No better, no worse

Elections only fortify Lebanon’s sectarian politics

by Sami Halabi

Phalange party supporters in Beirut celebrate the March 14 alliance's victory in Lebanon's June elections. (Matthew Cassel)

Lebanon’s elections last month confirmed yet again that in this tiny Mediterranean country, sectarian politics are paramount. Long gone from the collective consciousness are the lessons of the 15-year civil war that began as a political and class dispute and descended into sectarian enmity. Forgotten also are the post-war years that led up to the recent elections and were characterized by the ebb and flow of civil strife.

Many would argue that digging up the past, runs the risk of repeating it. But in Lebanon’s case, allowing the issues that propelled Lebanon into civil conflict to fester has not proved useful, either.

The Taif agreement, which effectively ended Lebanon’s civil war, stipulates that all of Lebanon’s civil war militias disband. Even though many of the country’s sectarian militias still hold onto some of their weapons, only Hizballah maintains a sizable military arsenal. Lebanon’s continuing occupation by Israel remains the main justification for Hizballah’s armed presence outside of the state’s apparatus. Hizballah’s arms are a particularly precarious issue that came to a head in May 2008 when Hizballah and its allies faced off with pro-government forces in the streets of Beirut.

It’s also no surprise that today many of those who take issue with the group’s weapons outside the state’s apparatus are members of sects that resent the growing political, economic and military power of the Shia in Lebanon. Much of this enmity towards Hizballah stems from the constituents of areas that have suffered considerably less from recent Israeli aggression against the country. This includes former supporters of the Phalange party, which was supported by Israel during the civil war, and openly backed Israel’s invasion in 1982 and the occupation of Lebanon’s south that ended in 2000.

Another dimension of the confessional mishmash is the sentiment among wide swaths of Lebanon’s Christian community that they are becoming demographically marginalized by an increasing population of Muslims, particularly the Shia and supporters of Hizballah. Since the last elections, held in 2005 on the heels of the assassination of Prime Minister Rafiq Hariri, different factions within the Christian political elite have chosen to deal with the issue by either allying themselves with the ballooning demographic reality of Lebanon’s Shia, or opposing it.

Michel Aoun — a former military commander and acting president — is supported by many Christians in Lebanon. Recently he sarcastically thanked US President Barack Obama for “likening the Maronite [Christian] protectorate in Lebanon to that of the pandas,” referring to the US president’s speech in Cairo. Aoun’s party, the Free Patriotic Movement, is part of the Hizballah-led parliamentary opposition. In turn, some have pointed to the schism within the Christian community as evidence that the political dynamics of Lebanon are beginning to overcome their sectarian deficiencies. The reality of the matter however is much less encouraging.

Aoun’s alliance with Hizballah is based solely on sectarian principles. At no point since he forged the alliance did he forgo the opportunity to remind anyone who would listen that he represented the “majority” of the Christian population, thus reinforcing the nature of the alliance as one between sects and not political partners. When I asked an MP in his coalition why he is allied with Hizballah when their platforms contradict on many points relating to reforms, he laughed and said that there are “no issue politics in Lebanon.” Even though Aoun’s party gained more seats than in the previous elections, mostly due to Lebanon’s archaic electoral law, that “majority” turned out to be nothing more than wishful thinking and selective analysis facilitated by Lebanon’s reluctance to conduct polling or a population census, for fear of upsetting the sectarian “balance” in the country.

Moreover, many of Aoun’s Christian supporters who were initially disenchanted with the party’s alliance with Hizballah opted to support the March 14 coalition, a loose allegiance of former warlords and business magnates who won the recent election in a landslide through monolithic clannish voting. Hizballah’s actions did not assist Aoun. Shortly before election day, Hassan Nasrallah, the head of Hizballah, made an inflammatory speech addressing the issue of last year’s 7 May events and called them “a glorious day.”

