Israel’s Reconciliation With Turkey Could Lead to New Energy Deals

Israel and Turkey agreed to normalize diplomatic relations Monday, six years after an Israeli raid on a Turkish aid ship sent to Gaza opened a bitter divide between two Mediterranean countries that had long been friendly. And while shared security concerns were apparently the biggest driver of the rapprochement, the deal could potentially pave the way for Israel to use its abundant reserves of natural gas to become a major energy supplier to Turkey in the years to come.

The reconciliation announced by Israeli and Turkish officials, in separate press conferences, marked the culmination of years of informal talks ushered along by the European Union and by U.S. officials including President Barack Obama and Secretary of State John Kerry.

Speaking to reporters in Rome, Israeli Prime Minister Benjamin Netanyahu stressed the “strategic importance” of the deal, especially at a time of deepening insecurity across the eastern Mediterranean. The five-year old civil war in Syria continues apace, while terrorist attacks have hammered both Turkey, and to a lesser extent, Israel in recent months.

“Energy diplomacy has been crucial in lubricating the relationship and giving them a non-controversial platform for contacts in recent years, but I think the reconciliation is definitely about security,” said Brenda Shaffer, a Georgetown University expert on the region.

Under the terms of the deal, Israel will pay Turkey $20 million in compensation for the victims of the 2010 raid, but it won’t lift the naval blockade on Gaza. Turkey, for its part, will ship aid to Gaza through Israel, rather than unilaterally, and promised to ensure that Hamas only carries out political activities on Turkish soil, rather than plotting attacks against Israel.

After the governments in Israel and Turkey ratify the final agreement, the two sides will exchange ambassadors and unwind some economic sanctions. That will pave the way for greater security and intelligence cooperation.

For Turkey, reconciliation with Israel comes not just as the region is unraveling, but while Ankara’s ties to other once-close friends have frayed. Turkish relations with Russia went into a nosedive last year after Turkish jets shot down a Russian bomber that briefly crossed into its airspace. That chilled ties between the two, hammered Turkish tourism and trade, and put Turkish-Russian energy projects on ice.

On Monday, Turkish President Recep Tayyip Erdogan apologized to Russian President Vladimir Putin for shooting down the jet, and indicated that Ankara is ready to normalize relations with Russia.

For Israel, and especially for Netanyahu, healing the breach with Turkey has been a primary objective for years, but has gained urgency as the Syrian crisis continues to worsen. The prime minister spoke of Monday’s reconciliation as creating “islands of stability” around Israel; since Turkey shares a border with Syria, closer cooperation between Israel and Turkey could help minimize the fallout from the civil war and the terrorist petri dish it has created.

But for Netanyahu, restoring normal ties with Turkey could also bring an economic benefit: a potential new market for Israeli energy exports. Late last year, the Israeli prime minister pressed the case for exporting Israeli gas — rather than keeping it all for the domestic market — by touting the geopolitical benefits of energy exports. One of the prizes he flagged? Closer ties with Turkey.

On Monday, Netanyahu again emphasized Israel’s hoped-for role as a supplier of natural gas to neighbors around the region, including Turkey, as well as to countries in Europe.

The reconciliation, Netanyahu said in joint remarks with Kerry, “has also immense implications for the Israeli economy – and I use that word advisedly – immense implications for the Israeli economy, and I mean positive immense implications.”

The prime minister said that Israeli gas, especially at the large Leviathan field off the Israeli coast, could supply enough energy for domestic use as well as exports to Egypt, Turkey, and European countries desperate to find suppliers other than Russia.

Israel has already explored some deals to sell gas to neighbors like Egypt and Jordan. But there are technical and commercial obstacles to big gas deals with Turkey. Building a pipeline in the deep waters of the Mediterranean would likely be very expensive, as would building a terminal to ship gas by tanker. At the same time, the world is awash in natural gas right now, and Turkey has increasing options to meet its future energy needs, including piped gas from countries like Iran and Azerbaijan, as well as gas from the Middle East or the United States shipped by tanker.

At any event, Shaffer said that future gas deals between Israel and Turkey would underscore that peace, stability, and good relations are generally the precursors of the energy trade, not the result.

“It’s not that pipelines bring peace, but that peace brings pipelines,” she said.

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