Home / Articles / Israel, Lebanon, and Failed Natural Gas Negotiations
Over the past decade, there has been a gas revolution in the Eastern Mediterranean, where discoveries of large offshore gas deposits have set up some of the littoral states—notably Israel, Egypt and perhaps Cyprus—as potential significant players in the European natural gas market. This has led to the creation of the Eastern Mediterranean Gas Forum (EMGF), set up in Cairo this year, to facilitate cooperation among members—Cyprus, Egypt, Greece, Israel, Italy, Jordan, and Palestine, with U.S. support. Lebanon has been late to join in the gas market and has not yet been able to join the EMGF, and Turkey has been excluded for contentious bilateral relationships among members. While there seems to be a chance that further gas deposits are located in Lebanese waters, further exploration and exploitation cannot take place near the Israeli and Lebanese marine border until the contested area is demarcated. The potential profits from oil exploration in the disputed area could bring in as much as US$600 billion over the next several decades. Economic and political possibilities would seem attractive enough to incentivize both sides toward finding common ground. Yet, negotiations to delimit the maritime boundary, set to begin late summer 2019, never came to fruition, and do not seem likely to begin any time soon.
Demarcating maritime borders differs slightly among the international community. Lebanon, like most UN member states, is a signatory of the United Nations Convention on the Law of the Sea (UNCLOS). This is a more technical convention than customary international law and line-drawing methods are drawn from a continuation of the land border to determine the exclusive economic zone (EEZ). Since Israel is not a UNCLOS signatory, its drawing method is different, and as a result, its unilateral borders conflict.
Cyprus and Lebanon entered a bilateral agreement compliant with UNCLOS to delimit their maritime border in 2007. Their agreement was never ratified, largely because Turkey denounced all agreements with the Republic of Cyprus and its neighboring countries and Lebanon retreated. Since Lebanon chose not to ratify for political reasons, the agreement was never binding.
In 2009, American company Noble Energy discovered the Tamar field off the coast of Israel, with proven and potential natural gas reserves of 320 billion cubic meters (bcm). Shortly after, the Leviathan field was discovered and found to hold about 600 bcm of reserves. The Leviathan falls in 860 square kilometers of disputed oceanic territory between Israel and Lebanon, where there may well be additional reserves yet to be discovered.
A year after the gas discovery, Lebanon submitted its unilateral border to the UN. The southernmost point of its unilateral submission to the United Nations, was 17km south of the line included in the unratified Cypriot-Lebanese agreement.
Shortly after Lebanon’s unilateral border submission, in 2011, Israel and Cyprus reached an agreement for their maritime border, also conflicting with the unratified bilateral agreement between Cyprus and Lebanon. Also, in July 2011, Israel submitted to the UN its own unilateral maritime coordinates, bordering Lebanon. Since then, developments toward negotiating have been minimal at best until this past year, when rumors spread of talks taking place.
Regardless of other incentives related to operations in the contested territory, Israel is likely looking first from a security standpoint. Challenges to the secure transport and stability of gas are not new; energy self-sufficiency has been prioritized by the government: in 2013, Israel placed into effect a law requiring that 60 percent of the gas produced would be for domestic use, with the remaining 40 percent available for export. Though the decision may not have been appreciated by interested international oil companies, Israel remained solid on protecting the bulk of its reserves to ensure its own energy independence, while also recognizing the significance of global market participation.
With the Tamar discovery, Israel had enough of a surplus to ensure domestic energy needs, allowing it to utilize its own natural gas rather than depend on imports from Egypt. The mammoth Leviathan discovery supplied an incentive greater than self-sufficiency, it offered strategic and economic power. The opportunity for self-sufficiency and for a better position vis-à-vis regional and international actors became increasingly attractive. The Leviathan field falls partially within the area contested with Lebanon, and, until an agreement is reached, Israel will face security threats by Hezbollah as well as commercial complications arising from the risk involved for customers in purchasing gas from contested sources.
The economic opportunities brought from exploration activities could bring some relief to a tumultuous Lebanon. Venturing into the natural gas industry will likely provide the Lebanese with a number of benefits: gaining a new and important source of income, partnering with other international companies, strengthening bilateral relations, deepening participation in the global market, and increasing governmental legitimacy. As long as negotiations are stalled, the country will face very limited opportunities in the Mediterranean and will likely remain excluded from participating in the EGMF. Thus, it will likely fall behind as the region adapts to the new geopolitical and economic environment. Lebanon’s not coming to an agreement not only means it will miss out on benefits seen by other states, but also that the country may be less likely to improve diplomatic relationships in the region.
Recent developments in Lebanon highlight its economic crisis: protesters have been demanding change in Beirut. Rationed access to U.S. dollars began earlier this month amid further taxes imposed on Lebanese citizens aimed at alleviating stress from the government deficit. A natural gas deal would perhaps alleviate some of the pressure from the population to address economic concerns of the private and public sector, and could provide the necessary boost to the government to ease tensions. Such bleak potential could not have been the ideal outcome for Beirut, but there were political factors that seemed more important to some members of the Lebanese negotiating party.
