When we talk of the Israeli-Palestinian conflict, we tend to focus on the latter’s political, social and humanitarian dimensions. But often this comes at the expense of considering an important economic dimension — one which recent events in Gaza have brought into stark relief.Perhaps the most financially destructive aspect of any military occupation is the appropriation of natural resources. And Israel’s is no exception. Most obviously, this has assumed the form of Israel taking control of (or rendering inaccessible to Palestinians) much of the West Bank and Gaza’s cultivable land and water supplies.
In other words, despite the establishment of the Palestinian Authority (PA) in the Nineties, the Palestinian people have never truly had control over their resources and their economy. This, on top of severe restrictions on the movement of people, labour and goods, has taken a very heavy toll on the Palestinian economy.
Less well-known, however, is Israel’s appropriation of the Palestinian Territory’s vast reservoirs of oil and natural gas. On its border with the West Bank, for instance, lies Israel’s largest onshore oil field, which Israel states is located west of the armistice line of 1948 — even though most of it is situated beneath Palestinian territory occupied since 1967.
Yet the site of the most controversial “energy war” between Israel and Palestine is not in the West Bank — but Gaza. In 1999, British Gas Group (BGG) discovered a large gas field (Gaza Marine) at a distance of 17 to 21 nautical miles off the coast of Gaza. This placed it within the bounds of the Oslo II Accord, signed in 1995, which gave the PA maritime jurisdiction over its waters up to 20 nautical miles from the coast.
Following the discovery of the gas field, the PA signed a 25-year contract for gas exploration with BGG, and, in 2000, the company drilled two wells in the field, which was estimated to contain 1.4 trillion cubic feet of natural gas — more than enough to satisfy the Palestinian Territory’s energy needs, and generate significant
export revenue flows.
It looked like, after much misfortune, the Palestinian people had finally struck gold. On 27 September 2000, after symbolically lighting the flame at the BGG offshore exploration platform, Yasser Arafat, then president of the PA, hailed the discovery as “a gift from God”, one which would “provide a solid foundation for our economy and for establishing an independent state”.God, however, had other plans: within two days, the Second Intifada had broken out. And the following year, Ariel Sharon, an ultranationalist, won the elections and used the unrest to block the Gaza Marine development project, claiming the profits risked being channelled to Hamas and other militant groups.
In the following years, little was done to bolster the Palestinian economy. Instead, successive Israeli governments insisted that the gas be piped to a refinery located within their territory, thus giving Israel control over the revenues from the Gaza gas fields. In the early 2000s, even Tony Blair, then prime minister, got involved, convincing the Palestinians to agree to send the proceeds from the natural gas reservoirs to the Federal Reserve Bank in New York to be vetted, to ensure that the money didn’t fall into the hands of armed resistance groups.
But Israel continued to drag its feet — and finally broke off all negotiations following Hamas’s takeover of Gaza in 2007. A crucial turning point came the following year, when Israel launched a military operation in the strip, after which Israel militarised the entire Gazan coastline and effectively brought under its control the Gaza natural gas field, in contravention of international law. From that moment onwards, BGG started dealing directly with the Israeli government. But for several years, largely due to recurrent hostilities between Israel and Hamas, there was hardly any progress on the project.
This has resulted in accumulated losses to the Palestinians in the billions of dollars. “The occupation continues to prevent Palestinians from developing their energy fields so as to exploit and benefit from such assets,” the United Nations Conference on Trade and Development observed in 2019. “Accordingly, the Palestinian people have been denied the benefits of using this natural resource to finance socioeconomic development and meet their need for energy over this entire period, and counting.”
After Russia’s invasion of Ukraine, however, the project was revived. As Europe started desperately scouring the world for alternatives to Russian gas, Netanyahu saw a perfect opportunity to crown his
long-held dream of transforming Israel into a regional energy hub and major energy exporter. This is a fairly recent development. Since its creation in 1948, Israel has been heavily dependent on energy imports from other countries.In 2009 and 2010, however, Israel discovered two massive natural gas fields off its coast, in its self-declared exclusive economic zone: the Tamar and Leviathan gas fields, with overall estimated reserves of around 30 trillion cubic feet of natural gas.
This markedly shifted the regional gas market’s geopolitical dynamics: in a decade, Israel went from net gas importer to exporter — mostly to Egypt and Jordan.However, the real market Israel has always eyed is Europe. To this end, several pipeline projects have been considered — including an offshore pipeline from Israel to Turkey, which would then link up with the Baku-Tbilisi-Ceyhan (BTC) pipeline, and the so-called EastMed pipeline, which would connect Israel to mainland Greece via Cyprus and then meet the existing Poseidon pipeline that runs across the Ionian Sea to Italy.
The Russia-Ukraine war gave fresh impetus to all these projects — including the development of the Gaza Marine field. In June, Israel gave preliminary approval to a $1.4 billion project involving the Palestinian Authority, Egypt, Israel and Hamas aimed at developing the Gaza gas reserves. Under the agreement, revenue — estimated to reach $700-800 million a year — would have gone to the PA with an agreed portion used to support Gaza’s economy. The project was hailed as “a rare glimpse of a potential win-win opportunity” for both Gazans and Israelis.
Unsurprisingly, the re-explosion of the Israel-Hamas conflict has put the deal on hold once again — and it’s hard to see how it could be revived soon, given the lack of any political solution to the war on the horizon. Indeed, several commentators have argued that seizing control of the gas field is the real reason behind Israel’s war in Gaza. Seyed Hossein Mousavian, a Middle East Security and Nuclear Policy Specialist at Princeton University, recently wrote that “the ultimate objective is not only to demolish Hamas and/or exclude Palestinians from their homeland, but to confiscate Gaza’s multi-billion-dollar gas resources”.
Frankly, this argument doesn’t hold: as noted, Israel already effectively controlled the Gaza coastline, including the gas field, prior to the conflict. Moreover, the reserves contained in the Gaza Marine field pale in comparison to those of the massive Leviathan and Tamar fields, Israel’s main gas resource. And indeed, it is in the Leviathan field that the Israeli Energy Minister recently
granted 12 licences to six companies, including BP and Italy’s Eni. In reality, then, the Gaza Marine field seems rather tangential to Israel’s energy policy and its grand geo-strategic plans.
And yet, it does remain crucial to the future of Israeli-Palestinian relations. This is why the US is now pushing Israel to revive the deal. “There is an opportunity here to develop the gas fields in offshore Gaza, on behalf of the Palestinians,” Amos Hochstein, Biden’s energy security advisor, said during a visit to Israel last month. Hochstein noted that he was “100%” sure Israel would allow this, adding that “there is no reason for them not to — it is not theirs [the Israelis], the gas belongs to the Palestinian people”.
As desperate as the Biden administration may be to avoid the conflict escalating into an all-out regional war, Hochstein’s words are little more than wishful thinking. For decades, it’s been clear that, as long as a lasting political settlement is out of reach, the gas off Gaza’s coast will remain under the sea and out of Palestinian control. Witness today’s war, and one can only conclude that their desire for development will remain thwarted.
Source: https://unherd.com
