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Can New Energy Supplies Bring Peace?

Can New Energy Supplies Bring Peace?

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This policy brief argues that recent gas discoveries in the Eastern Mediterranean are not large enough to truly be game-changing.
This policy brief argues that recent gas discoveries in the Eastern Mediterranean are not large enough to truly be game-changing.

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Published by: German Marshall Fund of the United States on Mar 11, 2014
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06/18/2014

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Summary:
The discovery of
signicant reserves of natural gas offshore Israel in 2009 and 2010 and rather smaller volumes of natural gas offshore Cyprus in 2011 has sparked interest in their potential to contribute to regional coopera
-
tion and peace. The switch to natural gas can reduce pollu
-
tion and carbon emissions, improve public health, lower electricity prices, and provide a stable and secure source of energy for power generation and desalinated water production in the region. However, the prob
-
ability that these new natural gas resources may serve as a lever for conict resolution or produce far-reaching geopolitical effects is rather low because the volumes of the reserves is relatively low, the potential economic benets are insuf 
-
cient to overcome deep-rooted political conicts, and there is no precedent from other parts of the world of energy trade func
-
tioning as an incentive for peace between states in conict.
Mediterranean Policy Program
Policy Brie 
Can New Energy Supplies Bring Peace?
by Brenda Shaffer 
1744 R Street NW Washington, DC 20009 1 202 745 3950 F 1 202 265 1662 E ino@gmus.org
Eastern Mediterranean Energy Project March 2014
Introduction
Te discovery o significant reserves o natural gas offshore Israel in 2009 and 2010 and rather smaller volumes o natural gas offshore Cyprus in 2011 has sparked interest in their potential to contribute to regional cooperation and peace. Tese newound resources, it is ofen said, can serve as peace catalysts and promote reconciliation between Israel and its neighbors, acilitate the reunification o Cyprus, oster cooperation between Cyprus and urkey, and improve relations between urkey and Israel.
1
 Te risk that conflicts over ownership o the resources in disputed sea areas could exacerbate long-standing conflicts has also been widely noted.
1 See, for instance, “With the discovery of signicant gas resources off Cyprus… gas could play as important a role in healing the island’s divisions as the coal and steel industry played in 1949 between France and Germany,”
Prepared remarks by Assistant Secretary of State for European and Eurasian Affairs
Victoria Nuland
 , delivered on November 12, 2013 at the Atlantic Council, 
-
 ;
former U.S. ambassador to Azerbaijan, Matthew Bryza, “Building an Israel-Turkey pipeline connected to a Cyprus LNG terminal offers strategic opportunities that transcend economics, including a chance for Israel and Turkey to restore their strategic partnership. It would also push Turkey to reach an agreement on the Cyprus ques
-
tion, removing a 40-year irritant in relations with Europe and re-energizing Turkey’s agging efforts to join the EU. The U.S., working with the EU, should help to shape this future.” Matthew Bryza, writing for Bloomberg, http://mobile.bloomberg.com/news/2014-01-20/israel-turkey-pipeline-can-x-eastern-mediterranean.html
 
Against the background o these contending views, a number o conclusions can be reached at this stage. Newly discovered natural gas resources can indeed contribute to positive trends in the Eastern Medi-terranean, though conflict resolution may not be among them. Te switch to natural gas can reduce pollution and carbon emissions, improve public health, lower electricity prices, and provide a stable and secure source o energy or power generation and desalinated water production in the region. However, the probability that these new natural gas resources may serve as a lever or conflict resolution or produce ar-reaching geopolitical effects is rather low or three main reasons:Te overall volume o the natural gas reserves discovered offshore Israel and Cyprus remains modest. While these discoveries will have a significant impact in the region itsel, they are too small to signifi-cantly influence major export markets in Europe or Asia, unless there are major additional discov-eries.Potential economic benefits are insufficient to overcome deep-rooted political conflicts that, in some cases, have persisted or several generations.
 
