After Israel’s latest military operation, and the ensuing massive devastation in Gaza, the international community has pledged hundreds of millions of dollars to help with the reconstruction of the Strip. However, a lasting end to conflict between Israel and Palestine will not be possible without long-term investment in Palestine’s economic and human development, running into billions of dollars per year.
An overlooked means of generating these revenues would be to allocate Palestine its fair share of benefits of oil and natural gas reserves in the occupied territories and the Eastern Mediterranean, which are currently being exploited only by Israel.
A recent study by the United Nations Conference on Trade and Development (UNCTAD) points out that new discoveries of natural gas in the Levant Basin are in the range of 122 trillion cubic feet, while recoverable oil is estimated at 1.7 billion barrels. These reserves offer an opportunity to distribute and share about $524bn among the different parties in the region. The Israeli military occupation of Palestinian territories since 1967 and the blockade of the Gaza Strip since 2007 have prevented the Palestinian people from exercising any control over their own fossil fuel resources, denying them much-needed fiscal and export revenues and leaving the Palestinian economy on the verge of collapse.
The economic costs inflicted on the Palestinian people under occupation are well documented: tight restrictions on the movement of people and goods; the confiscation and destruction of property and assets; loss of land, water and other natural resources; a fragmented domestic market and separation from neighbouring and international markets; and the expansion of Israeli settlements that are illegal under international law.
The Palestinian people also exercise only limited control over their fiscal space and policy. Per the stipulations of the Paris Protocol on Economic Relations, Israel controls Palestinian monetary policy, borders and trade. It also collects customs duties, VAT and income taxes on Palestinians employed in Israel which it then disburses to the Palestinian government. UNCTAD estimates that, under occupation, the Palestinian people have lost $47.7b in fiscal revenues over the 2007-2017 period, including revenues leaked to Israel and accrued interest. In comparison, the Palestinian government’s development spending over the same period was approximately $4.5b.
The prolonged closure and recurrent military operations in Gaza have left more than half the territory’s population living below the poverty line and cost $16.7b in lost GDP annually. This figure does not account for the huge opportunity cost of preventing the Palestinian people from using their natural gas field off the shores of Gaza.
The 1995 Israeli-Palestinian Interim Agreement on the West Bank and Gaza Strip, known as the Oslo II Accord, gave the Palestinian Authority (PA) maritime jurisdiction over its waters up to 20 nautical miles from the coast. The PA signed a 25-year contract for gas exploration with the British Gas Group in 1999, and a large gas field, Gaza Marine, was discovered at 17 to 21 nautical miles off the coast of Gaza the same year. However, despite initial discussions between the Israeli government, the PA and British Gas on the sale of gas from this field and the provision of much-needed revenue to the occupied Palestinian territories, the Palestinians have not realised any benefits.
Since the blockade of Gaza in 2007, the Israeli government has established de facto control over Gaza’s offshore natural gas reserves. The contractor, British Gas, has since been dealing with the Israeli government, effectively bypassing the Palestinian government regarding exploration and development rights.
Israel has also taken control of the Meged oil and natural gas field, located inside the occupied West Bank. Israel states that the field lies west of the armistice line of 1948, yet most of the reservoir is situated beneath the Palestinian territory occupied since 1967.
More recently, Israel has begun to develop new oil and gas finds in the Eastern Mediterranean, solely for its own benefit. In commandeering and exploiting Palestinian oil and gas resources, Israel is acting in violation of the letter and the spirit of the Hague Regulations, the Fourth Geneva Convention and a body of international humanitarian and human rights law that addresses the exploitation of common resources by an occupying power, without regard for the interest, rights and shares of the occupied population.
The international community has so far pledged $860m for the reconstruction of Gaza after the recent assault but, even prior to the latest military aggression, UNCTAD estimates that it would cost a minimum of $838m per year to lift Gaza’s population out of poverty. A fair share of oil and gas revenues would provide the Palestinians with sustainable financing to invest in long-term economic reconstruction, rehabilitation and recovery. The alternative is for these common resources to be exploited individually and exclusively by Israel, and to become another trigger for conflict and violence.
Of course, sustainable economic recovery and a sustainable political settlement go hand in hand. The UN maintains its longstanding position that a lasting and comprehensive peace can only be achieved through a negotiated two-state solution. The UN continues to work towards the establishment of an independent, democratic, contiguous, sovereign and viable State of Palestine, existing in peace and security with Israel. The economic survival of a Palestinian state will depend on the ability of Palestinians to control their own economy and have fair access to their share of oil and gas reserves in Palestine.