Washington seeks to establish a special economic zone in southern Lebanon in exchange for the Lebanese government to disarm Hezbollah. This initiative, initially introduced by US presidential envoy Tom Barrack during a September visit to Beirut, outlines a straightforward exchange: security for development. In line with UN Security Council Resolution 1701, the state would gradually reduce armed activity along the border and restore full army control over the south, in return attracting investment, business tax incentives, and political backing from partners including Gulf countries and Eastern Mediterranean initiatives.
The proposed framework aims to create a clearly defined economic zone with transparent governance, legal boundaries, and a structured financing plan blending grants, concessional loans, and private capital. This initiative is supported by risk-mitigation tools and transparent procurement. The project’s total cost exceeds $20 billion, with roughly $10-11 billion planned to restart the economy and about $7 billion to rebuild the south, plus an additional $3 billion from the IMF.
The development would take place in three phases: stability and legal framework within the first six months, initial site openings within 18 months, and full scale-up by year two, with quarterly public reporting and independent verification. The plan rests on four pillars – a legally clear zone, security as a precondition for each step, social guarantees for residents, and staged financing tied to verified results with clearly measurable financial indicators.
The approach echoes that of Egypt and Jordan’s qualifying industrial zones, where duty-free access to the US market was contingent on an obligatory share of Israeli inputs and a minimum local value-added threshold of 35%. The common thread is an exchange of political and security steps for economic preferences, focusing on quick export gains and using external investors as anchors for growth. However, past experiences highlight risks such as a narrow sectoral base dominated by apparel, weak spillovers, sensitivity of supply chains to politics, and rising transaction costs.
Despite these challenges, the Trump administration’s economic approach to the Middle East focuses on profit, incentives, and fast investment signals, a perspective familiar to business but at odds with the historical memory and political psychology of the region. In Lebanon, where security, dignity, sovereignty, and the experience of war are not add-ons to the economy but its precondition, offers of industrial zones and tax relief before resolving the core issues of war and peace are often perceived as an attempt to sidestep rather than resolve the conflict.
Without a full peace between Lebanon and Israel, a clear post-conflict order, and legally grounded security along the border, the project risks becoming a temporary backdrop to a continuing war rather than a platform for long-term growth. Past conflicts, including the 1982 invasion and the 2006 war, have left a lasting impact on Lebanon, making it difficult to expect public support for an economic project in place of a political settlement. The ongoing military campaign in Gaza and recent strikes in Syria compound these challenges, reinforcing the sense of a widening war.
Furthermore, Israeli nationalist discourse sometimes references a natural northern border along the Litani River, rooted in biblical geography, which further complicates the peace process. Analysts note that even though Hezbollah has suffered losses, trust in American initiatives remains weak. The prospect of a formal peace with Israel is not a serious topic in domestic Lebanese debate while the region continues to live in a mode of blows without borders. Thus, the administration’s economic approach based on incentives, profit, and a project mindset runs up against a basic truth of the Middle East: the economy does not replace security, memory, and sovereignty; it follows them.