Published on and written by Cyril Jarnias
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From the earliest Phoenician ports to an independent Lebanon plunged into an unprecedented economic crisis, the country’s history is that of a tiny territory that has never ceased to be at the heart of the major upheavals of the Near East. Between empires, mandates, civil wars, financial prosperity, and monetary collapse, this small state of 10,452 km² has often been presented as an open-air political and economic laboratory. Retracing this history means understanding how the balances that still structure Lebanese society today were woven, and then fractured.
From Canaanite Roots to the Phoenician Age
Long before the emergence of modern Lebanon, the coastal strip that largely corresponds to the current territory has sheltered human communities for tens of thousands of years. Excavations in Beirut have identified prehistoric sites containing flint tools from the Middle and Upper Paleolithic, the Neolithic, and then the Bronze Age. These remains confirm the continuity of occupation in an area that would become one of the pivots of the Eastern Mediterranean.
As early as the 2nd millennium BC, Canaanite city-states, direct ancestors of the Phoenician city-states, developed. Byblos (Jbeil), one of the oldest continuously inhabited cities, was a structured urban center. From the time of the Old Egyptian Kingdom, it maintained trade links with the Nile Valley, especially for the export of Lebanese cedar wood.
The name “Phoenicians” came later, through the Greek language, and designates these seafaring merchant populations settled on the Levantine coast, from present-day Arwad in the north to Mount Carmel. Tyre, Sidon, Byblos, Berytus (future Beirut), and Tripoli then functioned as autonomous city-states, each with its own king, merchant elites, and pantheon of deities, dominated by Baal and Astarte.
The linear alphabet invented by the Phoenicians in the 11th century BC was composed of 22 consonants.
Between Empires: From Roman Conquest to Islam
The Lebanese area escaped none of the great imperial cycles of Antiquity. The Phoenicians successively endured Assyrian, Babylonian, and Persian tutelage, before being swept up by the conquests of Alexander the Great. Tyre was besieged and destroyed by the Macedonian troops in 332 BC, an event that symbolically marked the end of Phoenician independence.
Under the Seleucids and the Ptolemies, the Lebanese hinterland was contested. Beirut, rebuilt on a Greek plan after its destruction in the 2nd century BC, was briefly named Laodicea of Phoenicia. Annexed by Pompey in 64 BC, it passed under Roman authority and resumed the name Berytus.
With Rome, the country entered a new phase. Berytus was granted the prestigious status of a colony, with the ius italicum which granted its colonists tax privileges comparable to those of citizens of the Italian peninsula. The city massively welcomed Roman veterans, became deeply Romanized, and became an island of Latin language within a predominantly Greek-speaking province. The Bekaa, integrated into the territory of Berytus, supplied Syria-Phoenicia with grain and, beyond, other provinces of the Empire.
Excavations in Beirut reveal major Roman remains (baths, theater, circus, colonnaded streets), testifying to significant imperial investment. The city housed a prestigious law school, influential throughout the Empire until the 6th century. A violent earthquake in 551 AD, followed by a fire a few years later, devastated the city and caused tens of thousands of deaths, marking a severe halt to its development.
The arrival of Muslim armies in the 7th century once again changed the political framework. In 635, Beirut fell into the hands of troops commanded by Yazid ibn Abi Sufyan and his half-brother Mu’awiya. The city was integrated into the administrative system of the Umayyad and then Abbasid caliphates, while remaining a strategic interface point between the Mediterranean and the Syrian hinterland. In the time of Al-Awza’i, a great jurist from Baalbek who resided in Beirut in the 8th century, the city experienced special religious influence. The coasts, however, remained exposed to Byzantine raids, a sign of the fragility of the maritime borders.
