09.07.2019 | Mutual economic interest draws Israel and Arab neighbours closer

Gas and water deals either planned or under way, as commercial and environmental interests take precedence over geopolitical rivalries.

Click here to read the Alaco article in LobeLog.



by Yigal Chazan

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.

Running parallel to the energy developments are moves to exploit Israel’s desalination potential to make good Jordan’s acute water shortages, which threatens its capacity to accommodate over a million Syrian refugees. Israel supplies Jordan with water as part of its 1994 peace treaty, but the 55 million cubic meters pumped from the Sea of Galilee annually could soon increase, thanks to the Israel’s expansion of its desalination capacity—the process already supplies 70 per cent of its drinking water.

In a bid to address the Sea of Galilee’s falling water level, caused by drought and decades of overuse, Israel is planning to restore it to health by drawing on desalinated water from new and existing plants. Late last year it was reported that work had begun on a pipeline and pumping facilities that would funnel desalinated water to Israel’s largest reservoir in about two years’ time. The project, estimated to cost around $280 million, will not only aim to replenish the historic lake but also bolster Jordan’s water supplies and revive the much-diminished River Jordan for which the Sea of Galilee is the primary source.

Another plan in the making is a World Bank-backed Israel-Jordan scheme to build a desalination plant in Aqaba, Jordan’s Red Sea port, which would supply both sides with drinking water and pipe the brine byproduct into the shrinking Dead Sea 200 kilometers to the north. Both countries border the hyper-saline lake, accruing economic value from its exploitation, through tourism and the mining of salts.

Israel is reportedly ready to press ahead with the long-delayed $10 billion Red Sea-Dead Sea canal project in order to improve bilateral relations. Signed off in 2015, the enterprise had been held up by diplomatic rows, concerns over costs, and possible environmental damage. Some scientists have warned that mixing the desalination plant-generated brine with Dead Sea waters could threaten its delicate ecosystem. Earthquake tremors might also cause the brine pipeline to leak, spoiling local agriculture.

Although the energy and water projects are largely economic and practical, security and political tensions could yet postpone or even scupper them. Notwithstanding the risks, these projects demonstrate a willingness on the part of Israel and its Arab neighbors to move forward, even as the Palestinian issue remains unresolved. That doesn’t necessarily reflect a grudging acceptance of Israel. Rather, it’s a recognition that their economies can no longer be held back by a disdain for or hostility towards the Jewish state.

For their part, the Palestinians are also keen on commercial opportunities but not as a substitute for a political solution to their current circumstances, hence their rejection of the Trump deal. Building up trust through economic incentives may create an environment more conducive to a final settlement of the decades-old conflict, but it is a mistake to view the former as ends in themselves.