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The New Middle East, Powered by Israeli Gas? Don’t Bet on It

Shalom, Jordan? The history of energy deals isn't one of 'peace pipelines' but of exactly the opposite. Take Russia and Ukraine.

David Rosenberg
David Rosenberg
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Ukrainian tanks and APCs move towards the de-facto border with Crimea near Kherson, southern Ukraine, Friday, Aug. 12, 2016. Ukraine put its troops on combat alert Thursday along the country's de-facto borders with Crimea and separatist rebels in the east amid an escalating war of words with Russia over Crimea.
Ukrainian tanks and APCs move towards the de-facto border with Crimea amid an escalating war of words with Russia.Credit: Aleksandr Shulman, AP
David Rosenberg
David Rosenberg

Old-timers will recall Peres’ book "The New Middle East," which envisioned Israeli technological prowess joining up with Arab oil money to bring peace and prosperity to everyone.

No groans, please. True, the idea never got off the ground, but not so much because its economics were so terrible, but because politics wouldn’t let it.

Commercial relations with the two Arab countries that have formal diplomatic relations with Israel are virtually zero. Israel’s high-tech industry found the capital and partners it needed a long time ago in Silicon Valley. Israel’s IDE Technologies, which makes some of the world’s most advanced desalination equipment, is up for sale because Arab countries – the world’s biggest market for the stuff – won’t touch it.

This week, however, we saw a funny twist on the New Middle East vision: Jordan agreed to buy $10 billion or so of Israeli natural gas over 15 years. Who would have imagined 25 years ago, when Peres’ book came out, that Israel would be selling an old-economy fossil fuel to a desperate, energy-poor Arab country?

Jordan has plenty of neighbors with big energy resources – Saudi Arabia, Iraq and Egypt – but politics of one kind or another makes importing gas from them impractical, so Israel has become the supplier of default. This is actually the second agreement with Jordan; it had previously committed to import gas from Israel for its Dead Sea chemical companies.

The kingdom has put its energy future in Israel’s hands. The Palestinian Authority will also probably be buying Israeli gas, there’s talk of a deal with Egypt, and of course, with Turkey. Is this the start of the New Middle East without the computer chips or solar panels? Don’t count on it.

Prime Minister Benjamin Netanyahu often defends his controversial energy policy, which puts the development of Israel’s gas resources ahead of antitrust and other concerns, on national security grounds. Under this thinking, not only does Israel need to have multiple sources of gas to ensure its supply isn’t threatened by war or terrorism, it has to make itself a useful friend to its neighbors by being their energy supplier.

That’s true enough, on one level. Jordan is in dire economic straits and is coping with Islamic extremism; one example is the shooting this week outside an Amman courtroom of a writer charged with blasphemy. Reducing the kingdom’s enormous energy bills with cheap Israeli gas would take an important item off its long list of problems.

The idea central to Peres' and Netanyahu’s thinking has been that economics can trump politics. And they haven’t been alone. U.S. diplomats have been encouraging energy deals between Israel and its neighbors in the hope that “peace pipelines” will lead to closer political relations.

Unfortunately, the history of energy deals is replete with instances where exactly the opposite happened – take Russia and Ukraine, or China and Vietnam. Certainly in the Middle East, where regional trade and economic cooperation is virtually nil, politics is in the driver’s seat, especially when it comes to Israel.

Buying gas from Israel is anathema for many Jordanians, and the opposition, led by the Muslim Brotherhood, has tried to block it. It probably wasn’t a coincidence that it was announced right after parliamentary elections in Jordan were over.

To assuage opponents, the agreement contains a fig leaf designed to cover up the stench of the gas’ origins by having it delivered by a non-Israeli intermediary, though since it will be coming by pipeline, the fiction is going to be pretty thin. Not that the deal’s opponents have any better solutions; the point is anything but Israel, including theoretically living in the cold and dark.

Israel’s gas is going to win us customers, but it’s not going to win us smiling partners looking off into the distant horizon and a better future with us. Long-term deals and multibillion-dollar pipelines to neighboring countries may look secure on paper, but this is still the same old volatile Middle East.



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