“The price of prosperity has already been paid,” read an ad that Lebanon’s Investment Development Authority ran in the summer of 1996. “Now is the time to harvest.” The ad also mentioned, euphemistically, that the price had been “a period of unrest.” The message was meant to convince international investors that Lebanon has reemerged as a stable location for big finance and capital. At the same time, it reflected the feeling of many Lebanese that the civil war (1975-1990) had been due to external, regional, rather than internal, domestic circumstances, and that Lebanon therefore ought to be compensated for all the suffering.
As is sometimes forgotten, Lebanon is the only state on whose soil the Arab-Israeli conflict is still fought militarily. By early 1996, it seemed that a Syria-Israel agreement on the Golan was within reach and that the conflict over the Israeli occupation of Lebanon’s southern border strip was about to be resolved. With the “Lebanese track” tied to the Syrian one, Lebanon had no active part in the negotiations with Israel. The Lebanese government, however, has been preparing for an eventual peace treaty more than the Syrian leadership. Quite symbolically, during Operation Grapes of Wrath — Israel’s 16-day war on Lebanon in April 1996 — construction work on the extension of Beirut international airport continued uninterrupted even as the nearby motorway was being bombed.
The airport, the coastal highway, the new motorway to the Syrian border, the rehabilitation of the telecommunications network and, most importantly, the reconstruction (or restructuring) of Beirut’s city center are all part of Prime Minister Rafiq al-Hariri’s program of infrastructural development intended to make the country a regional center of finance and services in a post-peace Middle Eastern division of labor. With its tradition as a service economy, its economic and cultural openness, entrepreneurial spirit and relatively well-educated, cosmopolitan work force, Lebanon’s leaders think that the country is much better equipped than many other states of the region to face and benefit from new forms of economic competition in the Middle East. Beirut has been eager to conclude negotiations with the European Union over a so-called partnership agreement. In contrast to Syria or other regional states, Lebanon uses import tariffs as a source of state income rather than as a means to protect local industries. Neither the government nor Lebanese industry is therefore particularly wary of free trade with Europe or others, provided that lost tariffs can be replaced by other forms of state revenue. 
Undoubtedly, Israel would be a strong competitor to Lebanon in a post-peace regional environment. But Lebanon would be better able to compete with Israel than other Arab states. Little wonder therefore that many in Lebanon viewed Israel’s Grapes of Wrath as an attempt to obstruct Lebanon’s reconstruction process. In fact, in addition to human and material losses, Grapes of Wrath dealt a blow to reemerging international business confidence in Lebanon. Little wonder, too, that Lebanon’s political elite was particularly concerned about Netanyahu’s election victory and the virtual freeze of the peace process between Israel and Syria.
The Socio-Economic Groundwork
Whether Lebanon is indeed prepared or preparing itself for the future is an issue of domestic debate. Some intellectual critics claim that Hariri has no vision at all; that he is simply parroting the jargon of neo-liberal ideology, trying to run the government and the country like a company, and furthering both his own material interests and that of his allies and cronies.  Corruption, never an alien phenomenon in Lebanon’s past, has been increasing with respect to the sums of money involved. Kickbacks from public spending are counted in millions rather than thousands. To mention but one example, senior officials in charge of the reconstruction program openly acknowledge that the contract for the southern part of the coastal motorway, won by the construction firm of Randa Berri, the entrepreneurial wife of Parliament Speaker Nabih Berri, has been overpriced by a three-digit million dollar sum.
Although not particularly visionary, Hariri’s program is nonetheless a project for Lebanon’s future. The “Hariri Project” aims at making Lebanon a center for regional business and finance, as well as a tax paradise. Priority is given to the economic infrastructure that foreign and expatriate capital will, in the optimistic version, make use of once regional peace arrives. Banking on peace is risky, because peace might not occur before interest has to be paid on a reconstruction loan. To fund its projects, the government has been borrowing heavily, ignoring IMF and local experts’ warnings regarding the growth of the country’s international and domestic debt. Debt service stands at more than 40 percent of the 1997 budget; as a result, budgetary policies are extremely tight on social expenditures and public sector wages. Also, through its own borrowing on the domestic market, the state is crowding out private investors. Certainly, it is undeniable that the country has been brought back to work since Hariri was first appointed prime minister in 1992. Beirut today is the largest building site in the Middle East. Inflation is low and the Lebanese pound has stabilized. Economic growth has been estimated at 9 and 6.5 percent in 1994 and 1995, respectively, and at 4 percent in 1996, the decline not only due to austerity and reduced private investment but to the direct and indirect effects of Israel’s April war on the country. 
