The King’s Gambit: The Opportunities and Risks of Israeli Approval of Gaza’s Offshore Gas Extraction

On 18 June 2023, Israel’s prime minister, Benjamin Netanyahu, announced that his country had given the green light to the Palestinian Authority’s (PA) development of a natural gas field off the coast of the Gaza Strip. Given the strained relations and recurring rounds of violent escalation between Israel and militants in Gaza, such a move is not straightforward and must be explained with reference to the political, economic and security interests of the parties involved.

Israel’s interests

To the outside observer, a concession to the Palestinians by an Israeli government broadly seen as the country’s most right-wing ever may be surprising. Yet it is an enduring fact that Israel’s most bold overtures to its neighbours have been carried out by the right wing. It was Menachem Begin’s Likud government that exchanged the Sinai Peninsula for a peace treaty with Egypt in 1979. Karine Elharrar, Israel’s Energy Minister under Israel’s previous, more centrist government related that she had been approached with the Gaza gas proposition toward the end of 2021 but ruled it out as unfeasible as her government was already under fire from the then-Netanyahu-led opposition for its pursuit of a maritime gas deal with Lebanon. The reason Israeli public opinion considers giveaways by the right more palatable is the impression that they have been vigorously negotiated over and, if made, must be squarely in the national interest. The logic here follows from the Israeli-Lebanese precedent: give your enemy something to lose, and they will think twice before risking all-out conflict.

The Israeli right has long opted for ‘managing’ the Israeli-Palestinian conflict over solving it. A recent, pressing challenge to this strategy has been the gradual disintegration of the PA, the governmental body created by the 1993 Oslo Accords and charged with governing the Palestinian Territories. It lost control of Gaza to Hamas after the latter’s violent takeover of the strip in 2007 and its legitimacy among the West Bank’s population has been undermined by accusations of corruption, mismanagement, and collaboration with Israel. Israel hopes the deal will shore up the PA, an important security partner in preventing and punishing local terrorist attacks, by bringing much-needed funds and restoring its image as a responsible, effective authority.

Nevertheless, Israeli leaders do not harbour any illusions about the fact that some of the revenue generated by the gas sales is bound to end up in the hands of Hamas, a militant group designated by it, the US, the EU, and many others as a terrorist organisation. This is widely seen as the reason for the stalling of the initiative since it was first proposed in 1999. Recently, however, experts have suggested that Israel intended the concession as a quid-pro-quo for Hamas’s acquiescence over its military campaign against the Palestinian Islamic Jihad (PIJ) in May 2023. Such an approach attempts to gain Hamas’s cooperation through a carrot-and-stick strategy.

Gaza’s interests

On Gaza’s side, the foremost imperative is economic. Years of economic blockade by Israel and Egypt, alongside local mismanagement have turned Gaza into what certain human rights organisations have called an ‘open-air prison’. Its 2.3 million inhabitants experience power cuts for up to 12 hours a day, a result of an over-dependence on a small local oil-fuelled power plant and insufficient Israeli electricity. Meanwhile, the Gaza Marine field is thought to hold almost 30 billion cubic metres (1 trillion cubic feet) of natural gas. If tapped, this source would be more than enough to cover the area’s estimated 500-megawatt daily requirement, with the remainder piped into liquefaction units in Egypt and sold on global markets, yielding billions of dollars in revenues.

If such a plan materialises, both the PA and Hamas will seek to claim credit. The PA will attempt to win back its support in Gaza and the West Bank as a government that secured economic development and raised living standards through internationally negotiated agreements. Hamas, for its part, would build on its credentials not only as a force of resistance to Israel but as a provider of economic and social benefits in the strip, potentially facilitating its formal consolidation in the West Bank too.

Risks

Progress on an Egyptian-mediated agreement on gas by Israel and the PA faces three principal risks.

First, and most obviously, the breakout of a new round of violence between Israel and Hamas, possibly, but not necessarily, as part of a broader regional escalation (e.g. involving clashes across the Israeli-Lebanese border) will likely cause Israel to take the deal off the table. Israel’s leadership must convince itself, and its supporters, that it is not arming its enemies.

Second, Israel is counting on Egypt to act as a guarantor and third-party stakeholder in securing Hamas’ continued cooperation and underwriting its good behaviour. Yet while Egypt has proved an indispensable mediator in this regard over the last decade, it is unclear how much sway it holds over the militant organisation in comparison to Iran, its chief ally and financial backer. Given the Israeli-Iranian geopolitical archrivalry, it is not straightforward to assume that Hamas is either willing or able to peacefully coexist with Israel for long.

Third, and finally, the recent political turmoil in Israel as a result of the judicial reforms introduced by Netanyahu’s coalition might complicate his efforts to justify the move to his supporters. If the coalition eventually backs down from the reforms demanded by its hard-line elements and supporter base, the addition of a formal concession to the Palestinians may become even harder to stomach, especially after Netanyahu himself had opposed Israel’s previous deal with Lebanon as a ‘surrender to terror’.

The next step

Full-scale extraction of natural gas from the Gaza Marine field will require the PA to obtain a final agreement designating the status of the field in which Israel will relinquish any remaining claims to the reservoir. Israel’s apparent green light for the project could bolster the economic prospects for the strip, and may succeed in furthering regional stability, as its proponents hope. If successful, the project and its Israeli-Lebanese predecessor of last year may illustrate the opportunities for opposing states of leveraging the relative ambiguity and lesser politicisation of maritime boundaries to reach compromises in spite of intransigent public audiences. Nevertheless, the multiplicity of actors involved, with their limited power and often conflicting interests, means the project is fraught with risks that threaten to turn it into another false start in a troubled political relationship.

Image credit: Bureau of Safety and Environmental Enforcement (BSSE)