Israel's 16-day Grapes of Wrath operation in April cost Lebanon some $500m, according to the economist Marwan Iskandar. The attacks, centered mainly on southern Lebanon and the western Biqa`, destroyed thousands of buildings, displaced approximately 500,000 civilians, and damaged infrastructure, including roads, water reservoirs, and bridges. Two electrical transformation and distribution stations near Beirut, one at Jamhour, the other at Bsalim, were destroyed by Israeli aircraft.
It remains to be seen what long-term effect Grapes of Wrath will have on the Lebanese economy. It may be too early to calculate all the opportunity costs provoked by the attacks. Studies are being prepared by various agencies to measure the real costs of Grapes of Wrath. The United Nations Development Program (UNDP) recently submitted a report to the Lebanese government, that remains unpublished. A team from the Economic and Social Commission for Western Asia (ESCWA) is also preparing a report. The first major study of the costs of the Israeli attacks was conducted by the Lebanese army on behalf of the High Relief Committee. The following figures have been gleaned partly from this report and from a study conducted by Marwan Iskandar.
Mr. Iskandar's estimate of losses of $500m appears to be relatively close to the mark according to independent calculations. These losses include both direct costs as well as costs incurred from the delay in the implementation of projects. The cost of rebuilding infrastructure in southern Lebanon may total some $100m, according to Mr. Iskandar. Israel's destruction of the Jamhour and Bsalim stations cost $40m. The opportunity costs provoked by the Israeli attacks are estimated at some $260m, particularly in the services and agricultural sectors. The costs of delayed projects is estimated at some $70m. The remaining $30m went to assisting the displaced from the south.
At the outset of Grapes of Wrath, there was a fear that the value of the Lebanese pound would depreciate. The pound has been the yardstick by which confidence in the economy and the country in general is measured. Expectations that the pound would collapse, however, proved groundless, and the currency remained stable throughout the April crisis. The central bank propped up the pound in the first days of Grapes of Wrath by spending an estimated $1m from foreign currency reserves. Traders who had purchased goods from abroad exchanged their pounds for U.S. dollars for insurance, but this was a relatively minor phenomenon.
On its own, the Grapes of Wrath operation did not do debilitating damage to the Lebanese economy. However, it came on top of an already uncertain economic situation characterized by lower-than-expected economic growth rates and few attractive investment opportunities. With no definite solution to the situation in the south, and the arrival of a hard-line government in Israel, foreign investors may increasingly come to see the Lebanese economy as too high a risk.
Lebanon's burgeoning tourist sector was badly affected by Grapes of Wrath, with some $150m lost during the operation according to Pierre Ashqar, the president of the Association of Hotel Owners. The government's tourism master plan, due to be unveiled at the Horeca hotel and restaurant trade fair, was delayed following the postponement of the exhibition. One episode was particularly symbolic: on April 11, the first day of the Israeli attacks, the minister of tourism, Nicholas Fattoush, held a press conference to extol the virtues of Lebanese tourism. The event was interrupted by the arrival overhead of Israeli helicopters on their way to bomb targets in the southern suburbs.
Many of Beirut's leading hotels suffered cancellations - in one instance a party of Japanese tourists canceled their group booking for as late as September! This was situation was temporarily alleviated in some hotels by an invasion of foreign journalists covering Grapes of Wrath. Yet even the Cavalier hotel, a favorite haunt of the foreign press corps, noted that it had lost about 100 European businessmen and tourists because of the events.
According to statistics provided by the tourism ministry, tourism generated $710m in 1995, with 350,000 foreign tourists visiting Lebanon. The figure is considerably higher, however, if Lebanese expatriates are taken into consideration. There are currently over 6,000 beds and 260 hotels in Lebanon. This remains very low, however: there have been estimates that for tourism to be responsible for a similar GDP share as in 1974, hotel beds have to be increased to 100,000 and hotels to 600.
The most apparent damage in southern Lebanon and the western Biqa` was that done to infrastructure. Roads, bridges, electricity pylons, and water storage tanks were hit throughout the southern portion of the country. The main road from Zahrani to Nabatiyyeh was rocketed at least twice near Msaylih, cutting it off and preventing distribution of relief aid to villages inland. This pattern was repeated throughout the south.
The Israelis also attacked numerous water distribution centers. At least 21 centers were destroyed, while 13 were partially destroyed. These centers, which supply water for both personal and agricultural use, tend to be located on high ground and provided easy targets for Israeli attacks.
The Israeli attacks against the Jamhour and Bsalim stations represented a qualitatively new step in Israeli actions against Lebanon. By destroying both stations, the Israelis appeared to be giving the Lebanese government one of two options: to resist or reconstruct. The damage to the stations was less severe to the electricity network than was originally thought, and it became clear that the Israelis used the bombings to send a political message to the government than any escalation could put Lebanon years behind in its economic development program.
Agriculture, the predominant sector in the south and the western Biqa`, was also badly affected by Grapes of Wrath. Dozens of heads of livestock were killed in shelling; crops ready to be harvested were destroyed; and tobacco farmers were unable to pick their crop, which they do in April.
Estimates were that 40-50% of the tobacco crop was lost due to the bombardments. According to the French-language daily L'Orient-Le Jour, this affected the livelihood of some 20,000 families. Under normal conditions tobacco production brings in a total of $45m. The government declared that it would subsidize tobacco farmers this year. Some farmers sought to take advantage of the government subsidies by suddenly switching to tobacco production. The government responded by declaring it would only purchase 8,200 tons of this year's crop, the same amount produced in 1995. The price paid by the government to tobacco farmers will be approximately eight times the price it will receive from selling tobacco.
Some 20% of the vegetable crop was destroyed, with losses estimated at $1m. Citrus production also suffered, particularly in the Nabatiyyeh region, where entire groves were damaged. Losses were also recorded in horticulture and fishing because of forced inactivity.
According to the Lebanese army report for the High Relief Committee, nearly 130 industries were damaged by bombing. Of these, 31 industrial units were totally destroyed, while 71 others were seriously damaged.
The social consequences of Grapes of Wrath were perhaps the most severe. The Israeli attacks forced some 500,000 civilians to flee north to Sidon and Beirut. Approximately 60,000 civilians remained in the south, and 7,000 sought shelter at bases of the United Nations Interim Force in Lebanon (UNIFIL). The number of casualties was estimated at between 170 and 200 killed, most of them civilians, and 400 wounded.
The resources of the Sidon municipality were stretched to the limit within the first few days as over 1,000 families sought shelter in the city. An international appeal was launched under the auspices of the UNDP to provide temporary assistance until the cessation of hostilities. A total of $15m was donated by nearly 40 countries, international organizations, and NGOs, in both cash and kind. The delivery of aid was hampered by the shelling of most southern roads, and particularly the coastal road north and south of Sidon.
According to the army report, 147 villages and towns were targeted by the Israelis. This led to the damage or destruction of 6,000 buildings, among which 500 homes were completely destroyed. The destruction affected some 11,000 people, with the cost to built-up property estimated at $24m. The government plans to compensate those affected to a maximum of L[[sterling]]30m ($19,000). Not everyone is satisfied, however, and the army has been accused by some of under-estimating the damage incurred. In some areas, citizens were caught deliberately dynamiting their houses to receive government compensation.
The single worst incident during the entire Grapes of Wrath operation occurred on April 18 at Qana, which houses the Fijian UNIFIL battalion headquarters. An Israeli artillery barrage against the base killed 103 civilians and injured many more, including four Fijian soldiers. Following the attack, 3,000 civilians left UNIFIL bases to find safety elsewhere.