Trump Economic Zone plan raises eyebrows in Lebanon

Lebanon is not without its attractions. In its waters, natural gas has already been found, and more hydrocarbons are believed to be lurking. Trump will want to know how America can benefit economically, as he has elsewhere. For instance, Armenia has agreed to give the US exclusive long-term development rights over a strategic corridor through the southern Caucasus, while Ukraine and the DRC have signed over mineral rights in Trump's battle with China over access to 'rare earths'.

France's Total halted its exploratory work off the Lebanese coast for security reasons when Israel and Hezbollah traded blows from 2023-24, and US firms such as Chevron and Exxon Mobil have expressed an interest in the area. Yet it is not just offshore reserves that offer promise. Southern Lebanon sits on a key oil transit route from the Gulf to the Mediterranean.

The outdated Trans-Arabian Pipeline once carried Saudi oil to the Zahrani refinery just south of Sidon (Lebanon's third biggest city). When Hezbollah held sway across Lebanese politics, Russia's Hydroelectric Engineering and Construction Company was awarded a $1.5bn contract to rebuild and extend the refinery, expanding its capacity. Trump may now wonder whether American firms could do so, instead.

Beyond oil and gas, Lebanon's south has long been known for its vast, fertile agricultural lands, irrigated thanks to the Litani River, but war has taken a heavy toll. Last month, the UN's Food and Agriculture Organisation said "drought conditions, economic crisis and conflict had severely affected cereal output in 2025". The cereal harvest was completed in July, and production was around 90,000 tonnes, nearly 50% below average. 

Read more: Lebanon at a crossroads over Hezbollah arms

But first, disarmament

Washington feels that Hezbollah needs to be disarmed before Lebanon can flourish. This is no easy task, given that the group's weapons are dispersed throughout the country's Shiite community. Barrack told The New York Times on 3 July that disarmament would require both incentives and sanctions, noting that house inspections would face objections in Shiite areas. Barrack said the US had sought financial support from Saudi Arabia and Qatar to fund reconstruction in Lebanon's south, adding that if Lebanon's Shiites felt the benefit from this, they would be more likely to cooperate.

Establishing a southern economic zone is part of the picture, offering southerners—particularly the Shiites—an improved alternative to Iranian funding. In Lebanon at the end of August, Barrack again said exclusive state control of arms was in Lebanon's interest, adding that improving the country's economy could help achieve political aims.

On 28 August, the United Nations Security Council decided to renew the mandate of UN Interim Force in Lebanon (UNIFIL) forces in the south for the final time, until the end of 2026. In 2027, they will withdraw from Lebanon. This means that the clock is ticking for those seeking a new design for the south, perhaps including the creation of an economic zone. Would this be agreed in Tel Aviv, however?

Israel has not ruled out renewing war in Lebanon, including another ground invasion of the south to establish a 12km buffer zone. Washington may not agree to this. What Israel sees as a security buffer, America sees as an economic buffer, potentially extending beyond 12km.

Unpopular and illogical

Mohieddine Chahimi, a Paris-based professor of politics and economics, told Al Majalla that a southern economic zone "remains a possibility (but) faces a mixed domestic Lebanese reaction", adding that it "ranks lower than the Riviera plan in Gaza, which has taken on a semi-official character, with planning more than a year old".

He thinks any economic zone would stretch up to 7km into Lebanese territory, but added, "This is no vacant land. It is a living landscape, with a society, an environment, and a heritage reaching back more than 4,000 years. To empty it would mean a demographic and social transfer, wiping villages off the map and forcing people to relocate. That could take many forms: forced displacement, migration, exodus, or outright expulsion."

Currently, Chahimi believes the idea is "illogical," but acknowledged that it may form part of a future solution. That solution, he said, "lies first in ending security issues and military threats, then consolidating political stability," before building work began.

For his part, Beirut-based economist Ali Noureddine told Al Majalla that "any economic zone within a state should form part of a national economic plan," adding: "It must be accompanied by a competitive or commercial advantage, such as being tax-free, or near a port or airport, but there is no clear economic proposal here. Rather, it is a matter of security involving human transfer—a demographic project with an economic façade. I see no competitive advantage or genuine economic dimension."

While not against the idea of an economic zone, he said, location was key. "For instance, proposing a major economic zone in Tripoli, northern Lebanon, makes sense, as it has a large port with expansion potential, is near Syria, and could offer facilities to the entire surrounding region. A technological hub near the universities' complex, where professors and researchers gather, would also be valuable."

Not easily uprooted

Although Trump believes that economic boosts can help solve political problems, many in southern Lebanon believe that security is a prerequisite to economic revival, citing the need to implement UN Security Council Resolution 1701 and the ceasefire agreement signed in November 2024. With residents worried that war may recommence at any moment, now is not the time to talk about trade, they argue.

Analysts agree that the success or otherwise of the battle to wrest Hezbollah's weapons away from the Iran-aligned group could well determine the economic future not just of Lebanon's south, but of the country as a whole. In the meantime, diplomats feel that the idea of a resident-free economic zone in southern Lebanon may soon dissipate. It is not part of Barrack's official brief, they say, and was raised during his visit to Lebanon by a US delegation led by Senator Lindsey Graham—a fervent supporter of Israel.

Threatening a 'Plan B' to forcibly disarm Hezbollah if needed, Graham said a southern economic zone would extend from Naqoura to Marjayoun, with 27 Shi'ite, Sunni, Christian, and coastal towns in between. The idea is that residents will get large pay-outs to leave their homes, to make way for industrial facilities. Yet the Lebanese people are known for their deep attachment to their land, homes, and villages, with roots stretching back generations. They will not walk away easily.