On August 5, Lebanon’s government took the unprecedented step of tasking the Lebanese army with presenting a plan to disarm Hezbollah by the end of year. The decision has pushed the country into a new phase of uncertainty and tension, as most of the current conversation has shifted toward the disarmament issue.
Months into the government’s mandate, the reform momentum that followed the election of Joseph Aoun as president and the nomination of Nawaf Salam as prime minister has been swiftly and efficiently derailed by Lebanon’s powerful banking lobby and sectarian leaders who succeeded in manipulating public opinion and weaponizing sectarian considerations to resist structural changes. The process of reform obstruction is based on complex and interconnected elements, both domestic and foreign. Five main factors are contributing to blocking the reform plan, some deliberately and others inadvertently. Understanding these dynamics could help lift these hindrances.
The banking lobby’s existential battle
Six years into the 2019 economic collapse and the deliberate inaction of the successive governments that accelerated Lebanon’s freefall, the banking lobby finds itself for the first time facing accountability. Foreign pressure for the restructuring of Lebanon’s financial sector has never been more real, leading the parliament to pass a landmark law that lifted bank secrecy, a long-time taboo in Lebanon.
Amid mounting pressure, the banking lobby waged an aggressive smear campaign targeting reform advocates, including the prime minister, ministers, “Change” MPs, independent media, as well as economists and pressure groups. Their efforts paid off, and the momentum behind lifting bank secrecy quickly faded. Soon after, the banking lobby secured the appointment of Central Bank Governor Karim Souaid, whose public statements downplay the banks’ role in the financial collapse, shifting most of the blame onto the state. Souaid also entertains problematic propositions to repay depositors’ money, such as selling or investing in gold reserves, the country’s most valuable asset. Since his appointment, Souaid has focused on derailing two key processes: the restructuring of bankrupt banks and the allocation of the 2019 financial collapse losses between the state, the banks, and depositors.
Souaid’s appointment was made possible through the lobbying efforts of the banking lobby, especially prominent banker Antoun Sehnaoui whose name resurfaces behind smear campaigns and lawsuits targeting reformist groups and independent media. One evidence of the connection between the two men was manifested through Souaid’s decision to hire US company K2 Integrity, without bidding, to support the central bank in combating money laundering. K2 Integrity’s global head of jurisdictional services, Daniel Glaser, is the former financial advisor of Antoun Sehnaoui. Sehnaoui also recently made a financial contribution to Glaser’s initiative, the US-Israeli opera at the Kennedy Center in Washington.
Joseph Aoun’s risky bets
Since his election as president, Joseph Aoun’s positions attest to his reluctance to pursue a bold path toward structural reform. Instead, the president is carefully consolidating power by appeasing international actors as well as the country’s political and financial establishment.
Aoun’s role in the appointment of Karim Souaid raised some doubts about his eagerness to properly take on Lebanon’s financial establishment. Indeed, the president endorsed him as his sole option for central bank governor, leading to heightened tensions with Prime Minister Salam, who was favoring a compromise candidate. The link between President Aoun and the banking lobby can be seen in his entourage, as his advisor for financial affairs Varouj Nerguizian is a board member of Souaid’s company Growthgate.
The president is carefully consolidating power by appeasing international actors as well as the country’s political and financial establishment
Aoun’s conciliatory approach was also visible in tackling the Hezbollah issue, to appease both domestic and international actors. The president appointed Ali Hamiye, a former Hezbollah-backed minister, as his advisor for the reconstruction of South Lebanon, but as the US pressure to disarm Hezbollah intensified, Aoun made clear statements reasserting the principle of state monopoly of arms.
Furthermore, the president’s warmer relationship with Speaker of Parliament Nabih Berri enabled the two men to set aside their differences and agree on key figures to be appointed in the judiciary and security apparatus who serve their mutual interests. This constituted a blow to the meritocratic standards Aoun had pledged to uphold during his inaugural speech.
Nabih Berri’s power consolidation
After the destruction of most of Hezbollah’s political and military command in the last Israeli war on Lebanon, 87-year-old Parliament Speaker Nabih Berri has emerged as the country’s most influential Shia political leader. The handover between Hezbollah and Berri has been formalized through Hezbollah’s Secretary General Naim Qassem dubbing Berri “the older brother,” and entrusting him with the task of negotiating the ceasefire with Israel. Today, through his position as the Shia community’s sole interlocutor with the US, Berri was able to further consolidate power.
As a key player in Lebanon’s post-civil war settlement after 1990, Nabih Berri has installed his protégés in key public sector positions over the past decades and is widely associated with the corrupt state bureaucracy, just like other former warlords. As speaker, he can convene or suspend sessions at will, block legislation, and shape parliamentary agendas, tactics he has used in the past to block elections and legislations. The recently adopted law on judicial independence, initially celebrated by civil society after years of lobbying, was watered-down through last-minute amendments engineered under his watch. The modified law was then adopted without a majority vote, or even a debate, with only a few parliamentarians called to vote.
As speaker, Berri can convene or suspend sessions at will, block legislation, and shape parliamentary agendas, tactics he has used in the past to block elections and legislations
Furthermore, the Amal Movement, Berri’s political party, played a key role in obstructing financial reforms since the 2019 economic collapse. Until recently, the leader of the party’s parliamentary bloc Ali Hassan Khalil continued to oppose the principle of lifting bank secrecy, and pushed to limit the scope of the law despite the international pressure that made other pro-bank MPs shift positions.
