Army soldiers patrol a street in Beirut on Saturday. EPA
Army soldiers patrol a street in Beirut on Saturday. EPA
Army soldiers patrol a street in Beirut on Saturday. EPA
Army soldiers patrol a street in Beirut on Saturday. EPA


Hassan Nasrallah's killing brings Hezbollah to a fork in the road


Lina Khatib
Lina Khatib
  • English
  • Arabic

September 29, 2024

It is not the end of Hezbollah. But it is the end of Hezbollah as we have known it for the past three decades, and as it has known itself.

Israel’s killing of Hezbollah secretary general Hassan Nasrallah stunned Lebanon and the Middle East, marking the development of a new political and security status quo in Lebanon, with serious implications for Iran’s role in the country. It is not only that Hezbollah cannot survive this new era without a major transformation in its identity, it is also that the group itself has already changed as a result of Israel’s ongoing campaign against it.

Hezbollah built its claimed credibility on the basis of being a “necessary” force for the liberation, and later defence, of Lebanon. But it was Hezbollah itself that helped create this necessity: the group benefitted from the Lebanese armed forces being too weak to stand up to external threats on their own, but it also contributed to maintaining the army’s weakness.

In 2014, when ISIS extremists were planning an incursion from Syria into Lebanon, Hezbollah did not share its intelligence on this plan with the army until after ISIS fighters crossed into the country and began attacking soldiers. Hezbollah then presented itself as spurring into action in aid of the army to show that is needed to defend Lebanon. It has used the same excuse of defence to justify its ignoring of UN Security Council Resolution 1701, which stipulates that only the Lebanese army should be present in the area south of the Litani River.

If Tehran wants to retain a degree of influence in Lebanon, it needs to recognise that Israel will no longer put up with the group being present at its border posing a potential threat

Hezbollah needed this military prowess, including its successes against Israel (namely the latter’s withdrawal in 2000 and after the 2006 war), to bolster its political standing in Lebanon so that it could impose its agenda as well as that of Iran. It also periodically used its weapons inside Lebanon to intimidate its political opponents.

In a country where the political system is based on consensus among Lebanon’s governing elite, Hezbollah needed to maintain its military supremacy so that it could continue to dominate national politics by forcing its opponents to acquiesce. If it did not manage to compel the other parties to toe the line, it was still able to block policy decisions not going in its favour.

Using its veto power in the cabinet and instructing its members of Parliament not to show up for presidential elections, Hezbollah was the main actor driving Lebanon towards a political vacuum. It also captured the state by exercising informal control over its institutions.

Lebanon’s border with Syria became porous, allowing the group to smuggle weapons and drugs in both directions with no state oversight, while the Port of Beirut had warehouses in which its goods were stored without inspection by authorities. In 2008, Hezbollah’s fighters took over areas of Beirut to pressure the group’s opponents to give up asking for its telecommunications network to be brought under government oversight, and used the need to preserve security as the reason why its telecommunications network should be separate from the national grid.

Hezbollah’s humiliation at the hands of Israel significantly shifts this situation. Having incurred such huge military losses due to Israeli air strikes, Hezbollah can no longer present itself as a defender of Lebanon with any degree of credibility. Its infiltration by Israel, which is not only due to cyber operations but also to human intelligence, has revealed its security infrastructure not to be as impenetrable as the group had claimed. Military and security loss paves the way for reduced political status.

Hezbollah is continuing its fight with Israel to still try to save face. But Israel’s relentless campaign no longer aims to push Hezbollah to agree to a deal. It has been upgraded to seek to neutralise the group permanently. It will be some time before Hezbollah sees that it is not what it thought it was, and that it has overestimated its own strengths while vastly underestimating Israel. But that revelation will eventually come.

What the organisation chooses to do about it matters greatly.

Iran's supreme leader, Ayatollah Ali Khamenei, welcomes Hezbollah secretary general Hassan Nasrallah in Tehran in 2000. AFP
Iran's supreme leader, Ayatollah Ali Khamenei, welcomes Hezbollah secretary general Hassan Nasrallah in Tehran in 2000. AFP

Although weakened in the face of Israel, it remains the strongest political actor domestically because it is Lebanon’s only political party in possession of arms. It will probably fiercely try to retain this privilege even if it is defeated by Israel. But its weakening also presents the country with an opportunity to restore state authority.

If the international community backs Lebanon in taking this necessary step, Hezbollah will be presented with two choices: be a spoiler and create chaos in the country, which could lead to civil strife, or shift its modus operandi and agree to become like the rest of the political parties, handing its weapons to the army or at least playing the role of an auxiliary force under state oversight.

While either destiny will take a while to materialise, Iran will be the main decision-maker for Hezbollah in this regard. If Tehran wants to retain a degree of influence in Lebanon, it needs to recognise that Israel will no longer put up with the group being present at its border posing a potential threat.

This means rolling back the extent of Iran’s involvement in Lebanon to accepting a diminished role for Hezbollah. The other path – that of being a spoiler – will eventually attract another wave of aggression not only from Israel but potentially also from international actors in a scenario akin to the global coalition against ISIS.

This is a time of reckoning for Hezbollah and for Iran’s role in Lebanon, a scenario that neither of them ever anticipated facing and which they are not prepared for. The group’s story underlines what happens when an actor’s ego becomes so big that it blinds it. The moment will come when it realises that the bubble has burst.

Lebanon’s stability is hinged upon pragmatism eventually prevailing in the Iran and Hezbollah camp.

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.”

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.


- Abdullah Ishnaneh, Partner, BSA Law 

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Jigra
Director: Vasan Bala
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Rated: 3.5/5
Updated: September 30, 2024, 9:52 AM