Aside from the financial risks it involves, the Hariri project is under criticism for its social coldness. Government policies seem to favor the wealthier parts of society — demonstrated by the reduction of income and corporate taxes to a flat 10 percent — and seem to care little for the less well-to-do. More than one quarter of the population is estimated to live below the poverty line, mainly as a result of war and displacement.  Tensions are high between the trade unions and the Hariri government. By rejecting union demands for cost of living wage and salary increases, Hariri is “socializing” parts of the reconstruction costs. When unions called for a general strike twice in 1996 the government responded by flexing its muscles rather than seeking an agreement, at one point even imposing a curfew to enforce an overall ban on demonstrations.
Trade union and social demands have become the common denominator of a broad, but in no way united, opposition alliance. This alliance was established after the 1996 legislative elections by political forces ranging from Christian hardliners close to exiled Gen. Michel Aoun on the one hand, to pro-Syrian leftists and Hizballah, on the other. Except for notorious opponents-in-government such as Walid Jumblatt, Hariri’s economic and social policies face little opposition from within the political establishment or from Syria. Damascus constantly interferes with Lebanese sovereignty, particularly where questions of external and internal security are concerned. Economic policies, however, are left to Lebanon’s own decision makers. The Syrian leadership, tending to view Lebanon not as competitor but rather as complement to its own economy — some would even speak of Lebanon as Syria’s Hong Kong — is interested in the success of Lebanon’s reconstruction process and in the job opportunities this process offers for a substantial part of Syria’s unemployed labor force. Lebanese cabinet ministers in charge of economic portfolios are Hariri’s own men — a handful of whom were actually employed in his business empire before he recruited them into government. Lebanon’s parliamentary elections of 1996, which despite a certain measure of fraud and manipulation were no doubt real elections, have installed a chamber whose largest “faction,” in terms of class, rather than political orientation, is a group of contractors and multi-millionaire businessmen. Their number has increased considerably at the expense of middle-class professionals and intellectuals who used to be the backbone of Lebanon’s parliament. Traditional leaders and notables have more or less maintained their relative weight. 
To attract and maintain the confidence not only of local and international capital, but of its citizens, Lebanon needs to achieve substantial political consensus and national integration. In the immediate aftermath of the civil war, as Lebanon’s Second Republic was formally established on the basis of the 1989 Ta‘if agreement, the main approach of Lebanon’s ruling elite was to produce an image of integration that would facilitate acceptance of the new order. This new order entailed the redistribution of legal political power at the expense of the Maronite part of the political class as well as Syria’s de facto hegemony over the country. One myth simply held that there had been no civil war in Lebanon but, to quote President Elias Hrawi, “only a war of others on our territory.”  As much as this myth might prepare the ground for a superficial reconciliation of people who had been at war with each other — placing the blame for most of the “events” on the Palestinians — it is not sufficient to serve as the ideological basis for national integration, or nation-building. What came closest to a formula of reconciliation was an idealized version of the Ta‘if agreement, the document of national understanding produced at the conference of Lebanese deputies in Ta‘if, Saudi Arabia, in October 1989, which both acknowledged the fact of civil war and claimed no winners or losers.  This seemed to be helpful in reassuring the Christian population that such constitutional changes as stipulated by the agreement — changes that would correct the pro-Christian and pro-Maronite bias of Lebanon’s constitution and political system — would nevertheless not make them second-class citizens. But the no-winner-no-loser formula also laid the groundwork for later complaints that Ta‘if was not being implemented fairly.  Many Christians harbor resentment toward the new republic, often referred to as al-ihbat al-masihi (Christian frustration). The problem, of course, is not with the formal distribution of power, as Christian representatives like President Hrawi occasionally try to suggest when calling for constitutional changes that would return some prerogatives to the (Maronite) president of the republic. Rather, Christian uneasiness with post-war Lebanon results from the fact (which no myth can argue away) that, whatever their formal representation, the leadership of the country is today in the hands of Muslim politicians. In terms of a confessionalist group logic, there is no doubt about who the winners and losers are. While a generation of Maronite leaders — Amin Gemayyel, Michel Aoun and Samir Geagea — has been defeated or ousted, either in the last stages of the war or thereafter, a new Christian leadership has yet to emerge.