Mountains, Emirs, and the Ottoman Empire
The historical originality of the country strengthened from the moment the Lebanese mountains acquired a distinct status from that of the surrounding plains. Under the Mamluks and then the Ottomans, the coastal strip and major cities – Beirut, Tripoli, Sidon – were integrated into classic imperial provinces, while the Mount Lebanon massifs were entrusted to local lineages according to an iqta’ system. The great families – Ma’n then Shihab, notably – collected taxes, administered justice, and raised men on behalf of the Sublime Porte, while retaining broad de facto autonomy.
Taking advantage of the Ottoman Empire’s distraction, occupied by wars against the Safavids and the Habsburgs, he built a quasi-principality, extended his territory from northern Palestine to the borders of Cilicia, and forged alliances with Tuscany at the turn of the 16th and 17th centuries.
Fakhr al-Din II, Druze emir of the Ma’n family
This rise in power alarmed Istanbul. After an exile in Italy and a triumphant return to the Chouf, Fakhr al-Din was eventually captured and executed in Constantinople in the 1630s. His experience, however, left a deep mark: for many historians, it represents a first sketch of a Lebanese political entity centered around Mount Lebanon, endowed with a multi-confessional army and open to European influences.
The Ma’n disappeared at the end of the 17th century, replaced by the Shihab who ruled Mount Lebanon until the mid-19th century. This Sunni dynasty saw some of its members convert to Maronitism, reinforcing the composite character of the leadership. Their capital was Deir el-Qamar. Under Bashir II, at the beginning of the 19th century, Shihabite power expanded and relied on Muhammad Ali of Egypt. The withdrawal of Egyptian troops in the 1830s, under Ottoman and European pressure, left a deeply fractured political situation.
Social and sectarian tensions, stoked by great power rivalries supporting one group or another (France with the Maronites, Great Britain with the Druze), led to the violence of 1860. Thousands of Christians were massacred in Mount Lebanon and Damascus. The intervention of a French expeditionary force, authorized by Sultan Abdülmecid, led to the establishment of a new regime for the mountain.
From the Mutasarrifiya to the Shadow of the Powers
In 1861, after negotiations between the Ottoman Empire and five European powers (France, United Kingdom, Russia, Austria, Prussia), the Mutasarrifiya of Mount Lebanon was established, an autonomous province governed by a Christian non-Lebanese governor, appointed by Istanbul but approved by the European capitals. He relied on a representative council of the different religious communities. This institutional compromise, amended in 1864, limited the direct control of the Empire while offering an unprecedented framework for sectarian coexistence.
This system, which lasted until the First World War, introduced several elements that would weigh heavily on the country’s future history. First, it consecrated the political role of religious communities as institutional actors. Second, it closely linked the Lebanese question to the interference of European powers, especially France, which positioned itself as the protector of the Maronites. Finally, it transformed Mount Lebanon into a laboratory of proto-self-government, distinct from the rest of Ottoman Syria.
The late Ottoman period saw Beirut and the coastline transform into a major economic and intellectual hub, thanks to trade and educational institutions.
Silkworms from Mount Lebanon supplied the silk mills of Lyon and Marseille, boosting the local economy and strengthening trade links with Europe.
Multiplication of missionary schools. Founding of the American University of Beirut (Syrian Protestant College) in 1866, then Saint Joseph University in 1875.
Promoted to capital of a vilayet in 1888, Beirut established itself as the indispensable intellectual and commercial center of the region.
This dynamism was accompanied by massive emigration: hundreds of thousands of Lebanese, especially Christians, left the mountains at the turn of the 20th century for Egypt, North and South America, or West Africa. The financial remittances from this diaspora played an essential role in the local economy and fueled the already well-established image of the Lebanese as a “people of merchants.”
War, Famine, and the End of the Ottoman Empire
The First World War shattered this fragile balance. The Ottoman Empire, allied with Germany, imposed a martial law regime on Mount Lebanon in 1915, abolished the Mutasarrifiya, and placed the region under the direct authority of Military Governor Jamal Pasha. The Allied blockade in the Mediterranean, combined with the requisition of foodstuffs by the Ottoman army, caused a famine of tragic proportions. More than a third of Mount Lebanon’s population perished between 1915 and 1918. The cedar forests were largely felled to fuel locomotives and the war effort.