What was so glorious about Beirut being taken over by masked gunman from Hizballah and its allies? Or their pro-government rivals setting up ad hoc checkpoints, making sure that no “undesirables” with Shia first or last names entered their sectarian enclaves? Such a declaration defies the bounds of common sense. That is, unless you are of the camp that believes Hizballah never wanted to win the election in the first place. While that may seem illogical to most, it is a real possibility that Hizballah would rather not deal with a debt-ridden economy that currently holds a debt-to-gross domestic product ratio of 170 percent.

Instead, what is increasingly becoming evident is that Hizballah will be satisfied, at least for the time being, with “assurances” that any new government will not attempt to rid it of its military arsenal or infrastructure. Whether it was intentional or not, Hizballah certainly dampened the support for Aoun amongst Lebanon’s Christians, even if that support didn’t reach his purported “70 percent” in the first place.

For its part, Hizballah is as keen as any to embrace the sectarian realities of Lebanon for its own purposes. The Party of God completely overwhelmed its opponents in its strongholds of Lebanon’s southern and western regions with the practically uniform voting of the country’s Shia. What’s more, Hizballah continues to provide social services solely to its constituents, further cementing the dependence and loyalty of many in the Shia community on the party, not to mention adding fodder to its detractors’ “state within a state” argument.

Somewhere in the middle of all of this are Lebanon’s Sunnis. Although they never had a formidable militia of their own, Lebanon’s Sunnis do possess one discernible weapon that everyone in Lebanon recognizes very well — money. Propped up by Saudi petrodollars, the Sunnis have managed to “buy” their way into power. The Saudis — who have many interests in Lebanon, ranging from fighters sympathetic to their tutelage in the north to real estate investments all over Lebanon — put forward large amounts of money (estimates range from $400 million to $1 billion) in Lebanon’s recent elections to ensure that their piece of Lebanon’s sectarian pie would not be eaten up by anyone else. It proved to be a worthwhile investment for the kingdom as their local patrons, the Hariri family and its allies, won a decisive election victory. Saad Hariri, the son of the assassinated former prime minister and head of the party that holds the largest share of seats in the new parliament, has just become Lebanon’s prime minister-designate after only four years in politics and never having assumed a ministerial portfolio or having been involved in implementing any of Lebanon’s much-needed reforms.

As the sectarian wheels of Lebanon continue to turn, they pull along the ability of Lebanon’s political elite to rule through a perpetual hand-me-down system. Hereditary inheritance of political power occurs across party lines, especially in the new parliamentary majority. The ruling March 14 coalition now includes five sons of deceased politicians, one sister, one wife, one brother and one 26-year-old daughter, Nayla Tueni. Tueni, who has never held any occupation other than working at her father’s newspaper, An-Nahar, is against a minimum quota for women in parliament. Moreover, when asked what she was going to do about 28.5 percent of Lebanon’s population living below the poverty line, she requested to send me a response by email. In her response, which was a superficial one at best, she said she would focus her “efforts” on her electoral district — one of the most affluent districts in the entire country.

Who is to blame for this situation? Essentially, it is the people who continue to reinforce the system by electing the same representatives or their progeny time and time again. Yet, it is the people of Lebanon who suffer the most from the lack of basic services or a functioning state, not the “leaders” they continue to elect. The reluctance of most of Lebanon’s population to admit to themselves that the core issue hampering progress in their lives is not which tribal lord rules over them for the next four years, but an unwillingness to keep God, and the absolute truth that he embodies, out of government. This is what is keeping them and their country on the brink of disaster, and surely this new government will be no different.

First published in Electronic Intifada on July 7, 2009

Like oil and water

Hydrocarbon politics in the Eastern Mediterranean

by Sami Halabi

There’s an old saying in the oil industry: “Oil is like a wild animal. Whoever captures it has it.” The late American oil magnate, Jean Paul Getty, may have been talking about the oil and gas market of the 1950s, but his words continue to ring true. Ever since a joint US-Israeli exploration group headed by Texas-based Noble Energy discovered a large natural gas deposit at Tamar (90 kilometers off the coast of Haifa) in January, the proverbial animal has been officially let out of its cage in the Eastern Mediterranean.

