Trump's economic zone: A new 'Gaza Riviera' in south Lebanon?

When Tom Barrack, the US presidential envoy, arrived in Beirut last month, he was accompanied by former State Department spokeswoman Morgan Ortagus and Senator Lindsey Graham.

The visit, however, was not ceremonial. It was an announcement for a plan that could potentially shape Lebanon’s future.

Barrack said that Washington was preparing a package of incentives for Lebanon, including the establishment of a special economic zone in the country’s south, if Hezbollah agrees to give up its weapons.

He argued that the initiative would reduce Iranian influence, pointing out that Tehran has long bankrolled Hezbollah, and suggested that Gulf states such as Saudi Arabia and Qatar would help fund the effort.

The idea has since dominated political debate in Beirut, where leaders are still grappling with the aftermath of the most recent war with Israel.

The initiative, personally championed by US President Donald Trump, promises to convert the war-torn south into an investment hub potentially linked to Eastern Mediterranean gas projects.

But for many Lebanese, the timing and conditions attached to this vision raise fundamental questions. Is this genuine post-war reconstruction, or a calculated attempt to reshape the region's demographic and security landscape under an economic guise?

The 27 November 2024 ceasefire may have reduced direct military operations, but daily Israeli violations continue - from surveillance flights to maintaining control over border points. Against this backdrop, the economic zone proposal has become, to most of the country’s residents, both a potential lifeline and a source of deep suspicion.

The disarmament push comes in the shadow of last year’s war between Israel and Hezbollah, which flared up after Hamas’s 7 October attack on Israel and escalated in September 2024. The conflict left over 4,000 dead and caused an estimated $11 billion in damage in Lebanon, according to the World Bank.

Hidden calculations behind economic promises

"Behind this attractive economic proposal, complex political and security calculations are hiding," Lebanese political researcher Tawfiq Shouman told The New Arab. He warns of the project's dangers, explaining that talk of a southern economic zone effectively means "establishing a zone on the ruins of destroyed frontline villages," potentially leading to displacement and preventing residents' return.

"If this zone's area remains undefined, it could encompass half of southern Lebanon, placing it under international supervision - effectively carved out from Lebanon," Shouman added.

The border areas proposed as potential sites for the project are the same ones that witnessed extensive destruction and repeated displacement during past wars. This, according to Shouman, raises “serious questions” about whether implementing the project would cement a new reality of displacement or lead to an undeclared demographic redistribution.

These concerns particularly focus on Shia-majority villages, where any demographic change would directly impact the south's political and demographic balance. 

Conditional economic viability

Economic expert Mounir Younes sees potential benefits in establishing an economic zone in southern Lebanon, but ties the project's realisation to ending the state of "permanent war" through border demarcation or normalising Lebanese-Israeli relations.

"The feasibility of this project, as Americans see it, lies in creating an economic zone on the border strip that becomes a convergence point for interests and investment attraction," Younes explained to TNA. "Investors in this zone would receive international guarantees, including disarmament and ending the Lebanese-Israeli conflict."

He adds that the project's success could open doors to a joint gas pipeline linking Lebanon and Israel to European markets, incentivising foreign companies to participate in gas exploration in Lebanese waters. 

"If the conflict ends completely, the economic zone would directly benefit southern residents," Younes said.

However, the reality on the ground suggests implementation will not be swift, especially with Lebanon tied to a broader regional crisis. 

"The solution begins gradually by addressing problems like Syrian and Palestinian refugees and other related issues," he noted.

Political analyst George Alem recalls Gaza's experience when the "Riviera" project was proposed, seeing the same scenario potentially repeating in the south. "An industrial zone where Lebanese work during the day, remaining empty of residents at night, is a security zone with economic cover."

He adds that Israel effectively seeks "a strip without people or stones," making any economic project parallel to a systematic displacement policy.

Disarmament as the price of reconstruction

The reconstruction file has become part of a larger political equation, with international aid and financing plans tied to conditions regarding economic reforms and the security situation.

Barrack’s announcement follows a closely contested Lebanese Cabinet vote earlier this month approving a US-backed plan to dismantle Hezbollah’s arsenal by the end of the year. The Lebanese army is now drafting the disarmament plan, which is expected to be presented to the government in September.

Lebanese analysts agree that the recent war changed the rules of engagement. Younes clarifies that Hezbollah's disarmament, economic reforms, and reconstruction have become directly interconnected. 

"It's become clear there's no reconstruction or funds from the IMF and international community without steps linked to weapons," he said.

This equation has become clear since Barrack's proposal was presented, stipulating a Lebanese economic conference conditional on field steps beginning with weapons surrender. 

United Nations Resolution 1701, along with repeated visits by American envoys to Beirut, reinforced the message: reconstruction would come only in exchange for disarmament.

Estimates indicate that Lebanon, even if receiving the promised $3 billion IMF funding, would remain far from meeting actual needs. Recovery requires $10-11 billion to revive the economy, plus approximately $7 billion for southern reconstruction, with total needs exceeding $20 billion. 

Shouman says that the recent visit by Barrack and the US delegation revealed a fixed American position, which begins with Hezbollah's disarmament, then discusses ending attacks, withdrawal from occupied Lebanese territories, and reconstruction.

"Americans don't carry compromise proposals, but repeat Israeli conditions - surrender weapons first, then talk about stopping attacks, without any guarantees," he said.

This condition, in Shouman's view, offers no real guarantee for Lebanon but opens doors to further escalation. 

Alem agrees, noting that escaping this predicament requires solid national unity, rejecting the south's transformation into a bargaining arena.

A fragile path forward

Meanwhile, Lebanese political circles are linking any decision on weapons to practical Israeli steps, like stopping attacks and setting a timeline for withdrawal from the occupied territories.

Alem points to an ongoing diplomatic track between Beirut and Washington over southern Lebanon and the implementation of Resolution 1701. But he highlights a key distinction between American administrations: under Amos Hochstein, US mediation was more flexible and produced workable understandings.

The current approach, he argues, is tilted toward Israeli interests, leaving the latest American proposal – shaped by Barrack and accepted in principle by Lebanon – unworkable under the Israeli conditions attached to it.

Forcible disarmament is considered unlikely, as neither the Lebanese army, presidency, nor government is prepared, fearing civil war. Any such approach "would be a war for Israel or the United States," Alem indicated.

Therefore, he argues, any discussion of disarmament must occur through an internal understanding, provided Israel advances reciprocal steps, which include stopping attacks, releasing Lebanese prisoners, and withdrawing from occupied territories. 

“Only then might there be hope for reaching a national consensus on the future of weapons,” he added.

This article is published in collaboration with Egab