On May 6, 1916, fourteen Arab and Lebanese nationalists, Christians and Muslims, in favor of autonomy or Arabism, were executed by hanging in Beirut and Damascus. This political repression, commemorated as Martyrs’ Day, helped strengthen ties between Arab and Lebanese elites in their common contestation of Ottoman tutelage.
At the end of the conflict, British armies and the Arab forces of Faisal entered Syria and Lebanon. But the promises of independence made to the Arabs collided with the secret agreements concluded between London and Paris. The Sykes-Picot Agreement (1916), confirmed by the San Remo Conference (1920), divided the Arab provinces of the Ottoman Empire between British and French influence. The future Lebanon found itself at the heart of a vast area placed under French mandate.
The Creation of Greater Lebanon: A Major Turning Point
One of the founding acts of the country’s history in modern Lebanon occurred on September 1, 1920. On that day, from the Pine Residence in Beirut, General Henri Gouraud, French High Commissioner, proclaimed the creation of the State of Greater Lebanon. This new entity, with Beirut as its capital, appended to the former autonomous territory of Mount Lebanon the coastal cities (Beirut, Tripoli, Sidon, Tyre), the Bekaa, and regions in the north and south. Decree 318, signed the day before, set the borders of this new outline, extending from Ras Naqoura in the south to Nahr el-Kabir in the north, and from the sea to the foothills of the Anti-Lebanon range.
This expansion partly responded to the demands of the Maronite hierarchy, embodied by Patriarch Elias al-Huwayyik, who particularly insisted on including the fertile Bekaa Valley, traumatized by the memories of the famine. It also upset the demographics: a territory that had been predominantly Christian now integrated significant Sunni and Shia populations, as well as Druze. The future state would have to contend with a much more pronounced sectarian and regional diversity.
Very quickly, Greater Lebanon provided itself with its own symbols. It adopted a flag combining the French tricolor bands with a green cedar, a mountain tree that became the national emblem. The graphic designer Naoum Mokarzel, a figure of the Lebanese diaspora in the United States, designed this banner which articulated local heritage and mandatory presence. The state also obtained a constitution in 1926, which made it a “Lebanese Republic” in gestation, even if effective sovereignty remained in the hands of the French High Commissioner.
Naoum Mokarzel, graphic designer of the Lebanese diaspora
Shaping a Composite Country: The French Mandate
The mandate assigned to France by the League of Nations, formalized in 1923, entrusted Paris with the mission of guiding the population towards “autonomy.” In practice, the administration remained highly centralized. A High Commissioner, relayed by a civil and military bureaucratic apparatus, made major political, economic, and security decisions from Beirut. Several figures succeeded each other in this post: Henri Gouraud, Maxime Weygand, Maurice Sarrail, Henri de Jouvenel, then on the eve of the Second World War Gabriel Puaux, and finally, under Vichy, General Dentz.
Lebanon, created in 1920, was not an isolated state but part of the recomposition of Bilad al-Sham under French mandate. France also administered Syria, the Alawite region of Latakia, Jabal al-Druze, and the Sanjak of Alexandretta (ceded to Turkey in 1939). These entities, sometimes federated, illustrate the integration of Greater Lebanon into a broader regional framework.
Domestically, the Third Republic introduced French institutions, language, and school system. The port of Beirut, destroyed during the war, was rebuilt and became a regional commercial hub again by 1920. A new urban layout was designed for the city center. But while some infrastructure developed, fiscal resources were largely captured to finance the military and security apparatus of the mandate. Education and health remained primarily the domain of private congregations and institutions, often Christian, which accentuated imbalances between populations.
