The answer is easy: Because they don’t need it. Because thanks to the confessional system in place in Lebanon, they found everything they could want without having to establish an Islamic state. The skeptic would retort: “But why did they vehemently proclaim all throughout the eighties that they wanted an Islamic state?” Well because at the time they did not know that they could get all their interests preserved thanks to the confessional system without having to go through the painful process of imposing the idea of an Islamic state (of course here ‘interest’ is a term that is at best elusive and must be understood as historically determined, changing according to available opportunities and conceptualizations, so that we avoid making retroactive arguments).
So here I want to first object to the idea that it is out of a process of vague “Lebanonization” of Hizbullah that they decided to drop the idea of an Islamic state. I want to object of course to the idea that they secretly (in a demonizing way for the scared Lebanese) entertain this dream. Actually to clarify what I meant, I would like to accept the “Lebanonization” thesis only by clarifying what Lebanonization mean in the institutional political and social sense by dropping the essentialist bias inherent in the argument. Yaaneh, Hizbullah was never “not Lebanese” and suddenly became “Lebanese”. Hizbulllah starting from an ad hoc group of zealous and enthusiastic few, with sufficient backing, discpline, and favorable local and regional circumstances developed into a fully fledged organization with institutional over-reach. This ‘developmental’ change is key here and nobody (to my knowledge) worked on the intricacies and implications of this change, except from a broad ‘elitist’ and ‘essentialist’ perspective. Yaaneh, scholars focused on the broad political agenda of Hizbullah as a monolithic formation with a leadership making rational decision in the face of changing opportunities. Example: When Nasrallah became secretary general (but already at the time of Moussawi) he saw an opportunity to play by the rules. What does that mean exactly? It means first a conscious decision of the party to get involved in the Lebanese political life indeed, but most importantly it inscribes itself in a process of long-term change that slowly crystallized the idea that ‘we’re much worth it like this’. This last phenomenon was never carefully understood because to do so one needs to understand how Hizbullah slowly became very much dependent on the confessional system.
This requires in turn an understanding of the evolution of not only the institutions and organizations of Hizbullah but in what way the new political class of Hizbullah became very much part of the political system in Lebanon. Actually both these process are intermingled. I don’t have a detailed answer to that, and actually this should be a research project on its own, but I would like to point out on an intuitive basis why this looks like a strong argument.
To name but a few, electoral processes, municipalities, social welfare (organizations, etc.), schools, hospitals, all work according to confessional categorizations in Lebanon, meaning that it is most of the case a particular religious group that holds decision making in these collective activities. Hizbullah found in this case a haven for his own activities. One can study how this affects identity formation through the daily practices of people in these institutions and fosters even more the marks of confessional ideas meanings and beliefs into the consciousness of individuals. Here I want to stress the “culture” of the confessional system is highly alien to the one of an Islamic state at the very least because of the completely different institutional structures in place.
It is important to point out here that Hizbullah is only imitating what other sectarian groups did before them and first and foremost the Christians. Christian schools hospitals etc. are the oldest, and the political system of confessional piecemeal rule was a Christian innovation. The only difference here is that by controlling key institutions in the State, Christian elites were able to export the idea that they were a ‘secularizing’ force as their management of State affairs was resemblant to what goes on in say European states. But in effect, all the institutions of the State, and the institutions of social life in general were heavily divided along confessional criteria. Slowly but surely, Amal then Hizbullah learned to play by these rules. What’s interesting in the Shi’a example is that because they are new comers you can basically see how the confessional system, first makes it virtually impossible and highly costly to organize collective action outside of it, and second, sucks in new comers to build on the available institutional confessional processes and mechanisms.
Activists who later became Hizbullah starts off from various discursive background (communist, Lebanese public schools, religious, clerical, etc) find a voice in sectarian groups like Amal and then decide that through Amal things are not going to work for them (in terms of conflict with the Israelis, utter marginalization of South and Bekaa etc.). The Iranians say we give you a hand and you can export the revolution. That seemed like enough of a mobilizing element for these few radicals. Then organizational capacity develops, these people starts achieving political and socially on the ground, their affinities with their allies have concrete instrumental implications, but are coupled with their grasp of new ways to preserve their interests or the interests of a broad movement inscribed in newly developed and virulently efficient religious (confessional) institutions (just like any other similar institutions whether Christian or Sunni, just take the Jesuit school Jamhour and university Saint Joseph for a comparison).
Basically Hizbullah learned the correct way to get things done in Lebanon. An Islamic state would probably destroy most of what they built until now. It would transform a situation of mutual interest built on solid institutional ground into a big mess where they will have to start afresh and create such gigantic structures in order to reap the same political economic and social benefit.