Domestic power companies would have access to cheaper fuel resulting in balanced national budgets. New revenues would empower governments to make historic investments that would help jumpstart their economies, lifting millions of people out of poverty. Given the potential advantages, it behooves all of these governments to leave no stone unturned in opening the way for their respective energy sectors. For all the benefits of a “by-the-book” process rooted in UNCLOS, however, no negotiation takes place in a vacuum, and the Israeli-Lebanese dispute is a case in point necessitating mediation by the U.S.
Many oppose even this kind of indirect engagement but if Lebanon wants to develop its offshore energy resources in peace, there is no alternative to some form of understanding with the Israelis, and therefore no substitute for American involvement. Similar factors apply to other overlapping claims areas in the Eastern Mediterranean, including those involving Turkey with Cyprus, Greece, Syria, and even Egypt. In each of these cases, both parties will have legitimate reasons to avoid negotiations, including the inevitable and potentially incendiary disapproval of nationalist voices. As with Lebanon and Israel, therefore, the ingredients necessary for progress will have to include the wisdom to see beyond short-term concerns, the will to overcome differences, and the common sense to prepare the political ground by educating the public about the potential rewards offered by diplomacy.
Maritime demarcation in the Eastern Mediterranean constitutes a grand opportunity to demonstrate the power and purpose of the UNCLOS formula. If and when the Libano-Israeli process succeeds, for example, both Israel and (especially) Lebanon would reap significant benefits. The same is true of other boundary disputes in the region. The more governments see for themselves the effectiveness and versatility of the legal and diplomatic tools at their disposal, the more likely they are to avail themselves of similar solutions. That would mean more talks, fewer tensions, more freedom to build stronger economies, and less likelihood of armed conflict. It would also bring the entire international system that much closer to being completely rules-based, fulfilling the spirit of the UN Charter. It is difficult to see how anyone would object to any of that.
1. See Carbon Brief, “Mapped: the world’s coal power plants,” 2018 (https://www.carbonbrief.org/mapped-worlds-coal-power-plants).
1
Challenges and Opportunities in the Eastern Mediterranean
It now seems likely that several countries possess reserves whose size and recoverability make them “game-changers” in terms of their potential to generate economic and other benefits for generations to come.
Resolving Disputes Critical to Exploiting Resources
The past few years have seen the global energy community paying increasingly close attention to the Eastern Mediterranean. Scientific evidence of extensive undersea oil and gas deposits could have broad economic and geostrategic implications that promise to be both far-reaching and long-lasting. Recent gas discoveries in various regional locations indicate that the quantities involved exceed the usual standard of commercial viability. It now seems likely that several countries possess reserves whose size and recoverability make them “game-changers” in terms of their potential to generate economic and other benefits for generations to come. For a region—and its peoples—long plagued by poverty, weak governance, armed conflict, and other drivers of instability, the advent of massive energy revenues would mean a rare opportunity to start catching up after more than a century’s worth of lost time.
Unfortunately, however, there are no guarantees that efforts to fully exploit the geology of the Eastern Mediterranean Basin can be insulated against the effects of various potential pitfalls emanating from both within and without. Already, tensions and rivalries over this precious resource are creating, sustaining, and exacerbating disputes, both directly and indirectly, among some of the region’s seven coastal states (Cyprus, Egypt, Greece, Israel, Lebanon, Syria, and Turkey). Given the longstanding animosities between, for instance, Lebanon and Israel, or Turkey and Cyprus, there is ample reason to fear that ill-considered rhetoric could drown out wiser approaches. If that were to happen, the consequences could include not just delayed development of a lucrative resource, but also increased frictions and perhaps even one or more shooting wars. In addition to the usual, indeed, virtually inevitable—disagreements among neighbors over ownership of resources, it will require deft management because the Eastern Mediterranean’s energy potential is on such a colossal scale. Development of these resources could also run afoul of exogenous obstacles ranging from commercial competition from much stronger rivals to geostrategic maneuvering by much larger powers.
Importance of Getting Investment from Other Countries
Consider the options available to Qatar, the world’s leading exporter of liquefied natural gas (LNG), and an increasingly significant investor in energy assets around the world.1 Qatar Petroleum holds a 40% stake (with ExxonMobil holding the rest) of Block 10 offshore Cyprus, which in the summer of 2018 yielded the world’s third-biggest gas find of the past two years.2 In a perfect world, Cyprus would profit not only from its gas but because of its central location as a regional energy hub for processing and transportation of other countries’ gas as well. If and when Cyprus establishes that it has the diplomatic wherewithal and managerial competence to go forward, Qatar would be a natural source of additional investment, providing crucial capital that would help get the region’s gas to other markets in a timely fashion.
Cyprus would reap unprecedented revenues, restoring financial strength to both public and private entities, and allowing historic investments in its people’s future. Other regional countries would also benefit, whether by getting their gas to market via Cyprus or by receiving pipeline transit fees. Conversely, imagine the same story turned on its head. In this scenario, Cyprus fails to resolve its maritime boundary dispute with Turkey, or the energy sector is mismanaged, causing the Qataris and other qualified investors to avoid further exposure because of the risks involved. If that happens, and if no other investor steps in, the pipeline(s) and liquefaction plant never get built, or capacity only comes online after Qatar and other major exporters have already locked up most of Europe’s LNG purchases for the next 20 years by taking out long-term leases on the continent’s crucial offloading facilities. If that happens, everyone in the region loses, including Turkey, which would have lost opportunities to secure its legitimate claims in the Eastern Mediterranean, as well as to collect pipeline transit fees.
The rate of extraction has to be determined by the size of the deposit involved and how long it will last. If it costs $100 billion in development and production spending, for instance, to extract $200 billion worth of gas from a given area over ten years, it makes no sense to spend an extra $100 billion to deplete the same field in half the time. The enormous increase in up-front investment required, with zero resulting increase in overall revenue, would be equivalent to economic self-harm by any producer taking part. Cooperation with other countries is key, including Russia. In Lebanon, for instance, Novatek is part of a consortium that owns exploration rights for one of the most promising blocks. The region needs a shared interest in peace and stability that reduces the scope for tensions and conflict, encourages cross-border cooperation and investment, and opens the way for lucrative revenues at the earliest opportunity. Given the costs and lengthy delays likely to result from Russian and other opposition, Eastern Mediterranean oil and gas resources should be viewed as a complement or supplement to those from other suppliers. This would include Turkey through