The conceded monopolies granted to French interests – in transportation, electricity, or other services – fueled a rentier capitalism criticized by local elites. Discontent manifested in new forms of protest: strikes, boycotts, like the Beirut tramway strike in 1931, which became emblematic of the contestation of what some called “concessionary imperialism.”
The Birth of a Political Sectarian System
The Lebanese Republic proclaimed in 1926, still under tutelage, had to provide itself with rules of the political game. These would durably associate modern institutions with the recognition of religious communities as indispensable structures of representation. It was not just an inheritance from Ottoman Mount Lebanon or the Mutasarrifiya: the French mandate gave it a new dimension by articulating, within the constitution, sectarian distribution and compromise with the notables.
First Presidents and the Rise of Local Elites
The first president of Lebanon, Charles Debbas, was a Greek Orthodox. Elected in 1926, he remained in office until 1934, under the close control of the High Commission. It was during his presidency that the institutional architecture of the Republic was debated and the foundations for the future sectarian distribution of public offices were laid. After him came Habib Pasha Saad, Émile Eddé, Alfred Naqqache, Ayoub Tabet, Petro Trad… A waltz of often provisional heads of state, revealing the permanent stranglehold of Paris over political life.
However, the local political scene began to structure itself around parties and blocs. Émile Eddé founded the National Bloc, rather favorable to France and attached to a Lebanese identity distinct from its Arab environment. Conversely, Bechara El Khoury created the Constitutional Bloc in 1932, more open to the idea of shared Arabness. In the background, the debate was not yet about immediate independence, but about the form it should take and the degree of proximity with neighboring Syria.
Year of the last official census in Lebanon, which established the demographic and political distribution among communities.
Independence, a Two-Stage Process
The Second World War upended the balance of power. After the French defeat in 1940, Lebanon fell under the control of the Vichy regime. High Commissioner Dentz allowed the Germans to use Syrian airfields to supply pro-Nazi troops in Iraq. Alarmed, the United Kingdom launched, with the Free French Forces, an offensive on Syria and Lebanon in 1941. Vichy forces capitulated, and General Georges Catroux, representative of Free France, proclaimed the “independence” of Lebanon in November 1941.
This declaration remained initially symbolic. Paris retained most of the levers of decision-making. It was only from 1943 that the balance of power truly shifted, when free legislative elections brought a nationalist majority to power. Parliament chose Bechara El Khoury as president and Riad al-Solh as Prime Minister. The two men agreed on a foundational compromise, famously known as the National Pact.
The National Pact: A Foundational and Ambiguous Compromise
In 1943, the National Pact was not a written text, but a political arrangement among elites. It sealed several key principles that would shape the history of the country in independent Lebanon. Internally, it institutionalized the sectarian distribution of the three sovereign functions: the presidency went to a Maronite, the premiership to a Sunni, and the presidency of the Chamber of Deputies to a Shia. Parliamentary seats, for their part, were distributed according to a ratio of 6 Christians to 5 Muslims, based on the 1932 census.
On the identity level, the Pact proposed a tightrope walk summarized by the often-repeated formula of “neither West nor East”. Christians agreed to renounce projects aimed at placing themselves under the exclusive protection of the West, while part of the Muslims renounced the objective of union with a larger Arab entity (like Syria). Lebanon was recognized as an independent entity in its own right, with a dual belonging: Arab through its language and culture, singular through its sectarian pluralism and close ties with Europe.
In response to the unilateral abrogation by the Lebanese Chamber of the constitutional articles relating to the French mandate on November 8, 1943, the French authorities arrested President Bechara El Khoury, Prime Minister Riad al-Solh, and most of the ministers. Their detention at the Rashaya Citadel became a powerful symbol of Lebanon’s confiscated independence.
The domestic reaction was immediate: massive demonstrations, convergence of Christian and Muslim leaders, formation of a provisional government in Bechamoun which refused to recognize French authority as long as the prisoners were not freed. Under British, American, and Arab pressure, France eventually yielded. The prisoners were released on November 22, 1943, a date now celebrated as Independence Day. Three years later, on December 31, 1946, the last French troops left the territory.
