Will the War in Ukraine be a Turning Point for the East Mediterranean?

Will the War in Ukraine be a Turning Point for the East Mediterranean?
(Dr. Basem Shabb, December 15, 2022)

Transcript available below

About the speaker

Dr. Basem Shabb served in the Lebanese Parliament from 2005 to 2018. During his tenure, he served on several committees addressing important challenges such as defense, economic policy, and human rights. He was also a member of the Parliamentary Network of the World Bank and International Monetary Fund as well as the Congressional US-Lebanon Friendship Caucus. He was a parliamentary representative at the EU-Lebanese security committee on illicit firearms, small arms and light weapons, and served as Lebanon’s representative at the International Institute for Justice and the Rule of Law.

Additionally, Dr. Shabb was part of the Lebanese parliamentary delegation that visited Norway to gather more information about oil and gas exploration and legislation. He is a surgeon and a clinical associate professor of surgery at the Lebanese American University. He is a founding member of the Euro-Asian Bridge Society of Cardiac Surgeons and as well as that of the Lebanese Association for Biosafety, Biosecurity, and Bioethics.



Robert R. Reilly:

Hello and welcome to the Westminster Institute. I am Robert Reilly, its director. Today, we are particularly delighted to welcome a guest from Lebanon, Dr. Basem Shabb, who served in the Lebanese Parliament from 2005 to 2018. During his tenure, he was a member of the defense and economics and human rights committees, addressing important challenges such as defense, economic policy, and human rights. He was also a member of the Parliamentary Network of the World Bank and International Monetary Fund as well as the Congressional US-Lebanon Friendship Caucus.

Additionally, Dr. Shabb was part of the Lebanese parliamentary delegation that visited Norway to gather more information about oil and gas exploration and legislation. He is a founding member of the Euro-Asian Bridge Society of Cardiac Surgeons as well as that of the Lebanese Association for Biosafety, Biosecurity, and Bioethics. He studied at the American University of Beirut, where he received an M.D. in 1982 with Distinction.

Today, he is joining me to discuss energy issues in the Eastern Mediterranean and Lebanon in the wake of the war in Ukraine, or to put the issue more provocatively: “Will the War in Ukraine be a Turning Point for the East Mediterranean?” Welcome, Dr. Shabb.

Dr. Basem Shabb:

Thank you. Thank you, Robert. Thank you very much. Thank you for the invitation. The war in Ukraine and Russia’s invasion of Ukraine are not in the top news here in Lebanon and other parts of the Middle East, but in fact the effects of the conflict in Ukraine have already affected the Middle East in energy and in politics. And the energy sector in particular has had a major reflection, an inflection point, if you wish, and I was very much taken by the title of Chancellor [Olaf] Scholz’s piece in Foreign Affairs in that it is a global point of inflection. And indeed, it is a point of inflection for the Levant, especially on the issue of gas.

Before the War in Ukraine

Prior to the war in Ukraine, it was well known that the Eastern Mediterranean had considerable quantities of hydrocarbons and gas, and we know that gas was discovered in Israel more than 10 years ago, Egypt six years ago. The problem with gas in the Mediterranean was that it was too expensive, it was [in] deep waters, and there was no way to export the gas. There were no pipes. The only pipe available was the Arab Pipeline that goes from Israel to Egypt to Jordan and Syria, and that was mainly affected by security issues, and so the prospects of gas from the East Med finding a market at a reasonable price were very, very low, and so therefore there was no interest.

And we have noted that the Israelis, who discovered gas more than 10 years ago, had difficulty exporting their gas. Their two main customers until now, until the war in Ukraine, have been Egypt and Jordan. Cyprus, which also discovered gas almost 10 years ago, found it uneconomical to produce. The only way to export gas had been through two plants in Egypt, two liquefication plants, and when that was taken into consideration, that gas was in no way competitive with cheap liquefied natural gas from Qatar, not to mention piped gas from Russia to other parts of Europe.

East Med Gas Forum

The interest in the East Mediterranean began, to be fair, before the war in Ukraine, as if it was anticipating an event of sorts. Three years ago, there was a consortium that met in Cairo and ended with the conclusion of the so-called East Med Energy Forum. Unfortunately, this forum did not include Lebanon. Lebanon was invited, but because Lebanon was in a state of war with Israel, Lebanon decided not to attend.

There was this conviction among the governments and companies that the only way that gas would be profitable to export would be through cooperation in the Eastern Mediterranean, and because of Israel being a member of the East Mediterranean Energy Consortium, Lebanon was kept out, so in Lebanon we have had a hiatus, a wasted time of at least 15 years in terms of getting contracts and drilling.

