This paper explores Lebanon's development potential associated with greater fiscal capacity building to promote more equality of economic opportunities and productive economic activity and examines their impact on the country's likelihood of sporadic or lasting armed conflict. It is found that Lebanon forgoes a substantial amount of socio-economic development due to the political system's inability to build an efficiently sized public sector that can complement private economic activity. But even if Lebanon utilized its full development potential, it can barely beat the odds of armed conflict. This can be explained by Lebanon's exposure to considerable geoeconomic and geopolitical constraints.