The summer 2006 war between Hizbollah and Israel wreaked terrible destruction on Lebanon: 1,200 dead (a third of them children), 4,000 wounded, 160,000 housing units destroyed or damaged, over 80 bridges destroyed, and hundreds of factories and businesses ruined. It set Lebanon back years economically, costing roughly $7 billion, or 30 percent of GDP. At the same time, the war and UN Security Council Resolution 1701 have created new possibilities for advancing political reform.

With the deployment of the Lebanese Army to the south and reestablishment of its authority over transit points with Syria (as well as sea and air entry routes into the country), Lebanon has regained one of the cornerstones of sovereignty: control of its borders. The state, however, still does not have a monopoly on power. Hizbollah will retain its arms and independence for the time being, and it still controls the southern suburbs of Beirut and other areas in the Beqaa Valley. Resolution 1701 reiterates the “importance of the extension of the control of the Government of Lebanon over all Lebanese territory” and the need for “disarmament of all armed groups” but leaves such tasks to the Lebanese government. Only if 1701 is implemented fully—including the withdrawal of Israel from Shebaa Farms and the return of Lebanese captives from Israeli jails—will the government be in a position to discuss Hizbollah's disarmament or at least the integration of its units into the armed forces. Meanwhile the main challenge facing the government is to build up the army and security services in order to discharge successfully their new national responsibilities and to make good on the opportunity at hand.

At the economic level, the government faces the equally challenging task of leading an efficient and transparent relief and reconstruction effort to aid those in need, rebuild what was destroyed, and revive the economies of devastated areas. It cannot afford to repeat the experience of reconstruction in the 1990s, which was rife with red tape, waste, and corruption. This is a key area of reform that many within the country are asking for, as are many in the international donor community. The government has not yet indicated how its new reconstruction mechanisms will differ from previous methods.

The war has cast a number of political issues into sharp relief. The robust performance of Hizbollah as a fighting force and an efficient distributor of postwar aid has put pressure on the government to take reform more seriously and to build a credible, efficient, and strong state that would obviate the need for Hizbollah. Topping the political agenda now is the need for a new election law (the government-appointed National Commission on Electoral Law Reform proposed a draft in June), an administrative decentralization law, strengthening the constitutional court and judiciary, and other institutional reforms.

Prime Minister Fouad Siniora and Speaker of Parliament Nabih Berri have ably contained sectarian tensions, but the war underlined the need for a deeper Shiite stake in the system. Such a change would require commitment from leaders within the Shiite community, as well as action on political reforms they demand. Shiites have long asked for the establishment of a bicameral legislature in which the seats in the lower house would not be predetermined based on confession, so that their growing numbers can be reflected in a larger share of legislative power. They have also clamored for a Shiite to fill the key post of Minister of Finance, which has not been the case since 1992. Sunni leaders now in power must not repeat the mistake made by Maronites before 1975—assuming that they could avoid full partnership with other communities.

Lebanon faced the war politically divided between the so-called March 14 group (named for the largest anti-Syrian protest in 2005) that controls Parliament and the March 8 group (named for the pro-Syria march organized by Hizbollah) that represents the opposition led by Hizbollah and Christian leader Michel Aoun. In the wake of the war, this opposition has been calling for a National Unity Government that would bring Aoun into the government and increase Hizbollah representation. The Siniora government has declined, arguing that it enjoys the confidence of a majority in Parliament and has done a good job during and after the war. At some point, however, the government has to reach out to these opposition groups, which represent majorities within the Christian and Shiite communities. In turn, the oppositionists need to tone down their rhetoric to find common ground with the majority coalition.

These political issues are likely to come to a head early next year. The current president's term ends in fall 2007 and political forces will be faced with the challenge of trying to agree on a new president who can bridge the current divides and contribute to building a more unified—and more independent—Lebanese state.

Paul Salem is director of the Carnegie Middle East Center in Beirut.