Geopolitical Factors

Also, geopolitical issues were a major factor. For example, when Lebanon put its blocks out on the market, we had only one offer, one reasonable offer, actually, from Total, Eni, and Novatek, a Russian company. And when the other blocks were put on the market, there were no offerings, so geopolitical risk in the Mediterranean was also a major issue at least for Lebanon.

And then, Russia invaded Ukraine and the price of gas went up, and the gas that was not very profitable suddenly became profitable. Pipe gas became a liability both to the producer and to the customer, and there was the rise of liquefied natural gas, which gave some sense of freedom to the producer and to the consumer.

Of note is that Amos Hochstein of the State Department was a big champion of liquefied natural gas, and we saw that in the proposition to build a gas pipeline from Israel to Cyprus to Greece, and it was deemed too expensive. And given the geopolitical changes, now the shift is definitely towards liquefied natural gas, and so there was a new opportunity that the East Mediterranean gas, especially from Israel, which was expensive to liquefy and sell, became reasonable and also a necessity for Europe.

And so in June, Ursula von der Leyen came to Egypt and signed a major agreement with Egypt and Israel whereby Israeli gas would be liquefied in Egypt and sold to Europe. This was a milestone in that security basically takes precedence to cost, and it is debatable how much gas the Mediterranean would compensate for the Russian gas, but it it became a commodity that needs to be looked into, and Europe has shown interest in East Med gas.

What followed was also very important, that East Med gas had geopolitical risks, namely the presence of Hezbollah in Lebanon. And Hezbollah in Lebanon after the war in Ukraine was no longer a regional power, it was an arm of Iran, which was now involved totally in the war in Europe, so Hezbollah in Lebanon was basically an extension of Iran and an extension of Russia, and so that issue needed to be dealt with.

Lebanon and Israel’s Maritime Dispute

And we saw, suddenly, an American interest in settling the maritime border dispute between Lebanon and Israel. This was attempted many years ago, going back to Fred Hoff twelve years ago, and the parties were not very interested, and the U.S. was not pushing. But now, the U.S. came with a very heavy hand and basically it forced both parties, Lebanon and Israel, to concede to an agreement that basically neutralizes Hezbollah in Lebanon.

The agreement on paper gives Lebanon the right to make use of the gas that may or may not be in the Qana field, but it also guarantees security for the state of Israel, so in this exchange of gas for security, the Israelis for sure got security and started producing gas from the Karish field, but for the Lebanese, the prospects of gas are still very remote.

Another interesting thing that we noticed before the war in Ukraine was a bill that was championed in the Senate by, I think, Senator Marco Rubio, the East Med Energy Bill, in which the U.S. guarantees and supports the energy in the Eastern Mediterranean by supporting Israel, Cyprus, and Greece, as if there was something in the air that this gas supply from Russia or from other places was not to be taken for granted.

The UAE and Israel

Also of interest about the same time was the involvement of the UAE in Israel. And a little bit more than a year ago, the UAE bought 22 percent of the Tamar field in Israel, and so the UAE became a direct partner in Israeli gas, which is something very interesting because there was an attempt to have the UAE become a part of the East Med Energy Consortium, but it was vetoed by the Palestinian delegation, apparently. So the UAE became interested in Mediterranean gas.

Qatar and Lebanon

And also of interest is Qatar, the largest producer of liquefied natural gas in the world, probably now after the United States, but a major exporter. [It] became interested in gas in Lebanon. And after the maritime deal with Israel, it showed interest in acquiring the 20 percent share of the Consortium that was owned by Novatek, the Russian company which could no longer operate in Lebanon.

So we have had American interests suddenly put pressure on both parties to have a maritime deal that would mitigate the geopolitical risk. We have had the UAE get interested in Israeli gas. We have had Qatar showing interest in Lebanese gas. And of note, Qatar has become now a major player in the presidential impasse that we have in Lebanon.

Qatar and the United States are Closer Allies

Qatar has emerged as a closer ally of the United States because of the war in Ukraine. Qatar and Jordan have taken sides with the United States and Europe, and so when one looks at Qatari interest in Lebanon, one cannot but think of the U.S. acting indirectly in Lebanon, and the most obvious example is when the United States wanted to support the Lebanese Army in Lebanon with cash, which the U.S. cannot do, they resorted to Qatar, which Qatar is doing.

So we have this interest in gas which also spilled over to Turkey, and there is a hypothesis at least that the issue of gas was one of the main reasons that Turkish-Israeli regulations got better, and in President Hertzog’s visit to Ankara, it was said that gas was one of the main issues that were discussed.

