Mutual economic interest draws Israel and Arab neighbors closer

Israel has had fairly good relationships with its Arab neighbors - other than the Palestinians. With the discovery of oil and natural gas in the region those ties are getting closer. And it will not help the Palestinians- the Arab States see them only as pawns.

With Donald Trump’s “deal of the century” seemingly doomed and the Israeli-Palestinian peace process as deadlocked as ever, Israel and its Arab neighbors are quietly moving ahead with major natural resource-based economic projects that could boost regional stability.

Self-interest is driving significant levels of cooperation in the energy and water sector that, notwithstanding its vulnerability to political and security tensions, will likely lead to greater interdependence between Israel and its neighbors, lessening the prospect of renewed conflict along their borders.


The eastern Mediterranean’s massive natural gas reserves are a boon for the economies of the littoral states. Egypt and Israel are notably working in tandem to maximize mutual benefit. With its Liquefied Natural Gas terminals, the Egyptians have their eye on becoming an export hub, as a planned pipeline connecting regional producers with European markets is barely off the drawing board and remains burdened by cost and engineering concerns.


Israel, which would benefit greatly from Egypt’s LNG distribution outlet, went some way to helping its southern neighbor achieve its ambition, striking a $15 billion deal to supply gas in February 2018. At the time, Egypt’s president Abdel Fatah al-Sisi said that the agreement would help him realize his dream of turning the country into a regional energy hub. The first of the Israeli deliveries, initially destined mainly for the Egyptian domestic market, is expected to be pumped through a Sinai pipeline this year.


Another Israeli supply contact, a $10 billion deal with Jordan, is also anticipated to come on stream soon, although there has been resistance to the move in the Jordanian parliament. MPs are concerned that it would undermine the country’s energy security and support Israel’s control of the West Bank. There had been suggestions that Egypt’s resumption of supplies to Jordan might also lessen the need for Israeli gas. Yet at the end of April, one of the partners in the project said that it was on schedule to deliver gas by the end of year.


Although Israel’s peace treaties with Jordan and Egypt made the respective deals possible, it remains technically at war with Lebanon to the north, which makes a U.S.-mediated Israeli- Lebanese effort to resolve a maritime border dispute all the more significant. The dispute concerns ownership of a gas field straddling their respective territorial waters. It was triggered by Beirut’s issuing of an exploration tender last year. The episode provoked a war of words, with Lebanon’s Iranian-backed Shia political and military movement, Hezbollah, vowing to defend the country’s “oil and gas rights.”


The Lebanese want a quick resolution because they are keen to start extracting gas to bolster their cash-strapped, debt-laden economy. Hezbollah, under sanctions and seeing less and less funds from embargoed Iran, would likely also benefit from the revenue stream. That may explain why Israel’s implacable enemy, which exerts huge influence in Lebanese politics, has not sought to obstruct the process.
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