As the wheels slowly fell off yet another ‘national unity’ government last month, Lebanon’s political class apparently had enough time to re-hash some old ideas and present them as legislation. But of all the bad ideas that Lebanese politicians have come up with to preserve the “diversity” of the country, the most recent draft law proposed by Labor Minister Butros Harb is likely the most regressive and divisive.
Harb’s proposal to ban the sale of land between individuals from different religions for a period of 15 years is nothing new and stems back as far as the 1860s, when Lebanon’s first “civil war” erupted. But supposing that the minister has read the constitution, he would know all too well that his proposal contravenes the principles of equality among the Lebanese, the right to private property, a free economy, and the fact that “there is no segregation of the people on the basis of any type of belonging, and no fragmentation, partition, or colonization.”
Then again, government regularly makes a habit of ignoring the constitution, from its obligation to hold timely sessions of parliament to that of passing a national budget, so perhaps we should regard Harb’s proposal as par for the course. At a time when the issue of Christians in the Middle East is particularly loaded, Harb may have used the opportunity to promote himself as the torchbearer of age-old Christian paranoia over being engulfed by the wider Muslim, and in this case Shia, population.
One reason for the draft law stems from allegations that parties such as Hezbollah are behind real estate purchases in “Christian” areas. If that is the problem, however, Harb could have used his legislative ingenuity to propose measures to lift banking secrecy on the accounts of public officials and their relatives and increase the transparency of financial transactions by political parties. That, however, might not go over well with his colleagues in government, who use banking secrecy to circumvent campaign finance laws to help buy their way into office.
A more relevant move for Harb in his capacity as labor minister would be to propose a measure to stamp out sectarian discrimination in the workplace.
Unfortunately, it makes more political sense to stoke sectarian fears and claim to be defending your own than to stick your neck out and actually propose something that takes aim at the institution of Lebanese sectarianism. For starters, if the intention of any law is to protect a particular sect then it is by definition discriminatory and will only serve to increase divisions rather than do away with them. The idea that people from sects that did not traditionally reside in places like Keserwan or Batroun now want to buy property there should not be thought of as particularly grotesque, unless one truly believes that each sect should have its own ghetto and Lebanon is nothing more than a collection of Bantustans.
If Harb truly fears for his community, then he should have used his position as both a member of Parliament and a minister to dismantle the institution of sectarianism by insisting that the cabinet form the constitutionally mandated committee to abolish the practice in society, and that legal structures of a secular state are voted on by parliament. True to form, neither Harb nor any of his colleagues has yet been brave enough to seriously propose either, preferring instead to use such suggestions as a political bargaining tool, happy that they can collect their paychecks and kickbacks based, effectively, on their own sect.
The mantra of coexistence between sects cannot just be a pretty phrase that we blindly recite to foreigners before rejecting citizens from “our” areas because they pray on Friday or Sunday. The fact that the country is already staunchly segregated is not something to be proud of, nor a condition to be supported through legislation.
For all their faults, the Constitution and the Taif Accord lay out the framework that intends to eventually abolish the stain of sectarianism. The Lebanese, including Harb, should not forget that the people and their government are not bound by any other social contract. So the next time a minister or MP would like to propose legislation to protect their community from the “dominance” of other sects, they would do well to start with that in mind and leave the sectarian laws where they belong: as things of the past.
First published in Executive Magazine’s February 2011 issue.
Oil has been interchangeably called “black gold” and the “devil’s excrement,” having both enriched the coffers of nations and pit them at war; it creates the capital for investment yet often destroys the development of other sectors in an economy. It is perhaps fitting then, that Lebanese politicians have recently found renewed impetus to squabble with each other over how to pry open the lid of this cursed treasure under the sea floor off our shores.
Lebanon’s slick history
The idea is not novel to those who have been following it. Oil and gas prospectors have long suspected the presence of hydrocarbons in the country, and there was a time when Lebanon had a proficient energy production industry.
Before the outbreak of the 1975-1990 civil war, Lebanon used to refine oil in both Tripoli and Zahrani, supplied either by ship or overland via the old Trans-Arabian pipeline, which still runs from Qaisumah in Saudi Arabia to Zahrani. Supplies were then refined and even exported.