An Independent State, but Structured by Confessionalism
From 1943, the Lebanese Republic officially entered its independent phase. The National Pact and the amended 1926 constitution organized a system that political scientists would later describe as “consociational”: a power-sharing arrangement between communal segments, guaranteed by explicit rules for the distribution of offices and administrative posts.
Institutional Distribution and the Logic of “No Victor”
The fundamental principle of the system is that of balance between components. The Maronite president held, in the first phase of the Republic, extensive powers: he appointed the Prime Minister, could dissolve Parliament, and exerted decisive influence over the army and the senior civil service. The Sunni Prime Minister and the Shia President of the Chamber played complementary roles, but with less weight.
In Lebanon, balanced representation of the 18 recognized religious communities is guaranteed throughout the state apparatus, including the army and civil service. This system, based on the principle “neither victor nor vanquished,” aims to prevent the domination of one group over others and to preserve stability.
In practice, this mechanism produced a system that was both stable and fragile. Stable, because it allowed the country to weather, for several decades, major regional crises – the creation of the State of Israel, the 1958 war, the rise of Arab nationalism, the Israeli-Palestinian conflict – without completely collapsing. Fragile, because it froze demographic and political power relations that were bound to evolve, and it consecrated the role of notables who controlled their communal clienteles through access to state resources.
The Economic “Miracle” and Its Reversals
Economically, the 1950s and 1960s are often presented as a golden age. Lebanon, endowed with a regime of economic freedom largely inherited from the mandate and reinforced by low taxation, attracted capital and entrepreneurs. Its banking system, based on confidentiality and the absence of exchange controls, made Beirut the financial center of the Near East. Bank deposits, fueled by petrodollars from the Gulf monarchies and diaspora savings, swelled spectacularly.
During this period of prosperity, Lebanon experienced rapid modernization, symbolized by Beirut and its coast. The port of Beirut became a key transit point for Gulf hydrocarbons to Europe, thanks to the IPC and Tapline pipelines. Development was also illustrated by the Tripoli and Zahrani refineries, luxury hotels, and modern buildings along the corniche, reflecting the rise of a consumer society. The international press then nicknamed the country ‘the Switzerland of the Middle East’ or ‘the Republic of Merchants’.
However, this success remained partial. Growth, centered on finance, trade, and tourism, benefited mainly Beirut and Mount Lebanon. The Shia South and the Bekaa Valley, more agricultural, remained marginalized. Social inequalities widened, particularly in urban and rural peripheries. The model remained highly dependent on external capital, imports, and the regional geopolitical context.
The Crisis of the System and the Descent into Civil War
From the late 1960s, several factors converged to weaken the compromise of the National Pact. Socio-economic imbalances, the absence of serious political reform, and the massive influx of Palestinian refugees after 1948 and then 1967 fueled growing discontent, particularly among Muslims and the Lebanese left.
The Palestinian Question as an Accelerator
After being expelled from Jordan in 1970, the Palestine Liberation Organization (PLO) transferred the core of its military apparatus to Lebanon, primarily in the South and in the camps around Beirut. The Cairo Agreement of 1969, signed between the Lebanese army and Yasser Arafat, officially regulated the Palestinian armed presence, granting it significant leeway in the South. For many Lebanese, especially in Christian circles, this situation amounted to the creation of a “state within a state.”
Tensions multiplied between Palestinian militias, the Israeli army, and southern villages. Israel launched repeated raids into Lebanese territory. In this context, the internal fault line hardened: on one side, Christian formations, united within the “Lebanese Front,” saw the PLO as an existential threat and defended the political status quo. On the other side, Muslim, Druze, and leftist parties, united in the Lebanese National Movement, demanded a thorough reform of the sectarian structure and expressed solidarity with the Palestinian cause.