Seismic survey vessels like this one, owned by Petroleum Geo-Services, have located vast hydrocarbon prospects in the Eastern Mediterranean

Analysts estimate reserves at Tamar of around 142 billion cubic meters (BCM), valued at around $3.6 billion, with a $1.5 billion extraction cost. The discovery has been heralded by Noble’s Chairman and Chief Executive Officer Charles Davidson as possibly “the largest discovery in the company’s history.” For a company like Noble that boasts assets of more than $12 billion, that’s no passing phrase.
A few months after the initial discovery, Noble found another deposit of gas at Dalit, 13 kilometers east of Tamar. That discovery is expected to yield reserves of around 14 BCM, or around 10 percent of the Tamar find. Noble declined to comment on the finds and Executive is legally forbidden to correspond with Noble’s Israeli partners.
The amount of gas present in the two fields could potentially serve Israel’s gas demand for a decade, or even longer.
“We are witnessing an historic moment in Israel’s energy market,” Israeli Infrastructure Minister Binyamin Ben Eliezer said at the time of the Tamar find.

Source: Noble Energy.
Noble Energy’s operations in Israel and Cyprus

A thorny relationship
At present Israel depends on Egyptian gas exports to run its power plants. The agreement for Egypt to supply Israel with a constant stream of gas comes under a clause of the Camp David accords, signed in 1979, and stipulates that the two parties will set a fixed price for each million thermal units (MMBTU), the standard unit of measurement for commercial gas exports, which corresponds to around 28 cubic meters of gas. The export of Egyptian gas to Israel has been the cause of much controversy in Egypt where anti-Israeli public sentiment is pervasive 30 years after the two countries’ leaders signed a peace treaty.
The issue of Egyptian gas exports to Israel remains a thorn in the side of both governments; politically for the Egyptians and in terms of energy planning for the Israelis. Hence, while energy independence for Israel would constitute a negative for Egypt’s current account, it could also translate into some much needed wiggle room for Egypt’s autocractic government.
“The opposition parties are always questioning the wisdom of supplying Israel with gas,” says Ibrahim Saif, resident scholar specializing in the political economy of the Middle East at the Carnegie Middle East Center. “Egypt is [always] trying to downplay that subject because there is a sentiment in Egypt that is against supplying Israel with gas.”

How much do they really have?
While Israel’s estimated gas reserves seem promising, they are still just that, estimates. The numbers currently available only indicate a ‘geological reserve’ based on seismic surveys conducted from above the seabed. The fields still have to undergo an appraisal phase to ascertain how large the ‘proven reserve’ is and exactly how much of the gas can actually be extracted.
“The initial discovery does not provide a clear picture as to the structure of the field. You need a year until it becomes a proven reserve and only part of it can be extracted,” said Ziad Arbahe, a Syrian energy consultant.
Arbahe explained that commonly only 30 to 40 percent of a geological reserve can be extracted. There have been rare cases where up to 50 percent has been extracted, but this usually requires that a company inject water into a field, increasing operational costs and often damaging the field itself.
“In general, when there is a find, countries and companies are optimistic about the amount. But when you start to produce… the initial estimation is usually much higher than the actual amount,” Arbahe adds.

