Gaza and Israeli Gas

By Michael J. Economides and Ayala Yarkoni Sorek

On November 21 at 9pm Israeli time, not a moment too soon, a cease fire was declared between the Israeli military forces amassed outside of Gaza and Hamas which since 2007 has been controlling the city. Along with the West Bank, Gaza is supposed to be the flesh of a would-be Palestinian state.

But Hamas, if not a client organization to Iran’s mullahs like Hezbollah, has been at least accepting military and financial aid from Iran. Gaza, surrounded by Israel and Egypt from three sides and blockaded by the Israeli navy on the fourth must be receiving weapons smuggled through Egypt

The last round of military confrontation was in the Gaza War during the winter of 2008–2009. It was a three-week armed conflict between Israel and Hamas. Since then both sides maintained the fighting at a low intensity: Israel’s demands were to withhold  the fire from Gaza while Hamas has been asking mainly to remove the blockade, which came into a climax in the Gaza flotilla raid on 2010 and the ensuing new element, the friction between Turkey and Israel .

The recent round of conflict started a week earlier. On November 14 over 100 rockets were lobbed into Israel over a 24-hour period. Over the next week 1400 missiles were launched from the Gaza strip into south of Israel and for the first time into Tel Aviv and the center of Israel. Six Israelis had been killed by the attacks. The Israeli forces bombarded targets inside Gaza and a far more devastating attack was planned.

After a many-year hiatus from such activity, one bus was attacked by a terrorist in the center of Tel Aviv with dozens injured. In the usual asymmetry of such conflict, the Palestinian Centre for Human Rights (PCHR) said on November 21 that 136 Palestinians had been killed by Israeli forces.

Another new development during the last week is the technological Israeli evolution of the “Iron Dome” also known as “Iron Cap,” a mobile all-weather air defense system developed by Israel based Rafael Advanced Defense Systems and largely funded by the United States. It is a missile system designed to intercept and destroy short-range rockets whose trajectory would take them to a populated area. During the week, the Iron Dome intercepted 400 missiles.

The recent cease fire was achieved thanks to the involvement of the new Moslem Brotherhood government of Egypt headed by Mohamed Morsi. Egypt viewed as a mediator of Gaza conflict has retaken the role of regional superpower.  This will be welcome by Israel for certain. The involvement of Egypt will be the key for future peaceful resolution of the fighting.

But there is more and there is a new reality. Energy needs, energy resources in the area and the economic benefits for both sides may provide the impetus that no dry political equations can ever accomplish.

First, Israel has been the recipient of many recent good news. Drilling in Israeli territorial waters has unveiled some of the largest hydrocarbon reservoirs discovered in recent years anywhere. The total volumes that have already been proven are far larger than Israeli domestic needs. Israel, along with neighboring Cyprus can be a source of natural gas exports to Europe and beyond.

Indigenous energy sources for a high-tech, economic superpower like Israel, are critical. This has become particularly important after last April when Egypt abolished unilaterally the gas contract with Israel, a deal that went back to the Camp David Accords. Egypt’s shutoff led to a severe shortage of gas and to a loss of one billion Shekel per month from the Israeli economy. Israel is eager to get the fresh natural gas supply from the recently discovered and under development offshore Tamar field, supposed to get to Israeli land at the port of Ashdod, around April 2013.

Ashdod, the second largest port city in Israel has been the launching center of most of the activity in the offshore fields. By coincidence it has been under Gaza rocket attacks during the last few years and mainly during last week.

Hydrocarbon fields, the ownership of which will be shared by Israel, Egypt and a Palestinian State are big enough to paper over any economic conflict of today and can prove sweet enough to allow for a compromise on issues where compromise might have appeared impossible. That’s the nature of making money hands over fist in the commodity that literally and figuratively oils the world.

Economides is Editor-in-Chief and Yarkoni Zorek is Israel Editor of the Energy Tribune