The Implosion of 1975 and Fifteen Years of War
On April 13, 1975, a shooting targeting Pierre Gemayel, leader of the Kataeb party, followed by an attack on a bus carrying Palestinians in Ain el-Rummaneh, triggered a spiral of violence that collective memory recalls as the starting point of the civil war. In reality, clashes between militias and the contestation of the politico-sectarian system had already been intensifying for several years. But the bus incident crystallized the rupture.
What followed was a conflict of extreme complexity, intertwining inter-Lebanese fighting, Syrian intervention, Israeli invasion, and camp wars. From 1975 to 1990, the country was devastated. Front lines divided Beirut between a Christian East and a predominantly Muslim West. Massacres deeply marked memories: Black Saturday, Karantina, Damour, Tel al-Zaatar, Sabra and Shatila, among others.
In 1976, the Syrian army entered Lebanon with the tacit approval of the United States and Israel, positioning itself as an armed arbiter of the conflict. It successively supported different factions, depending on its regional interests. In 1982, Israel invaded the country, besieged Beirut, and forced the PLO to leave the capital. The assassination of President-elect Bachir Gemayel and the Sabra and Shatila massacre, committed by Christian militiamen under the watch of the Israeli army, shocked the world.
The war fragmented further in the 1980s, with the rise of Shia movements like Amal and then Hezbollah, supported by post-revolutionary Iran. Intra-Christian rivalries also erupted, notably between the army commanded by Michel Aoun and the Lebanese Forces of Samir Geagea. State institutions disintegrated, the economy collapsed, even if the financial sector continued to function for a time thanks to diaspora capital.
In total, the war caused between 120,000 and 150,000 deaths and over a million displaced people. It also left behind a devastated urban fabric, particularly in downtown Beirut, transformed into a no-man’s land.
The Taif Agreement: End of the War, Restructuring of the System
In 1989, as the conflict seemed without issue, the Arab League managed to gather in Taif, Saudi Arabia, the members of the last parliament elected before the war (in 1972). After several weeks of negotiations, they adopted a “National Accord Document,” better known as the Taif Agreement. Its stated ambition was twofold: to end the war and reform the political system without overthrowing it.
A Renegotiated Power-Sharing
One of the major modifications introduced by Taif concerned the balance of powers at the top of the state. While the communal key for distributing the three high offices remained unchanged, prerogatives were readjusted. The powers of the Maronite president were reduced in favor of a collegial Council of Ministers, headed by a Sunni Prime Minister. The Shia President of the Chamber saw his role consolidated, with his term extended to four years and a real capacity for political arbitration.
The number of parliamentary seats allocated to each confessional group (Christians and Muslims) following the reform establishing perfect parity.
Finally, Taif proclaimed the principle, in the long term, of the abolition of political confessionalism. A national commission was supposed to be created to prepare this transition, while a Communal Senate was, on paper, to take over from sectarian representation. These mechanisms, however, never really saw the light of day.
Disarming the Militias, Except One
The agreement provided for the dismantling of all militias, Lebanese and non-Lebanese, within a period of six months. In 1991, a general amnesty law erased most crimes committed during the war, allowing former warlords to reinvent themselves as political leaders. The Lebanese army, reconstituted under the supervision of President Elias Hraoui and Commander Émile Lahoud, carried out several disarmament operations, particularly against Palestinian groups that remained armed in the camps.
Hezbollah retained its arsenal in the name of resistance against Israeli occupation in South Lebanon. This exception, accepted and encouraged in this context, transformed the organization into a preponderant politico-military force, with resources far exceeding those of the state in certain areas.
An Agreement Under Syrian Tutelage
The implementation of Taif took place within the framework of a massive Syrian presence. The Damascus army, already deployed since 1976, reinforced its control over Lebanese territory. The agreements theoretically provided for a gradual withdrawal to the Bekaa Valley, then a complete evacuation. In practice, Syria remained the true arbiter of Lebanese political life until 2005, supported by a treaty of “brotherhood, coordination, and cooperation” that bound Beirut not to serve as a base against Syrian interests.