“We could regain our position as a major strategic transit country, like we used to be
before the 1970s, but we are not going to be Qatar or Saudi,” says Roudi Baroudi, independent energy consultant and Secretary General of the World Energy Council’s (WEC) Lebanon Member Committee.
Today, however, Lebanon’s oil and gas infrastructure lies in tatters, with the country unable to cover its own energy needs, much less regain its position as a strategic oil and gas nation. What’s more, in comparison to its neighbors, Lebanon is far behind in terms of its progress in oil and gas exploration and production.
“Our real problem is that we are very slow and we are late; everybody is ahead of us,” says Mohamad Kabbani, head of the Parliamentary Committee for Public Works, Transport, Energy and Water and a member of parliament (MP) allied with the former Prime Minister Saad Hariri.
Lebanon has already drilled seven onshore exploration wells and is currently considering options to perform surveys again. It was former Prime Minister Rafiq Hariri’s government that shifted the focus to exploring the offshore area in the early 2000s. Since then, a number of seismic surveys have taken place off the coast of the country, and the results have piqued the interests of international oil companies (IOCs). The latest was conducted by the Norwegian firm PGS, which has recently concluded a full two-dimensional survey of Lebanon’s Exclusive Economic Zone (EEZ) — an area 200 miles (370.4 nautical kilometers) from the borders of a nation in which it can legally extract natural resources as per the United Nations Convention on the Law of the Sea.
According to Cesar Abu Khalil, advisor to the caretaker Minister of Energy and Water (MoEW) Gebran Bassil, who is part of the opposition Free Patriotic Movement, Lebanon has two-dimensional seismic data covering 23,500 square kilometers and 3,500 kilometers of three-dimensional seismic data. It also has an operational ‘data room’ where survey results can be viewed and analyzed, which is an essential condition for launching a bidding round. The information costs seismic companies tens of millions of dollars to acquire, which they then hope to turn around and sell to oil companies, with revenue from the sale shared with the Lebanese government.
The Lebanese treasury has already benefited from its sale along with the companies that have performed the surveys. More than 10 IOCs and national oil companies (NOCs) have bought data from the ministry and they are asking for more, says Abu Khalil, who added that no single company had all the seismic data. Baroudi estimates that if the entire offshore area of the country were licensed out, each portion in which companies are licensed to operate would require an investment between $3 million and $6 million to perform 3-dimensional surveys.
However, it remains to be seen whether these data purchases indicate genuine interest or are just efforts to keep the libraries of various IOCs and NOCs up to date.
Lebanon’s offshore area is part of the Syrian Arc, a geological structure of the earth that runs from Tadmor in Syria to Egypt and contains similar geological structures throughout. Lebanon is also part of the Levantine Basin, another structure located mostly beneath the waters of Lebanon, Israel, Cyprus and Syria. The government-run United States Geological Survey estimates that the basin contains some 1.7 billion barrels of recoverable oil and 3.45 trillion cubic meters of recoverable gas. That becomes more significant when considered with the fact that the offshore Nile Delta region of Egypt has had an 85 percent exploration success rate, according to Baroudi.
But the more recent findings offshore of Haifa, straddling the Lebanese and Cypriot maritime border, are the ones that have raised the greatest interest of prospectors, and the greatest concern among Lebanese.
For all the promise the Lebanese offshore area holds, IOCs and NOCs have been loath in the past to seriously consider any foray into the country due to the absence of high-level regulation or legislation to protect potential investments. That changed last August when Lebanon’s parliament voted unanimously to pass legislation allowing for offshore exploration and production. The law had been lying dormant in parliament since the early part of last decade, unable to reach the floor due to a lack of political consensus and various conflicts among Lebanon’s political factions. At the behest of the Speaker of Parliament Nabih Berri — without whom no draft laws can come to the floor — the law was pushed through in a matter of days.
The reason for such haste was not only the backlog of legislation, but concern regarding activities south of the border. In January 2009, a joint United States-Israeli exploration group led by the US firm Noble Energy struck gold when they found a large natural gas deposit, dubbed Tamar, estimated at some 142 billion cubic meters (BCM) some 90 kilometers off the coast of Haifa and just south of the Lebanese border. A few months later the group made another find in the Dalit field, estimated to be about 10 percent the size of the Tamar find. Such monumental discoveries could turn Israel into an energy exporter, a prospect that whipped the usually sluggish Lebanese parliament into action.