Berri’s influence over the judiciary has been equally disruptive, as he insisted to impose his candidate Zaher Hamadeh as financial prosecutor, against the will of the minister of justice. Hamade’s political biases showed, when he ordered the arrest of a spokesperson to the Beirut Port blast victims’ families after a protest. While Berri’s first choice was not selected, Maher Cheiato, another of Berri’s approved judges, was chosen for the position. Berri also pushed Aoun and Salam to postpone a parliament session in order to secure parliamentary immunity for MP Ghazi Zaiter, who had been summoned for interrogation as part of the Beirut Port explosion investigation.
Reformists’ uncoordinated actions
Nawaf Salam’s appointment as prime minister was largely the result of coordinated efforts between “Change” MPs and grassroots groups, who capitalized on a favorable international context. However, in the face of a pro-active political and financial establishment fiercely resisting change, the reformist camp did not maintain that level of coordination, and inadvertently contributed to hindering the reform path.
The appointment of Salam has successfully galvanized Lebanon’s anti-establishment base. Despite this, ties between grassroots constituencies and the government remain weak. The prime minister and his ministers, drawing on their professional and academic backgrounds, have taken a cautious, technocratic approach to complex political dossiers. The insufficient mobilization of public opinion and grassroots activists by Salam represents a missed opportunity to rally support in the political battles to come. Ultimately, limited public communication and an inward-looking approach weakened ties between reformists ministers and the anti-establishment grassroots base, deflating popular pressure for reform.
The weakness of the reformists’ political infrastructure—including parties, syndicates, and pressure groups—is also to blame. The absence of strong parties that connect anti-establishment MPs with their voter base is limiting the ability of grassroot mobilization, and hence Salam’s efforts for reform.
The shift in the US position
The initial breakthrough that led to the lifting of the bank secrecy law was the product of both a local momentum for reform and a clear US imperative to kick-start the financial restructuring plan. The US foreign policy back then was adamant that political and financial reforms, and resolving Hezbollah’s disarmament question, came hand-in-hand.
Israel’s near-daily violations of the ceasefire, combined with a US policy shift prioritizing the disarmament question over anything else, has further fragilized the reform path. The latest visit by US envoy Tom Barrack and Senator Lindsey Graham clearly tied access to foreign aid to a full disarmament of Hezbollah. The adoption of an IMF plan will no longer be sufficient for Lebanon to access money the country desperately needs to rebuild the areas destroyed during the latest war.
The government’s credibility was hindered among the inhabitants of South Lebanon, given Israel’s constant violations of Lebanese sovereignty and the impossibility of reconstruction
Not enough support was given to the government to appear as a credible actor capable of delivering needed assistance for the population. The government’s credibility was hindered among the inhabitants of South Lebanon, given Israel’s constant violations of Lebanese sovereignty and the impossibility of reconstruction. Furthermore, the lack of foreign funds has prevented the adoption of socioeconomic aid programs that would have alleviated the hardships on the population after years of economic freefall.
At the same time, the single-handed focus on the disarmament question has provided an opportunity for some reform obstructors to benefit from the new regional dynamics. Members of the political and financial establishment have been eager to fill the power-vacuum left by Hezbollah, to further entrench their power in Lebanon’s political system and to avoid any kind of accountability, and such easing of foreign pressure on reform only fuels that ambition.
A possible comeback for reformists?
Nine months before the next elections in May 2026, Lebanon is at multiple crossroads. On the security level, Israel is intensifying its attacks despite the recent government’s decision to disarm Hezbollah. While the possibility of a renewed Israeli war or civil strife is real, the reformist camp also needs to keep an eye on the next parliamentary elections, as they may bring an end to the experiment that began in 2022, when anti-sectarian reformist MPs sought to carve out a place for themselves in Lebanon’s institutional politics. Despite their structural weakness and fragmentation, the reformists are still playing their best hand with Salam in power. There is a clear interdependence between the government’s ability to deliver on reform and the reformists MPs’ ability to perform well in May 2026, and vice versa.
Despite their structural weakness and fragmentation, the reformists are still playing their best hand with Salam in power
A possible way for the Salam government to get reform on track, is to formally acknowledge that equation and reconnect the three components of the reformist movement: the grassroot base, the “Change” MPs, and their allies in the executive power.
This reorganization of the reformist camp both inside and outside the realm of institutions can provide support the Salam government needs to push for reforms, whenever it gets too entangled by the political establishment’s maneuvers.
The reformist camps urgently need to secure concrete wins ahead of the next elections. Voters have already sanctioned reformists in the latest local elections in May 2025, predominantly for their inability to deliver concrete wins since 2022. Securing wins is in the interest of both the MPs seeking reelection and the prime minister, who is under pressure to deliver within the limited time left in his mandate.
A drastic effort is also needed to end Israel’s daily aggressions and push it to withdraw from occupied Lebanese land, which erodes the government’s credibility. This must be coupled with a swift shift from the United States’ one-dimensional, security-focused approach to the Lebanese dossier, empowering the government to rebuild credibility by adopting key socioeconomic reforms and delivering on South Lebanon’s reconstruction.
Stability and a state monopoly on arms cannot come at the cost of lost sovereignty, compromised territorial integrity, stalled reforms, and the revival of a corrupt elite. The prospects for Lebanon’s reform process remain alive, but only if urgent action is taken before the window of opportunity closes.
Jean Kassir is a Nonresident Fellow at TIMEP focusing on governance, politics, and economy in Lebanon. He is also the institute’s 2025-2026 Mohamed Aboelgheit Fellow.