Drowning in crises, Lebanon now galvanized to solve offshore gas row with Israel

Looking out from the limestone cliffs of Rosh Hanikra, the tiny “island” of Tekheilet is barely visible, a rocky outcropping just barely kissing the waveline a kilometer from Israel’s shoreline at the country’s northern frontier.

In November 2020, Energy Minister Yuval Steinitz, his chief of staff Mor Halutz and ministry director-general Udi Adiri donned bright orange lifejackets and clambered onto the islet for a spot of tea and a show of Israel’s claim not only to the island but to the expanse of sea stretching far beyond.

Steinitz’s trip, which he was sure to record and publicize, came a month after talks with Lebanon over a maritime border dispute — and rights to the riches of natural gas lying below — fell apart following an attempt by Beirut to push its own claim deep into what Israel considers its established exclusive economic zone, or EEZ.

On Tuesday, Israeli and Lebanese negotiators returned to the table for six hours of talks after Beirut backed away from its previous position, likely putting teensy Tekheilet once again at the center of a hoped-for agreement.

The fact that Lebanon was back at the table, without the aggressive claims that torpedoed talks in the last round, shows how badly it needs a deal. But the same official disfunction that has underpinned Beirut’s desperate straits may also wind up keeping an elusive agreement at bay.

Energy Minister Yuval Steinitz (center) drinks tea on the Tekheilet islet as part of Israel’s effort to assert its desired maritime boundary with Lebanon (courtesy, Energy Ministry)

As in past rounds, few details were available about the latest round of US-mediated talks between the countries, which are officially in a state of war. The Energy Ministry told The Times of Israel only that further rounds may take place in the future, a sign of cautious hope.

For Israel, already reaping the fruits of its offshore gas leases, reaching a deal would be a positive development, but far from a necessary one.

Israel has lived without a mutually recognized land border with Lebanon since 1949, and took advantage of the ambiguity to include key terrain features on the Israeli side of the demarcation line after the withdrawal from southern Lebanon in 2000. At sea, Israel is able to attract foreign investment and exploration of its natural gas reserves and has not faced any attacks over the disputed boundary. At the same time, Israel would certainly be happy to achieve a negotiated solution with Lebanon, a country it believes could be a constructive neighbor were it not for the malign influence of Iran and Hezbollah.

Lebanon, on the other hand, is in desperate economic and political straits. It hopes that settling the maritime border will give it at least some hope to start clawing its way out. Though it needs an agreement and is clearly in the weaker position, internal Lebanese politics make it difficult for the government to agree on a compromise with the Jewish state.

A helicopter flies over a base of the UN peacekeeping force, in the town of Naqoura, Lebanon, October 14, 2020, during the first round of talks between Lebanese and Israeli delegations on the countries’ maritime border. (AP/Bilal Hussein)

“Israel already is a major energy player in the Eastern Mediterranean,” explained Jonathan Ruhe, Director of Foreign Policy at The Jewish Institute for National Security of America.

“It produces and is preparing to export natural gas from major fields in uncontested parts of its EEZ, and it has great ties with its other maritime neighbors Egypt, Cyprus and Greece. Lebanon, by contrast, doesn’t have any of these, and without a deal it will have trouble attracting new energy exploration and investment, which would be the crucial first step in boosting Lebanon’s abysmal economy through natural resource extraction.”

A line in the sea

Maritime boundary disputes, which are common, are generally adjudicated based on the 1982 United Nations Convention on the Law of the Sea, to which Lebanon is a party but Israel and the US are not. Regardless, Israel uses the UNCLOS principles as the basis for its maritime claims. The convention does not prescribe one mandated means of determining boundaries between overlapping claims to territorial waters, and Lebanon and Israel both rely on it while coming up with vastly differing claims over where the boundary line between the two countries lies. Lebanon and Israel made conflicting claims in 2008 and in 2011, respectively, with hundreds of square kilometers overlapping.

