Defining Defeat and Victory

As Israel expands its ground operation, we admit our errors, review the strategies of the two sides, their conditions for victory, the potential outcomes and their commercial implications.

Commercial Summary: Success for Israel entails capturing all the territories south of the Litani and then even further to Jezzine, Hasbaya and Marjeyoun, recreating the 1982-2000 occupation. Israel has been able to capture territories, but not clear or hold them. And the expansion of its ground operation will prove the ultimate test. Success for Israel would place Lebanon firmly in the Western camp. Failure may take years to materialise, with the key indicator being Hezbollah’s ability to continue to operate south of the Litani. Cutting off Syria from Iraq is a pre-requisite for Israeli success, which in turn requires Russian cooperation. This outcome would create enormous commercial opportunities in Syria and Lebanon for Western and regional firms (commercial implications are paywalled). Hezbollah sees this as a potentially generational war.

Israel has approved initial plans to expand its ground operation against Hezbollah, while also expanding its punitive airstrikes. To what end, however? What would give Israel a victory, what would constitute a failure for Israel, and what is Hezbollah seeking?

Israel

Success for Israel would involve establishing a depopulated zone south of the Litani River, and possibly beyond towards the Jezzine district (caza). That zone would also include, in part or in full, the Marjeyoun, Hasbaya and perhaps even the Rachaya districts. This would involve expelling all the Shi’a and most of the Sunnis, and allowing the Druse and Christians to return, as these communities do not have a history of armed conflict with Israel.

Moreover, if Israel expands its objectives further across the Litani into the historically Christian region of Jezzine, it will have a touchpoint with the Lebanese Druse of the Chouf region and therefore with the rest of Mount Lebanon Druse and Christians. Combined with its touchpoints with the Druse in Rachaya and Hasbaya, this would bring us back fully to the 1982-2000 period of Israeli occupation of south Lebanon, where the Shi’a took the lead in fighting Israel while the Christians and Druse either sat on the sidelines or sided with Israel.

There would be, however, some major differences:

1. Most Shi’a and perhaps many Sunnis would have been ethnically cleansed from south Lebanon, preventing Hezbollah from entrenching itself in the civilian population as it had done in previous wars.

2. Last time this happened, the Lebanese Druse leader Walid Jumblatt and Shi’a leader Nabih Berri stood against any cooperation with Israel and backed the Syrian government of late President Hafez al-Assad. This time, with Syria in disarray, and with Russia willing to recognise Israeli expansion in exchange for recognition for its Ukraine expansion, things may be different.

3. Having a land connection to the Druse and Christians, especially with the Christians of northern Mount Lebanon being so hostile to Hezbollah, could transform Lebanese politics, and create an anti-Hezbollah alliance. Or so Israel would hope.

4. The countries of the United Nations Interim Force in Lebanon (UNIFIL) have become more hostile to Hezbollah, and may end up with a stronger mandate to assist the Israeli military.

5. Hezbollah may try to continue the fight from areas to which its members are displaced. While so far, Lebanese politicians have wanted to avoid clashing with Hezbollah-backing Shi’a, Hezbollah conducting attacks from their areas would almost certainly trigger conflict. It is unclear if the Iranians appreciate this nuance, however.

Hezbollah

Hezbollah’s main advantage is defence in depth. Israel has advanced on one line of villages in Lebanon, taking some casualties in doing so, and requiring more than a month of very intense fighting. Hezbollah is not concerned by timelines or by the Lebanese economy: it has all the time it needs. Its template may be that of the Houthi in Yemen, who fought Saudi Arabia for 8 years before successfully imposing a ceasefire on their terms.

From Live Universal Awareness Map, the territories in south Lebanon that Israel has captured, along with the areas it would still need to capture for its campaign to be considered a full success.

Hezbollah’s only strategy is steadfastness: it has to outlast Israel, keep on inflicting casualties and economic damage, in the hope that Israel reduces its objectives, withdraws, and allows Hezbollah to rebuild with Syrian and Iranian support. Syrian support especially is not guaranteed, and Iranian support depends on succession.

If Hezbollah is severely weakened, Lebanese politicians from rival communities would not allow it to rebuild its armed capabilities, considering that Hezbollah used these capabilities in assassinations in Lebanon and against other Lebanese. Like Israel, Hezbollah is fighting for survival, and is willing to fight for months if not years.

That said, Hezbollah’s missiles and drones are not impacting the strategic picture in Israel. Rather, though they are sometimes causing damage, they are convincing the Israelis that they need to win.

We had assumed that Hezbollah’s missiles would be far more effective, and that its rate of fire would be much higher. We had also assumed that Hezbollah would use anti-ship capabilities against Israeli offshore energy, and that it would be able to disrupt operations in Haifa Port. Although this was likely part of Hezbollah’s plan, we were wrong to underestimate Israeli intelligence and its ability to pre-emptively take out significant parts of Hezbollah’s stockpiles, and to overestimate Hezbollah’s freedom of movement.

This is not to say that Hezbollah cannot cause significant damage, or that it may not be able to use some anti-ship capabilities, including potentially against some offshore energy targets. This is to say that that damage will not be enough to bring about an end to the war or change the strategic picture. Simply, Hezbollah’s deterrence has collapsed.

Scenarios:

Scenario 1: Israeli success

• In this scenario, Israel establishes a buffer zone south of the Litani River and in Marjeyoun and Hasbaya. Israel is awarded a right to patrol or police, perhaps through a combination of Lebanese proxies or through UN forces, the region between the Litani River and the Awali River.

• The risk of internal conflict between the Shi’a and the rest of the Lebanese would be high, with the West willing to back local Christian and Druse forces against the Shi’a.

Indicators for scenario 1

• Israel reaches Jezzine and takes all of Marjeyoun and Hasbaya, as well as clearing the area south of the Litani. While this is Israel’s likely objective, it would not constitute a final victory, as Hezbollah can still wage an insurgency. Rather, it would be an important indicator of success.

• Israel successfully imposes the evacuation of all civilians from areas it controls, an effort which has already progressed quite considerably, denying Hezbollah the presence of civilians in which it can conduct insurgency activities.

• The US and Russia reach an accommodation over Ukraine, in which Russia gains major concessions in Ukraine and over Syrian sanctions, in exchange for cooperation with the US in the Middle East (among other things).

• Syria, under Russian and US pressure, halts the shipping of weapons to Hezbollah.

• Local tribes in the Bu Kamal and Deir Ezzor regions of Syria turn against Iranian militias, disrupting Hezbollah’s supply lines.

• Infighting between the Shi’a and other communities escalates, with local militias seeking to prevent Hezbollah militants from firing rockets or drones from their areas.

• Sa’ad Hariri and Walid Jumblatt call for Hezbollah’s disarmament and for the Lebanese Army to be the sole armed entity in Lebanon.

• Iraq announces arrangements to host hundreds of thousands of Lebanese Shi’a refugees.

• A new nuclear deal between Iran and the US is announced, which this time includes limiting Iranian influence to the Gulf and Iraq, and ending Iran’s military presence in Syria and Lebanon.

• The Islamic Revolution flounders and collapses on the back of a succession crisis, as discussed below:

Commercial implications of scenario 1

• Risks to assets within Israel fall dramatically, albeit with a continuing risk of low-level terrorist attacks including car rammings, shootings and the like.

• Changing risks in Lebanon: spike in terrorism and war risks throughout the country as the conflict between the Shi’a and the rest of the Lebanese escalates, followed by a fall in risks as the Shi’a are defeated with international backing.