Hezbollah has engaged in deadly clashes with Israel since Palestinian militant group Hamas attacked southern Israel on October 7. Reuters
Hezbollah has engaged in deadly clashes with Israel since Palestinian militant group Hamas attacked southern Israel on October 7. Reuters
Hezbollah has engaged in deadly clashes with Israel since Palestinian militant group Hamas attacked southern Israel on October 7. Reuters
Hezbollah has engaged in deadly clashes with Israel since Palestinian militant group Hamas attacked southern Israel on October 7. Reuters


A devastating Israel-Lebanon war is brewing, but it can still be stopped


  • English
  • Arabic

October 13, 2023

This week’s shock attack by Palestinian militant group Hamas against Israel left the Middle East on a knife’s edge. The world remains focused on Israel’s unfolding military response in Gaza, which in the days ahead will surely prove long, punishing, and unpredictable. But meanwhile, fears of a broader regional war are growing, especially after Iranian Foreign Minister Hossein Amirabdollahian, speaking from Lebanon, explicitly threatened expanding hostilities to new fronts. Such a development risks drawing in the US.

If Lebanese group Hezbollah enters the war against Israel, the hostilities in Gaza will become a sideshow. Hezbollah is the world’s most formidable non-state military. Hamas is but a much weaker underling. In 2006, Hezbollah fought Israel to a standstill following a devastating month-long war. It has since grown into a much more capable and experienced fighting force, boasting up to 100,000 fighters and estimated to have a similar number of missiles that can overwhelm Israeli defences, rain down on its cities, and paralyse its economy.

In such a conflict, Hezbollah may also be joined by other Iranian-backed militias. From Beirut to Baghdad, these groups have been threatening to join the battle in what they refer to as the “merger of all fronts” against Israel. These militias have a combined operations centre in Lebanon and have previously fought alongside each other in next-door Syria. They can be deployed to aid Hezbollah and to attack Israel from Syrian territory.

Whether aided or alone, Hezbollah’s entry into the war will be a game changer for Israel and the region. But this is by no means a foregone conclusion. The memory of the destruction visited upon Lebanon in the last major war with Israel is not lost on the group’s leadership. Thousands of its supporters are already fleeing its heartland in south Lebanon, seeking shelter further north in Beirut.

If Hezbollah enters the war against Israel, the hostilities in Gaza will become a sideshow

Iran, despite the heated rhetoric, also has to weigh the risks and benefits of such a devastating confrontation. In its network of militant groups, Hezbollah is the crown jewel and its leading line of defence should Israel strike Tehran’s nuclear programme. Will Iran’s leaders wager Hezbollah’s future to try and rescue Hamas, or will they judge it to be too costly and ultimately too futile of an effort?

To date, the decision for Hezbollah to enter into full confrontation with Israel has not been taken. Instead, Hezbollah is limiting its attacks to levels understood by Israel to be within the tacit rules of engagement. Shelling by both parties remains largely confined to the border zone, sparing major population centres. This week’s killing of three Hezbollah fighters in retaliatory Israeli strikes was followed by Hezbollah targeting a similar number of Israeli soldiers. This remains calculated messaging by fire, with the goals of emphasising deterrence and harassing Israel short of igniting a major war.

In the days ahead, as Israel launches a ground invasion of Gaza, Hezbollah will dial up the pressure and it will be difficult for it to completely avoid an active second front from Lebanon. Still, Israeli leaders can potentially preclude a direct bone-crushing confrontation with Hezbollah if their retaliation remains limited and proportional. Hezbollah can perhaps, in turn, curtail its direct involvement, relegating offensive operations to much less capable Palestinian militants operating from its areas of control.

Imperfect as it may be, such a scenario would preclude much worse outcomes while offering advantages to all sides. Iran and Hezbollah can brandish their resistance credentials and posture to their audiences without plunging Lebanon into a devastating war. And Israel can focus on its strategic objective of destroying Hamas’s military infrastructure without getting sucked into a much broader and more perilous battle.

While supporting Israel by providing it all that is necessary to defend itself, the US must also work towards containing the conflict by shaping Iran and Hezbollah’s calculus. Deploying the formidable aircraft carrier USS Gerald Ford, along with a naval strike group, into the Eastern Mediterranean is a good first step. But given President Joe Biden’s humiliating retreat from Afghanistan in 2021, and the deep deficit of credibility his administration suffers in the Middle East, he must speak from the podium and explicitly lay out the red line. There must be no room for doubt that the US will use its military might if Iran or Hezbollah enter the war.

Deterrence must also be coupled with diplomacy. The White House has well established lines of communications to Tehran that run through Qatar, Oman and other regional partners. This is not the time to sever contact.

In the critical period ahead, to preclude the perils posed by the fog of war, the Biden administration should use third parties to outline to Iran the limits of Israel’s military activities if Hezbollah accepts to exercise restraint. It must also clearly spell out what will constitute a crossing of its red line, particularly since Hezbollah prefers and excels in grey-zone warfare. And it should privately reinforce its public messaging, stressing the punitive actions it, along with Israel, will take to extract a heavy price if the line is crossed.

“War is the realm of uncertainty,” renown Prussian war strategist Carl Von Clausewitz famously observed. It is in America’s interest to reduce the grave uncertainty ahead, and to preclude the immense human suffering a broader regional war will surely produce.

Who's who in Yemen conflict

Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government

Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south

Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory

DIVINE%20INTERVENTOIN
%3Cp%3EStarring%3A%20Elia%20Suleiman%2C%20Manal%20Khader%2C%20Amer%20Daher%3C%2Fp%3E%0A%3Cp%3EDirector%3A%20Elia%20Suleiman%3C%2Fp%3E%0A%3Cp%3ERating%3A%204.5%2F5%3C%2Fp%3E%0A

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.”

MOUNTAINHEAD REVIEW

Starring: Ramy Youssef, Steve Carell, Jason Schwartzman

Director: Jesse Armstrong

Rating: 3.5/5

Updated: October 15, 2023, 2:43 PM