Lebanon’s Energy Minister Cesar Abi Khalil, explains an offshore drilling map on disputed waters with Israel, Feb. 1, 2018. (AP Photo/Hussein Malla)

“Lebanon did what it could, within acceptable customary standards, to make that line bend south, nearly touching established Israeli exploratory fields,” wrote US mediator Ambassador Frederic Hof late last year. “Israel did what it could, short of violating anything appropriate, to make its line veer toward the north. Neither side did anything improper or illegal. But 882 square kilometers of Mediterranean Sea were left in dispute.”

Israel’s claim centers around Tekheilet, its most northerly offshore holding. If it is taken into consideration, it pushes the demarcation line to the north, and not surprisingly, Lebanon argues that the reef is too insignificant to impact the line so drastically.

White sea foam laps at the tiny islet of Tekheilet, barely visible near the center of the photo. (Screen capture: Google Street View)

The issue is especially sensitive for Lebanon, as Israel’s claim cuts through the offshore zone called Block 9, which some Lebanese experts estimate has a 50% chance of holding more than 15 trillion cubic feet of gas, a gargantuan prize. As of 2017, Israel had 6.22 trillion feet of proven gas reserves.

The US, led by Hof, mediated between the sides from late 2010 until November 2012. The goal was to determine a line from Rosh HaNikra/Naqoura to the perpendicular line where Cypriot waters begin 70 miles away.

Though he was unable to get the sides into the same room, in April 2012 Hof proposed a compromise between the competing claims, which would have given the Lebanese 55% of the disputed area and Israel 45%. Hezbollah made only relatively muted statements about the compromise, indicating it would not torpedo it. Both countries were – reluctantly, according to US mediators — prepared to reach an agreement based on the “Hof Line,” but Lebanon’s government fell amid growing sectarian violence and talks collapsed.

Prime Minister Benjamin Netanyahu during the inauguration of the foundation platform for the Leviathan natural gas field in the Mediterranean Sea on January 31, 2019. (Marc Israel SELLEM / POOL / AFP)

In October 2020, Lebanon and Israel resumed negotiations, mediated by the US and under the auspices of the UN. This time Israel was willing to sit in the same room at the UNIFIL headquarters in Naqoura. But Lebanese negotiators took an extremely aggressive stance, pushing claims described as “maximalist” that would place an additional 1,430 square kilometers (550 square miles) beyond its previous claim under Lebanese control, including parts of Israel’s Karish gas field. Those talks were suspended over the expanded Lebanese claims, with Israel accusing its neighbor of inconsistency.

“Until last year, at least Israel and Lebanon seemed to agree on what they disagreed on – in other words, they at least agreed on the overall size and location of the slice of EEZs they were contesting,” said Ruhe.

“It’s a non-starter and I think it’s clear to the Lebanese that it’s a non-starter,” said Michael Harari, Israel’s former ambassador to Cyprus, referring to the new claims.

A maritime map of the eastern Mediterranean showing Exclusive Economic Zone borders, including an area of dispute (marked 4) between Israel and Lebanon. Source: IEMed Mediterranean Yearbook 2012 (www.iemed.org/medyearbook)

According to Harari, US pressure forced the Lebanese to back away from the provocative claim. Lebanon saved face by having Lebanon’s president, Michel Aoun, climb down from the demand, paving the way for the new talks this week.

Spiraling crises

Lebanon, mired in its worst economic crisis since the 1975-1990 civil war, is looking to settle the maritime border dispute so it can press on with its offshore quest for oil and gas. Beirut hopes that potential discoveries in its territorial waters will help it overcome an unprecedented economic and financial crisis and pay back its massive debt that stands at 170% of GDP, making it one of the highest in the world. Lebanon’s currency hit an all-time low in March amid the spiraling economic crisis. At commercial banks, depositors stand in line for hours and fight with managers in vain to access their dollar savings. Most banks have stopped giving loans.

It faces other woes beyond the economic troubles. An explosion in August of last year at Beirut’s port killed over 200 people and injured more than 6,000, devastating a large portion of the city. The government resigned in the wake of the blast, and political dysfunction — a near constant issue in the country —  has delayed the formation of a new cabinet.

Political graffiti is visible in front of the scene of the August 4 explosion that hit the seaport of Beirut, Lebanon, August 9, 2020. (AP/Hussein Malla)

Prime Minister-designate Saad Hariri has failed to form a new government since he was named for the post in October. Hariri has been insisting on forming a cabinet of experts whose main job will be to get Lebanon out of its economic crisis. Other groups, including Hezbollah, insist on a mixed cabinet of politicians and experts.

