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Economic impacts from the use of explosive weapons in Lebanon

The 2006 conflict between Hezbollah and Israel lasted 33 days over July and August and predominantly took place in the southern areas of Lebanon and south Beirut. Approximately 1,000 civilians were killed in Lebanon and 4,400 wounded, of which most were civilians. Almost one million Lebanese were displaced by the violence and 125,000 homes were destroyed in the bombardment.

Explosive violence has always been associated with economic insecurity. However, whilst the impact to the economy from explosive weapons is plain, it is hard to distinguish from the consequences of other forms of violence in many respects. In any case, it is clear that there are particular economic harms greater associated with explosive weapons, including the wide-spread harm to infrastructure from bombardment and fear of violence resurging.

AOAV sought to try and establish the long-term economic consequences from the use of explosive weapons.

GDP

In Lebanon, the government estimated war damage at $2.8billion and lost output and income at $2.2 billion. Additionally, the economy was predicted to grow 5-6% in 2006, but instead shrank by 5%.  However, the effect on the economy was short-lived, likely due to the short duration of the conflict and the substantial and swift efforts to rebuild. GDP growth, after dropping to 1.7% in 2006, increased quickly and by 2009 stood at 10.1%.[i] Though, it was not long before the country was hit again by the impacts of explosive violence – this time from the Syrian war.[ii]

Nevertheless, the 2006 bombardment left substantial impacts for local populations and investment. And, in any case, it is estimated to have taken about four years for the economy to recover from a war that lasted one month.[iii]

Poverty

It was Lebanon’s rural areas that experienced some of the worst bombardment – particularly those in the south. Living conditions prior to war in these areas had been low and had seen little development. Populations in this area, generally rely on agriculture and few have savings. The damage severely impacted livelihoods – see employment below. Those working in agriculture, most the population in south Lebanon, are amongst the poorest.

However, current poverty rates do not reflect the impact of the 2006 explosive violence, as the influx of refugees from Syria has left the regions along the borders seeing the highest levels of poverty – although, of course, this too is an impact of explosive violence.

Infrastructure

In Lebanon, the collective damages incurred across the country consisted of the destruction of 445,000 m2 of road network, 92 bridges and overpasses, 130,000 dwelling units, 300 factories and thousands of businesses, as well as significant damage to the electricity network and water supply and wastewater infrastructure. This careful recording of the harm wrought during the violence is of note: in Sri Lanka the victorious government saw no political capital to survey, assess and quantify the damage. For this reason, some of these statistics, in both Lebanon and Sri Lanka, were viewed by AOAV with some caution – they are undeniably politicised figures. Still, the very fact that the harm was charted and reported means that the reconstruction effort could be, to a degree, orchestrated and costed.

Some homes still remain destroyed – Mleeta, Lebanon.

Such cost was not insubstantial. It was estimated that structural damage amounted to $3.6billion (USD). But, perhaps driven by a national fervour to show that they would not be cowed, reconstruction was rapid and widespread. The fact that many areas were controlled by Hezbollah also meant that funding was quickly found by their Iranian and Qatari sponsors, a fact that appears to have strengthened local Hezbollah support in many areas.[iv] The dominant sentiment expressed, certainly, was defiance against Israel (as opposed to in Sri Lanka where the dominant emotion seemed one of defeated resignation).

Having said this, whilst homes have been rebuilt, the damage to some infrastructure is still evident in some areas. Reconstruction may have, in this way, hampered development that could have otherwise happened, and today many still rely on diesel-run power generators and purchasing bottled drinking water. There is also a notable oversupply of, frequently unfinished, housing in post-war Lebanon, in part owing to the diaspora community leaving because of the conflict (as well as the previous civil war) and the construction of holiday, retirement or investment homes.

Though, of course, the long-reach of the terrible civil war on Lebanon cannot be separated in this analysis as that clearly casts a long shadow.

