Lebanon’s Last Chance: Disarming Nonstate Actors in a Post-War Transition

In July 2025, as Kurdistan Workers’ Party (PKK) fighters in northern Iraq burned their weapons in a symbolic farewell to decades of armed insurgency, Beirut faced a quieter but no less consequential reckoning. From his prison cell, PKK leader Abdullah Öcalan issued a message urging Kurdish factions to embrace political struggle over military confrontation—a call that resonated across a region fatigued by conflict. Meanwhile, Lebanon’s government continued to face mounting pressure from Western and Gulf allies, who signaled that unlocking over $15 billion in pledged international aid would depend on meaningful steps toward curbing Hezbollah’s military autonomy. The contrast was striking: the Kurds had chosen dialogue and institutional engagement; Hezbollah, by contrast, remains a dominant actor in Lebanon, with influence near border areas, access to military assets, and a significant role in shaping national political outcomes.

That contrast reveals more than symbolism—it exposes Lebanon’s structural impasse. The pretense is no longer sustainable: the country cannot rebuild its economy, unlock IMF support, or implement meaningful reform on all fronts while one faction holds the means to overrule the country by force. The PKK’s disarmament lays bare what years of donor diplomacy have tiptoed around—sovereignty and armed autonomy cannot coexist. As long as Hezbollah retains its weapons, Lebanon remains a hostage to paralysis, not a candidate for recovery.

Four Structural Obstacles Rooted in Hezbollah’s Military Autonomy

1- Sovereignty Sabotaged

Hezbollah may be continuing to operate a sprawling military infrastructure across Lebanon, including an arsenal of rockets and drones—though its exact scale remains uncertain following the extensive damage sustained during the 2024 war with Israel. Much of its remaining stockpile is believed to be embedded in civilian areas, complicating state oversight and military parity. On the ground, Hezbollah retains a presence across parts of southern Lebanon and transit routes. Smuggling networks under its influence, according to IMF estimates (2024), are costing the Lebanese economy between $5 and $7 billion annually. These losses steadily drain the Banque du Liban’s foreign currency reserves, undermining efforts to stabilize the financial system and implement narrow banking (deposit banks) reforms tied to deposit recovery.

2- Shadow Financial System

A shadow economy continues to thrive alongside Lebanon’s collapsing formal sector, operating beyond the reach of regulatory oversight. Hezbollah is widely believed to play a central role in this parallel system—circumventing capital controls through informal exchange houses, with financial flows potentially linked to regional narcotics trafficking. Its estimated annual intake—around $700 million—also draws from coercive revenues, illicit levies, and influence over fuel networks. One key pillar of this informal economy is Al-Qard Al-Hassan, a Hezbollah-linked financial institution that has long operated outside Lebanon’s formal banking sector. In a notable shift, the Banque du Liban (BDL) recently issued a circular banning all licensed financial institutions from dealing with Al-Qard Al-Hassan—a rare move welcomed by reform advocates as a step toward restoring financial governance. Ongoing discussions about the potential closure of its branches signal growing institutional will, under both international and domestic pressure, to curtail Hezbollah’s financial footprint. These informal financial channels have contributed to Lebanon’s deepening isolation, with U.S. sanctions targeting affiliated entities and further severing the country’s access to correspondent banking—undermining any credible path to restoring international confidence.

3- Veto Politics

In practice, Hezbollah’s political leverage—whether exercised directly or through allied factions—has played a central role in stalling reform efforts. Key initiatives such as forensic audits of the central bank, reform of the banking sector, capital controls, and energy sector restructuring have either been delayed or diluted in Parliament. The deployment of the Lebanese Army along the Syrian border, long advocated by reformists, has also faced persistent resistance. These blockages have helped preserve the interests of powerful political and financial actors, while undermining transparency benchmarks tied to IMF support and international assistance.

4- The Heavy Price of Unchecked Armed Engagements

Hezbollah’s regional posture has drawn Lebanon into repeated conflict and external entanglements—from the 2006 war with Israel, to its prolonged involvement in Syria’s civil war, and the 2024 cross-border war that devastated the South and Dahieh. These confrontations have triggered aviation blackouts, disrupted trade corridors, and contributed to a 92% collapse in tourism revenues. The cumulative toll on Lebanon’s economy has been severe, further isolating it from global markets and deterring both aid and investment at a time of urgent national recovery.

