Oil, guns, and gas: How Gulf money will fuel Israel’s arms industry

Israel and its new Arab allies are striking major deals to advance fossil fuel projects — endangering the region's stability and the global climate.

Prime Minister Benjamin Netanyahu meets with Base Commander Brigadier General Peleg Niago, during a visit to the Air Force base in Tel Nof to meet with foreign air force commanders, May 23, 2018. (Kobi Gideon/GPO)
Prime Minister Benjamin Netanyahu meets with Base Commander Brigadier General Peleg Niago, during a visit to the Air Force base in Tel Nof to meet with foreign air force commanders, May 23, 2018. (Kobi Gideon/GPO)

In the Israeli consciousness, 1973 will forever be tied to the trauma of the Yom Kippur War, when Israel struggled to turn the tide following a surprise attack by a coalition of Arab armies. Perhaps unsurprisingly, 1973 was also a key year in the history of the Israeli arms industry.

One of the lessons the Israeli security establishment took away from the war was the need to strengthen local arms manufacturing rather than relying on imports. The national investment in weapons manufacturing during the 1970s precipitated the industry’s growth into what it is today: one of Israel’s largest export industries, reaching over USD $7.2 billion in 2019.

The Yom Kippur War triggered another regional geopolitical crisis that had lasting economic consequences. As the war raged on, the Organization of Petroleum Exporting Countries (OPEC) declared a boycott against countries supporting Israel during the war.

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The resulting crisis led to a surge in global demand for oil and soaring prices, and OPEC’s income from oil exports sky-rocketed accordingly. From 1973 to ‘74, Saudi Arabia’s already-rising annual oil exports jumped from $4.9 billion to $19.4 billion. The Emirate of Abu Dhabi, Iran, and Iraq enjoyed similar boosts to their oil exports.

In 1974, a report published by the Stockholm International Peace Research Institute (SIPRI) presciently warned that this vast influx of cash might be spent on stockpiling weapons, “particularly [by] those [countries] in the Arabian/Persian Gulf.” The report further cautioned that this potential arms race could significantly destabilize the entire region as well as “the world balance of power.”

Israeli missile launchers during the 1973 Yom Kippur War (IDF via Wikimedia)
Israeli missile launchers during the 1973 Yom Kippur War (IDF via Wikimedia)

Alongside a dramatic increase in greenhouse gas emissions in Saudi Arabia during the 1970s, the region did indeed become increasingly militarized. The kingdom’s military expenditure increased tenfold from 1970 to 1980, starting at around $3 billion and ending up at $31 billion.

That increase did not necessarily reflect a change in Saudi Arabia’s priorities: the percentage of military expenditure on arms only grew from 9.4 to 12.6 percent during that period. Rather, the increased weapons expenditure came down to one thing: oil money.

A different threat

This year, nearly half a century after the Yom Kippur War, Israel signed normalization agreements with the United Arab Emirates and Bahrain, with all traces of the OPEC boycott seemingly gone. At the same time, the close relationship between the interests of the fossil fuel industry and those of regional military industries have only grown.

As the Israel-UAE normalization deal was being hammered out, Israeli Interior Ministry representatives, including from the export department, joined representatives from the Eilat Ashkelon Pipeline Company (EAPC) at the negotiation table. The final agreement declared that the countries would “advance and develop mutual cooperation in energy projects… that will help to promote and unlock the energy potential of the region.”

In September, Israel and Saudi Arabia announced a plan to build a pipeline between the two countries in order to export Saudi oil to Europe. In October, the EAPC signed a memorandum of understanding with the UAE to transport oil to Eilat’s port, and from there through the Eilat-Ashkelon pipeline to Europe. In both plans, going via Israel significantly reduces the cost of transporting the oil to Europe by avoiding Egypt’s Suez Canal.

