ANALYST NOTES - 6/28/2024: Lebanon Rising: How Conflict with Israel Could Spell a Wider Crisis

With the war in Gaza shifting to a “low-intensity conflict against Hamas pockets”, all eyes are turning towards the looming conflict in southern Lebanon, between the Israeli Defense Force and the “Jihad Council” of Hezbollah, the Shia political party that has been at war with their neighbors to the south since October 8th of last year, one day after the horrific attacks that initiated the conflict in Gaza. Hezbollah is not alone, either, but has gotten promises of support from factions as various as the Afghan Taliban, the Iranian Revolutionary Guard Corps, and the Houthi rebels in Yemen.

But why is a potential Lebanese conflict different from Gaza? Aside from strengthening a coalition of which Hezbollah is a key part, Lebanon could become a new Bosnia or Afghanistan, a powerful magnet drawing international jihadist fighters from across the world to fight alongside the better armed, better equipped, and better financed big brother of Hamas. Additionally, the increased support for Hezbollah would strengthen its position in the political power vacuum that has existed in Lebanon since late 2022, when former president Michel Auon stepped down. Presidential vacancies have occurred here before, including during the Lebanese Civil War, but never at a time of such regional and international instability as our present crisis.

ANALYSIS: How will this affect international business and security? First it gives cover to the Houthis’ strategy to arrest international shipping. They recently sunk a commercial freighter in the Red Sea, sparking concerns that international shipping would once again be shunted off from the Mediterranean, forced instead into traversing the Cape of Good Hope or taking overland routes. Second, it offers the Taliban the opportunity to exploit its revived terrorist training camps and sell off the materiel it inherited during the US withdrawal. Lastly, the eastern Mediterranean is clearly an unsafe neighborhood but intensified conflict in the northeast corner will stifle shipping on that side of the Middle Eastern landmass as well, cutting off or severely restricting access to the Persian Gulf, the Red Sea, the Suez Canal and the Leviathan gas field east of Cyprus. As a result, business in this region will necessarily grind to a halt, forcing prices through the roof (especially Iranian oil), while simultaneously boosting Russian and Iranian oil exports, and allowing China to step into the breach.