But passing a law will hardly be sufficient to bring the country up to speed with the rest of the region, let alone make it an attractive destination for IOCs and NOCs to invest in exploration. For starters, Lebanon has not set its maritime borders with any of its neighbors. Back in 2007, Lebanon and Cyprus did agree on the delineation of their maritime borders, a necessary measure given the overlap of their EEZs. But the agreement is now stuck at the prime minister’s office, which has not sent it on to the Parliament to be ratified for fear of angering Turkey — which does not recognize the Cypriot government — according to Future Movement MP Kabbani.
Turkey is now a key mediator in efforts to resolve Lebanon’s political crisis after its cabinet collapsed last month. However, Lebanon not formalizing its borders with Cyprus means that royalties from any resources found in common fields — which the MoEW’s Abu Khalil suspects exist given the seismic data from companies that have operated in both countries — that extend to Lebanese and Cypriot waters cannot be divided between the two states as would be common practice according to the UN Law of the Sea, which both Lebanon and Cyprus have ratified. The prime minister’s office did not respond to Executive’s request for comment.
Cyprus is currently in the exploration phase after the success of its first bidding round and is expecting to contract areas that could contain common fields with Lebanon in the second half of this year, according to press reports. Cyprus has already awarded Noble Energy the rights to explore a 1,250-square-mile contract area bordering Israeli-claimed waters and formalized its borders with Israel in December of last year.
Syria — which already launched an unsuccessful exploration bidding round to attract interested companies and looks to be preparing for a second round this year — and Lebanon have not formally delineated their border, but Kabbani claims that “we can solve it with Syrians; it’s not a problem.”
But that is unlikely to assuage the fears of the IOCs and NOCs that will need to invest up to $250 million per block in design and development, with between $500 million and $600 million of foreign direct investment to actually build the infrastructure needed, according to the WEC’s Baroudi. Just in the exploration phase, he estimates companies will need to invest as much as $100 million, and a further $500 million individually or through joint ventures. Nonetheless, Baroudi believes that when all is said and done, Lebanon could bring in $3 billion per year in net earnings.
A regulator of sorts
Of course the revenues will have to be shared between the Lebanese government and the oil companies. According to the exploration law, each contract block will have to be bid on by a consortium of at least three companies under a production sharing agreement. Following a proposal by the energy minister, based on the opinion of “The Administrative Board for the Petroleum Sector,” the cabinet will decree the terms of the agreements for each block.
The administrative board itself will have to be appointed by the cabinet following a proposal by the minister. It will act as both regulator and consultant to the minister while also being under his purview. Kabbani explains that this structure was a focal point of the negotiation process to pass the law, whereby his party sought to water down the minister’s authority over the sector.
Having the board appointed by the Council of Ministers also implies that it will be subject to the sectarian trade-off of members, as are all administrative boards in Lebanon. That effectively means that if the sector is to be regulated according to best practices, and decisions are to be taken in a streamlined fashion, the cabinet, minister and board will all have to agree. At the time of this writing, there is no functioning cabinet, the backlog of decisions and appointments to be made numbers more than 300 and Lebanon is in the midst of a full-blown political crisis.
“The Council of Ministers does not study anything except if one minister gets a call from one of his supporters telling him something is wrong because there is an interest of one party or another; he goes in to defend his interests or his side’s interests,” says Kabbani. “The Council of Ministers is a bazaar, I am saying that and my boss is the prime minister; it’s a bazaar. Pass something for me so I pass something for you.”
Another contentious measure that has been postponed is the establishment of the country’s first sovereign wealth fund, intended to house the revenues of any hydrocarbon proceeds. Which political body would regulate the fund has proved to be a divisive issue, due to the fact that opposing political interests control bodies such as the finance ministry and the central bank (allied with the March 14 coalition) and the energy ministry (allied with the March 8 coalition). As a result, the law states that the details of how this fund will be structured are to be specified in another piece of legislation. “From now until we get our first oil and proceeds there is enough time for us to pass the law and manage the fund under it,” claims Abu Khalil.
Fortunately, Lebanon’s fractious politicians may have some time on their hands to resolve these matters. Before any bidding round is launched, the energy ministry will need to issue the bylaws. This process is being overseen by the minister’s advisors, who estimate that it will take another year before they are put in place. The decrees are related to exploration and they are “basically the priority,” says Danny Samaha, also an advisor to the (caretaker) energy minister.
