Lebanon's Exclusion from Regional Economic Corridors and the Path Back In

Dany Salman

On September 9, 2023, at the G20 summit in New Delhi, the India-Middle East-Europe Economic Corridor (IMEC) was announced as a transformative project for regional connectivity in the Middle East and a trade link between India and Europe. Members of this project in the Middle East included the United Arab Emirates, Saudi Arabia, Jordan, and Israel. The project was a U.S. initiative to counter China's Belt and Road Initiative (BRI), aimed at linking the region through a series of rail lines, shipping lanes, and digital cables. Notably, IMEC opted to utilize Israel’s Haifa port as the final Middle Eastern destination before Europe, giving it a considerable position as a logistics transit hub in the project.

While this project would certainly improve regional connectivity, IMEC included only select countries and was perceived as the “economic wing” of the Abraham Accords, which led to diplomatic normalization between Israel and several Gulf countries. More recently however, the war in Gaza, the regional military escalation in Lebanon, the closure of the Strait of Hormuz, and the destabilization in the Gulf further complicated the feasibility of the project.

Unsurprisingly, Lebanon was not included in the project. The country continues to grapple with deep financial and political crises, while its transport infrastructure remains underdeveloped. As a result, it found itself with no seats at this table. However, in a notable development on February 25, President Joseph Aoun expressed Lebanon’s interest in joining the U.S. - led project following a meeting with France’s special envoy for IMEC. The article will examine the reasons behind Lebanon’s exclusion, assess the political consequences, and explore what a realistic pathway for reintegration into the regional economy might entail.

Lebanon's Exclusion: Causes and Consequences

 Beirut’s exclusion from IMEC and other regional projects stems from a set of uncertainties that made the country a non-desirable partner to work with. Economically, the crisis that has persisted since 2019 meant that the banking sector is effectively unable to perform its core functions at the same capacity as before. This is because banks do not have the same level of capital as pre-2019 to offer loans, nor can they offer them at the same pre-2019 interest rates which were much lower than today’s.

At the same time, Lebanon’s economy is has become primarily a cash economy, meaning there is little modern digital financial infrastructure, and transactions are much harder to monitor. When Lebanon was placed on the Financial Action Task Force’s grey list in 2024, it led to even less investor confidence and more scrutiny of transactions across borders. This placement signaled lots of shortcomings in financial transparency and in preventing corruption. For international investors and regional initiatives that require strict compliance with anti-money-laundering and financing standards, this creates additional due diligence costs and uncertainty around how funds are used and monitored.

For investors, this economic situation thus translates into higher risk, limited legal and financial safeguards, and uncertainty over returns, all of which make Lebanon a less attractive partner compared to other countries in the region.

Politically, it would be a major challenge to bring Lebanon and Israel under one regional project, especially considering the similar roles that they would be required to play geographically on the Eastern Mediterranean. Meanwhile, the expansion of the Israeli occupation in the south and the uncertainties springing from the ongoing war have raised serious doubts about the long-term security of the country which includes stable political solutions between the two countries that are not just limited to fragile ceasefires.

Moreover, Lebanon’s involvement would either require establishing direct rail links to Israel or the inclusion of Syria as a member of IMEC. Unfortunately for Lebanon, both options seem quite unrealistic at the present time considering the political and economic instability of Syria and as well as the ongoing Israeli military activities in Southern Lebanon. Consequently, Lebanon is seen as a less desirable partner for regional projects due to its border difficulties, security uncertainty, involvement in regional conflict, and Gulf disapproval of Hezbollah’s actions.

Lebanon is thus actively missing out on taking advantage of its strategic location on the Eastern Mediterranean as a potential link between east and west. Some estimates suggest that Lebanese participation in IMEC could generate between USD 4-5 billion in annual revenue and create thousands of jobs over an eight to 10-year period.
 
 Lebanon's Path Back into Regional Trade

Given the ongoing war and uncertainties, Lebanon needs to revise its diplomatic priorities and urgently rebuild its relationship with the Gulf. Historically, the major obstacles that blocked Gulf investment affected its relations with Lebanon were Lebanon’s security concerns (both internal and external threats) and Hezbollah’s growing influence. On March 2, 2026, the Lebanese government formally designated Hezbollah’s military activities in Lebanon illegal, a move that was immediately welcomed by the UAE’s Deputy Prime Minister Abdullah bin Zayed Al Nahyan.

While Lebanon has recently seen growing Gulf investment in its digital sector, the Lebanese government should work to continue expanding the fields in which cooperation with the GCC can take place. Rebuilding such a relationship is a crucial first step because gulf investment can help in reviving various Lebanese sectors, which are in desperate need of activation following three years of war and seven years of financial collapse. This relationship can re-attract Gulf tourists back to Lebanon (which accounts for 50% of total tourism revenue) and greater direct investment in Lebanon’s development. This revival can be achieved in three ways. Increased government authority over the Beirut port, stronger security at the eastern borders (to avoid smuggling), and continued political efforts to re-establish positive relations with the gulf which require far less Iranian influence in the country’s affairs.

The second step concerns infrastructural development and building credibility. For Lebanon, this means that the more realistic objective for now is not to imagine immediate integration into IMEC’s original backbone, but to position itself as a credible supplementary branch. To achieve this, it needs to prioritize preparing the Beirut and Tripoli ports to handle heavier transit traffic through the following steps: reducing customs delays, digitizing customs and cargo clearance procedures to reduce delays and paperwork and upgrading storage and handling capacity. Lebanon also needs to ensure that the ports are connected to reliable roads and transport routes for smoother transport. It would also require a basic level of security and day-to-day operational reliability so that shipping firms and investors can treat Lebanese ports as working commercial hubs with true potential. In other words, Lebanon’s geography still offers an opportunity, but that opportunity will only matter if the state can show that its ports can move goods efficiently and with minimal disruption.

Finally, it is crucial for Lebanon to find a long-term security solution with Israel. The continuous threats of attacks on Lebanese soil and active Israeli military presence mean Lebanon cannot yet integrate in regional projects or attract any investment until security guarantees are restored. With Lebanon and Israel participating in direct talks for the first time since 1993 in Washington, a 10-day ceasefire was agreed upon, with intention to continue direct negotiations in the future and hopes of reaching long term peace. This helps Lebanon’s odds in joining IMEC by addressing both the security concerns and the limitations of Lebanon’s geography in relation to the rest of IMEC’s infrastructure.
 
Conclusion
 
Lebanon’s path toward becoming part of future regional trade and connectivity projects, therefore, depends less on declarations of interest and more on building the conditions that make its inclusion realistic. Rather than presenting itself as a replacement for existing corridor routes, Lebanon can position itself as a useful and reliable complement that supports broader regional trade as a meaningful post-war recovery strategy. In a post-war setting, this requires a steadier relationship with the Gulf that can reopen the door to tourism, investment, and increased confidence in the long-term stability of the country. Additionally, Lebanon needs firmer state control over the Beirut port and border crossings to limit smuggling and reassure external partners, as well as visible improvements in transport and trade infrastructure. Combined with long-term security guarantees, Lebanon can begin to move from being sidelined in regional economic planning back to being considered a reliable partner.

About the Author
Dany Salman was an intern at the Regional and International Affairs Cluster at IFI.