The Disarmament Blueprint: Global Lessons for Lebanon’s Crossroads

Disarming nonstate actors has worked before—not through idealism, but through a mix of pressure, incentives, and smart diplomacy. In places as different as Northern Ireland, Colombia, and most recently Iraq, armed groups walked away from decades of conflict when the costs of fighting began to outweigh the benefits. Lebanon doesn’t need to reinvent the wheel—it just needs to stop pretending it’s exempt from the lessons others have already learned. The following cases offer clear precedents. Each highlights a mechanism that succeeded—and the corresponding gap Lebanon has yet to addess:

The PKK’s July 2025 move—burning its weapons without preconditions—sent shockwaves through armed movements across the region. After decades of insurgency, the act was more than symbolic; it marked a public renunciation of the gun as a political instrument. There were no grand bargains, no international guarantees—just a decision that the battlefield had reached a dead end. For other entrenched militias, the message was unmistakable: even the most ideologically hardened groups can pivot to politics when the cost of war outweighs its value, and when public legitimacy slips away. Across Kurdish regions, the gesture was met with cautious hope. In Beirut, it must have landed like a warning. 

Hezbollah’s Strategic Dilemma: Guns or Government

Since the assassination of Sayyid Hassan Nasrallah in September 2024, Hezbollah’s leadership has taken a more defiant stance. In July 2025, newly appointed Secretary-General Sheikh Naim Qassem reaffirmed the group’s hard line, declaring:
“Disarmament is surrender to Israel.”

But the regional landscape has shifted—and not in Hezbollah’s favor:

• Military Reality: Israeli strikes during the 2024 war reportedly destroyed over 60% of Hezbollah’s missile stockpile (Chatham House), weakening its deterrent capability and exposing the limits of its war-fighting posture.

• Financial Reality: Iran, Hezbollah’s primary backer, is under mounting strain. For the first time in its modern history, Iranian territory came under direct attack, with Israeli strikes reportedly targeting Islamic Revolutionary Guard Corps (IRGC)-linked missile facilities near Isfahan and air defense infrastructure around Natanz. The psychological shock, combined with ongoing domestic unrest and sanctions pressure, may have forced Tehran to reprioritize resources inward—contributing to an estimated 40% cut in financial support to Hezbollah.

• Popular Reality: In parts of southern Lebanon, where Hezbollah has long drawn support, growing fatigue is evident. While still seen by some as a symbol of resistance, others increasingly associate the group with prolonged instability.

Hezbollah’s long-standing claim to resistance remains central to its identity, but the context around it is shifting. What was once broadly seen as a source of protection and pride is now, for some, increasingly tied to Lebanon’s deepening crises. The group faces a pivotal moment: whether to align more fully with the institutions of a sovereign state or continue operating in ways that risk further national fragmentation. 

Three Scenarios for Lebanon’s Future

Six Steps to Break the Cycle: A Policy Blueprint

Messaging Lines for Reform Advocates and Diplomats

Reformers and diplomats pushing for disarmament will need more than policy memos—they’ll need language that cuts through decades of narrative fatigue. Messaging must be sharp, clear, and rooted in Lebanon’s lived reality. The failure of implementing fully the Taif Accord is also a cautionary refrain: Taif failed because it left one militia standing. Lebanon can’t afford that mistake again.

In a country worn down by slogans, it’s time for clarity: Resistance that blocks reform becomes repression—just dressed in rhetoric. And for those who still see disarmament as surrender, the counter-narrative is simple: Disarmament isn’t defeat-it’s Lebanon’s path to survival.

Conclusion: The 24-Month Window to Reclaim the Republic

The PKK’s disarmament in July 2025 was more than symbolic—it marked the end of decades of insurgency and the beginning of a political recalibration once thought impossible. It also stripped Hezbollah of its last excuse. If a movement as deeply entrenched as the PKK could burn its weapons without preconditions, what justification remains for Hezbollah to cling to its arsenal?

Lebanon now faces its most decisive window in a generation. If Hezbollah agrees to disarm, even in phases, the country can pivot toward sovereignty, economic stabilization, and institutional legitimacy. IMF funding could be unlocked. Gulf investments may resume. Diaspora remittances—currently cautious—would likely return with confidence. Most importantly, depositors might finally see a path to justice and recovering some of its deposits.

But if disarmament is delayed or evaded, the alternative is grim. Lebanon risks sliding deeper into factionalism and informal governance. Banking reform prospects will collapse. Territorial integrity could fracture. The state, already fragile, may not survive another lost opportunity.

As U.S. Special Envoy Thomas Barrack warned:
“This opportunity may never come again.”

The message could not be clearer—for Hezbollah, for Lebanon’s political class, and for a generation of young Lebanese losing faith in their country:
the guns must fall silent, or the republic will.