News Analysis: Can Israel leverage its newly found gas reserves?

by Keren Setton

JERUSALEM, Jan. 11 (Xinhua) -- When natural gas reserves were discovered off the shores of Israel, it was a turning point for the country.

In a neighborhood where it is largely isolated politically, Israel had always been energy dependent.

Now, not only was it able to supply its own needs, there was enough excess to go around. But in the not so friendly environment it is situated in, will economics overcome politics? Will realpolitik lead Israel's foes to overlook disagreements on issues that have divided the Middle East for decades?

Probably not.

"The power of energy to influence politics, which was a powerful force in the 1970s, is much weaker these days, for better or for worse," Prof. Eyal Winter told Xinhua. "Despite Israel's recent discovery (of gas), it will not be able to change the policy towards Israel in the Arab world and beyond."

Winter, from the Hebrew University of Jerusalem, is a Silverzweig Professor of Economics who specializes in political economics and the Middle East.

In the 1970s, Arab states that exported oil imposed embargo on countries they perceived as supportive of Israel during the 1973 war that was fought in the region. The effect was global and immediate. It also highlighted Israel's dependence.

In 2009, when the gas was discovered, it was a change of course for the small state.

According to the Israeli Ministry of Energy, there are enough reserves to allow export of 7 BCM (Billion cubic meters) a year, while still retaining enough gas to supply its own needs for the coming decades.

But are Israel's neighbors, not its greatest fans, interested in its gas? Does Israel need to aim farther away in order to export the sought-after resource?

One successful example of cooperation is the deal between American firm Nobel Energy, the company conducting the gas exploration and production off Israel's shores, and the Jordanian state-owned electric company NEPCO.

The deal was signed in 2016. Jordan and Israel have had diplomatic relations since 1994. Tumulus at times, even recently, the relations between the two countries have not stood in the way of the deal.

According to a paper published by Oded Eran, a former Israeli ambassador to Jordan and a senior research fellow at the Institute for National Security Studies at the Tel Aviv University, the agreement proves "that the sides can reach understandings and perhaps full agreements in many areas, and these can create a positive environment, even if they are not substitutes for political agreements."

Amir Foster, head of Strategy and Research at the Israeli Association of Oil and Gas Exploration Industries, believes once agreements and pipelines are in place, political turmoil does not have a negative effect.

"It is much more durable than we think," Foster told Xinhua. "Energy is a stabilizer. Political obstacles exist until there is an actual pipeline, an actual deal. Once that is in place and all the money has been invested, you do not shut down a pipe because of diplomatic incidents."

Indeed, oil which Israel exports mostly from former Soviet Nations in pipes passing through Turkey, kept on coming despite a severe deterioration in Israel-Turkey relations.

But will this work both ways?

"If the country importing from Israel has an alternative source, then a deterioration in the political situation will lead that country to the alternative option," Winter explained. Dependence here is the key.

Prof. Winter notes that the exponential technological advancements in recent years in the field of gas exploration will most likely result in finding more natural gas in the Mediterranean, not necessarily in Israeli territorial waters. This means Israel is currently enjoying a momentum in the ability to export gas, but it might be a short one. It needs to strike while the iron is hot in order to make enjoy the profit.

Late last year, Israeli Energy Minister Yuval Steinitz signed a Memorandum of Understanding (MOU) with Cyprus, Greece and Italy on the laying of an underwater gas pipeline from Israel to Italy to be completed in 2025. This will allow Israel to export gas to the Europe, a friendlier market to Israel than its hostile neighborhood.

"As soon as the economic issues take precedent and there is an understanding that there is a mutual interest that everyone can benefit from, naturally this will tone down conflicts," Foster told Xinhua.

"Commerce can improve relations," agreed Winter.

In the reality of the Middle East, it is doubtful that energy trade will bring peace, it may help maintain whatever agreements already exist. Clearly, though, Israel's position has changed.

"Israel's energy card has switched from a burden to an advantage," said Foster.

While Israel has been relieved of the vulnerable position of being completely energy dependent on outside sources, it cannot assume this will translate into political support from former foes or hostile neighbors.

"It would be a grave mistake for Israel to use (the gas exports) as a condition for political support," said Prof. Winter.

Largely isolated in the international arena, Israel is on the lookout for countries who will support it at forums such as the UN General Assembly where it is often outnumbered. So far, no gas pipeline has solved that issue. But Israel's trauma of past energy isolation and dependency has been erased, making it a more confident player in the arena. Enditem