In a move that shook the political landscape of the Middle East, Lebanese and Israeli civilian representatives met at the UNIFIL headquarters in Naqoura for (almost) direct talks mediated by the United States. This meeting— the first of its kind since 1983—took place within the framework of the ceasefire monitoring mechanism established in November 2024.

While the office of the Israeli Prime Minister celebrated the meeting as a first step toward laying the groundwork for future relations and economic cooperation, the Lebanese reaction was markedly divided, reflecting a deep disparity between the goals of the two countries. It is a complex diplomatic game whose contours we attempt to clarify here.

The Current Situation

The negotiations are unfolding amid highly volatile circumstances and under external pressure—specifically American—to launch a civilian dialogue that could put an end to a long and destructive conflict. The ceasefire agreement signed in November 2024 called for Hezbollah’s withdrawal from south of the Litani River, the deployment of the Lebanese Army in that region, and the restriction of weapons to the state alone starting from south of the Litani, followed by Israel’s gradual withdrawal from Lebanese territory. But the agreement was not upheld, and violations continued. This prompted external powers to push for dialogue that goes beyond security and military matters, in hopes of injecting a degree of stability and confidence into an otherwise fragile military situation.

At the same time, the economic and financial crisis continues to weigh heavily on Lebanon despite official claims of improvement. The formal economy—deprived of investments—has not grown, as reflected in World Bank figures showing a decline of – 6.6% in 2024. The banking sector remains at the heart of the storm, paralyzed by the political class’s inability to enact reforms in this sector, in public finances, and in state institutions. Add to this the fact that the most recent war cost Lebanon more than $14 billion, according to the World Bank, and resulted in rising poverty and declining essential services. This has driven Lebanon to seek international assistance—conditional on political stability and reform. Escaping this crisis and preventing a new wave of violence are likely the primary motivations behind Lebanon’s willingness to participate in negotiations involving civilians.

Economic Cooperation

The Israeli Prime Minister’s office stated that the ongoing talks represent “a preliminary attempt to lay the foundation for a relationship and economic cooperation.” But what kind of economic cooperation is Netanyahu referring to?

According to available information, the economic discussion revolves around key areas vital to Lebanon’s sustainability. There is no question regarding Israel’s technological superiority and its resources, but if political and security obstacles are overcome, economic cooperation is expected to focus on:

1. Natural gas and energy:

This is the most immediately profitable opportunity. Israel has the capacity to supply Lebanon with gas to operate its power plants, or the two sides could cooperate regarding security and infrastructure for natural gas extraction in the eastern Mediterranean basin.

2. Water management:

Israel possesses extensive expertise in seawater desalination—an area Lebanon urgently needs amid a severe decline in rainfall. Israel may expect joint projects or at least an exchange of technical expertise.

3. Reconstruction and infrastructure:

The war caused massive destruction in southern Lebanon. Theoretically, a future aid package from the United States and European countries could include Israeli participation in rebuilding major infrastructure, under a political condition that would implicitly push toward establishing a demilitarized economic zone along the border.

Clashing Expectations

The office of the Israeli Prime Minister reiterated that the talks aim to “lay the foundation for a relationship and economic cooperation.” In contrast, Lebanese Prime Minister Nawaf Salam described the economic discussions as a step toward normalization—one that must follow a peace agreement, which he believes remains distant.

The primary difficulty lies in the fundamentally divergent strategic goals and agendas of Lebanon and Israel. While the economic discussions may appear technical, they are in fact a battleground for a political sequence.

1. The Israeli position:

Israel sees stability as the product of integration. Its long-term vision for regional security and normalization drives its expectations and shapes its conditions—chief among them the disarmament of Hezbollah and its complete withdrawal from the border region. Israel views economic incentives as a strategic tool to enable the Lebanese state to achieve full sovereignty.

Israel also frames its approach within a broader regional integration agenda—the India–Arab–Europe corridor that passes through Israel—and seeks to incorporate Lebanon into a wider network of trade and political stability through the Abraham Accords. Given the eastern Mediterranean’s natural gas reserves, Israel aims to secure its installations by coordinating operations in offshore gas fields to ensure exports and safeguard limited national resources.

2. The Lebanese position:

Lebanon’s priority is to ease the effects of the crisis and preserve national sovereignty, while firmly rejecting normalization. Specifically, Lebanon is seeking urgent international assistance to support its financial system and solve the electricity crisis, to avoid societal collapse. Thus, economic engagement is conducted within the framework of humanitarian needs—not political concessions.

Lebanon also insists on a full ceasefire from Israel and its complete withdrawal from occupied Lebanese territory, which it views as an essential prerequisite for any viable negotiations. Meanwhile, Lebanon’s official stance remains firmly opposed to normalization—as stated by the Prime Minister—and committed to the 2002 Arab Peace Initiative, which requires a Palestinian state solution.

A Long Road Ahead

Civil-level negotiations are historic in themselves. This is the first time that a mechanism originally limited to monitoring ceasefire violations on the military level is transformed into a political instrument. Yet initial analysis shows a deep gap between Israel’s goals and Lebanon’s: Israel sees economic cooperation as a prelude to normalization, while Lebanon considers it a result that can only follow guaranteed peace and security.

At this stage, all that can be agreed upon is to continue discussions and develop additional ideas for confidence-building measures. The success of this diplomatic mission will not hinge on the brilliance of economic proposals involving gas and water, but rather on Washington’s ability to balance Israel’s quest for absolute security with Lebanon’s need to survive—without crossing its political red lines.