The One That Got Away
Incentives to negotiate do not outweigh the political costs of reaching common ground necessary for talks to begin. Movement towards an agreement has been sluggish for more than a decade. Sources with first-hand knowledge of the negotiations identify a few challenges impeding negotiations. These include the U.S. acting “lazily” as mediator; Lebanon’s insistence on completing negotiations on the land border (especially the disputed Shebaa farms) and skepticism of the U.S. favoring Israel; and Israel’s wariness regarding members within the opposing negotiating team. Among the justifications of delay appears to be a common problem: Hezbollah. Without Parliament Speaker Nabih Berri—the head of the Shiite Amal party and a key Hezbollah ally—approving the terms, Beirut cannot move forward. Of the 30 ministers in the government, 18 align with Hezbollah. The terrorist organization’s power extends to parliament, too, where Speaker Berri and more than half of the seats belong to the Hezbollah camp. The U.S. is therefore limited to continued shuttle diplomacy between the two parties. Meanwhile, the further into disarray Lebanon falls, the further it increases exposure to political risk and makes the prospect of energy deals more remote.
The United States has served as the primary mediating party throughout all previous attempts at negotiations. First was Frederic Hof, the initial mediator beginning in May 2012 when attempts at talks first began. Hof created the “Hof Line” as a proposed compromise, using the UNCLOS delineation tactics. The proposal Hof put forth would have given about 500 km2 of the disputed area to Lebanon (roughly a 55/45 split). It was noted that the “Hof Line” was likely to be supported by Israel, but it was rejected by Hezbollah due ultimately to the group’s political goal of pushing Israelis out of Shebaa Farms. Bundling land and oceanic borders has been Hezbollah’s insisted position, and Israel has made clear its present interest lies only with negotiating the maritime border.
Hof stepped down in September 2012 and was followed by U.S. Deputy Assistant Secretary of State for Energy Diplomacy Amos J. Hochstein. Hochstein held the position until the conclusion of the Obama administration in 2016. He furthered efforts to use the Hof Line, but was unable to get both sides to the table.
David Satterfield, the former Acting U.S. Assistant Secretary of State for Near Eastern Affairs, was the prominent mediator assuming leadership with during Trump administration. There is little information regarding Satterfield’s efforts in negotiations prior to March 2019. This could be because shuttle diplomacy is conducted in private. Now that Satterfield is the Ambassador to Turkey, the new U.S. Assistant Secretary of State for Near Eastern Affairs is David Schenker, who has taken over as mediator.
Lebanon voiced concerns of distrust of the U.S. as a mediator, citing its stance on Hezbollah (which the U.S. defines as a terrorist organization) and strong bilateral relationship with Israel. A March meeting between Satterfield and Parliament Speaker Nabih Berri showed progress towards a consolidated position from Lebanon, and, weeks later, talks were set to be held under the auspices of the United Nations Interim Force in Lebanon (UNIFIL). As the White House was gearing up for the June 26 Bahrain conference, the status of negotiations on the Israel-Lebanon maritime border may have been overstated to play up U.S. power and influence in the region.
An agreement could foster a friendlier relationship between the two neighbors, stabilize current domestic-level problems, integrate both parties further into the global market, and enrich both countries.
Tensions have grown between Hezbollah and Israel over the past year, nearing levels not seen since their 34-day border war in 2006. The previous approach of the Israeli government to maintain deniability regarding military operations against Hezbollah and Iran in Syria and Lebanon has been altered in recent months by Prime Minister Benjamin Netanyahu, and Israel has laid bare its multifaceted efforts to combat Hezbollah. This approach may garner Israel political support, but will also attract attention from allies of Hezbollah and therefore sharpen security vulnerabilities.
Lebanon’s economic situation has been in a reconstruction phase since the 15-year civil war ended in 1990. The public distrust of Lebanese government has not subsided in the years since and worsened with the influx of Syrian refugees. Worsened by the incapacity to create much-needed economic and social reform, class disparities and inequality deepened among the population. Government debt relative to gross domestic product (GDP) continues to grow, reaching 151% of GDP in 2018. Economic collapse will occur if something drastic doesn’t happen soon, and it appears the same is true for the social and political environment in the country. This type of collapse would create a power vacuum in Lebanon and lead to destabilization of an unstable region once again.
It seemed as though there was once a moment where an agreement on the disputed sea might take place, gas exploration could have helped both sides, and steps toward peace seemed closer. The window of opportunity on reaching consensus is likely closed, and things are certainly looking like they will get worse before getting better. The panic in Lebanon and increasing tensions between Hezbollah and Israel have made the maritime agreement less relevant and less attainable.
 The land border between them was also the land border between Syria and Lebanon when Syria held the Golan Heights, complicating delineation for this area in particular compared to the rest or the border. Sunniva Rose, “Shebaa Farms: Why Hezbollah Uses Israel’s Occupation of a Tiny Strip of Land to Justify Its Arsenal.”