On the Lebanese side…
The recent discoveries have “caused a flurry of interest in the Lebanese offshore area,” says Charles Harmer, executive vice president of multi-client services at Spectrum Geo, the company that previously performed preliminary seismic surveys for the Lebanese government between 2000 and 2007.
Fawaz Mourad, the regional representative of Petroleum Geo-Services (PGS), agrees. His company  and Spectrum Geo have both conducted seismic surveys in Lebanon’s offshore area, which is part of the “Levantine basin.”
The Levantine basin is the underwater geological structure that is located beneath the territorial waters of Lebanon, Israel, Cyprus and Syria. The basin itself has “similar structures and formations” in both Israeli and Lebanese waters which makes “offshore Lebanon even more interesting and more prospective,” says Mourad.
Lebanese oil and gas exploration began in the late 1960’s and early to mid-1970’s with the drilling of several wells across the country. Then, like many things in Lebanon at the time, exploration came to a grinding halt when Lebanon’s civil war began in 1975. After the war, Syria and Lebanon formed the “Committee of Cooperation between Lebanon and Syria for Oil Exploration in Lebanon,” which lasted until Syrian troops pulled out of Lebanon in 2005 after the assassination of the former Prime Minister Rafiq Hariri.
“The order from [current Syrian] president Assad’s father was to help Lebanon by all means possible, even for free, to get oil out of Lebanese ground,” says Ali Haidar, a former member of the committee and current petroleum studies professor in Beirut. “There were some favorable interpretations of this behavior on some Lebanese sides and on others there were unfavorable [interpretations].”
During the run-up to Lebanon’s parliamentary elections, Nabih Berri, the country’s speaker of parliament and member of the current opposition, stressed the importance of “encouraging the exploration of [oil and gas] prospects in all the Lebanese territories,” ostensibly referring to the continuation of onshore exploration.
However, little headway has been made in Lebanon since pre-war drilling, despite the fact that Lebanon is part of the same geological structure where proven gas deposits have been found in Syria “only 40 kilometers from the Lebanese border,” says Haidar. Today, Lebanon’s old wells still sit idle and efforts to resume exploration have been “postponed” according to a senior executive at Lebanon’s Ministry of Energy and Water.
Ghazi Youssef, a member of Lebanon’s new ruling parliamentary coalition who used to manage the oil and gas file as an advisor to former Prime Minister Rafiq Hariri in the earlier part of this decade, is nonetheless pessimistic about the prospects of oil and gas aground in Lebanon. He says that the issue of exploring these wells should be put on a “back burner” because “all the reports I have seen in the past do not really show the possibility of a major find [onshore]. It’s mostly tar and other residue but not hydrocarbons. Things point more to the offshore fields than they do onshore.”

Move to water
Indeed, since 2000 the focus of the Lebanese government and international oil and survey companies has been on offshore exploration. In 2002, the Lebanese government entered into an agreement with Spectrum Geo to perform a two-dimensional seismic survey off the coast of Lebanon to supplement a survey completed in 2000, which did not require government permission “because of the location and the fact that there was no previous work in the area,” says Harmer. Two-dimensional seismic surveys are used to identify breaks and possible traps in geological formations where there is a high possibility that oil or gas may be present.
The agreement gave Spectrum Geo the right to gather data off the Lebanese coast at its own cost and to later sell the data to prospective oil companies on a licensing basis. The Lebanese government would then receive a percentage of the license agreement and get a copy of the final data.
“We had to try to sell it as many times as we could to cover our costs and then make a profit on it,”says Harmer.
The agreement itself, however, ended in 2007, and the government says Spectrum Geo has requested another five year agreement with the Lebanese state.
In both 2006 and 2007, the government commissioned another Norwegian survey company, Petroleum Geo-Services (PGS), to perform three-dimensional seismic surveys off the coast of Lebanon. Three-dimensional studies subject geological formations to sets of waves which then ‘bounce back’ off these structures to provide a clearer view below a surface.
But several experts have questioned the manner in which the three-dimensional studies were conducted. “Normally when you have such a huge possibility… you do a lot more than this,” says Haidar. Harmer of Spectrum agrees. “It is very unusual to shoot a [three-dimensional seismic survey] like that. I still don’t understand why they have shot those.”
Mourad of PGS, however, insists that the data acquired was “comprehensive” and that “there is enough data to allow the companies to drill. They don’t need to do more 3-D surveys. So if a bid-round takes place over the areas which are covered by the 3-D survey, then the oil companies are able to drill immediately, thus saving a lot of time,” he says.
According to Sarkis Hlaiss, general manager and head of Lebanon’s gas and oil installations committee at the Ministry of Energy and Water, the main reason that a more extensive survey was not done is that the Lebanese government and PGS are currently performing another two-dimensional survey on Lebanon’s Exclusive Economic Zone (EEZ), which was only delimited — the process by which a country defines its borders — in May by a committee at the energy and water ministry. A source at the United Nations, who spoke on condition of anonymity, said that the issue of border demarcation between Lebanon and Israel has yet to be officially resolved by the UN and stressed that maritime borders would only be addressed once the border delimitation on the ground has been completed. PGS insists that the issue is inconsequential.
“Even if they haven’t officially delimited it, it doesn’t mean that it is disputed. There is no dispute,” said Mourad.
In any case, most experts agree that it is premature to consider the possibility of common resources before all the results of Lebanon’s seismic surveys are completed to ascertain if there are fields shared with Israel. The results of the survey are expected to become available within four to five months.
“By the end of September we will have the complete data in two-dimensions and three-dimensions from PGS,” says Hlaiss.
The new survey will employ seismic technology developed by PGS that enables seismic waves to overcome the distortions caused by layers of salt present across the Levantine Basin. The results of the survey will provide data that is much clearer and more useful to prospective oil companies and the Lebanese government, who can negotiate better if a bidding round ever materializes.

