Overview
Today's Deep Dive is 2,037 words and a 13-minute read.
In the last week, after a year of escalating conflict, the Middle East tipped further into the all-out war that observers have feared since the onset of the conflict. On September 27, Israel killed Lebanese Hizballah leader Hassan Nasrallah and other senior commanders of the organization in an air attack on Beirut. In retaliation, Iran launched a massive direct missile attack on Israel on October 1 (the second such attack this year, with the first occurring in April). Nearly two hundred Iranian ballistic missiles were launched simultaneously at Israel and, similar to April, the US, Arab and Israeli air defense systems were able to intercept most incoming missiles. Still, several missiles did enter Israeli airspace and landed in urban areas, causing slight damage and very few injuries. All eyes are now on Israel as it weighs its response to Iran, while in Lebanon Israel has widened its attack on Hizballah, decisively opening a second front in its regional war with a limited ground incursion into the southern part of the country. It may be too early to fully assess the direction in which things are moving, but it is not too soon to make near-term observations.
Israel Decimates Hizballah – for Now
The elimination of Nasrallah was the culmination of an 11-day intense, seamless Israeli military campaign against Hizballah. The campaign began with pager and walkie-talkie attacks, and continued with surgical strikes against the commanders of Hizballah’s missile and drone units, and some of their weapons caches. The attacks caught Hizballah and its senior political and military leadership off guard, disrupting its command and control structure, and reportedly creating havoc and chaos among its operatives.
While the leadership was successfully targeted at the central headquarters in Dahieh and regional headquarters in the South and the Bekaa valley, Hizballah’s artillery batteries in the field continued their almost year-long campaign to support Hamas in Gaza via sporadic and predominantly unsuccessful missile and rocket attacks into Israel’s northern region, with one missile landing in the vicinity of Jerusalem.
Following the successful Israeli decapitation strike, Hizballah is in disarray and attempting to regroup, while simultaneously trying not to lose face with its constituents. Israel is continuing its airstrikes in Beirut and across Lebanon in an effort to capitalize on Hizballah’s vulnerabilities. Despite Israel’s best efforts, tens of thousands of Hizballah fighters remain spread throughout southern Lebanon, in bunkers along the Lebanese-Israeli border and in other parts of the country. Tens of thousands of rockets and missiles are still at Hizballah’s disposal. An outstanding question is whether Hizballah is not launching an all-out assault because its missile infrastructure has been hit hard, or because it is saving them for a later time of its own choosing. At this point, Hizballah is also waiting for guidance and instructions from Tehran. Of note, Hizballah did not use any of its precision-guided missiles over the course of the last year, and has lost a portion of them over the last two weeks to Israeli strikes.
Iran Is Still the Wild Card
In the immediate aftermath of Nasrallah’s assassination, Iran’s Supreme Leader Ali Khamenei stopped short of calling for revenge, and instead declared that Israel would “regret its actions.” He added: “The fate of this region will be determined by the forces of resistance with Hizballah at the forefront.” The Supreme Leader’s position suggests he wants to avoid an open disagreement with elected leaders, including President Masoud Pezeshkian, who has called for a more conciliatory position towards the West. In his September 25 UNGA address Pezeshkian stated Iran wants to play a “constructive role in the region” and offered a restart of talks to restore US and Iranian compliance with the 2015 multilateral Iran nuclear deal (JCPOA).
Iran’s attack on October 1, however, represents a change in the regime’s calculus. If earlier Tehran had signaled it wants to allow Hizballah to respond on its own, and perhaps in concert with the Houthis in Yemen, now it has taken matters into its own hands. The future direction in the region depends in many ways on the decisions the Iranian leadership will make in the coming weeks. In this regard, Iran is the wild card. After the October 1 attack Iran announced it has retaliated against Israel’s strikes in Lebanon, signaling it may be returning to a “business as usual” mode, warning Israel not to retaliate again as it will suffer the consequences. Iran’s military and air defenses are on high alert in anticipation of an Israeli attack.
Israel’s Next Steps
In less than two weeks, Israel has managed to dramatically alter the 18-year security equation with Hizballah, in place since the end of the Second Lebanon War in 2006. Israel’s plan to decapitate Hizballah’s leadership was devised years ago, but PM Netanyahu was reportedly reluctant to carry it out. On September 27, at the urging of Defense Minister Gallant and the IDF senior command, Netanyahu finally gave the green light and the Israeli Air Force (IAF) carried out the successful strike. Since then, Israel has not taken its foot off the pedal and has conducted continued air strikes against Iran-backed targets in Lebanon, Syria, and Yemen, working to break up the “ring of fire” Iran has created around Israel with its proxies and to send a message to Tehran that Israel is willing and able to respond to Iranian aggression in every corner of the region. Through its military actions in recent weeks, Israel has restored much of the deterrence it lost on October 7 last year.
As part of the Israeli government's prioritization of the return to their homes of nearly 80,000 northern Israeli residents displaced since October 8, the IDF also began a limited land incursion into southern Lebanon. The invasion is meant to solidify gains increased precipitously with every successful airstrike against a senior Hizballah target, to push Hizballah from areas near the Lebanese-Israeli border and destroy missiles and launching sites spread throughout southern Lebanon. Israel did not declare its end goal, which raises concerns the IDF may be planning to deploy troops in Lebanon for an extended period of time.
