Kataeb Political Bureau member Alain Hakim said successive wars fought by Hezbollah outside the framework of the Lebanese State have contributed to weakening economic growth and shrinking the country's economy, warning that restoring confidence in Lebanon's institutions and financial sector remains essential to resolving the country's prolonged financial crisis.

Speaking to This Is Lebanon, Hakim said the deterioration in economic conditions has limited the state's ability to improve payments to depositors despite previous progress under existing banking mechanisms.

"Hezbollah's successive wars outside the State's authority contributed to lower economic growth and a contraction of the Lebanese economy," Hakim said. "This has reduced the ability to increase payments to depositors, despite a previously positive trajectory that saw gradual increases in withdrawal amounts."

Hakim said rebuilding confidence in the Lebanese State is the cornerstone of any sustainable recovery, arguing that solutions to the country's financial crisis are neither overly complicated nor impossible to implement.

"Restoring confidence in the Lebanese State is the gateway to all solutions," he said, expressing optimism that progress can be achieved through the combined efforts of Lebanese banks, Banque du Liban, the Finance Ministry, parliament and the private sector.

The former economy minister pointed to economic growth of between 3% and 4% in 2024, saying it was driven largely by individual initiatives and private-sector activity despite the absence of meaningful government support.

He also stressed the importance of the International Monetary Fund's role, describing the institution as a source of international credibility for Lebanon rather than merely a potential lender.

"The IMF provides Lebanon with a certificate of confidence before the international community," he said, adding that the bulk of future financing would likely come from Lebanese citizens at home and abroad, as well as from Banque du Liban and local banks.

Turning to the banking sector, Hakim argued that the primary objective of the proposed bank restructuring legislation should be restoring confidence rather than punishing financial institutions.

"The fundamental question is whether bank restructuring is an objective in itself or simply a means of achieving a larger goal," he said. "The real goal is restoring confidence in Lebanon's financial sector and economy."

He cautioned against viewing restructuring as a process aimed at penalizing banks or merely replacing current management teams.

"That would be a serious mistake," he said. "The purpose must be to rebuild confidence in both the banking sector and the economy."

Hakim noted that amendments to financial legislation are common in Lebanon but stressed that any draft law should be reviewed comprehensively.

He said the reopening of discussions surrounding the proposed bank restructuring law demonstrated that its current version remains inadequate.

"The ongoing debate shows that specialists recognize weaknesses in the draft and believe it requires deeper treatment," he said.

According to Hakim, one of the greatest threats to Lebanon's economy is the fragile institutional condition of the banking sector, since any disruption within banks quickly affects the broader market. He also highlighted the unresolved issue of depositors' funds, noting that repaying deposits often exceeds the capabilities of banks in their current state, although Banque du Liban has addressed part of the problem through existing circulars.

Hakim said confidence remains the decisive factor in reviving economic activity and attracting investment.

"Investors need a clear vision of the future," he said, arguing that such clarity remains insufficiently reflected in the practical application of the proposed Financial Gap Law.

He said both the Financial Gap Law and the Bank Restructuring Law provide a broad framework but lack sufficient implementation mechanisms capable of restoring confidence among citizens, depositors and investors.

"The issue is no longer primarily about distributing losses," he said. "It is about determining responsibility, especially after the IMF classified Lebanon's crisis as a systemic one."

Hakim argued that while Lebanon does not need its current number of banks, it cannot afford a complete collapse of the banking sector.

"The solution begins with merging a number of banks through a process based on transparency, governance and sound management," he said, adding that these principles remain insufficiently reflected in the draft legislation.

He also called for attracting new shareholders to help revitalize the banking sector, saying the Lebanese economy cannot function without an effective banking system.

Hakim suggested converting part of the country's large deposits into long-term investment instruments, provided such a move is based on serious studies and a clear strategic vision. He also proposed establishing a bad bank that would consolidate distressed assets and losses, creating the foundation for a fresh economic start built on sound management principles.

He stressed that the success of any law ultimately depends on implementation.

"Good governance, transparency and sound management are the pillars of any meaningful reform," he said, adding that amendments being discussed by Banque du Liban, the IMF and the Finance Ministry could help address shortcomings in the legislation and strengthen its implementation mechanisms.

On the issue of depositors, Hakim said they effectively entered a danger zone when the Lebanese state defaulted on its debt obligations, renewing his call for accountability for the government that made that decision.

Nevertheless, he insisted that solutions remain available.

"There are no magical or immediate solutions, but there are solutions," he said.

Hakim said deposit recovery would require rebuilding confidence, stimulating economic growth, increasing remittances, reforming the public sector and attracting fresh capital into the country.

"Those are the factors that will ultimately make it possible to return depositors' funds," he said.

He acknowledged that complete justice is impossible in financial crises and that deposits cannot be repaid all at once. Instead, he said, repayments would need to occur gradually over the medium and long term, similar to existing mechanisms under Circulars 158 and 166.

He suggested that progressively increasing monthly withdrawal payments could become a key element in resolving the crisis.

Hakim also argued that the solution lies less in a capital controls law than in effective cash management policies regulating the circulation of cash, particularly foreign currency, in line with international standards and aimed at reducing Lebanon's large cash-based economy.

He maintained that the current version of the Bank Restructuring Law is not implementable and will not produce positive results unless substantial amendments are introduced.

"The law needs stronger provisions on transparency, governance and sound management if it is to achieve its central objective of restoring confidence in the banking sector," he said.

Hakim also welcomed a recent ruling by the State Shura Council, saying it helped clarify the distribution of responsibilities and losses stemming from the financial crisis.

"The challenge is no longer technical or accounting-related because everyone knows the scale of the losses and the responsibilities involved," he said. "The real challenge is making a fair political decision that allocates responsibility and distributes losses in a way that restores confidence in both the financial sector and the Lebanese state."

"Confidence remains the foundation for recovering funds and reviving the economy," he concluded.