Prisoners' Financial Dilemmas: A Consociational Future for Lebanon?

Abstract

Lebanon's banking system is viewed as an “international regime” that held the country together in the face of all pervasive warfare. The system illustrates the underlying logic of such regimes, in that the banks' credit policies operationalized the rational choice model of an iterated prisoner's dilemma game. And just as international regimes are supposed to reflect the interests of state actors, analysis of the banks' balance sheets and income statements reveals changes in capital structure that reflect changes in Lebanon's political balance. While sustaining elite cohesion, the banks serviced political clienteles and might, if a political settlement were reached, support the restructuring of a consociational system more in line with Lebanon's demographic balance. If, on the other hand, no settlement is reached, the poor country's suicide may highlight certain aspects of international reality that seem recalcitrant to the theory of international regimes.