Elections in Turkey and Gas Discoveries in Egypt Bode Ill for Israel’s Natural-Gas Industry

July 13 2018

While the dictates of economics, geography, and technology suggest that Turkey would be the best possible market for the natural gas beneath Israel’s coastal waters, politics dictate otherwise. Recep Tayyip Erdogan, recently reelected to the Turkish presidency, has been hostile to the Jewish state since first coming to power, and is unlikely to be eager to set up a gas pipeline between the two countries. But, write Oded Eran and Elai Rettig, further gas extraction is only worthwhile if the gas can be exported, and it is now unclear whether Egypt, the only viable alternative to Turkey, will be any more receptive:

Turkey’s regional relations in general, and with Israel in particular, do not provide the gas companies with the stability required to build an inter-state pipeline and sign off on such capital-intensive contracts. Although the deterioration of Turkish-Israeli bilateral relations that began in late 2008 was halted temporarily by the normalization agreement signed in June 2016, it resumed with even greater intensity over the past year with the violent events on the Temple Mount and in the Gaza Strip. . . . It is currently doubtful that Erdogan will approve an agreement whereby Israeli companies supply natural gas to Turkey. It is also doubtful that the gas companies themselves will agree to incur the risk of relying on a Turkish president so hostile toward Israel. . . .

A greater worry [stems from] reports on a new gas-field discovery in Egypt, [which preclude] Israel’s use of the liquefaction facilities in Egypt. The new field, if confirmed, will meet the Egyptian demand for natural gas for the foreseeable future and will rekindle Egypt’s desire to export liquid gas to Europe through its underutilized facilities. New Egyptian discoveries leave no room to accommodate Israeli gas and will create additional hurdles for Israel’s desire to reach the European market, [since the most efficient way to get the gas to Europe would be first to send it to Egypt for liquefaction]. Although a new and larger Egyptian gas field could encourage the construction of an additional liquefaction facility in Egypt or the expansion of the existing facilities, any such addition would require a substantial investment of time and capital.

The natural gas that was discovered in Israel’s [coastal] waters has the potential to generate immense profits and revenue, as well as to improve Israel’s relations with its neighbors. However, the prolonged internal political process within Israel regarding the development of the reserves, the method of taxation, and the ratio between domestic use and exports, in addition to the recent developments in Turkey and Egypt, make it difficult for Israel to realize these benefits. . . .

[E]ven in the most optimistic of scenarios, the Israeli economy cannot itself absorb a large enough volume of gas in the coming years to justify the capital investment needed for the development of the Leviathan gas field. If the gas export deal with Egypt does not materialize, the gas partners will become dependent on the relatively small export deal with Jordan as their only anchor. . . . Therefore, gas companies should push for the rapid implementation of the export deal with Egypt while the Egyptian gas shortage continues. In turn, the Israeli government should provide behind-the-scenes assistance in this matter to the extent necessary.

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More about: Egypt, Israel & Zionism, Natural Gas, Turkey

By Recognizing Israeli Sovereignty over the Golan, the U.S. Has Freed Israel from “Land for Peace”

March 25 2019

In the 52 years since Israel seized the Golan Heights from Syria, there have been multiple efforts to negotiate their return in exchange for Damascus ending its continuous war against the Jewish state. Shmuel Rosner argues that, with his announcement on Thursday acknowledging the legitimacy of Jerusalem’s claim to the Golan, Donald Trump has finally decoupled territorial concessions from peacemaking:

[With] the takeover of much of Syria by Iran and its proxies, . . . Israel had no choice but to give up on the idea of withdrawing from the Golan Heights. But this reality involves a complete overhaul of the way the international community thinks not just about the Golan Heights but also about all of the lands Israel occupied in 1967. . . .

Withdrawal worked for Israel once, in 1979, when it signed a peace agreement with Egypt and left the Sinai Peninsula, which had also been occupied in 1967. But that also set a problematic precedent. President Anwar Sadat of Egypt insisted that Israel hand back the entire peninsula to the last inch. Israel decided that the reward was worth the price, as a major Arab country agreed to break with other Arab states and accept Israel’s legitimacy.

But there was a hidden, unanticipated cost: Israel’s adversaries, in future negotiations, would demand the same kind of compensation. The 1967 line—what Israel controlled before the war—became the starting point for all Arab countries, including Syria. It became a sacred formula, worshiped by the international community.

What President Trump is doing extends far beyond the ability of Israel to control the Golan Heights, to settle it, and to invest in it. The American president is setting the clock back to before the peace deal with Egypt, to a time when Israel could argue that the reward for peace is peace—not land. Syria, of course, is unlikely to accept this. At least not in the short term. But maybe someday, a Syrian leader will come along who doesn’t entertain the thought that Israel might agree to return to the pre-1967 line and who will accept a different formula for achieving peace.

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More about: Donald Trump, Golan Heights, Israel & Zionis, Peace Process, Sinai Peninsula, Syria