Editor's Note: On May 21, 2008, Lebanon's western-backed government, under increasing military pressure from the militant group Hezbollah, made concessions to end a 19-month political stalemate and form a new unity government, which will give Hezbollah veto control over its decisions. Saad Hariri's Future Movement, the nation's largest Sunni political party, will hold a majority of 16 posts in the Lebanese Cabinet. “We were always ready to give concessions for the sake of co-existence, and open a new page for reconciliation," Hariri told reporters. 

Amid the Mercedes-choked broil of West Beirut—where it’s not unusual to see a beautiful woman in Chanel and plastic-surgery bandages gliding past soldiers in armored trucks—sits a salmon-colored stone mansion. Called Koreitem, it is a monument to pride and paranoia that takes up an entire city block. In here, past bomb-sniffing dogs, metal detectors, and windows shuttered to foil snipers, lurks Saad Hariri. A 37-year-old former business executive with a fondness for Partagas cigars and vintage roadsters, he is one of Lebanon’s richest men (worth a reported $2.3 billion), head of the country’s ruling party, and a prisoner in his own vast home.

On a moist, sea-scented evening, at around dinnertime, angry crowds have blocked the downtown streets near the city’s Mediterranean port. Amid blazing trash fires, burbling hookahs, and trucks blaring martial music, 100,000 or so protesters have turned the night into an antagonistic carnival. With banners and slogans, they mock Saad Hariri and curse his name. They accuse his family of thievery. They want nothing less than to destroy him and the government his party controls. Already, riots have broken out; shots have been fired. One man has been left dead. There are reports of tires burning on the airport road.

As the crowd outside grows increasingly agitated, Hariri skulks into a greeting room in Koreitem’s fourth-floor offices. Here, his late father once received such dignitaries as former French president Jacques Chirac. There are no dignitaries tonight, only a lone army colonel with a prosthetic hand. The colonel announces that he lost the real one “in service to my country!” The Lebanese army is notoriously ill trained. When pressed for details, the colonel admits he lost it in an accident—while showing recruits how to safely handle a grenade. The sight of Saad shaking the proud colonel’s fake hand and pretending not to notice seems telling.

“If my father were still alive, we wouldn’t have this,” Saad says, collapsing onto a stiff chair in a nearby office, his own hand mysteriously bandaged in a splint. “What has happened here in these two years has been a disaster. Tsunami after tsunami, bombs, terrorism.”

With America’s Iraq policy in shambles, Iran defying ­Western powers by building a bomb, Saudi Arabia looking to erect its own nuclear plant to counter Iran’s nuclear ambitions, and the entire Middle East worse for wear thanks in part to American efforts in the region, the last thing the Bush administration wants, the last thing it needs, is to lose Lebanon.

But two years after its vaunted independence revolution drove Syrian troops out of the country—ending a 29-year military occupation—Lebanon is once again in flames and looking like an Afghanistan of foreign-policy bungling. It was supposed to be a model for Arab states; a beacon of democracy; a liberal, modern, and Western-loving government that America could count on. Now there’s this: a powder-keg standoff in the streets. On one side, the freely elected government of Saad Hariri; on the other, the Shiite militant organization Hezbollah and its hyperthyroid followers. With backing from Syria and Iran, Hezbollah­—which serves as Iran’s proxy army and ideological placeholder on the scene—is trying to topple Saad Hariri’s Sunni-dominated and Western-backed administration. If Iran and Syria can’t have Lebanon, they want to mire it in conflict and chaos.