Dollars for data
According to Mourad, PGS has invested “tens of millions of dollars” to acquire data off the Lebanese coast. The company “hopes to recover its investment by selling the data” to oil companies looking to enter any Lebanese oil and gas market, once the government starts a bidding round and offers licenses to companies to start drilling offshore.

Visualization showing how seismic surveys allow geophysicists to see beneath the surface and map areas that are not visible

“PGS has not sold any data for the simple reason that companies, when they own data, need to know that they can do something with it, like participate in a bid round,” said Mourad.
But in order to open up a bidding round, Lebanon would need to have a law that dictates the terms and obligations of both the Lebanese government and prospective oil companies — something the Lebanese government has been dragging its feet on for decades.
“Until now we don’t have a law, it’s a disaster,” says Hlaiss. All the countries of the Eastern Mediterranean who have access to the Levantine Basin have legislation that apportions their maritime territory into blocs, ready for sale to prospective oil companies looking to explore their offshore prospects. Cyprus opened its first bidding session in 2007, as did Syria.
Fortunately for Lebanon, they have some friends in high places within the oil and gas industry. Since 2007 the Norwegian Agency for Development Co-operation (NORAD), as part of its ‘Oil for Development’ program, has been assisting the Lebanese energy ministry to draft a new law to the tune of “several million dollars to start putting legislation in place [and] actually start a bid round,” says one oil and gas industry executive who spoke on condition of anonymity.
Martin Yettervik, counselor at the Norwegian Embassy in Lebanon, says that the program is about institution building as opposed to drilling and is aimed at helping the Lebanese avoid the pitfalls of an energy dependent economy.
“For any country that is new to petroleum, it is important to take into account the economic effect of the petroleum economy, because it is different from other kinds of economic factors,” says Yettervik. “There are examples around the world where, when the petroleum economy dominates, it is to the detriment of the other fields in the country.”
Countries such as Nigeria and Iran have felt the pain of an economy overly dependent on petroleum resources. However the risk to Lebanon is not just economic. The potential for oil and gas revenues to play into Lebanon’s polarized and volatile sectarian political mixture is very real. One look at the electricity or telecommunications situation in the country and an ineffective or politically tainted oil and gas industry could be “another killer,” according to professor Haidar.
Nonetheless, Yettervik insists that the program has not become “a tool for one or another power factor in a country” and that “since the beginning we have seen a trans-political cooperation, even when the country was in the deepest of crisis,” referring to the 18-month political standoff that led to the May 2008 conflict in Lebanon.

