A Hamas and Houthi War Is Bad Enough. Get Ready for War with Hezbollah.

The war between Israel and Hamas has been going on in Gaza since the October 7, 2023, massacre of Jews by Hamas cowards in southern Israel.

The Israeli Defense Forces (IDF) moved first into Gaza City, which is the largest city in Gaza and adjacent to the Israeli border. Then they moved to Khan Yunis, a smaller city in central Gaza. Finally, the IDF assaulted Rafah, which is the southern part of Gaza, on the border with Egypt.

The purpose of all three assaults was to annihilate the Hamas fighters. The original fighting strength of Hamas was about 40,000 troops. It will be necessary to kill at least 30,000 to reduce Hamas to the point where it no longer constitutes an effective fighting force. Perhaps 25,000 Hamas fighters have been killed already.

It’s not difficult to estimate when this war will be over. It might take another month or so to kill another 5,000 Hamas troops. At that point, Israel will be able to end the main fighting and move to a plan for the post-war administration of Gaza.

The problem is that this might not be the end of the fighting for Israel and the IDF. A new war is brewing on Israel’s northern border with Lebanon.

The threat in Lebanon comes from an Iran-allied terrorist army called “The Party of God” or Hezbollah, which controls most of southern Lebanon adjacent to Israel.

Lebanese society as a whole is not deeply anti-Israeli. It includes Maronite Christians, expatriates and Druze who are able to get along with Israel. Still, Hezbollah is rabidly anti-Jewish and as a Shite sect is closely aligned with Shite Iran.

Hezbollah also has over 10,000 missiles aimed at Israel and ample supplies of artillery shells, drones and other weapons with which to attack the area around the Sea of Galilee. Some of the Hezbollah missiles can also reach Tel Aviv and Jerusalem.

This new war is likely to be even more intense than the war in Gaza. Israel will have to rely on its Iron Dome air defense system as well as Patriot anti-missile batteries supplied by the U.S. The Israeli Air Force will also resort to heavy bombing and efforts to disrupt Hezbollah’s command and control systems.

The risk of escalation including more direct missile attacks between Israel and Iran is high. Let’s hope the fighting in Gaza is over soon. But let’s not be naive about what comes next.

It looks like a case of finishing one war and then fighting another with no break in the action. Investors should prepare for the volatility that comes with this degree of geopolitical uncertainty.

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