights to and from Lebanon, citing military activities that pose a danger to flights.

Fears grew after the assassinations of Hamas political leader Ismail Haniyeh in Tehran, Iran, and Hezbollah senior military commander Fuad Shukr in Beirut, Lebanon, in late July, forcing thousands of Lebanese nationals to leave the country.

Meanwhile, many foreign tourists also rushed to pack their bags and return home. The exodus of foreign tourists has dealt a devastating blow to the Lebanese economy.

As a major source of revenue for the Middle Eastern country, the departure of international tourists has severely affected small and medium-sized businesses, especially in the tourism sector.

"If we sacrifice tourism this year, we will sacrifice Lebanon," said Jean Bayruti, secretary general of the Federation of Lebanese Tourism Associations.

Lebanon's economy, already fragile and weakened by years of political instability, now faces major risks.

According to the World Bank (WB), the Lebanese economy grew by 0.2% in 2023, boosted by remittances and tourism. However, the situation has changed significantly this year.

Lebanon's currency has lost 95% of its value against the US dollar since the country's economy collapsed in 2019, with more than 80% of the population now living below the poverty line.

Lebanese economist Jassem Ajaka warned that the low-intensity conflict in southern Lebanon is eroding the economy, saying the damage to the tourism sector could exceed $2 billion, along with disruptions to imports and banking transactions.

In the event of a full-scale conflict involving Israeli attacks on Lebanon's fragile infrastructure, the damage could be catastrophic, Ajaka said.

Lebanon's gross domestic product (GDP) could fall by 24-25%, while businesses and hospitals will be affected and Lebanon could face shortages of essential goods such as wheat and fuel.

Whole towns in southern Lebanon have been wiped out by retaliatory airstrikes by the Israeli army, displacing tens of thousands of families.

The Lebanese government has few options to avoid disaster. One Lebanese analyst said the best thing the Lebanese government can do at this point is to resort to diplomacy with Israel.

The situation today is very different from the 2006 Israel-Hezbollah war, with fewer safe routes for evacuees.

Many Lebanese consider areas with a majority of Christians, Druze or Sunni Muslims to be relatively safe, while areas with a majority of Shiite Muslims with close ties to Hezbollah are considered unsafe.

A sense of fear is growing in the capital Beirut, especially in Dahiyeh, a southern suburb of Beirut. Lebanon now faces an uncertain future. The economic crisis, combined with the threat of war, has left many feeling fearful and helpless.

On August 12, Lebanese Prime Minister Najib Mikati said diplomatic contacts are being carried out in many directions to ensure long-term security for the south of the country.

According to a statement from the Lebanese Prime Minister's Office, Mr. Mikati affirmed that he is focusing all his meetings and diplomatic contacts on the implementation of UN Security Council Resolution 1701, considering it the foundation for ensuring stability and security in southern Lebanon.

He stressed that all Lebanese ministries and agencies, in cooperation with relevant international organizations and social organizations, will continue to take the necessary measures and steps within the framework of the Government's emergency plan, to cope with difficult circumstances and all possible scenarios.

According to Prime Minister Mikati, the Lebanese Government issued a document two days ago, which stipulates de-escalation and stopping provocations to avoid a full-blown conflict, implementing Resolution 1701, and emphasizing cooperation with the international community to strengthen the capacity of the Lebanese army and support the missions of the United Nations Force in the South to ensure security and stability.