The Mad Geopolitics of Israel’s EastMed Gas Pipeline

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by F. William Engdahl, New Eastern Outlook:

At just a time when the world holds its collective breath over risk of a World War over the US assassination of Iran’s leading general and other provocations, Israel has chosen to sign a natural gas pipeline deal with Greece and Cyprus that is the equivalent of tossing a loaded hand grenade into the hyper-tense region.

Until some months ago it was doubtful whether Israel’s long-touted EastMed gas pipeline deal with Cyprus and Greece would see the light of day. Despite being backed by the US and the EU as an alternative to Russian gas, the EastMed as it is known, is dubious on many grounds, not the least its high cost compared with alternatives. The January 2 signing by the governments of Israel, Greece and Cyprus is directly connected to provocative moves by Turkey’s Erdogan to conspire with Libya to illegally declare almost all of the Eastern Mediterranean waters to be a Turkish and now Libyan Exclusive Economic Zone.

If Mideast tensions were not already at the breaking point, the Israeli move throws a huge monkey wrench into the region’s troubled geopolitics.

As recently as December, 2019 the Israeli companies involved in their offshore Leviathan gas field were openly discussing further options for export of the gas following an export agreement with Egypt and Jordan. The EastMed pipeline was not mentioned in Israeli media.

What has changed the situation was the announcement by Turkey’s President Erdogan that he was sending Turkish troops to defend the Tripoli UN-backed Government of National Accord (GNA) in Tripoli of Fayez al Sarraj, on their request, to counter the forces of General Khalifa Haftar’s Libyan National Army (LNA).

Libya has the potential to become a major new explosion point in the rapidly-deteriorating Middle East terrain. Haftar is backed by Russia, Egypt, the UAE, Saudi Arabia and yes, France, and secretly since 2017 by Israel. Since April 2019 Haftar has been moving to take Tripoli from his stronghold in the oil-rich east. The GNA in Tripoli in turn is backed by Turkey, Qatar and Italy. The EU is desperately trying to mediate a truce between the GNA and Haftar after Putin failed some days ago.

The Mediterranean energy clashes

As Cyprus has discovered rich offshore fields of natural gas in addition to those of Israel at Leviathan, Turkey, who so far lacks its own major gas resources, began to aggressively interfere in Cyprus offshore waters. On January 1, 2020 Turkey and Russia opened the Black Sea Russian TurkStream with first deliveries of gas to EU member Bulgaria.

On December 11, Turkish Foreign Minister Mevlut Çavuşoğlu hinted that Ankara could use its military to prevent gas drilling in waters off Cyprus that it now claims. “No one can do this kind of work without our permission,” he said. Since early 2019 Turkish ships have entered Cyprus exclusive waters claiming rights to drill. In December 2019, the Turkish navy intercepted Bat Galim, an Israeli ship in Cypriot waters and forced it to move out of the area. The ship was of the Israeli Oceanographic and Limnological Research Institution, doing research in Cyprus’s territorial waters in coordination with Cypriot officials. The US State Department warned Turkey to back off and the EU imposed sanctions on Turkish persons, to little effect so far.

Turkey’s recent interest in Libya is directly related to blocking Cyprus gas exploration and declaring vast Turkish offshore space legal for its drilling ships.

On November 27, 2019 Turkey’s President Recep Tayyip Erdoğan signed a bilateral agreement on maritime boundaries in the southeastern Mediterranean. It would redraw existing recognized sea boundaries to give Libya exclusive rights for some 39,000 square kilometers of maritime waters belonging to Greece. The new joint zone of Tripoli-Turkey runs directly between the both countries and completely ignores the fact it violates Greek waters off Crete. Conveniently, it would cut directly across the planned Israel-Cyprus-Greece EastMed pipeline routeWithout Turkey’s approval, Turkey has suggested the Greek EastMed pipeline would be a non-starter.

The ongoing war between Haftar and Tripoli’s GNA becomes even more complex, as Israel is also backing Haftar who now controls Benghazi and much of Tobruk along the Mediterranean coastline. Since 2017 the Israeli military have secretly been supporting Haftar in his attempt to gain control of Libya.

The EastMed Project

The just signed agreement between Israel, Greece and Cyprus is more fantasy than reality at this point. It calls for a hugely expensive $7 billion 1,900 km (1,180 mile) subsea pipeline, “the longest and deepest gas pipeline in the world,” that should initially bring up to 10 billion cubic meters of gas a year from Israeli and Cypriot waters to Crete and then on to the Greek mainland and ultimately to Italy. That would amount to roughly 4% of total EU gas consumption, far less than Russia’s present 39% share, let alone Gazprom’s increased share once NordStream 2 and TurkStream are fully completed in the coming months. TurkStream, where the first of two pipelines opened on January 1, 2020, will supply a total of more than 31 bcm, with half available for the EU gas market and NordStream2 will add another 55 bcm annually to the EU gas market.

It has been ten years since gas was discovered at Israel’s Leviathan. The first gas deliveries only began early this month to Egypt and to Jordan leaving 80% available for export following numerous delays. However prospects of finding finance for the huge project are grim at best. The EU, while greeting a rival to Russian gas, has made clear it has no money for the project. Greece financing is hardly possible after the 2010 Greek crisis and Cyprus is similarly depleted after its 2013 banking crisis. According to a statement from the Israeli Finance Ministry it will be financed by “private companies and institutional lenders.” To find private financing for such a politically risky undertaking at a time of growing risk aversion in finance is dubious. With a current glut of gas on the world market and the increasing availability of LNG sources it is not at all clear that a politically risky Israeli EastMed undersea pipeline makes economic sense.

Notably, Greek state television channel ERT refers to the EastMed project as a “protective shield against Turkish provocations.” That makes clear Greece sees it as a response to the recent rapprochement between Turkey and the government in Libya and Erdogan’s announcement he is sending troops to support the GNA in Tripoli to make pressure against Haftar. Were Haftar to ultimately take Tripoli, clearly the Turkish-Libya bilateral agreement on maritime boundaries would be repealed.

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