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15 avril 2017 6 15 /04 /avril /2017 09:11

How Israel Uses Gas to Enforce Palestinian Dependency and Promote Normalization

 

Overview

Israel’s occupation of Palestinian territory does not only exist above ground. Since 1967, Israel has systematically colonized Palestinian natural resources and, in the field of hydrocarbons, has prevented Palestinians from accessing their own oil and gas reserves. Such restrictions have ensured the continued dependence of Palestinians on Israel for their energy needs. The Palestinians’ own efforts to develop their energy sector fail to challenge Israel’s overarching hegemony over Palestinian resources. Rather, they pursue growth and state building within the reality of the occupation, further reinforcing – even if inadvertently – the asymmetric balance between occupied and occupier. 1

Al-Shabaka Policy Fellow Tareq Baconi begins by reviewing the context of recent gas deals. He goes on to discuss how efforts to develop the Palestinian energy sector fail to challenge this reality and rely primarily on occupation-circumventing practices that seek to enhance quality of life within the context of the occupation. As Baconi argues, these efforts ultimately reinforce the role of the Palestinian territories as a captive market for Israeli energy exports and lay the groundwork for regional normalization under the rubric of “economic peace.” He underscores that lasting peace and stability will only be produced if the underlying factors that maintain Palestinians as subservient to Israel’s rule are addressed and makes a number of policy recommendations as to how to do so.

The Political Impact of Israel’s Gas Bonanza

Until a few years ago, both Israel and Jordan relied quite heavily on Egyptian gas imports. In 2011-2012, and especially after the fall of President Hosni Mubarak’s regime, gas exports from Egypt became unreliable. This was due to both domestic issues within Egypt’s energy sector as well as increased instability in the Sinai Peninsula, which housed the main route of the pipeline carrying gas to Israel and Jordan. With the drop of Egyptian imports, Israel and Jordan began seeking alternative sources of supply. In 2009, an Israeli-American consortium of energy firms discovered Tamar, a field roughly 80km off the coast of Haifa, containing 10 trillion cubic feet (tcf) of gas. With Israel’s energy security in jeopardy, the consortium rapidly moved toward production, and gas began to flow in 2013. A year after Tamar’s discovery, the same consortium identified the much larger Leviathan gas field, estimated to hold around 20tcf of gas.

Figure One: Gas Reserves in the Eastern Mediterranean

 

Within the space of a few years, Israel moved from being a regional gas importer to acquiring the potential to become an exporter. It looked to both the local markets as well as neighboring countries and further afield to identify potential export destinations. Within its immediate vicinity, the implications for advancing economic normalization were evident: As Prime Minister Benjamin Netanyahu recently declared, producing gas from Leviathan “will provide gas to Israel and promote cooperation with countries in the region.”

Jordan became the first country to commit to buying Israeli gas. Negotiations began between Jordan and Israel soon after Leviathan’s discovery, and a Memorandum of Understanding (MoU) was signed in 2014. That same year, gas sales agreements were also finalized between Tamar’s owners and two Jordanian industrial players, the Jordan Bromine and Arab Potash companies. The MoU signed with Jordan’s government entailed a commitment from Jordan to buy Israeli gas for a period of 15 years. This was met with vigorous protests in Jordan: Many activists rejected dealings with Israel, particularly given its onslaught on the Gaza Strip that year, and Jordanian parliamentarians voted against the deal. In early 2017, gas began to flow from Israel to Jordan Bromine and Arab Potash, although players kept a low profile to avoid reigniting protests.

Anger that Jordan was financing Israel’s gas sector was aggravated by the fact that Jordan had other prospects for the purchase of gas. Following the decline of Egyptian gas, Jordan had constructed a terminal for the import of liquefied natural gas in Aqaba, on the coast of the Red Sea, which started operations in 2015. Furthermore, Egypt’s discovery of the supergiant gas field Zohr in 2016 resuscitated prospects for the resumption of Egypt’s role as a regional gas supplier. Nonetheless, and doubtless influenced by external pressure, Jordan formalized its MoU with Israel in September 2016, overriding parliamentary objections and popular protests.

The Energy Crisis Israel Imposes on Gaza – and Palestine

As Israel became awash with gas, the Gaza Strip’s pitiful reality became starker than ever. The Gaza Strip has been under blockade since 2007. The Gaza Power Generation Company (GPGC), the sole company of its kind in the Palestinian territory, currently runs on liquid fuel that is purchased and transported into the Gaza Strip from the Palestinian Authority (PA) in the West Bank. To supplement power from GPGC, Gaza purchases electricity from the Israeli Electricity Company as well as from the Egyptian electric grid. 2 Even so, fuel purchased for power generation in Gaza is insufficient to meet local demand, and the Strip has suffered from chronic electricity shortages since Israel imposed the blockade.

