In his latest speech, Hezbollah Secretary General, Hassan Nasrallah delved into an interesting topic that not many others in the region talk about; and that is the cost of a potential war in Lebanon for Israel. Basically, he cited economic studies, which placed the value of Israel’s northern industrial, agricultural, technological, facilities, factories, technology, and research centers in the range of $150 Billion. He warned that if Israel were to venture into a war with Lebanon, this industrial north would be obliterated in an hour or less. From an economic perspective of course, Nasrallah may have been citing the actual value of the assets, not the overall economic value that they generate, which would be a multiple of this number.
This raises the key question of what the cost to Israel would be if it declared a war on Lebanon. What better way of gauging this than to look at what cost the current war in Gaza has so far meant to Israel. According to a recent report by the American think tank, Rand, the total costs to Israel of the Gaza War are expected to total about $400 Billion Dollars. This can be split into 10% of direct war costs, such as military expenditures, lives lost, compensation for lifetime disabled, housing of the displaced, and the destruction of property. The other 90% includes indirect costs, such as businesses closed, unemployment, reduction in investment, currency or stock market valuation, wasted agriculture due to lack of workers, lost industrial production and export, immigration of talent and high value workers to safer shores … etc.
What is important to keep in mind here is that the Gaza War is between Hamas and Israel; and by all objective measures Hamas is a much weaker opponent to Israel than Hezbollah. In fact, most military analysts have Hezbollah’s capabilities quantitatively at least five times the firepower (rocketry) and manpower of Hamas. Qualitatively, however, Hezbollah’s capabilities are far more advanced than Hamas’ rudimentary methods and tools. Unlike Hamas, Hezbollah has been directly involved in highly advanced warfare in Syria, Iraq, and Yemen. It has shown its military capabilities and technology to be state-of-the-art, and much more precise. Its intelligence is more developed; and most importantly, its supply lines extend to the Arab and Iranian hinterland.
The quantitative and qualitative military differential is therefore substantial; and the damage it can heap on Israel would be many folds more than Hamas'. Here we could also look at both the direct and indirect costs.
In terms of the direct costs, Nasrallah’s estimate, if anything, could be considered conservative as he only took into account northern Israel. He did not allude to what his group is quite capable of destroying in the heart of Israel, which includes both Tel Aviv and Haifa. In fact, most Western and Israeli military analysts agree that Hezbollah’s missiles can now reach any part of Israel and with pin- point accuracy. One recent Israeli report estimated that the group could lob as much as 3,000 rockets per day for a period exceeding a month, which they stated would overwhelm any defense system that Israel can muster. The costs of all this direct damage would be substantially higher than even Nasrallah himself estimates.
As for the indirect costs, the Gaza war has reportedly caused Israeli business investment to plummet by 67.8%, consumption to contract by 26.9%, exports to drop by 18%, and the Israeli budget deficit to rise to 6.6%, with 46,000 businesses shut down, and an impending downgrading of debt rating. At the height of the war with Gaza, in the last quarter of 2023, the Israeli economy shrank by a stunning 20%, which is double a depression rate.
The key point here is if Hamas—whose direct war reach was for the most part distant from the Israeli economic centers and limited to the areas surrounding the Gaza strip—was able to inflict on Israel such an economic toll, what would be the indirect costs of a full-blown war with Lebanon, which would entail a sizeable expansion of operations.
In geographic scope, the war would be at least twenty times as large as Gaza. After all, Gaza is a very small strip, whereas Hezbollah operates in large swathes of Lebanon and can hit anywhere in similarly-sized Israel.
Quantitatively, in military terms, it could be at least five times as intense, simply due to the larger size of Hezbollah’s forces and firepower. Qualitatively, destruction inside of Israel would be expected to be substantially more because of the advanced intelligence and guided weaponry.
In grosso modo terms, if one were to multiply the expected direct cost of the Gaza war (Estimated at $40 Billion) by a factor of five to account for the above intensity and accuracy, the direct costs of a Lebanon war could reach as high as $200 Billion. In indirect cost terms, if we multiplied the Gaza war costs (Estimated at $360 Billion by Rand) by a factor of three to account for the nationwide disruption in wider Israel with such a massively expanded war, the indirect costs could very well top $1 Trillion. Adding both, the total cost of such a war could exceed $1.2 Trillion for Israel (This assumes a single war front with Lebanon, without the continuation of the Gaza war, which so far does not seem likely to end anytime soon). Under such a scenario, all the Western economic support is unlikely to save Israel’s government from bankruptcy, circumvent a massive economic calamity, and culminate in the massive exodus of people and businesses to safer shores.
Interestingly, most objective strategists and military analysts do not believe there would be much to gain from such a war. Almost none believe that Hezbollah could be overcome; and none believe that Israel can invade Lebanon and occupy it as it did back in 1982. If anything, some military experts point to the possibility that Israel itself could potentially be invaded in the north by Hezbollah. Regardless, most objective analysis points to a strategic loss for Israel in such a war.
Has Israel reached a point where it is willing to allow its extremists to throw away trillions of Dollars, cause massive destruction, and exodus, and all without any strategic gain? Rationally, one should think not, which may explain why Israel hasn’t launched a war on Lebanon yet, and indeed may never dare to.