Crown Prince of Saudi Arabia Mohammad bin Salman Al Saud meets with Russian President Vladimir Putin in the Kremlin, Moscow, June 14, 2018. (Russian Presidential Executive Office via Wikimedia)
Crown Prince of Saudi Arabia Mohammad bin Salman Al Saud meets with Russian President Vladimir Putin in the Kremlin, Moscow, June 14, 2018. (Russian Presidential Executive Office via Wikimedia)

The emphasis on decreasing costs, even as prices are relatively low, reflects a changing energy environment. Unlike in 1973, oil now has competition in the energy sector, along with other novel challenges. Citizens around the world are demanding a move to renewable green energy, and campaigns demanding divestment from fossil fuels are denting their profitability.

If 50 years ago countries could increase oil profits by using countries’ support of Israel as an excuse to restrict supply, today they need to cooperate with Israel to keep oil prices down and maintain sales against a different threat: the transition toward renewable energy.

A line to Europe

Until recently, Israel did not play a major role in the fossil fuel industry. But with the discovery of natural gas in the Mediterranean during the past decade, Israel became, for the first time, a fuel exporter. With new allies such as the UAE and Saudi Arabia, Israel’s gas exports are no longer restricted to Europe. Even as Israel is advancing the East-Med pipeline with Greece and Cyprus (with U.S. support), it is also moving forward with supplying Arab countries.

On this front, the EAPC is advancing a plan for a new gas pipeline to Eilat that can transport a quantity of gas equivalent to 85 percent of Israel’s entire usage in 2019. Not only does Eilat not need that amount of gas, but the city itself is increasingly moving toward green energy.

So why build a pipeline that can sustain almost an entire country to a city that doesn’t need it? One can only assume that in the future, it could be used to transport gas from the Mediterranean to Eilat, and then further south to the Arab peninsula and/or East Africa.

An Israeli submarine lands in the bay of Eilat for a maneuver of the Israeli Navy, after crossing the Suez Canal, July 5 2009. (Yehuda Ben Itah and Moshiko Azulay/Flash90)
An Israeli submarine lands in the bay of Eilat for a maneuver of the Israeli Navy, after crossing the Suez Canal, July 5 2009. (Yehuda Ben Itah and Moshiko Azulay/Flash90)

But in order for the gas to be transported onward from Eilat by sea, it would need to be liquefied. This would require infrastructure that could further jeopardize Eilat’s coral reef, which is already at risk due to climate change and rising sea temperatures.

Almost exactly a year ago, the EAPC was forced to pay NIS 100 million in damages for polluting a nature reservation in 2014, yet the company is already advancing a plan to increase the means and quantity of fuel it intends to transport. And it is doing so in Eilat — one of the most ecologically sensitive areas in the country, with a critical role in saving corals globally, and where local employment is at high risk due to its dependence on local nature reservations and associated tourism.

Profits over people

The state of the military-fuel complex in the Middle East, and Israel’s growing place in it, makes for a gloomy picture. Instead of being at the forefront of the move to green energy, Israel is playing a key role in advancing fossil fuels and ensuring they remain competitive.

The Israeli government could have based its rapprochement with other countries in the region on a movement toward peace and justice. Instead, the recent normalization agreements are directed toward strengthening ties with arms and fuel industries — both of which are harmful not only to the region, but also the wider world.

At a time when the climate crisis has put the future of humanity on the line, the state choosing profits over people is more harmful than ever. But these geopolitical processes also provide us, the people living here, with an opportunity to look at things differently.

We can see the destruction caused, for example, by oil leaks in the Red Sea not just as an Israeli, Saudi Arabian, or Egyptian problem, but as a problem for us all. Likewise, we can understand that carbon emissions leading to record-breaking temperatures in the Arava desert basin between Israel and Jordan — as well as in Abu Dhabi — is not just a national problem, but a regional one that requires a regional solution. And we can see how what we, as citizens of a small Middle Eastern country in a key location, choose to allow or not will affect the entire region.

We have a choice. We can stand against the construction of the new gas pipeline to Eilat, and against the transfer of more fuel through the city. And we can demand that we, the people of this region, will be our leaders’ top priority — not oil, guns, and gas.