Analysis

The Pipeline Connecting Israeli Tycoons, Mideast Politicians and Daily Consumers

The Tamar and Leviathan offshore natural gas discoveries in effect reshuffles the deck that Jerusalem is playing with and stacks it in Israel's favor. Overnight Israel obtained the opportunity to shape the map of alliances in the Middle East to its will.

The launching on Saturday of the natural-gas pipeline flowing from the Tamar offshore field to Israel Electric Corporation power plants and to Israel's manufacturing plants is good news. True, electricity rates won't come down so quickly - the delay is to help cover the utility's debts. True, neither the onshore pipeline nor Israeli manufacturers are ready for the wholesale shift to natural gas. True, the tax breaks will delay the state's revenues from the profits by a few years, and with it a 1% to 2% rise in the gross national product.

But despite all this, cheap and relatively clean fuel, in Israel's territorial waters, within the state's exclusive economic zone, and in the impressive amounts that were discovered, will make a genuine contribution for years to come, and not only in economic and environmental terms.

Natural gas is a political tool. In 2009 Russia freezed out millions of Ukrainians in response to the Kiev government cozying up too much to the West by halting operation of the gas pipeline between the two countries. Israel, too, experienced this tool firsthand when the newly empowered Muslim Brotherhood canceled Egypt's gas contracts with Jerusalem.

Israel is therefore in a position of power, with enormous potential to leverage its natural-gas discoveries for geopolitical benefit.

Jordan, its neighbor to the East, is desperate for an alternative to Egypt as a gas supplier, after losing $5.6 billion in the past two years as a result of repeated suspensions of the Egyptian natural-gas deliveries on which around 80% of Amman's electricity depends.

The Palestinian Authority, which would like to sever its dependence on Israel Electric Corporation infrastructure, is planning a power station in Jenin that will be fueled solely with natural gas from Tamar.

Cyprus seeks Israeli natural gas in order to become a regional hub for the regional oil-drilling industry, so as to attract the European markets and to shore up its crumbling economy.

Turkey is also interested in Israeli natural gas as a bargaining chip vis-a-vis Russia, which still supports the Assad regime in Syria; Ankara hopes to use the Israeli fuel to threaten Gazprom's monopoly in Europe.

The Tamar and Leviathan offshore natural gas discoveries in effect reshuffled the deck that Jerusalem is playing with and stacked it in Israel's favor. Overnight Israel obtained the opportunity to shape the map of alliances in the Middle East to its will. But there's the catch.

The more the recognition of the strategic importance of the natural gas reserves grows, and the higher the stack of the politicians' promises to take advantage of this edge, the greater the national dependence on a natural resource that in effect has been delivered into the hands of private businessmen. The price of next week's geopolitical ambitions is likely to be paid tomorrow by Israeli consumers.

The tight interface between the national interest and the power given to the private exploration and production companies will necessarily give rise to conflicts of interest that could lead to the deliberate overlooking of the damage to the local market.

Already, the government declined to interfere with the high price set by the Tamar monopoly for the natural gas purchased by the IEC, which the Israeli public will subsidize for decades to come. So too, today the government must decide whether to permit exports of natural gas, even at the cost of creating a shortage of the fuel for subsequent generations.

Albatross Aerial Photography