Beirut residents fear escalation after Israeli attack 'crosses red lines'


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The site of an Israeli drone strike in a Beirut suburb remained sealed off on Wednesday as rescuers continued searching through the rubble of the residential building hit the previous night.

At least four people were killed and dozens injured when three missiles struck in the Haret Hriek municipality of the Lebanese capital's densely populated southern suburb of Dahieh.

“There is a high possibility that there are still people under the rubble,” a municipality employee told The National.

The Israeli attack destroyed part of the building where its target, high-ranking Hezbollah commander Fouad Shukr, was staying, and damaged others nearby.

Hezbollah confirmed Mr Shukr was in the building at the time of the strike but not that he was killed. Israel claims to have killed him.

The attack killed two women and two children. The children were identified as Amira and Hassan Fadallah, six and 10 years old, respectively. One of the women was identified as Wasila Baydoun, while the other victim's identity is so far unknown.

Tuesday's attack was only the second time Israel has targeted Beirut since Hezbollah and the Israeli military began exchanging attacks at the border on October 8, and the first in which civilians were killed.

The area was tense on Wednesday, with a large security presence from both the Lebanese Army and Hezbollah. Workers were already repairing the shattered windows of some shops in the neighbourhood, many of which had stayed closed.

The aftermath of an Israeli military strike on a building in Beirut's southern suburb on July 31, 2024. AFP
The aftermath of an Israeli military strike on a building in Beirut's southern suburb on July 31, 2024. AFP

Most residents refused to give interviews, saying the situation was too sensitive, while those who did expressed defiance and concerns over a potential escalation.

“We were peacefully smoking narguileh when we heard a huge boom. It was like an earthquake,” said Hussein Krayem, 50, owner of corner shop near the site.

“They've crossed a red line. I didn't expect them to target Dahieh. Now it’s 'an eye for an eye'.'”

Mr Krayem's shop was one of the few open, even though the area was largely deserted.

“We want to live and die on our land,” he said. “We're not leaving.”

The owner of an open mini-mart beside the site of the attack, who gave her name as Layla, said she would support whatever retaliation Hezbollah leader Hassan Nasrallah chose, at any cost.

“We are waiting for Hezbollah to decide the appropriate response but we expect a significant one,” she said.

“We're not scared. We're used to it. We've been through many wars, especially as our family comes from the south.”

Southern Lebanon, the residents of which have suffered extensive displacement and damage to homes and farmland since October, has a long history of warfare with Israel, which occupied the region until 2000.

The last war Hezbollah fought with Israel was in 2006. At least 1,200 people in Lebanon, mostly civilians, and 158 Israelis, mainly soldiers, were killed. Beirut's southern areas were particularly badly hit.

Other residents said they would leave the southern suburb immediately if a bigger war starts.

“Of course we will leave if something happens. We're scared for our family. Many people already left yesterday,” Moussa Riad, 51, said.

“We're mentally preparing to leave and go to the mountains if anything happens."

He said he had opened his shop and was staying in the neighbourhood for now because he didn't have any choice “but to continue living”.

“It is calm now, but we expect a big escalation after this terrorist escalation. Killing and wounding civilians, this is unjustifiable.”

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: July 31, 2024, 3:16 PM