Hariri, who was brought in as prime minister in 1992, two years after the end of the civil war, has followed a practical approach to consolidating post-war Lebanon. This approach can be characterized as functional authoritarianism. It combines all the functional aspects of the “Hariri project” — physical reconstruction and the creation of a friendly business environment — with professional management of Lebanese issues on the international scene and a strong element of authoritarianism beyond the simple restoration of state functions. Hariri’s government made a good impression on international diplomats when, during and after Israel’s Operation Grapes of Wrath, Hariri toured Western capitals, apparently dealing with other statesmen on an equal basis.  Also in 1996, two visits of French President Jacques Chirac to Beirut, a White House meeting between Hariri and President Bill Clinton and the successful conclusion of the “Friends of Lebanon” meeting in Washington, from which Hariri returned with a $3 billion-plus pledge of grants and soft loans, all lent credibility to the claim that Lebanon had reemerged as an international actor in its own right.
Domestically, the first four years of Hariri’s premiership have brought home to Lebanese citizens the fact that the government is no longer an empty shell as it had been during most of the civil war years. It is, rather, a tough regime, whose main pillars, aside from Hariri are Nabih Berri, Walid Jumblatt, army chief Emile Lahoud and, by virtue of his position rather than personality, President Elias Hrawi. This regime does not allow opposition to the current distribution of power nor to Syria’s involvement in Lebanon. In fact, the general amnesty for all but a few of the crimes and atrocities of the civil war has been withdrawn for those who refused to cooperate with the regime. Samir Geagea, leader of the largest Christian civil war militia, the Forces Libanaises, who blatantly challenged the regime in 1992, has been jailed and on trial for various post-war and wartime murders since 1994.  His predecessor, Elie Hobeika — notorious for his role in the 1982 Sabra and Shatila massacres — allied himself with Syria as early as 1985 and has succeeded in becoming one of the “permanent” government ministers of the new republic.
The authoritarian tendencies of the present regime are apparent. The constitution was manipulated to allow an extension of President Hrawi’s term, the electoral law of 1996 was tailored to ensure political “stability” and the military has been put in charge of maintaining public order. Public demonstrations have been banned since 1994 and numerous people suspected of connections to opposition groups have been arrested following a brutal attack on Syrian workers in a Beirut suburb in December 1996. All of these actions have been understood as attempts to intimidate potential and real political opposition.
The regime also seems to be wary of media pluralism. There is some agreement that the state should seek to regulate the audio-visual media landscape characterized since the war by the proliferation of more than 100 radio stations and some 50 television networks. There are, however, substantial fears that Hariri and the Syrians will use regulation to do away with much of Lebanon’s traditional freedom of the media. In 1994, the parliament overruled a government decree stipulating that news and political broadcasts would be restricted to state television and radio. Immediately after the 1996 election, the government passed another decree seen by many as an onslaught on pluralism and as an attempt by the prime minister and his political partners to protect their own business interests, in this case their share of the audio-visual advertising business. The decree stipulated that only a limited number of private radio and television stations would be licensed, and unlicensed stations would have to cease operations. Moreover, only four private television networks and three private radio stations were allowed to send news and political programs: Hariri’s own TV al-Mustaqbal and Radio Orient; Murr TV owned by the brother of the minister of the interior; a new network still in the process of being set up and owned by Nabih Berri and his friends  and the LBC television and Free Lebanon radio networks. The latter two were formerly owned by the outlawed Forces Libanaises and are now under the control of a group of investors considered close to some Christian leaders from northern Lebanon and some of the enterprising sons of Syrian officials. An exception was made at Syrian insistence for Hizballah which would still be allowed to transmit news related to anti-Israeli resistance operations. As public protests mounted, the government showed some leniency, indicating that additional networks could be licensed. At almost the same time, however, the government decreed that all news and political programs transmitted by satellite would be subject to censors. In particular, news that might offend friendly Arab governments would be banned.
