There's a phrase attributed to Rafic Hariri that captures Lebanon's postwar bargain, because that's what it is, with almost frightening clarity: "we bought peace with debt." After the 1989 Taif Agreement, the men who had waged war entered the state and began administering peace, because it became more profitable than continuing the war.
Reconstruction contracts, borrowed money, bank deposits, Gulf capital and donor support turned the end of fighting into a financial settlement, giving every major bloc a stake in keeping it alive. The end of the civil war in 1990 safeguarded the political class by handing it a new economic arrangement.
Nearly four decades later, Lebanon is being offered another version of the same bargain: disarm Hezbollah, place the south under state control, and the money returns: an IMF programme, World Bank lending, Gulf investment in a southern economic zone. The first bargain was priced in debt and expired in October 2019, when the banks shut their doors. This one is priced in weapons.
Reconstruction is the word being used. Resuscitation is closer.
The arrangement offered to Lebanon is asymmetrical. Hezbollah is asked to disarm, accept verification, and place the south under Lebanese Army control, while Israeli withdrawal remains gradual and conditional. The Lebanese Armed Forces, Lebanon's principal cross-sectarian institution, must enforce state authority against a movement rooted in the same communities from which many of its soldiers are recruited.
Joseph Aoun, president since January 2025, knows what that asks of the army he once led. Ordering it into direct confrontation with Hezbollah – Lebanon's fear – could lead to the same fracture as in the early years of the civil war. And the country supplying the bombs dropped on the south is also the power that decides how the south gets rebuilt. A government that cannot safely fulfil one demand or compel the other keeps both in motion, and both unresolved.
For nearly thirty years, Lebanon spent more dollars than it earned. Diaspora deposits and Gulf capital entered the banks that financed the state, and Banque du Liban defended an artificial currency peg. Governments borrowed to pay salaries, service debt, and rebuild Beirut, while the fixed lira made imports cheap and incomes look stronger than the economy beneath them.
In 2019 the dollars stopped arriving at the rate the system required. The peg became a fiction, the banks locked depositors out, salaries collapsed, and the life built around the 1,500 lira disappeared.
How the money becomes loyalty
The pattern didn't start in 2019. It started at the 1989 Taif Agreement.
The standard complaint at the time was precise: Taif reconciled the warlords, not the people. Reconstruction began only once the political class had survived the war, and the ministries handed out under the new sectarian formula converted that survival into permanence.
Solidere, the Lebanese Company for the Development and Reconstruction of Beirut Central District, founded in 1994, compelled landowners to trade their property for shares rather than compensation, and was financed through the same treasury bills that paid interest to the same banks partly owned by the political class.
Contracts for roads, power and reconstruction were distributed through ministries now held by the men who had fought each other for those buildings a few years earlier, and each ministry became a channel: deposits into debt, debt into contracts, contracts into the jobs, favours, and protection that bind a constituency to its leader. The war had ended. The economy built to finance its end had relocated the same men into the offices that controlled it.
Hezbollah is no outsider to the post-Taif order; it is one of its armed shareholders. Yet disarmament asks one faction to surrender the instrument of its power while the governing order is asked to surrender none of the institutions through which it reproduces itself. The banks, ministries and confessional formula are absent from every agreement on the table. A binding allocation of banking losses, bank recapitalisation or serious tax reform would force every faction to pay. Disarmament concentrates the bill on Hezbollah.
What returns once that condition is met is the same machine that has been running for four decades. An IMF programme supplies the external seal of approval. The World Bank's existing reconstruction framework can expand; bilateral aid and Gulf capital become easier to mobilise; the money returns through the same state machinery. Hezbollah is weakened. The post-Taif order is refinanced.
Disarmament is the maximum reform the system can absorb without dissolving. Everything the system cannot survive – a law dividing the banking losses, a tax base, the confessional formula itself – stays exactly where it has been since 1989. Past that point, real reform starts touching their own accounts, and none of them will vote for that.
What that refinancing looks like in practice is not abstract. A house in the south does not become a reconstruction project on its own. Someone has to recognise the damage, decide who is eligible for compensation, choose which villages are prioritised over others, design the tender and pick the contractor, approve the payment, and rule on whatever delay or appeal follows. Every one of those decisions is political, and Lebanon has followed this exact sequence twice before.
After Taif, reconstruction aid flowed through the Council for Development and Reconstruction, an agency established in 1977 to sit above politics, but captured by it within two decades. Rafik Hariri and, later, Nabih Berri took command of its board, and it became a byword for sweetheart deals.
Its board went essentially unchanged from 2006 until 2025, extended by a 2009 decree that kept the same members in place indefinitely. Split after Taif between Hariri and Jumblatt, the Central Fund for the Displaced was meant to resettle the displaced from the civil war within three years for $500 million. It took ten years and cost over a billion, while investigators found that residents were compensated for properties that never existed and officials at the Ministry of Displaced had accumulated real estate no salary could explain.
The current round runs the same route. The World Bank's Lebanon Emergency Assistance Project, with $250 million in funding against a $1 billion framework, is implemented through the CDR according to international benchmarks. The ministries distributing that money, and appointing those consultants, are the same ones allocated under the sectarian formula in 1990.
Ask, then, what disarmament actually buys, if the framework is implemented, verified and completed. It buys a state with one gun instead of two. It does not, on its own, buy a different state.
A promise with no deadline
The sovereignty case is real. Lebanon cannot remain a country where Hezbollah decides when war begins. But Lebanon's constitutional order has been promising its own abolition for thirty-six years. The 1990 amendments name the end of political confessionalism as a national goal and assign parliament a staged plan for carrying it out. No deadline was imposed on the people who benefit from delay.
At what point do we stop treating each crisis as a separate malfunction? The banking collapse, the port explosion and the stalled IMF negotiations were different events, yet each ran into the same structure: divided authority, protected officeholders, concealed responsibility, and no institution strong enough to impose a settlement on the others.
Today, new loans diagnose a shortage of money. Reconstruction diagnoses destroyed buildings. Neither diagnosis reaches the political machinery that makes accountability impossible. The post-Taif order receives new money, new legitimacy, and another lease on life.
In Beirut's southern suburbs, a resident named Mohammad has been waiting since the ceasefire for someone to open a file on his damaged home and business. Not the state's reconstruction project, which hasn't reached his street. Not Jihad al-Bina, Hezbollah's own compensation arm, which paid out roughly four hundred million dollars after the 2024 war but has gone largely quiet on this one, with its funding from Tehran disrupted by sanctions and the fall of Assad.
Two authorities spent twenty years competing for the right to be the name a family calls when the roof comes down. For the moment, in Mohammad's street, neither one has come.
Karim Salam is a Lebanese writer and researcher focused on Lebanon, political economy and the wider Levant. He is the founder of @lebaneseacademic, a research and media platform exploring the region’s politics, history and society.
Follow Karim on Instagram: @lebaneseacademic
Join the conversation: @The_NewArab
Have questions or comments? Email us at: editorial-english@newarab.com
Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.