Eastern Mediterranean Energy Project
Policy Brief
2
Tere is no precedent rom other parts o the world o energy trade unctioning as an incentive or peace between states in conflict. However, cooperation in the development o these resources can
reinforce
 any political breakthroughs in the Middle East Peace Process or in efforts to find a compre-hensive solution to the problem o the division o Cyprus. Similarly, energy cooperation could reinorce any political progress made in relations between Israel and its neigh-bors, including urkey and Lebanon. Te development o these resources has the potential to benefit all the peoples o the region:By lowering the costs o desalination and increasing the supply o resh water, these new natural gas reserves can contribute to the elimination o water conflicts. Te new natural gas volumes have already increased water supply in the region.By increasing economic prosperity, the new resources creating a more avorable climate or successul imple-mentation o any political agreements concluded.By providing reliable and affordable electricity to the Palestinian territories, Jordan, Lebanon, and Syria, the new natural gas resources will avor economic develop-ment. Tis is especially significant or a region in which most countries’ electricity supply is limited to certain hours o the day and where electricity production is unstable and cost-prohibitive.By producing electricity in a more environmentally sae manner, public health will improve.
The Size of the Natural Gas Volumes and the Prospects for Export
Te volumes o natural gas resources ound in the Eastern Mediterranean to date remain modest by global stan-dards. Israel’s natural gas reserves are: amar (10 trillion cubic eet – CF, 283 billion cubic meters – BCM, proved reserves), Leviathan (18-19 CF, 510-540 BCM, estimated reserves), and a number o small fields, together totalling about 3 CF (85 BCM, estimated). Te volumes o Cyprus’s natural gas discovered so ar are 3-5 CF (80-140 BCM, estimated). Te Gaza Marine field (offshore o the Gaza strip) holds 1 CF (30 BCM, estimated). Known reserves in the region have the potential o satisying local demand in Israel, Cyprus, Jordan, and the Palestinian territories or the next 40-50 years. However, the quantity available or export beyond the region at present is limited. Te size o the reserve available or export rom Israel and Cyprus is approximately 400-500 BCM, given projected domestic demand and export limitations imposed by the government o Israel (which will allow the export o between 260-360 BCM, depending on the size o the proven reserves). Te Palestinian territories and Jordan are likely to absorb about hal o that quantity. Te remaining amount o gas avail-able or export beyond the immediate region is currently estimated at 200-300 BCM.
2
Some analysts and journalists who have examined the prospects or the export o natural gas rom Cyprus and Israel to markets beyond the region have described the gas as being “trapped by politics” or as “diplomatically trapped gas.” In reality, however, the export o natural gas has not been constrained by inter-state politics or by government policies but rather by the small size o the reserves and the strong existing demand or gas by Israel and its neighbors. Te governments o Israel and Cyprus have established clear and transparent regulatory rameworks or licensing natural gas exploration and or taxation as well as guide-lines or exports. In act, the United States, EU, and even urkey have given significant positive diplomatic attention to these new resources.Te recent natural gas discoveries in the Eastern Medi-terranean have been accompanied by major new natural gas discoveries elsewhere in the world (or instance, East Arica) and a dramatic increase in proved reserves in the United States and Canada. Tese developments will affect global gas supplies and prices. It normally takes more than ten years rom discovery and production, so companies considering export options rom the Eastern Mediter-ranean over coming decades will need to actor in likely developments in world markets.
Why No Peace Pipelines?
Tere is no evidence rom elsewhere in the world that trading in energy is an incentive or peace. Case studies show no instances in which the incentive o energy trade led countries to make concessions on issues critical to peace agreements such as borders and the status o reu-
2 For more data on reserves, see EIA, “Overview of oil and natural gas in the Eastern Mediterranean region,” August 2013, p. 5., http://www.eia.gov/countries/analysis
-
 ;
 