Liberals, Christian hardliners, Islamists, trade unionists and outspoken leftists have all been critical, to varying degrees, of Hariri’s authoritarian tendencies, as well as of particular aspects of his reconstruction program. Apparently, such criticism has not overly disturbed the prime minister. On the contrary, in his election campaign Hariri took the offensive, using a discourse that portrayed himself not only as the guarantor of reconstruction, but also as the man who had brought authority back to Lebanon. The elections, according to his discourse, were a confrontation between “moderation and extremism” (al-i‘tidal wa al-tatarruf). “Moderation” meant to “accept the logic of the state.” “Extremism” referred particularly to Hizballah, but also implicitly to all other opposition forces rejecting Hariri’s form of state building.  In Beirut, where Hariri ran for a seat, he and his list won 14 out of the 19 seats. Those results cannot be attributed to manipulation or fraud. Rather, voters seem to have accepted, and voted for, Hariri’s project, giving the prime minister a popular mandate for his political and economic plans.
Still, politics in Lebanon, six years and a full legislative period after the end of the civil war, are like a juggler’s exercise. There are three main overlapping conflicts. First, there is the cleavage between the current regime and those old and new political elites who have so far refused to support the regime’s post-war order, because the share of political power they have been offered is unacceptably limited.  Weakened since the end of the civil war, these groups could regain considerable public support if the regime fails to deliver on its promises of reconstruction and economic recovery. The second conflict is between the winners and losers of the reconstruction process. The regime has to consider the threat of an antagonistic coalition comprising the political losers of the post-war order, the trade unions (which in principle support that order), and other opposition forces, such as Hizballah, that are both critical of the regime’s domestic policies and of its interests in reaching a settlement with Israel. The third line of conflict runs between an authoritarian-minded leadership and its liberal opponents. Hariri knows, however, that the country’s intellectuals and other elements of civil society now critical of his project will eventually try to influence his policies rather than risk his fall. Moreover, a liberal opposition is unlikely to find any support or encouragement from other regional states.
To prevent mass protest against its economic and social policies and to preclude opposition forces from exploiting discontent, Hariri uses the army to guard public security and enforce the general ban on demonstrations. Conflicts between the unions and the government are thus kept under control. In return, the army has been privileged and strengthened, becoming assertive in its demands for salaries and promotions. Within the security forces a new corporate spirit has emerged. More than a few military leaders see the army as the only reliable pillar of the state, that it alone can guarantee civil peace after an eventual withdrawal of Israeli and Syrian forces from the country and that it would be best to promote one of their ranks to the very top. Army chief Emile Lahoud, in fact, is a strong candidate to succeed President Hrawi — acceptable to the Syrians, the West and a large number of disgruntled Christians who see him as one of the few Maronite figures within the system that could be a counterweight to Hariri.
To counter criticism of the regime’s insensitivity to increasing inequalities and to its authoritarian tendencies, those close to it point to the functional requirements of the reconstruction program. The country has to be fit for regional competition; only a business-friendly environment will eventually guarantee work and employment for the largest possible number. Therefore, some economic imbalances will have to be accepted. Thus, the argument continues, to strengthen its sovereignty, the Lebanese regime must prove to the Syrian leadership, the Israelis and the West, that the country is under control. The regime itself can deal with any political force that might seek to challenge either the Syrian regime or regional rearrangements that might result from an Arab-Israeli settlement.  Syria’s redeployment of some of its troops from Beirut and parts of Mount Lebanon in the aftermath of the first rounds of Lebanon’s 1996 elections signaled the Syrian leadership’s confidence in the Lebanese government’s ability to guarantee internal security, political stability and the reelection of some of Syria’s main allies and friends.
Hariri’s first four years may be remembered not for his personal electoral victory and his image as a leader of scale, but for the shift in the lines of political conflict. In contrast to the immediate post-civil war period, political debate during the election campaign and after has been primarily concerned with social and political issues — citizens’ rights, public freedoms, respect for the constitution, economic reconstruction, social policies and even relations with Syria. Given that the 1992 elections still largely represented a continuation of the war by nonmilitary means — mainly fought along the civil war lines of division  — the significance of this development for the emergence of a viable polity can hardly be underestimated.
