Lebanon-Israel deal a landmark but with limits, experts say

The recent maritime border deal between Lebanon and Israel allocates rights to off-shore natural gas drilling and has been hailed as a game changer

U.S. mediators tried for more than a decade to broker a maritime border agreement between Lebanon and Israel. Finally, the elements fell into place for a landmark deal between two countries officially — and sometimes actively — at war since 1948.

Russia’s war in Ukraine this year and Europe’s resulting energy crisis have increased demand for natural gas, which the deal will enable Lebanon and Israel to extract from the Mediterranean Sea.

At the same time, Lebanon’s spiraling economic crisis, impending Israeli elections and rising tensions between Israel and Lebanon’s militant Hezbollah group added more incentive to finalize the deal.

The long-awaited agreement inked last week was hailed as a game changer by officials in Lebanon, Israel and the United States. It is far from a peace deal, but proponents say the shared interest of exploiting the gas will make it less likely the two longtime enemies will go to war.

Iranian-backed Hezbollah, which fought a destructive war with Israel in 2006, has backed the deal. Lebanese hope it will help save their country from financial meltdown.

Still, analysts say the payoff is likely to be more limited than all three players’ ambitious projections.

“I don’t think it’s like the Abraham Accords, where it would change the political fabric in the region,” said Randa Slim, director of the Conflict Resolution and Track II Dialogues Program at the Washington-based Middle East Institute, referring to a series of deals brokered by the Trump administration in 2020 to normalize relations between Israel and several Arab countries.

“It did not change the character of the relationship between Lebanon and Israel,” she said.

The U.S. first began trying to broker a maritime border in 2010 after significant gas discoveries in Israeli waters and a U.S. study estimating 122 trillion cubic feet of recoverable gas off the coasts of Syria, Lebanon, Israel and Gaza.

In late 2020, the parties agreed on a framework for indirect negotiations mediated by the U.S. and held at the headquarters of U.N. peacekeepers in southern Lebanon. Simply agreeing on the structure of the talks took three years given the sensitivities, particularly for Lebanese officials anxious to avoid appearing to recognize Israel.

Both sides then came in with “maximalist demands,” and the talks floundered, said David Schenker, former U.S. assistant secretary of state for Near Eastern Affairs under then-President Donald Trump, who took over mediation at that point.

“It wasn’t really a priority for me,” he told The Associated Press. “I basically said, if the Lebanese want it, that’s fine. If they don’t want it that’s fine too. I’m not going to be doing shuttle diplomacy on this,” said Schenker, now a senior fellow at the Washington Institute for Near East Policy, a think tank widely seen as pro-Israel.

With the Biden administration, negotiations started again, mediated by Israeli-born U.S. Senior Advisor for Energy Security Amos Hochstein, whose appointment caused some criticism in Lebanon.

Talks started slowly, until February, when Russia invaded Ukraine, changing the picture. Both Lebanese and Israeli officials have acknowledged that the ensuing global demand for gas sped up talks.

Lebanon badly needs a windfall. Its economic crisis has plunged three-quarters of its population into poverty.

However, experts say a fledgling gas industry is unlikely to be a panacea.

A study by the Lebanese Oil and Gas Initiative and other groups two years ago estimated that potential oil and gas revenues likely won’t exceed $8 billion, just 10% of Lebanon’s gargantuan public debt.

“This is definitely a positive step forward, but not on the scale that is being portrayed to the public,” said the Initiative’s interim Executive Director Amer Mardam-Bey. “We’re not going to wake up tomorrow, and everything will be fine and the debt is gone.”

The amount of gas under Lebanese waters is unknown. Some in Lebanon have criticized the government for backing off a proposed border containing part of the Karish field, which is known to contain gas, and accepting a deal that gives it the Qana field, where reserves have not been proven.

Mardam-Bey says it’s likely that there is gas in the field but how much can’t be known before drilling.

There is also a danger that any gas revenues will be siphoned off by corruption. Lebanon for decades allocated hefty contracts to politically connected companies.

“If that’s not changed, then those revenues will be subject to the same channels of clientelism (and) patronage,” said Sami Atallah, director of The Policy Initiative, a Beirut-based think tank.

In Israel, the deal’s proponents have touted potential security and economic benefits. “It establishes a new security equation with regard to the sea and the strategic assets of the state of Israel,” Defense Minister Benny Gantz said recently.

The agreement clears the way for Israel to begin drilling in the Karish gas field. Earlier this year, Hezbollah threatened to strike ships operating in the field if Israel began extracting gas before reaching a deal with Lebanon.

Hezbollah's chief Hassan Nasrallah said that forced Israel to make concessions. Israeli detractors of the deal accuse Israeli Prime Minister Yair Lapid of surrendering to Hezbollah’s threats.

Schenker acknowledged that the final deal was an accomplishment, but he questioned whether it would actually deter war, suggesting Hezbollah could be emboldened.

The outcome of Israel’s national elections on Tuesday could further complicate the picture. Former Prime Minister Benjamin Netanyahu, who appears poised to make a comeback, previously vowed to “neutralize” the maritime border deal.

However, a senior U.S. administration official familiar with the negotiations said the White House believes that Netanyahu would be hesitant to walk away from a deal that would be a boon to the Israeli economy and security. The official requested anonymity to discuss the administration’s deliberations.

In a recent radio interview, Netanyahu said that if he became prime minister again, he would treat the Lebanon deal just as he did the Oslo agreements reached with the Palestinians in the 1990s. Those agreements were never canceled but were also never fully implemented and are moribund today.

Efraim Inbar, president of the Jerusalem Institute for Strategy and Security, an Israeli think tank, wrote that Israel in the negotiations had failed to take advantage of Lebanon’s “great weakness.” He argued that Lebanon needs gas revenues from the disputed territory far more than Israel.

Slim described the deal as a “win in foreign policy” for the Biden administration, but a limited one.

“There are no more big deals to be had in the Middle East,” she said. “There are small deals, transactionalism.”

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Associated Press writers Eleanor Reich in Jerusalem and Aamer Madhani in Washington contributed to this report.