Eastern Mediterranean Energy Project
Policy Brief
3
ments, but ew companies will initiate exploration in hot conflict zones. Intergovernmental agreements are necessary to support commercial agreements on international gas pipelines, and banks will rarely und new investments in active conflict zones. In the case o the Eastern Mediterra-nean region, reliance on energy trade or conflict resolution might create unrealistic expectations and divert attention rom tackling serious regional security problems head-on.
How Can the Resources be Useful in the Region?
The End of Water Conicts
Adequate water supply is a requirement or development in the region and competition over water resources is a potential flash point or conflict between bordering states. Water issues need to be resolved as part o broader peace efforts between both Israel and the Palestinians and Israel and Syria. Israel has significantly expanded its water desali-nation capacity and is now ully able to meet its domestic needs. Under these circumstances, Israel has accepted that Jordan may draw more rom the Jordan River and is itsel prepared to export water to Jordan. Israel has also signaled its readiness to provide additional water to the Palestinian territories as part o a peace agreement. Te increased  volume o natural gas supplies lowers the costs o water desalination and reduces associated pollution. Tus natural gas may indirectly help create a more propitious climate or peace by reducing conflicts over water.
Natural Gas Needed in an Electricity-Hungry Region
Many Eastern Mediterranean and adjacent Middle Eastern states have limited access to electricity supplies. Tis is one o the ew places in the world where electricity is still largely produced rom oil. Consequently power generation
Table 1: Source of Electricity Generation (percent of total), from the World Bank Database (updated for 2011)
1
gees.
3
 Energy trade reflects existing peaceul relations; it does not create them. In many cases, the causal arrow points the other way; disputes over energy resources or commercial conditions o trade can exacerbate existing political conflicts.
4
 Te “peace pipelines” theory is ounded on the assump-tion that trade in energy leads to interdependence, and interdependence, in turn, avors peace. However, this assumption is undamentally flawed since natural gas trade does not create interdependence in most cases. Natural gas trade can generally take place in three orms: 1) trade in which neither supplier nor consumer is dependent on the energy source; 2) trade in which the supplier or the consumer is dependent on the other; 3) interdependence between the supplier and consumer.
5
 Te last scenario is very rarely encoun-tered; there are only a handul o cases o interdepen-dence between gas supplier and consumer.
6
 Moreover, the existing data has not established a clear link between interdependence and the establishment o peace.
7
 In act, major oil and gas producing countries have a propensity toward engaging in conflict as demonstrated in a number o studies. Based on this experience, the energy resources in the Eastern Mediterranean are more likely to be a source o conflict than an incentive or peace.
8
Close political cooperation generally precedes the estab-lishment o pipeline inrastructure between countries. Most international energy companies shy away rom setting up operations in conflict zones. Companies may stay in a region i conflict emerges afer they have made invest-
3 For more on “peace pipelines,” see Brenda Shaffer, “Natural gas supply stability and foreign policy,”
Energy Policy 
-
Energy Politics
 
(Philadelphia, University of Pennsylvania Press, 2009), p. 70-74.4 Shaffer, “Natural gas supply stability and foreign policy,” ibid.5 For more on natural gas trade and political relations, see Brenda Shaffer, “Natural gas supply stability and foreign policy,”
Energy Policy 
 56 (2013): 114-125. http://explore.georgetown.edu/publications/index.cfm?Action=View&DocumentID=711366 One of the cases of interdependence between gas supplier and gas consumer is Rus
-
sia and Germany. 7 In international relations theory, some studies see trade interdependence as a source of peace, while others see it as an incentive for conict, since one of the sides may want to disengage from its own dependence. See Dale C. Copeland, “Economic Interdepen
-
dence and War: A Theory of Trade Expectations,”
International Security 
 Vol. 20, no. 4 (Spring 1996); Kenneth N. Waltz, “The Myth of National Interdependence,” in Charles P. Kindleberger (ed.)
The International Corporation
 (Cambridge, MA.: MIT Press, 1970), pp. 205-223; Kenneth N. Waltz,
Theory of International Politics
(Reading, MA.: Addison-Wesley Publishing Company, 1979).8 For a review on the literature linking oil and gas production to a higher propensity to involvement in conict, see Shaffer,
Energy Politics,
pp. 74-77.
Name of CountryCoalGasOilHydroOther Renew-ablesNuclearEgypt
0.074.715.88.31.30.0
Israel
5933.17.300.40
Lebanon
0095.14.900
Jordan
02772.50.40.10
Cyprus
0096.403.60
Syria
052.439.6800
Palestinian Territories
------

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