As Lebanon enters the new year, developments in the country have a familiar ring to them. Often, Lebanon appears to enter a new phase of its political development, provoking widespread optimism about its future, only to see traditional power structures re-assert themselves and thwart real change.
A year ago, there was hope that Hezbollah’s defeat in the war with Israel, followed by the downfall of Syria’s Assad regime, would break the stranglehold of Iran and its allies over the country. Later, there was also a belief that financial and economic reform, which had been obstructed since the collapse of 2019-2020 by the political class and sectoral lobbies, and bolstered by Hezbollah’s preference for the status quo, would finally move forward under the reformist Nawaf Salam government.
The picture today is mixed. Lebanon’s government, the most credible in decades, has advanced on several key fronts. Notably, it recently presented a so-called gap law that distributes the $70 billion in losses from the financial collapse, and outlines compensation for depositors. It has also decided to impose a state monopoly over weapons – a move directed primarily at disarming Hezbollah.
The government has also passed other laws, on judicial independence, banking secrecy and restructuring the banking sector, and even a much-needed law imposing filters on neighbourhood generators that supply much of the country’s electricity, but also pollute its skies and kill citizens. Yet despite such efforts, there is a sense that little has changed decisively, and that the government’s departure next year will allow purveyors of stalemate to regain the initiative.
The reasons for this are many, but a main problem is that Lebanon remains a divided society. For as long as this continues, it will fail to rally around good governance options and instead be riven by special interest groups allied with sectarian politicians uneasy with transformational progress. Regionally, it means Lebanon will remain the pawn of more powerful states, its sovereignty a chimera.
Hezbollah’s weapons are an example. While the government took the decision in summer to collect all weapons outside state control, Hezbollah has refused to comply. The reason is that Iran, the party’s main sponsor, does not want to lose a valuable regional card for nothing in exchange. The government, in turn, has wisely avoided disarming Hezbollah by force, which would likely fail and lead to sectarian armed conflict.
In the south, the government’s options have been, similarly, shaped by the preferences of foreign powers. Israel and the US both seek to lock Lebanon into a normalisation process with Israel, which the Lebanese reject. They understand that such a path would tear the society apart and place Lebanon at the heart of regional rivalries involving Israel, Turkey and Saudi Arabia.
There are three major issues the Lebanese will have to watch in 2026. The first is the consequence of the country’s eroded sovereignty, namely the possibility that Israel will resume widespread military operations in Lebanon to decisively weaken Hezbollah, facilitating the party’s disarmament.
For now, negotiations are taking place within the context of the so-called “Mechanism”, the five-party committee to monitor and discuss implementation of the ceasefire agreement between Israel and Lebanon. Recently, Lebanon appointed a civilian to head its negotiating team, satisfying a US request, a move that was met by Israel doing the same.
For as long as the Lebanese bend to US and Israeli demands and make concessions, a major escalation in the conflict may be averted, bearing in mind that Israel continues to attack alleged Hezbollah targets in Lebanon on a near-daily basis. However, once the Israelis meet strong Lebanese push back, they will ramp up the violence to force Lebanon to accept their conditions.
A second central issue in the coming year is parliamentary elections. The major political forces view the outcome as essential, primarily because elections are taking place at a new juncture in the country. Hezbollah and its main ally, the Amal Movement, seek to win all Shiite seats to confirm their hold on the community.
In the Christian community, the Lebanese Forces, who already have the largest parliamentary bloc, want to expand their representation and impose themselves as the paramount Christian political party, not least because this would help make their leader, Samir Geagea, the leading presidential candidate in 2031. While Mr Geagea will be 79 then, Michel Aoun was over 80 when he was elected president, and current parliament Speaker Nabih Berri is 87 today, so age is no obstacle to ambition.
The third dynamic the Lebanese will be watching for is whether the government begins to lead the country out of its financial and economic crises. The gap law has to be approved by the government and parliament but also endorsed by the International Monetary Fund. There has been opposition, mainly by forces trying to ride a populist wave prior to the elections and portray themselves as committed to depositors.
Negotiations over the draft proposal will involve trade-offs and compromises. Yet shaping this is the IMF tying funding to its support for the law: no support, no money. Moreover, while certain interest groups may want to torpedo the law, unless they propose a realistic alternative, it will be difficult to shoot down.
These three issues show that foreign interference, domestic sectarian calculations and the power of special interest groups remain major hindrances for government amelioration. Yet they are mainstays of the political and financial order. Those who thought Lebanon might enter a radically new phase earlier this year may soon regret that the appearance of change often ensures things stay as they are.
