The first month of Israel’s war on Lebanon wrought upon the country a scale of destruction unseen in a generation.
As the Israeli military dynamite entire villages in southern Lebanon, and Dahiyeh in southern Beirut sits as a skeletal ruin, people’s homes, their businesses, and their futures are turning to ash under the onslaught of Israeli ‘rampage’ missiles.
But will they be able to rebuild their lives after the war?
During the 2006 conflict, Israel inflicted $2.8 billion in war damages in just 34 days of fighting, according to government estimates.
However, the UN Development Program believes that the “scale of current hostilities, the humanitarian impact, and the economic fallout in 2024 are expected to be much greater than in the 2006 war”.
Last week, caretaker Prime Minister Najib Mikati called on the international community to support the rebuilding effort.
But with economic losses estimated at $20 billion, there is a serious risk that neither global powers, weary of Lebanon’s sclerotic political class, nor Lebanon, broken under a collapsed economy, will be willing to foot the bill.
The role of Hezbollah and Iran
An LA Times article from 2006 described the “rush” to rebuild a war-ravaged Lebanon, as “Arab governments raced against Iran and its ally Hezbollah to win political clout and capture grassroots loyalty”.
Whilst Hezbollah claimed to have spent $300 million on reconstruction, “Iran and Hezbollah’s role was largely limited to providing cash relief to those in immediate need,” Nicholas Blanford, a non-resident fellow at the Atlantic Council, told The New Arab.
At registration centres across Lebanon, Hezbollah officials handed out plastic-wrapped packages of $12,000 to those who lost their homes in the conflict to cover rent until the party could rebuild their houses.
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Although Israel has targeted Hezbollah’s financial infrastructure by striking Al-Qard Al-Hassan branches, a Hezbollah-affiliated bank, Blanford believes that “it is unlikely that Hezbollah has kept much cash there,” but that “we don’t really know” the impact of the war on their finances.
“The reality though is that the Iranian economy is struggling, and so Hezbollah and Iran alone can’t pay for reconstruction,” he adds.
However, there will be immense pressure on Hezbollah to look after the social welfare needs of their constituency, as “without the continued support of the Shia community, there simply won’t be a Hezbollah”.
Reluctance in the Gulf
In the last war with Israel, Arab donors – in particular Saudi Arabia and Qatar – were central to building Lebanon, pledging $1.3 billion. Qatar rebuilt four towns, whilst Saudi Arabia rebuilt 25 villages in southern Lebanon.
Many Arab states had hoped that “their support could demonstrate to the Shia the possibility of a political and economic future not aligned with Hezbollah and Iran”, says Hassan Kotob, a Lebanese analyst and manager of the Lebanese Center for Research.
However, this support strengthened Hezbollah by showing that “they could resist and that their homes would be rebuilt and their losses compensated,” adds Kotob.
“But don’t expect the Gulf countries to make that assessment this time.”
Last week, French President Emmanuel Macron’s international conference in support of Lebanon raised $1 billion in pledges for humanitarian aid and military support – yet saw no financial commitment from the Gulf.
Relations between the Gulf and Lebanon have strained in recent years. Hezbollah has found itself increasingly at odds with Riyadh and Abu Dhabi, in particular over Hezbollah’s support for the Houthis during the 2015 Saudi intervention in the Yemeni civil war.
Alongside this, “the era of multi-billion-dollar aid packages from the Gulf States without conditions is over,” says Mohammed Al-Basha, a US-based Middle East Analyst.
Saudi Arabia is facing economic headwinds in its attempt to shift its economy away from its dependency on oil. In June, amid declining oil revenues and growing anxiety that Mohammed Bin Salman’s ‘Project 2030’ is failing to shift the economy away from fossil fuels, Riyadh announced plans to dramatically scale back public spending.
“Due to its prioritisation of domestic growth, Riyadh is unlikely to commit substantial funds for Lebanon’s reconstruction as it did in previous eras,” says Al-Basha, adding that they will also be “hesitant to invest in Lebanon with its persistent corruption and mismanagement, especially in the absence of a trusted partner like Rafic Hariri.”
Hariri, Lebanon’s former prime minister, was a crucial player in the country’s post-civil war reconstruction as a conduit for capital from the Gulf.
However, his son and heir to his political fortune, Saad Hariri, dramatically withdrew from politics in 2017, allegedly under house arrest by the Saudis, angry at his inability to counter Hezbollah’s influence.
Frustration from the West
Following the 2006 war, the international community rallied to support the rebuilding of the country, with a French-hosted conference raising $7.2 billion, the majority of which was tied to economic reforms that the government failed to implement.
This wilful failure to implement much-demanded reforms is “characteristic” of Lebanon’s political class, says Michael Young, a senior editor at the Malcolm H. Kerr Carnegie Middle East Center.
During last week’s conference, the UN Secretary-General, Antonio Guterres, called on Lebanon’s leaders to “take decisive action to ensure the proper functioning of state institutions”. Lebanon has not had a president for over two years.
The collapse of Lebanon’s banking sector in 2019 – deridingly referred to by the World Bank as a ‘state-sponsored ponzi scheme’ – caused the Lira to lose 98% of its value, and GDP to shrink by 28% over the last 5 years. Yet even then Lebanon’s political class continued to obstruct meaningful reforms.
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In 2022, the IMF agreed to a $3 billion bailout deal, which Lebanon has not been able to access due to its failure to adequately implement the deal’s stipulated reforms.
Lebanon’s political and financial elites are deeply intertwined, and because “a broad segment of the political class have stakes in the banks, financial restructuring is perceived as a threat to their interests,” believes Young.
However, “Lebanon is not going to get a free ride” this time, as the international community will probably utilise the necessity of rebuilding “to push for political and economic reforms”.
So, the critical question remains: after years of political deadlock, an economic collapse, a failed revolution, and a devastating port explosion, will Lebanon’s political elites finally realise the necessity for reform?
Can Lebanon ‘build back better’?
It is said that Beirut has been rebuilt seven times. Through earthquakes, wars, economic collapse, and devastating explosions, the Lebanese weather the storm and then try to rebuild their lives.
Yet, according to Mona Fawaz, a Professor of Urban Studies and Planning at the American University of Beirut, “every post-disaster recovery has further weakened the institutions of the state”.
In the wake of the 2006 war, the state played a subsidiary role to international actors and local organisations, says Fawaz. This phenomenon was repeated after the port explosion in 2020, when “we again saw public agencies retreat and NGOs take over reconstruction of the neighbourhoods”.
Political groups have then used the absence of the state in these crucial moments, as an opportunity to impose themselves as “custodians” over the rebuilding of neighbourhoods.
Reconstruction, Fawaz warns, will only serve as “a catalytic moment” that leads to further disintegration of a paralysed state.
With the state paralysed, and the international community baying for change, reform is urgent, but “represents an existential threat” for political elites, says Blanford, and “if the revolution and economic collapse couldn’t persuade them to change, then nothing will”.
Fawaz is equally sceptical. “We are really far from a turning point. 34 years since the end of the civil war, there is ample evidence that a state run by a coalition of former warlords and pseudo-bankers cannot be reformed.”
Cian Ward is a Beirut-based journalist with an interest in migration and asylum-related issues
