KUWAIT CITY, Aug 4, (Agencies): Lieutenant General Pilot Bandar Al- Muzain, Chief of General Staff of the Army, emphasized the critical importance of maintaining the highest levels of readiness and vigilance during his inspection of several Air Defense Force sites on Saturday evening, reports Al-Seyassah daily.

During his visits, Al-Muzain underscored the necessity of continued hard work to safeguard the security and safety of the homeland, reinforcing the military’s commitment to national defense. Meanwhile, the United States has urged its citizens to leave Lebanon and is increasing its military presence in the Middle East as a precautionary measure, according to Jonathan Finer, the White House National Security Council deputy adviser, on Sunday. “Our objectives are de-escalation, deterrence, and the defense of Israel,” Finer stated during an interview with CBS’ “Face the Nation.”

This move comes amid heightened regional tensions following the assassination of Ismail Haniyeh, Hamas’ top leader, in Tehran on Wednesday, which occurred just one day after an Israeli strike in Beirut killed Fuad Shukr, a senior military commander from Hezbollah, another Iran-backed group like Hamas. A recent economic report highlights the potentially severe impacts of escalating geopolitical risks and the prospect of a full-scale war on the economic prospects of the region, particularly in Lebanon and the occupied territories, as well as on Iran’s economy, which is already struggling under international sanctions.

According to the report published on The National website, Lebanon’s economy is already grappling with economic and political stagnation. A full-scale war could exacerbate these issues, leading to a significant contraction in GDP. The Lebanese economy is at risk of collapse if the conflict intensifies. Analysts suggest that while a fullscale war is not inevitable, ongoing tensions could still cause considerable economic damage across the Middle East. Naeem Aslam, Chief Investment Officer at Zai Capital, expressed skepticism about Iran’s capability to engage in a full-scale war, noting that markets do not currently price in such a scenario. Jack Kennedy, Head of Country Risk in the Middle East at Standard & Poor’s Markets Agency, warned that if the conflict escalates, coordinated attacks could come from multiple fronts, including Iran, Lebanon, Syria, Iraq, Yemen, and the Palestinian territories.

Gary Dugan, CEO of CIO Global Investments, pointed out that escalating conflict might lead to tighter sanctions on Iran rather than easing them. Meanwhile, the occupied territories have been forced to borrow extensively to finance the war. Elliot Garside from Oxford Economics noted that increased domestic borrowing to cover the budget deficit might lead to more debt issuance, potentially lowering the credit rating of the occupied territories and making future financing more challenging and expensive. The occupied territories’ economy is projected to grow by 1.5% in 2024 and 4.2% in 2025. The report also notes that an extended regional conflict would likely impact investor confidence and affect sectors such as tourism, shipping, retail trade, and real estate. Standard & Poor’s estimates that the tourism sector in Lebanon, Jordan, and Egypt, which accounts for 12% to 26% of current account revenues, could lose approximately $16.1 billion due to the escalation of the war.

Maya Senous, an economist at Oxford Economics, emphasized that travel, tourism, transportation, and retail sectors would be most affected by a full-scale regional war. A rise in oil prices due to Iran’s direct involvement could reignite global inflation, adding to economic pressures worldwide. Nassib Ghobril from Byblos Bank predicts that the Lebanese economy could shrink by 10% to 15% this year due to potential widespread damage to infrastructure from the conflict. The tourism sector, already suffering from the ongoing conflict, is expected to face further delays in recovery. Gary Dugan noted that broader attacks on the occupied territories could worsen its economic situation, especially given its large budget deficit. There are also signs that international companies are postponing investments in the region due to the unstable situation.