Business and employment

In Lebanon, a 2007 World Bank study found a 50% decline in enterprises and 26% increase in the duration of unemployment following the conflict. Whilst agriculture was particularly affected, other businesses were impacted too: 900 factories, markets, farms and medium-sized enterprises, as well as 2,800 small-size enterprises, were to be damaged or destroyed in the violence, mostly by shelling. Many of these tragedies go unreported and yet can have profound impacts on the course of a person’s life.

A destroyed building in south Lebanon sent by a business owner in the area.

AOAV met with business owners and managers in Nabatîyé, southern Lebanon, in February 2018. One store owner interviewed had their entire shop destroyed in a bombardment, along with all his stock. Whilst he didn’t want to provide his name out of fear of repercussions,[v] he claimed that, even today, he is still paying off the debt of that impact to his supplier, totalling some $400,000. He commented that he would be unable to buy a home or get married until the debt was paid off.

A few doors down AOAV met the owner of a fast-food outlet – he too preferred we did not use his real name. His business too was destroyed in Israeli bombing. It took him six years to pay off the loan he had taken out to build this business just prior to the war and he had to take on multiple jobs to do so. No one that AOAV spoke to had received compensation for their loss.

Investment

In Lebanon, AOAV were told that investors are put-off many areas of Lebanon due to the potential for conflict to begin again.[vi] Investment in tourism infrastructure has been hampered by the destruction brought by the bombardment and the threat of future violence deters foreign investment into the areas most impacted.[vii]

Some AOAV spoke to discussed the oil and gas exploration, which Israel is claiming is within their waters. Economists are hoping that this opportunity will show that peaceful negotiation is possible between the two countries which could stimulate investment.[viii]

Tourism

Lebanon relies heavily on tourism as part of the services sector – in 2006 tourism receipts functioned as a main part of the economy along with real estate and construction. The services sector makes up 70% of the economy.[ix] About 20% was estimated to be from tourism, it is now about 8%.[x]

The war contributed to a loss of 3 million USD in the tourism sector alone. The continued impacts of explosive violence had a strain for many years. For example, the bombardment on the Jiyeh power station saw 15,000 tons of fuel oil leak into the Mediterranean, and with approximately 60% of the tourism industry dependent on sea-related activities, beach owners were thought to lose about 90% of their income in 2006. However, tourism numbers had generally recovered by 2010 before being impacted by the explosive violence in Syria.

Though, Lebanon has seen a resurgence in internal tourism. Many of the areas most bombed hold a special place in the collective memory due to their association to resistance against Israel. For example, the Hojeir valley, or Resistance Valley, cultural and spiritual importance was magnified due to the role it played in the resistance. Despite the huge levels of contamination now left and the destruction of historical buildings, it retains a special significance in the collective memory and is often referred to in the speeches of Lebanon’s political leaders.

Economic conclusion

Whilst it is true that the economic consequences of the explosive violence are hard to distinguish, it is clear that their destructive nature causes specific economic consequences as well as lengthens and exacerbates others. The damage to infrastructure, roads, water and power distribution networks, as well as the contamination, serves to destabilise the impacted areas for years and prevents the recovery that would be expected from other forms of conflict.

 

This article is part of AOAV’s research on the reverberating effects of explosive weapons. For the main report, ‘When the bombs fall silent’, see here. For an overview and some key findings, see here. Or, to reach other articles as part of this research, please see here.

 

[i] Interview with Talal F Salman, Economic Advisor to the Minister Project Director, in Beirut, Lebanon.

[ii] Interview with Talal F Salman, Economic Advisor to the Minister Project Director, in Beirut, Lebanon.

[iii] Interview with Talal F Salman, Economic Advisor to the Minister Project Director, in Beirut, Lebanon.

[iv] Interviews conducted with civilians in Dahieh and throughout south Lebanon.

[v] Due to the support for Hezbollah in the area and the suspicion of foreign researchers many local people were worried about being seen to cooperate with us and provide information.

[vi] Economy and tourism experts interviewed in Lebanon.

[vii] Interview with the tourism minister

[viii] Interview with tourism minister in Lebanon.

[ix] Interview with Talal F Salman, Economic Advisor to the Minister Project Director, in Beirut, Lebanon.

[x] Interview with the tourism minister.