In early 2017, protests swept throughout Gaza as inhabitants of this coastal enclave protested having electricity for only three to four hours daily. Aside from the tremendous restrictions these shortages put on mundane facets of life, electricity outages have a crippling impact on the economic activity of the private sector, healthcare, education, and life-sustaining facilities such as water sanitation plants. Stunted operations in these areas have consequences that are both immediate and lasting, impacting rising generations.

As Israel became awash with gas, the Gaza Strip’s pitiful reality became starker than ever Click To Tweet

Blame for Gaza’s energy crisis is fired in all directions. Protestors flooding the winter streets blamed Hamas’s government, the PA, and Israel. Anger was directed at Hamas’s government for allegedly diverting funds from the purchase of fuel necessary to run Gaza’s only power plant toward other activities, including the building of tunnels. Frustrated demonstrators accused the PA of supporting the blockade by controlling fuel purchases and transfers into Gaza. The power company itself, a privately owned operation, is repeatedly criticized for supposedly making profit off the backs of ordinary Gazans who suffer from these shortages. To mitigate the particularly painful winter months of late 2016 and early 2017, interventions into Gaza’s energy sector were forthcoming from Turkey and Qatar in the form of fuel supplies that allowed the resumption of power generation from GPGC. These measures are at best short-term palliatives that will carry Gazans through another chapter of a chronic crisis.

In this wave of popular anger and recrimination, the impact of the Israeli blockade on the Gaza Strip and Israel’s broader colonization and control of Palestinian resources is diluted, if not pushed to the background.

Yet Palestinians discovered gas reserves almost a decade before Israel’s gas bonanza. In 1999, the Gaza Marine field was discovered off the coast of Gaza, and the license for exploration and production was awarded to BG Group, the major British oil and gas company since acquired by Shell. In the early days of the discovery, this national treasure was hailed as a breakthrough that could offer Palestinians a windfall. At a time when the Oslo Accords that had been signed in 1993 still seemed plausible, the resource discovery was viewed as something that could provide Palestinians with a much-needed boost toward self-determination.

With an estimated 1tcf of gas, Gaza Marine is not sufficiently large to act as an exporter. But the gas volumes it holds are sufficient to make the Palestinian energy sector entirely self-sufficient. Not only would Palestinians not have to import Israeli or Egyptian gas or electricity, but the Gaza Strip would not suffer from any electricity shortages. Moreover, the Palestinian economy would enjoy a significant source of revenue.

That move to sovereign rule was not to be. Despite persistent attempts by owners of the field and investors to develop Gaza Marine, Israel placed unyielding restrictions that have prevented any measures from taking place. This is despite the fact that exploration and production from Gaza Marine would be relatively straightforward given the shallow depth of the reserve and its location close to Palestinian shores. 3 According to documents uncovered by Al-Shabaka, Israel initially prevented the development of this field as it sought commercially favorable terms for the gas produced. After Israel discovered its own resources, it began citing “security concerns” that were heightened with Hamas’s takeover of the Gaza Strip. Although Netanyahu allegedly considered allowing Palestinians to develop Gaza Marine in 2012 as part of a broader strategy to stabilize the Gaza Strip, these efforts have yet to materialize. Given the recent acquisition of BG Group by Shell, and the latter’s global asset divestment program, it is likely that Gaza Marine will be sold off.

Until Israel ends its stranglehold on the Palestinian economy, this Palestinian asset is likely to remain stranded. Indeed, the manner in which the Israeli and Palestinian gas discoveries have shaped economic development in Israel and the Palestinian territory elucidates the power disparity between the two parties. Unlike Israel, which rapidly secured energy independence after the discovery of its gas fields, Palestinians are unable to access a resource they discovered close to two decades earlier. Rather than addressing the root cause of the blockade and the occupation regime that has prevented their control of resources such as Gaza Marine, Palestinians are instead forced to seek immediate measures that mitigate the pressing misery they face. Although this is understandable in the context of a brutal occupation, efforts to enhance quality of life under occupation overlook the longer-term strategic goal of securing energy independence within the broader goal of freedom from occupation and realization of Palestinian rights.

Economic Peace and Normalization

Israel’s gas discoveries are often heralded as potential catalysts for a regional transformation. The positioning of the Israeli state as an energy supplier to resource-poor neighbors is considered a sure way to facilitate economic integration between countries such as Jordan and Egypt as well as the Palestinians. The economic benefit that cheap pipeline gas could offer these countries is seen to offset any social and political concerns among their citizens regarding dealings with Israel. This line of thinking assumes that through economic integration, the pursuant stability would diminish prospects of volatility in an explosive region as Israel and its neighbors become integrated in mutual dependency.

The notion of “economic peace” has a long history in the region and has manifested itself in various forms, including recently in Secretary of State John Kerry’s economic development proposal. This view also appears favored by the Trump administration’s ambassador to Israel, David Friedman. Rather than directly addressing the political impasse caused by Israel’s prolonged occupation and other violations, such proposals address issues related to quality of life, trade, or economic growth, presumably as a stepping stone to peace. With similar thinking, once the Israeli gas discoveries were made, the Obama administration began to explore ways to position Israel as a regional energy ........(....).........

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