Can Israel fund a war on two fronts?

Almost one year on from the 7 October terrorist attacks by Hamas, Israel is on the verge of all-out war with Lebanon, leading to the prospect of the country fighting on two fronts. 

Benjamin Netanyahu has vowed to continue the deadly airstrikes on Hezbollah targets in Lebanon that have killed hundreds of people and displaced tens of thousands over the last few days. Hezbollah is also continuing its rocket attacks on northern Israel. At the same time, there is no let up in the war in Gaza, with Israeli forces still launching attacks on Hamas positions in the territory.

Prime Minister Netanyahu says he won't back down until his goals are achieved, but military analysts are sceptical the country can afford a war on two fronts. 

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What did the commentators say?

"This war seems like the mother of all wars," said Dany Bahar, a senior fellow at the non-profit think tank the Center for Global Development. And "that means it is expensive", he told The Washington Post. The price paid by the economy has been "often lost in the turmoil and tragedy of the past year", said the newspaper. Israel's credit score has been downgraded, its GDP has fallen "sharply" and tourism is down 75% since Hamas's attack last year. 

Earlier this month, Finance Minister Bezalel Smotrich had to request an emergency deficit increase. "Israeli economists are resigned to things getting worse," said The Economist. Any wartime government must fund its military, usually through deficit spending, but also stay "robust enough to clear its debts when peace arrives", meaning the "economy rests on a knife edge".

Israel's educated workers are leaving the country "in droves" as the war in Gaza has "ground" its economic sector to a standstill, said Adrian Finnigan, on Al Jazeera's "Counting the Cost". The economy – "once seen as an entrepreneurial engine" – is losing the trust of the international community. More than 46,000 businesses have closed and it is "challenging" to attract new talent to the country.

But this is not necessarily damaging the economy, said Eyal Winter, an economics professor at Lancaster University. Many of them are in the tech sector and can do their job from anywhere in the world. "They don't resign, they don't take a leave of absence," he said. They simply continue their work online. 

War could even benefit the economy "if conducted wisely", Israeli journalist Meirav Arlosoroff said in Haaretz. The threat from Hamas "has been lifted" and will not surface "for years to come", while "a 'good' war" with Hezbollah would probably leave it "battered and bruised enough" to stop it being a concern in the north.

There are two provisos, however: first, that no economic crisis arises in the meantime, and second, that any war with Hezbollah follows the example of the 2006 Lebanon war, a "relatively short conflict that ended decisively and damaged Hezbollah's military capabilities".

What next?

Arlosoroff's hopes for a short war look unlikely. Israel would have a true fight on its hands if full war broke out in Lebanon, as Hezbollah has a much more sophisticated military operation than Hamas, Yoel Guzansky, who served on Israel's National Security Council, told CNN. "Hezbollah is not Hamas."

The continued fighting means the mood is "pessimistic", despite ongoing diplomatic efforts for a ceasefire, said BBC. Netanyahu is under pressure from Israeli hard-liners to continue the attacks, while Hezbollah has said it will not stop until a ceasefire has been declared in Gaza. 

Ultimately, it is not the economy that will decide whether Israel fights on two fronts, said Winter, but whether the government has the support of the people. "And you may be surprised by the Israeli support to the war against Hezbollah."