This context allowed for relative security stabilization and the launch of ambitious reconstruction, but it made any profound reform of the political system illusory. The clientelist and communal logic was perpetuated, this time integrated into a framework of regional tutelage. The state remained weak, fragmented, unable to fully control its territory and borders.
Reconstruction, Financial “Miracle,” and Structural Crisis
From the early 1990s, Lebanon embarked on a vast reconstruction effort, centered on Beirut. The key figure in this phase was Rafik Hariri, a businessman turned Prime Minister in 1992, representing a new Sunni bourgeoisie enriched by contracts in the Gulf. His vision: to make Lebanon, and especially its capital, a regional platform for services, finance, and tourism.
Horizon 2000 and the Rebirth of Beirut
At the heart of this project was the “Horizon 2000” program, an investment plan of over 14 billion dollars over about ten years, primarily concentrated on Beirut and Mount Lebanon. Road infrastructure, telecommunications, airport, city center: everything had to be modernized at a forced pace. The real estate company Solidere, of which Hariri was one of the main shareholders, obtained the concession for the reconstruction of downtown Beirut, through the massive expropriation of thousands of owners.
The transformation project for the capital, while giving it a new face, sparked strong opposition. Archaeologists and historians denounced the destruction of important layers of Ottoman and medieval heritage. Meanwhile, residents contested compensation deemed insufficient. Critics saw it as an illustration of crony capitalism, where private interests and public decisions were closely intertwined.
A Model Based on Debt and Finance
To finance this reconstruction, the Lebanese state resorted massively to debt, both domestic and external. The Banque du Liban, in coordination with the government and under the watchful eye of institutions like the IMF and the World Bank, implemented a monetary policy aimed at stabilizing the currency and attracting capital. In 1997, the pound was pegged to the dollar at a fixed rate, which helped restore confidence and curb inflation that exceeded 100% in the early 1990s.
In exchange for high interest rates on public debt securities, they massively purchased these bonds, financing the budget deficit and pocketing significant profits. Deposits from the diaspora and Arab investors fueled this cycle, reinforcing the image of a solid banking sector, which earned Lebanon the return of its nickname “Switzerland of the East.”
The commercial banks
But this architecture rested on a fundamental imbalance: public debt grew much faster than GDP. Between the early 1990s and the late 2010s, the debt stock went from about 4 billion to over 90 billion dollars, an increase of over 2000%. During the same period, GDP only multiplied by about four. In the long term, this differential could only be offset by continuous inflows of external capital, a fragile condition subject to regional circumstances.
Growth, Inequalities, and Missed Opportunities
The economic results of the 1990s and 2000s were mixed. On one hand, growth resumed: GDP multiplied by more than five between 1990 and 2000, boosted by investments, financial flows, and a climate perceived as relatively stable after the war. Between 2007 and 2010, a new phase of strong average growth (over 8% per year) followed the end of the 2006 war with Israel, driven by improved internal security and an influx of Gulf capital.
One third of the Lebanese population lived below the poverty line at the beginning of the 21st century.
Fiscal choices accentuated this bias: the reduction of direct taxes to encourage investment, the introduction of VAT, privatization, and the liberalization of several sectors weighed more heavily on the middle and lower classes. Public power, for its part, devoted a growing share of its budget to debt service, to the detriment of productive investment and social services.
From Economic Imbalance to Collapse
From 2011, the regional environment changed radically. The war in Syria, one of Lebanon’s main trading partners, disrupted trade and cut off part of the land routes to the Gulf. The country hosted over a million Syrian refugees, weighing on infrastructure and the labor market. In parallel, the international climate became less favorable to speculative investments in emerging economies.
