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The literature on the “war economy” is extensive, and it’s quite normal considering the prevalence of wars. There are essentially two types of war economies:
- War Economy in Developed and Industrialized Countries: This type primarily focuses on repurposing industrial capacities for the war effort. For example, companies like Renault might start manufacturing tanks, Lacoste could produce military uniforms, and Danone might shift to producing survival rations.
- War Economy in Underdeveloped Countries: In this scenario, the emphasis is on providing assistance to refugees, offering medical care to the wounded, and ensuring the continuity of essential supply chains. However, leaders in these countries often show little concern for their citizens, leaving international aid organizations to take up the task.
That being said, Lebanon has its own unique approach to the war economy, which shares similarities with the second type but also has distinctive features. Let’s start with the comical part. The Lebanese government has just developed a “war emergency plan,” which is around 200 pages of rather soporific and ludicrous literature. The statements made after the meeting were so vacuous that they seemed to trip over themselves. It’s quite amusing, really.
On a more dramatic note, Lebanon has had enough wartime experience to identify the essential elements of a war economy. Lebanon, in fact, coined the term “war profiteers,” which dates back to World War II but has proven relevant time and time again. So, what are the key aspects of Lebanon’s unique war economy?
- In case of destruction due to war, if there’s enough money available (which is unlikely), Lebanon tends to award reconstruction contracts directly, without tenders, citing the need to “address the urgent situation.” This becomes a significant source of revenue, with the Hezbollah-affiliated Minister of Public Works seemingly securing this concession from the last Council of Ministers.
- Another practice that tends to flourish during wartime is the real estate market. Families from the south often rent apartments in safer areas as a precaution. However, during the ensuing chaos, an existing phenomenon is magnified: the rush of families, both war victims and opportunists, to squat on public, state-owned, or even private land to hastily construct makeshift dwellings. This usually leads to an abnormal demand for cement.
- Humanitarian organizations, typically meticulous in their aid distribution, may become less stringent due to the urgency of essential needs. This is when the black market thrives once again. During the subsidy period in the 2020–2022 timeframe, subsidized products were even found in supermarkets in the Congo.
- Furthermore, the informal economy, which is already dominant, will experience further growth amid the general chaos. All sectors, particularly trade and small-scale industry, will be affected. Soaring inflation, in dollars, will contribute to the ailing economy.
- Unfortunately, the tourism sector, which had just begun to recover, is likely to suffer a traumatic blow. This prospect may please Hezbollah, which has reservations about this thriving and indecent sector that eludes its influence.
- Hezbollah, as it did in 2006, will insist on receiving the “dividends of victory,” regardless of the conflict’s outcome. Even if the south is devastated, infrastructure is destroyed, hundreds are killed, and thousands are wounded, Hezbollah will still claim victory, a divine one. These dividends will manifest both politically and economically, with a Frangieh in Baabda, a Mikati lookalike in the Serail, some lucrative ministries, including the Ministry of Finance, and a contract for its Jihad-Al-Binaa to handle reconstruction. The Persian Mehdi’s money will suffice, along with whatever the government may have received or scraped together.
One should not be mistaken; wars are also about managing business. They involve deciding who to take money from and who to give it to.