As for an attack on Iran, Israel is considering possible targets. No site in Iran is safe, and while the Biden administration has signaled it opposes an Israeli strike on Iran’s nuclear facilities, such an attack cannot be ruled out (although Israel on its own does not have the capabilities to attack most of Iran’s nuclear facilities, which are situated deep underground). Nevertheless, more likely targets would be military bases and energy facilities across Iran. Israel has vowed a strong response and that may happen in the coming days.
Lebanon Enters New Phase?
Nasrallah’s killing is a seismic shift for the domestic politics of Lebanon, since he and his Shiite Duo ally Nabih Berri, the speaker of Parliament since 1993 and the head of the Amal party were long successful in managing domestic challenges. Although the de-facto start of the Third Lebanon War this week (regardless of the fact it is a limited incursion) undoubtedly gives rise to clichés among US, Western, and Israeli officials and think tank scholars of an opportunity for Lebanese parties to forge a new future for themselves by making the most of the chaos to reassert control over the country, this is unlikely. It is worth noting that the same expectations for a new Lebanon were there during the first Lebanon War (1982-2000) which brought Hizballah into existence, and the Second Lebanon War (2006), which solidified Hizballah’s role in the country, despite the hopes and wishes of the Bush Administration.
Although it is too early to gauge how well Hizballah’s foot soldiers will perform against IDF units that have been battle-hardened in Gaza, and what preparations Hizballah has made since 2006 for an inevitable Israeli incursion, it would be a mistake to expect Hizballah’s political role to diminish significantly in Lebanon because of the decapitation of its military and political leadership by Israel. As for the rest of Lebanon’s political elite, there may be no appetite to further destabilize the bankrupt country by taking on a wounded Hizballah before it picks new leaders, deals with its internally displaced population, and fights against an Israeli incursion. The greatest concern for some analysts is whether a longer than anticipated Israeli presence in Lebanon would lead to mass resettlement attempts by Hizballah supporters in other parts of the country, and rekindle confessional problems.
A Regional Game Changer?
Another big question is the exact impact recent events will have on the region: will it lead to a further widening of the conflict, pitting Israel against Iran in a direct confrontation? Will it weaken Iran’s hand and bring about new Shiite political players in Lebanon, and perhaps additional fallout in Syria and Iraq? Will it be just another historical footnote in the continuum of the region’s conflict? Or will it be a catalyst towards the formation of what Biden and Netanyahu described as an “Abrahamic Alliance,” bringing together the US, Israel, the Abraham Accords states, Egypt, and Jordan, and perhaps Saudi Arabia, in a coalition to finally confront Iran’s malign action? While it may be too early to assess the direction in which the region is heading, it is clear the path to creating a US-led regional coalition will require a “ceasefire for hostage release” deal between Israel and Hamas as a first step, followed by a “day after” plan which will present a clear path to Palestinian statehood. Saudi Arabia, a key legacy policy focus of the Biden Administration, has already indicated it will settle for nothing short of that.
The War in Gaza on the Back Burner – for Now
As Israel has shifted its military focus from Gaza to Lebanon, it has not indicated that it plans to end its war against Hamas anytime soon, or a concrete vision for the day after. Efforts to reach a “ceasefire for hostage release” deal, led by Egypt and Qatar to find a way out of the deadlocked negotiations, are on hold. Analysts suggest that following Israel’s successes in Lebanon, Netanyahu may feel more confident in advancing negotiations on his vision for a deal. Nonetheless, the Israeli populace is unlikely to allow Gaza and its citizen hostages held by Hamas to remain out of view from Netanyahu for the long term.
Energy Market Impacts
The rising tensions are certainly taking a toll on the region’s economies, and an escalation between Iran and Israel, which may include Israeli airstrikes on Iran’s oil infrastructure, will no doubt impact the world’s energy market. While it has not happened yet, such Israeli strikes could lead the Islamic Republic to target neighboring Gulf states’ oil and natural gas infrastructures (similar to its 2019 attack on Abqaiq), which in turn may lead to lower production volumes and rising energy prices. If Israel hits Iranian oil infrastructure targets but Iran does not attack Gulf infrastructure, then Saudi Arabia and the UAE are capable of making up the lost volume given their current spare capacity. According to analysts there is certainly substantial potential for unintended consequences from targeting Iranian oil infrastructure, and the Biden administration is doing its utmost to prevent this from happening.
Geopolitical Risks on the Horizon
The prospect of a broader war in the Middle East increases geopolitical risks across the board. Maritime-based trade though the Persian Gulf, the Red Sea and the Suez Canal risks disruptions to East-West commercial trade. Beyond the oil market, commodities are sensitive to geopolitical shocks and are likely to see increased volatility. CBOE's market volatility index, Wall Street's fear gauge, has risen to 20.40, nearing the peak level just after the start of the Gaza War last October.
Among the many unknowns is if or how Russia and China will respond to the growing Middle East crisis. Both are political allies of Iran, and Moscow has greatly expanded its military relationship with Tehran over the past two years. The Gulf alone accounts for half of China’s hydrocarbon imports, so it has strong incentives to work towards de-escalation; Russia, less so. Russia could see opportunity in extending the crisis in order to distract the US and European allies and to draw down on available military supplies, channeling emergency resupplying efforts to Israel at Ukraine’s loss.
