Lebanon’s improving relations with the Gulf could begin to translate into economic support, but only if Beirut advances on the disarmament of non-state actors and completes reforms through an agreement with the International Monetary Fund (IMF), economists said.

Saudi Arabia lifted its nearly five-year ban on Lebanese imports in June, allowing the first containers of goods to leave Beirut for Jeddah on June 20. The UAE has also resumed operations at its embassy in Beirut and restored travel for Emirati citizens after a temporary wartime restriction.

The moves represent the most concrete economic signs yet of a diplomatic thaw that began after Joseph Aoun was elected president in January 2025 and Nawaf Salam formed a government the following month.

Nassib Ghobril, chief economist and head of economic research and analysis at Byblos Bank Group, said Gulf and Western envoys had been explicit about what must follow.

“The existing international political and diplomatic support for Lebanon will translate into economic and financial support” once the government advances on two parallel tracks, he said. The first is the disarmament of non-state actors and the restoration of executive authority over decisions of war and peace. The second is structural reform through an IMF agreement.

The security track remains deeply contested. Lebanon tasked its army in 2025 with establishing a state monopoly over weapons, while Aoun pledged that the state alone would hold the right to bear arms. Hezbollah has resisted full disarmament and argues that the issue cannot be settled while Israeli forces remain on Lebanese territory.

The dispute has become central to negotiations following the latest war. A US-brokered framework agreed in June links a phased Israeli withdrawal from southern Lebanon to the disarmament of non-state armed groups and a wider deployment of the Lebanese army. Israel has said it will not withdraw until Hezbollah is disarmed, while the group has rejected that sequence.

Saudi eases Lebanon trade restrictions

Saudi Arabia’s decision to restore imports showed how progress on a narrower security issue can produce a commercial result. Riyadh first banned Lebanese fruit and vegetables in April 2021 after more than five million Captagon pills were discovered in a shipment of pomegranates. The prohibition was later extended to all Lebanese goods during a wider diplomatic rupture.

Before the first containers departed in June, Salam and Saudi ambassador Fahd Al-Dossari inspected new cargo scanners at Beirut port. Saudi authorities said the ban was lifted after positive steps by Lebanon towards rebuilding state institutions and tighter controls against smuggling.

“The reopening of the Saudi market to Lebanese exports goes way beyond economics and technicalities, and has a very symbolic dimension,” Ghobril said. The decision reflected renewed confidence in the authorities’ willingness to impose the rule of law, protect border crossings and reconnect Lebanon with its Arab partners, he added.

Economic reforms

The economic reform track has also moved, though the most difficult decisions remain unresolved. Parliament passed further amendments to the Bank Resolution Law on August 12 after the IMF identified shortcomings in the original framework. A separate financial gap bill must determine how losses from the 2019 collapse are divided among the state, the central bank, commercial banks and depositors.

Lebanon’s real GDP fell by nearly 40 per cent between 2019 and the end of 2024. The World Bank estimated growth of 3.5 per cent in 2025, helped by tourism, remittances and private consumption, but the latest war overturned expectations of another expansion. Finance Minister Yassine Jaber said in May that the economy could contract by at least 7 per cent this year, with damage reaching $20 billion.

Leila Dagher, founding director of the Center for Policy Action and an associate professor of economics and policy at Lebanese American University, said political and security stability was the first condition for investment.

“Serious long-term investment is extremely difficult to attract when there is a persistent risk of conflict or when armed actors operate outside the authority of the state,” she said.

Banking restructuring, judicial independence, enforceable contracts, transparent procurement and predictable regulation must follow, Dagher added.

Ghobril said banking and fiscal measures would need to be accompanied by improvements to the rule of law, greater public-sector accountability and action against the shadow economy.

“Focusing only on technical issues, such as fiscal and banking reforms, despite their importance, will not restore confidence in the economy or attract investments,” he said.