According to the energy ministry, there are 28 pending decrees and 17 of them must be passed before the first licensing round can be launched. One of the most important decrees will draw the actual areas that foreign oil companies will eventually bid on. But when these are drawn by the ministry they will have to take into account the fact that the outer-lying areas of Lebanon’s EEZ have not been agreed upon, most notably not with Israel, with whom Lebanon is still officially at war.
Broader border problems
The past several months have seen particularly heated saber rattling over the maritime areas just south of Lebanon’s border. Both Israel and Lebanon have sworn to defend their interests, by force if necessary, with Hezbollah chipping in as well. At present the only non-official demarcation line that exists is a string of unofficial buoys off Ras Naqoura, planted by the Israelis upon withdrawing from the majority of the area they occupied in Lebanon up 2000. Last December, Israel’s infrastructure minister told Agence France Presse that their border demarcation with Cyprus “lays out the limit of the maritime border north of Israel and fixes the [sea] border with Lebanon.”
On Israel’s concessions map, a line across the northernmost area contracted to Noble Energy represents what is likely their interpretation of the border. However, if demarcation were to follow historical precedents, such as the military demarcation line between North and South Korea which, similar to lines of latitude, curves in relation to the shape of the earth, Lebanon may be entitled to a portion of the existing Israeli finds.
According to Kabbani, the Lebanese cabinet formed a committee last year headed by the Director General of Maritime Transport Abdel-Hafiz al-Qaisi to draw up the borders which were then sent the UN with the request to intercede to resolve the issue. The United Nations Force in Lebanon (UNIFIL), however, does not have the mandate to monitor or delineate the maritime border. “UNIFIL is concerned about a number of security incidents along the line of buoys since 2006,” reads a statement from UN Secretary General’s spokesman’s office. “Such incidents have the potential to escalate tension between the parties. UNIFIL has raised this issue in the tripartite forum [Israel, Lebanon and UNIFIL].” The office added that it was “unaware of the provenance of any such maps” relating to border demarcation between Israel and Lebanon.
According to the UN Convention on the Law of the Sea (UNCLS), disputes over territorial rights in EEZs should be resolved “on the basis of equity and in the light of all relative circumstances, taking into account the respective importance of the interests involved to the parties as well as to the international community as a whole.”
Such lofty language may look good on paper but it does little to resolve the border dispute between Lebanon and Israel, especially given that Israel has not signed the UNCLS or defined its land borders. The fear of many is that, without these borders defined, nothing will stop Israel from taking unilateral decisions to do as it pleases in the disputed areas.
Even if it does stay on “its side” of the border, Baroudi and Kabbani both fear that modern oil and gas techniques, such as the use of pressure to migrate gas inside a common field or using horizontal drilling to tap into fields from a distance of up to 11 kilometers, make the disputed area especially vulnerable, and Lebanon has no way to monitor whether or not this is happening.
Baroudi also cautions that, depending on how the borders are drawn, there may be an area in the Eastern Mediterranean that sees an overlap of interests from five different nations: Palestine (Gaza), Israel, Lebanon, Egypt and Cyprus. As far as Lebanon is concerned, there could theoretically already be a legal way out of negotiating directly with the Israelis over common fields. Article 38 of Lebanon’s exploration law mandates that for any joint fields across borders to be shared, it is the companies on either side who must come to an agreement, which then requires approval from the cabinet, energy minister and the board.
“This could happen with a friendly country like Cyprus or Syria,” says Abu Khalil. “But the issue of having joint operations between contractors in Lebanon and Israel is a very remote scenario.” Another option for Lebanon would be to begin issuing contract blocks that are not in disputed areas, as Cyprus did during their first bidding round in 2007. With everyone else ahead of Lebanon in the race for the spoils of the Eastern Mediterranean, one would imagine that the prospect of bringing billions of dollars into a country struggling to provide basic services to its citizens and with a debt one and a half times the size of its annual gross domestic product would be high on the agenda. But until there is a new cabinet, there is little hope that things will progress in Lebanon, while other countries in the region plow ahead.
“Regardless of ‘false witnesses,’ the people need water, electricity, healthcare,” says Baroudi. “Let bygones be bygones, let the tribunal continue [on its own], but let the country work.”
First published in Executive Magazine’s February 2011 issue.