 Such partnership agreements, as part of the EU’s so-called Mediterranean initiative launched with the Barcelona Conference of November 1995, basically stipulate the establishment of a free trade zone between the EU and its individual partners by 2010, financial aid from the EU, and an institutionalized political dialogue. As an example of demonstrative Lebanese self-confidence regarding the prospects of globalization and even competition with Israel, see the interview with the president of the Association of Lebanese Industrialists, Jacques Sarraf, al-Nahar, May 20, 1996.
 See, among others, Joseph Samaha, Qada’an, la Qadar fi-Ikhlaq al-Jumhuriyya al-Thaniyya (By Decision, Not by Fate: On the Morals of the Second Republic), (Beirut: Dar al-Jadid) 1996.
 Economic data and estimates are based on Banque Audi’s Quarterly Economic Report, various issues.
 See Antoine Haddad, “The Poor in Lebanon,” Lebanon Report (Summer 1996).
 See Volker Perthes, “Die Parlamentswahlen im Libanon: Akzeptanz des Faktischen,” Orient 38/1 (1997).
 Quoted from al-Hayat, October 11, 1993. Some other myths and legends that have been invented to patch over the differences of the war (such as the myth that the militias did not represent anyone but themselves) are dealt with by Samaha, Qada‘an, la Qadar, pp. 27-38.
 For details of the proceedings and outcome of the conference, see Theodor Hanf, Coexistence in Wartime Lebanon: Decline of a State and Rise of a Nation (London: I. B. Tauris, 1993).
 One of the authors extensively riding this argument (Ta‘if being good but unfairly implemented) is Albert Mansour. See his Al-Inqilab ‘ala Ta‘if (The Coup Against Ta‘if) (Beirut: Dar al-Jadid, 1993).
 See Paul Salem, “In the Wake of ‘Grapes of Wrath’: Meeting the Challenge,” in Rosemary Hollis and Nadim Shehadi, eds., Lebanon on Hold: Implications for Middle East Peace (London: Royal Institute for International Affairs, 1996), pp. 75-78.
 Geagea has been sentenced to life imprisonment for the 1990 assassination of Dany Chamoun, leader of the National Liberal Party and a rival for the leadership of the Maronite community. He has been acquitted of having blown up a church in 1994, but he is still accused of being involved in the civil wartime assassination of a Christian lawyer and of then Prime Minister Rashid Karama.
 Berri has officially denied that he is involved in the establishment of the network. See al-Hayat, September 18-19, 1996.
 See Perthes, “Die Parlamentswahlen im Libanon.”
 In the first place, these are Maronite Christian elites, including the remnants of the Forces Libanaises, the Chamounists (National Liberal Party) and some independent leaders who supported the Ta‘if agreement in expectation of a better share in the post-war order than they actually obtained. Some leaders from other communities share similar attitudes. A prominent example is former speaker of parliament Husayn al-Husayni.
 We can certainly expect that Lebanon will be called upon not only to disarm Hizballah, but also to contain it politically, along with and after an Israeli withdrawal from the occupied southern border strip. Apart from that, one of the most important issues for Lebanon in the peace process is the issue of Palestinian refugees. As it is unlikely that more than a tiny minority of Lebanon’s Palestinian population would be able to “return” to the Palestinian Territories (the majority of Palestinian refugees in Lebanon come from towns and villages now inside Israel, not in the West Bank and Gaza Strip), most of them are likely to remain in Lebanon. This implies that Lebanon will remain the most fertile ground for radical Palestinian opposition factions that may try to carry on the struggle with Israel even after a “final status” agreement. It is likely that Lebanon will have to grant permanent residence and civil rights close to citizenship to most of its Palestinian inhabitants, a possibility not very much to the liking of a substantial part of the Lebanese population.
 See Volker Perthes, “Problems with Peace: Post-War Politics and Parliamentary Elections in Lebanon,” Orient 33/3 (September 1992), pp. 409-432.