On Tuesday, Lebanon and Israel reached a historic agreement that formally ends a dispute between the two countries over their maritime borders. Brokered indirectly over the past decade, initially by the United Nations and then by the United States, the deal marks the first agreement between the two countries since their ceasefire following the August 2006 war. The agreement allows for the exploration of offshore gas reserves believed to lie along the countries’ respective shorelines—one clearly delimited offshore area for Lebanon and another for Israel. The deal does not finalize the status of disputed land border areas, and a last-minute adjustment maintains that the buoys placed by Israel to demarcate its maritime border are not official, even as the agreement takes note of them. As part of the agreement, the United States has agreed to provide security guarantees to Israel, should there be an attack by Hezbollah against Israel’s interests and to deny Hezbollah any income from the gas revenues.
This deal would not have happened without a rare consensus among Lebanon’s political parties and the support of two key political groups, the Free Patriotic Movement (FPM) and Hezbollah. The deal gives the FPM’s president, Michel Aoun, whose tenure will end on October 31, an important win at a time when the country is in the throes of the most catastrophic economic and institutional collapse in its recent history. The World Bank has dubbed this collapse a deliberate depression due to the deep-rooted aversion of the country’s political leadership to undertake the kind of structural reform that would loosen its stronghold on the country’s institutions and weaken its patronage networks. Today, the Lebanese pound has lost more than 90 percent of its value, inflation is estimated to be around 180 percent, and 60 percent of the population lives in poverty.
Hezbollah’s support for the deal also can be understood in this context. The countrywide socioeconomic collapse has led to considerable discontent within members of the party’s own constituency. The deal presents the prospect of future economic growth and offers hope that Lebanon can emerge from its current quagmire. Moreover, despite an uptick in Hezbollah’s rhetoric toward Israel, a military conflict would wreak havoc on the party’s own backyard and might impinge on its expanding regional role. As a result, Hezbollah is not keen to go to war. And geopolitical dynamics, the preoccupation of the world with the Ukraine conflict, and moves toward de-escalation across most regional fault lines and conflict zones have contributed to an overall political environment conducive to the deal.
For Israel, the deal likely will bring considerable economic dividends: Karish, one of the gas fields, contains 1.75 trillion cubic feet of gas worth $3 billion, according to Israeli estimates. It can also be considered a political win for Prime Minister Yair Lapid in the run-up to the November election in which he will have to fight tooth and nail to maintain his current majority in the Knesset.
While this is far from a peace treaty between Lebanon and Israel, the agreement means that both countries now have vested economic interests in maintaining calm along their common border regions. This should bring an important sense of stability in a region marred by continued turbulence as well as in Lebanon, whose prospects remain uncertain. It will reduce the long-running threat of an outbreak of war between the two countries and, in time, may open the door to further political negotiations around land borders.
In the immediate term, the deal is likely to trigger the finalization of previously negotiated agreements to provide Lebanon with gas from Egypt and electricity from Jordan, in both cases via Syria. These agreements seem to have been held up in part by Washington’s withholding of commitments to shield Egypt and Jordan from the repercussions of the Caesar Act, a U.S. law that sanctions countries that have significant dealings with Syria.
In the medium to long term, the agreement provides an economic lifeline for Lebanon at a time when it desperately needs one. Even though the actual payout is likely to take years to materialize, the hoped-for windfall from the potential gas fields could help cushion the economic crisis and pave the way for an economic recovery. The dividends would not remain limited to revenues from the actual gas fields but would extend to associated industries and shore up overall employment.
A key concern for the Lebanese is that their political leadership may use this agreement as a pretext to reject a deal with the International Monetary Fund to implement ten reforms in exchange for $3 billion in relief that would help put the country on the road to economic recovery. This could mean that the expected revenue stream from the gas fields would be squandered by the governing political class on maintaining its patronage networks and further delay the needed structural changes. Pressure will now mount on Parliament to establish a sovereign wealth fund that can protect the country’s revenue streams for its future generations.
On the Israeli side, the ratification of the agreement by a government on the eve of an election has triggered objections over its legitimacy. Israel is already seeing demands for a referendum on the agreement, as well as claims that the deal requires Knesset approval—not mere review, as maintained by the government. Yet security concerns, the fast-approaching elections, and the end of Aoun’s tenure were compelling reasons for Israel to approve the agreement. Additionally, Israel’s signing of a similar maritime border deal with Cyprus without a referendum set an important precedent. An internal blockage of the deal in a post-election period, irrespective of election outcomes, would be hard to imagine, especially given the significant support of U.S. President Joe Biden’s administration.
Although this agreement is historic on many fronts, it does not mean a cessation of hostilities. For that to occur, the Palestinian/Israeli conflict will need to be addressed. But for now, the deal illustrates that the relationship between Lebanon and Israel is suspended between no war and no peace.