Norway’s helping hand
The Oil for Development program is set to carry on until 2011, at the behest of the Lebanese government. In order to expedite the process of drafting the still non-existent law, the Norwegian government has contracted an international law firm to assist the energy ministry with setting up a bidding round and has trained several officials at the ministries of energy and water, and finance and environment. Both Spectrum Geo and PGS’s head offices are located in Norway, but Hlaiss insists that the Norwegian government “didn’t ask for anything in return.”
Yettervik admits that the program “gives the Lebanese authorities familiarity with the Norwegian system,” but insists that any collusion between the Norwegian government and its companies “would be contrary to the spirit of the program.”
The government has confirmed that the new law will allow Lebanon to alter the output of any firm that extract’s oil or gas, which, if done hastily, could damage any potential field and substantially reduce its long term productivity. Moreover, the law will oblige future oil companies to adhere to the Lebanese labor law, which compels them to hire a majority of Lebanese citizens if qualified persons are present in the country.
According to the energy ministry and the Norwegian embassy, the draft exploration law is all but completed. The text, which is still in English, is complete and is in the translation process. Once in the Lebanese Parliament, it will be subject to the scrutiny of the country’s conflicting political interests.
“We are trying to push [the law] through this government,” says one government official who spoke off the record. “If we don’t, and the minister [of energy and water] changes, it will take us another three months to explain to the new minister what we are doing and then who knows [how long it will take].”
MP Youssef expressed his coalition’s desire to depose the current minister, whose party is part of the opposition, but insists that it will not derail the process.
“We believe that when someone comes to power you don’t just take everything and throw it down the drain; there’s continuity. We have to deal with [the law] and try to finish it as soon as possible.”

Sharing with the enemy
Perhaps the most important point to consider in Lebanon’s energy saga may be that if Tamar, Dalit or another field is a common field between Lebanon and Israel then the latter is currently usurping Lebanon’s natural gas.
“Whoever starts before gets the resources because of drainage,” says Haidar, adding that the clock is now ticking down on the Lebanese government’s opportunity to tap this resource before the Israelis do.
Contested borders have always posed a problem in the Middle East, especially when it comes to hydrocarbon resources. The “neutral zone” between Saudi Arabia and Kuwait that was demarcated by the Anglo-Turkish convention in 1913 still exists today. It has been a source of ongoing disputes over maritime borders between Kuwait and Iran for some time, although Kuwait and Saudi Arabia have come to an agreement over how to share the resources present in the area. Lebanon and Israel however remain in a state of war, and Israel still occupies some of Lebanon’s territory. Hence the issue of sharing resources, if indeed they do exist, seems far-fetched at best; more likely, perhaps, is the prospect of further conflict between the countries over energy.
“This is not going to be an easy issue,” says Saif. “If Israel starts to pump and utilize [any common resource], it would be a source of contention and Lebanon will find itself forced to move and to block any Israeli unilateral move.”
Most experts agree that it is highly improbable that the recent finds at Tamar and Dalit constitute a common field because of the distance between the finds and the border area, but that does not preclude the possibility of it being one or that one could exist, given the commonalties between the Lebanese and Israeli areas of the Levantine Basin. Just to make sure Israel is aware of Lebanon’s territorial concerns, the  prime minister’s office has sent a letter to Noble demanding that the company does not encroach upon Lebanese maritime territory, according to a government source who spoke on condition of anonymity.
Even if Lebanon does manage to pass a law, starts the bidding process and brings in the oil companies in to begin drilling, the economic benefits will not be felt until much further down the line. The Tamar field is not expected to produce commercial quantities of gas until at least 2013. One energy consultant offered to bet this journalist $1,000 that commercial quantities would not be extracted before 2015. Moreover, any potential Lebanese field may take even longer enter production.
“In eight years, if we find something, we can actually open the lid and start making some money. Whoever wakes up first gets the money and the resources,” says Haidar.
If the Lebanese don’t wake up soon, they may well find themselves snoozing through yet another regional boom and lose the chance to revive their debt-ridden economy.

First published in Executive Magazine’s July 2009 issue