Despite a lack of formal diplomatic ties, Israel and Lebanon signed an unprecedented agreement on October 28 to demarcate their disputed maritime border. Culminating more than a decade of U.S.-mediated talks over three successive presidential administrations, the two countries—each of which formally defines the other as an “enemy state”—agreed to settle competing claims on resource-rich territorial waters in the Eastern Mediterranean, particularly concerning the Qana-Sidon field and its estimated 100 BCM of natural gas.
The pact establishes a maritime boundary line (the “MBL”) along a series of coordinates known as “Line 23.” Though the agreed-upon boundary cuts through the Qana-Sidon field, Lebanon is granted full control of it. The deal forges a mechanism for both energy exploration and development by foreign companies and the reception of the potential royalties, of which Israel will receive roughly 17%, as this is the percentage of the field located in Israel’s maritime area.
The agreement was actualized against the backdrop of Europe’s energy supply challenges following the Russian invasion of Ukraine and a wider global conversation on energy security and stability amid ever-rising energy prices and a looming economic recession.
Regionally, the accord was preceded by several months of heightened tensions between the sides and domestic challenges in both countries. Lebanese militia Hezbollah—which is designated by the United States and Israel as a terrorist organization—had threatened to attack Israel’s offshore energy assets should the country advance natural gas drilling at the Karish field near the disputed maritime zone. Lebanon has been experiencing acute financial challenges and political instability and thereby sought a long-term growth engine to rehabilitate its economy.
In the Israeli context, the deal was approved by an outgoing interim Israeli government only several days before the country’s general election and without being put to a full vote in the unicameral parliament (Knesset). The timing and procedure of Israel agreeing to the deal thereby generated criticism by parliamentary opposition leader, who maintained that the agreement lacked the legitimacy and broad public consensus that should accompany a major treaty regarding Israel’s foreign relations and territorial arrangements with a neighboring country. Nonetheless, it is unlikely that a future Israel government would consider abrogating the agreement, given the central role played by the United States—Israel’s main ally—in brokering it, and a myriad of other security and diplomatic risks that this reversal would entail.
The pact in actuality is comprised of two parallel agreements between the United States and each country. In this regard, the arrangement does not establish diplomatic relations between Israel and Lebanon, nor does it address the ongoing land border dispute between the two nations.
Business and Geopolitical Implications
Although the pact is limited in scope, it has several wide-ranging business and geopolitical implications of note:
- Greater Global Energy Security: Israel and Lebanon reached the agreement with the strong support of American and European leaders. As the acute energy crisis driven by Russia’s invasion of Ukraine deepens, the United States and Europe have turned to new markets to provide long-term solutions to Europe’s energy needs and weaken Russia’s global leverage on the market. In this vein, this deal promotes greater long-term energy security and export capability worldwide through increasing natural gas sources from both the proven reserves of Lebanese and Israeli fields and incentivizing exploration for additional resources in the territorial waters of the two countries. Amid concerns over prolonged sluggish global economic growth, high energy prices, and overdependence on unreliable states, the deal could allow for increased global supply and lower energy costs in the medium to long term.
- Increased Eastern Mediterranean Stability, Incentivized Energy Development: Demarcating the maritime border lowers the threat of war between Israel and Hezbollah over the disputed maritime territory and the Qana-Sidon and Karish gas fields. The agreement paves the way for Lebanon’s energy independence and greater Israeli energy security (as since 2009 Israel has already developed two large-scale gas fields, Leviathan and Tamar, and obtained an energy surplus to allow for exports to Jordan and Egypt), lowering tensions between the countries and a pretext for conflict. Greater Eastern Mediterranean stability paves the way for international actors to increase business activity in the region, especially in the energy sector, as geopolitical risks are perceived as lower.
In the days after the agreement was announced, Israeli media outlets reported on Egypt-sponsored talks to secure Israeli approval for the Palestinians’ development of a gas field in the Gaza Strip’s territorial waters. Such offshore gas development could be utilized to rehabilitate the economy of the Gaza Strip and lower the risks of renewed armed conflict between Israel and Gaza’s Hamas rulers. This outcome likewise could showcase the capacity for energy interests to draw Israel closer to regional neighbors, including longstanding adversaries.
- U.S. Leadership in the Middle East Maintained: Successive U.S. administrations have engaged in shuttle diplomacy behind the scenes since 2012 to arrange the maritime agreement. One key component for the Israeli side was the inclusion of U.S. “security guarantees,” which stress that the United States will strengthen the capacity of the Israeli military to defend itself, including against threats targeting Israeli vessels and energy assets. The U.S. leadership on the agreement comes against a backdrop of Russian and Chinese attempts to increase their presence in the Middle East and longstanding U.S. allies’ concerns over Washington’s potential drawback of regional influence. The maritime agreement thereby strengthens the United States’ role as a relevant geopolitical anchor in the region, particularly in advancing Israeli-Arab diplomacy.
- Tactical, Not Comprehensive Bilateral Cooperation: Comparisons to the Abraham Accords in 2020 have been raised in the aftermath of the agreement, though the agreement is strictly limited to maritime borders and offshore energy development. Whereas the Abraham Accords saw mutual diplomatic recognition between Israel and several Arab states and the establishment of comprehensive economic relations, this Lebanon-Israel agreement excludes mutual recognition and bilateral commerce and trade. The framework of the agreement does not open the door for cross-border trade and economic opportunities for local or multinational businesses (and seems to preclude the possibility of joint Israel-Lebanon energy development and cooperation), nor does it advance political relations on other tactical matters between the two countries. Nonetheless, despite the agreement’s limited scope, it has the potential to serve as a precedent for advancing relations between Israel and Lebanon—and perhaps other states with whom Israel lacks official ties—should regional dynamics shift towards this direction in the future.