Many in Lebanon see the offshore gas fields as the best hope for getting out of the economic crisis, pushing Beirut toward the negotiating table with Israel.

“The Lebanese think that if they find natural gas in their waters it could provide some serious relief,” explained Gabriel Mitchell, director of external relations of the Mitvim Institute, an Israeli foreign policy think tank that seeks to promote regional cooperation. (Mitchell is also a former employee of The Times of Israel.)

But such relief may take years to come to fruition, if it happens at all.

“It’s hoping to hit a moving train with a silver bullet,” Mitchell said. “They have to come to an agreement with Israel, then they have to have foreign companies operate and discover something, and then they have to go through the process of actually extracting it and selling it.”

“There are a lot of steps before Lebanon would see even a single dollar, but at least in principle, if they’re able to resolve this issue with Israel, it could at the very least get things started, and it could allow them a little more flexibility in front of international banks and the IMF,” he added.

A protester burns tires to block a road, in Beirut, Lebanon, March 4, 2021. (AP Photo/Bilal Hussein, File)

While the economic situation creates incentives for a deal, the political crisis could create obstacles to an agreement on the Lebanese side. The new aggressive Lebanese claims were not based on a new understanding of the law or of geography, argued Harari. “The issue is a political one. It’s not purely technical and legal. The technical and legal is supposed to – and will – serve the political.”

If the political leadership in Lebanon makes the decision that it wants to reach an agreement with Israel, said Harari, then it will. But with a weak caretaker government, it has little legitimacy to make concessions, while the many internal and external players in Lebanon politics jockey for position.

For example, Gebran Bassil, Aoun’s son-in-law and Lebanon’s energy and water minister during the 2012 talks, commented on the dispute in April, proposing a new line between the Hof Line and the maximalist Lebanese one. Some say he was trying to ingratiate himself with the US by offering a constructive solution, while others allege he has been working behind the scenes to scuttle the deal that he couldn’t achieve during his tenure.

Foreign powers, who have used Lebanon to pursue their own interests for decades, make the politics of reaching an agreement with Israel even more complex. Iran, which wields significant influence in Lebanon through the Shiite community and Hezbollah, is involved in high-stakes talks with the US over its nuclear program. It could keep Hezbollah from publicly opposing talks as a signal or concession to the US, but could just as easily sabotage them to show the Biden administration the cost of not removing punishing economic sanctions.

Syria, which historically has controlled Lebanese foreign policy, and Russia, a major new player in the region, are also factors in Lebanese calculations. Lebanon and Syria dispute the maritime boundary between them as well.

Lebanese leaders have pledged to protect the country’s economic waters, but doing so means going up against Moscow, which reached a deal with Damascus in March to explore for gas in the Mediterranean, including 750 square kilometers of waters also claimed by Beirut.

Syrian President Bashar Assad heads a cabinet meeting, in Damascus, Syria, March 30, 2021. (Syrian Presidency Facebook page via AP)

For Russia, wielding influence over gas exploration in the Eastern Mediterranean helps it counter US influence, especially with the emergence of the pro-Western EastMed Gas Forum, which includes Israel. Moscow also wants to protect its own status as the primary natural gas supplier to Europe.

Lebanon may well have understood that it has no recourse in the north, and therefore is taking a more aggressive stance in the south to recoup some lost territorial waters.

An aerial view of an Israeli offshore gas rig (Albatross Aerial photography/Noble Energy/Flash90/File)

Despite the hurdles, it’s still in Israel’s interest to hold the talks.

“There is no cost to negotiating,” said Mitchell. “If Lebanon is interested in talking, that’s good. If the US is interested in being involved in the process, that’s good as well. If a resolution is reached, that will be good for Israel as well, because it will at the very least allow Israel to be able to say to foreign companies that these spaces near Lebanon’s border are no longer problematic. Israel has had a hard time drawing foreign investment for some of those blocks, so at least in principle there wouldn’t be a question mark there.”

AP and Times of Israel Staff contributed to this report. 


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