The Mechanics of the Crisis (2019‑…)
Signs of exhaustion accumulated, but the system held on for a few more years thanks to new injections of capital, notably through international support conferences like Paris II or CEDRE. Yet, by around 2018, the debt-to-GDP ratio had already exceeded 150%, placing Lebanon among the most indebted countries in the world. Capital inflows slowed, and the foreign exchange reserves of the Banque du Liban began to erode.
In the fall of 2019, the situation tipped over. A series of unpopular fiscal measures, against a backdrop of informal depreciation of the pound and banking restrictions, triggered a unprecedented protest movement, transcending communal divisions. Hundreds of thousands of Lebanese took to the streets to denounce corruption, clientelism, and the political class’s inability to reform.
Banks drastically limited dollar withdrawals, trapping depositors. The parallel exchange rate soared, while the official rate remained artificially frozen. In March 2020, the state defaulted on part of its foreign debt, a first in the country’s history. Negotiations with the IMF failed to produce an agreement, due to a lack of internal consensus on necessary reforms and conflicting interests among banks, the Banque du Liban, and political power.
The Covid-19 pandemic worsened an already grim picture. The economy contracted by nearly 20% in 2020. The exchange rate on the black market continued to plummet, causing hyperinflation exceeding 100% per year. Salaries in pounds lost most of their purchasing power. Entire segments of the middle class slid into poverty.
The Port Explosion, Symbol of a Failing State
On August 4, 2020, a massive explosion devastated the port of Beirut and its surroundings, killing hundreds of people, injuring thousands, and causing billions of dollars in damage. The blast was caused by a stockpile of ammonium nitrate stored for years without precautions, despite repeated warnings. The event concentrated in an instant all the characteristics of a failed state: administrative negligence, corruption, lack of control, generalized irresponsibility.
The World Bank estimates the recovery and reconstruction needs of the port of Beirut, vital for over 70% of the country’s imports, at approximately 11 billion dollars.
Meanwhile, the pound continued to depreciate, unemployment skyrocketed, and over 80% of the population fell below the poverty line. Departures abroad multiplied, recalling the great waves of emigration of the 19th and 20th centuries, but in a much more desperate context. International organizations no longer hesitated to describe Lebanon as a “failed state.”
A History Marked by the Continuity of Fault Lines
The history of the country in Lebanon, from the founding of Greater Lebanon to the current crisis, is neither linear nor purely cyclical. But certain red threads appear clearly.
The first is the persistence of a political sectarian system, born at the crossroads of the Ottoman Mount Lebanon experience, the French mandate, and the 1943 National Pact, reorganized by the Taif Agreement without ever being truly transcended. This system prevented total hegemony by one community over the others, but at the cost of a lasting fragmentation of the state and an extreme personification of public powers around communal clan leaders.
The economy is structurally oriented towards finance, real estate, and services, to the detriment of agriculture and industry. This choice, initiated during the era of the refineries, reinforced during the golden age of banking in the 1960s, and erected as dogma after the civil war, generated phases of prosperity but also a chronic vulnerability to external shocks and dependence on volatile capital flows.
The third lies in the constant role of external actors – empires, colonial powers, regional states, international financial institutions – in structuring internal power relations. From Franco-British interference in the 19th century to post-Taif Syrian tutelage, from the circulation of petrodollars to the pressures of donors, Lebanon’s ability to autonomously define its political and economic trajectories has always been limited.
Lebanon’s history is marked by political and social innovations, such as the creation of a multi-confessional state aimed at reconciling political freedom, cultural pluralism, and regional integration. Moreover, civil society has several times forced ruptures, as in 1943, 2005, and 2019, defying elites clinging to their privileges.
Today, as the country faces one of the worst economic crises of modern history, these historical resources guarantee nothing, but they remind us that Lebanon is the product of a long series of compromises, revolts, catastrophes, and rebounds. Understanding this trajectory is also to grasp that the central question is not whether history repeats itself, but how a small state, born from a colonial compromise a century ago, can still reinvent a social pact commensurate with its fractures.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