So gas in the Eastern Mediterranean, which was not very economical and did not interest many parties, is now a hot issue and in many ways, it has accelerated improving diplomatic relations, whether between Israel and Egypt, or Israel and Jordan, or Israel and the UAE, in addition to the Abraham Accords, and with Turkey.

Will Lebanon Benefit?

How much in Lebanon are we going to benefit from this tailwind? I am not sure.

Total said it is going to start preparing for exploration maybe sometime in early spring, but we know that will take time. And we know from Israel, and from Cyprus, and from Egypt that the time between exploring for gas and actually making use of it and turning a profit is in years, not less than six or seven years, so Lebanon, which was hoping that gas would get it out of its economic misery through this maritime deal, this hope may be over overestimated. It may be overestimated.

Russia in Syria

In Syria, the Russians have taken a contract over gas exploration in Syria, but we have not seen any evidence that the Russians are interested or will do anything in Syria. One issue that arose is if a pipeline from Israel to Turkey goes beyond the 12-mile maritime sovereignty border, whether it needs approval or not. We are not sure, but the distance between Turkey and Israel is very short, actually, compared to the pipeline that would go from Israel to Cyprus to Greece. So if more gas is discovered in Israel and it has been [found] in north Israel, the prospect of some cooperation with Turkey is not far-fetched.

How Could Lebanon Export Gas?

Now, the problem for Lebanon if we do discover gas [is] how do we export that gas? We have to hook up to some channel, and because of the political situation, we cannot hook up to this East Med network. That is also another hurdle that awaits Lebanese gas if we do find gas in economically profitable quantities.

Lebanon in the past was very much involved with oil. In fact, between 1967 and 1975, there was a pipeline from Saudi Arabia that went through the Golan Heights and Lebanon, and was a major source of oil, Saudi oil exports to the West when the Suez Canal was closed, so Lebanon actually generated lots of revenue from Saudi oil being transferred through Lebanese territories. After 1975 when the Suez Canal opened, the line was cut off.

Another pipeline that we had was from Kirkuk through Iraq [and] Syria that bifurcated at the end to Baniyas in Syria and Tripoli in Lebanon. And so, I think if there is a new mood and perhaps an extension of the Abrahamic Accords, and if it is politically possible, Lebanon can still play a role as a conduit of energy, especially between Saudi Arabia and the West. The pipeline is there, and it is relatively well preserved, so I think we do have some potential.

Geopolitical Isolation Costs Lebanon Electricity and Gas

But the main risk for Lebanon, really, is geopolitical. You know, we have hardly any electricity in Lebanon. We get an average of one hour a day. And there was an attempt by the United States about a year and a half ago, upon a move by Jordan to open up economically to Syria, for Lebanon to get Egyptian gas through the Arab pipeline from Egypt to Jordan, to Syria, to Lebanon, and to get electricity from Jordan.

But now that Syria is an ally of Russia, and Russia is at war with Europe, it has become politically impossible to have gas and electricity come to Lebanon from Egypt and from Jordan. So again, geopolitical risk trumps all other economic benefits and Lebanon is not going to see any gas, neither from Egypt nor electricity from Jordan.

Lebanon’s political isolation, in fact, I think is a detriment, and Lebanon has to think like it is an island, whereby we have to ensure our supply of everything. But in fact, if we do think a little bit outside the box, then Lebanon can have lots of options.

You know that Turkey has an excess of power generation, and the shoreline between Lebanon and Turkey is hardly 130 miles. It is possible that if the relations improve, that Turkey can give us a cable through the Mediterranean and provide electricity at much lower cost than producing electricity in Lebanon.

Lebanon potentially has excess water, which it can share with its neighbors, so I think there was a turning point with the war in Ukraine, but I am not sure that Lebanon is going to be part of this new movement or new trend. I think the economic benefits are going to be reaped by other nations in the Mediterranean, specifically those in the Eastern Med Gas Forum that Egypt now leads. Lebanon, unfortunately, has been left out. And the fact that Lebanon is under Iranian influence through Hezbollah, also is a negative factor.


So far, after three years we have not had any bids on the other blocks that are out on the market, so I think we have a lot of things to do in Lebanon to improve the situation to make Lebanon more attractive, but unless, one way or the other, we become part of the East Med Gas Forum, which is led by Egypt, it is going to be very difficult for Lebanon to make use of its natural resources even if they prove to be available. We will have problems liquefying the gas, we will have problems marketing the gas.

And I do not want to sound too pessimistic, but change may come, and I think should the Abrahamic Accords extend to Saudi Arabia, and Oman, possibly, and should there be a change in the area after the uprisings in Iran (ifs but they may come true), they may realize. And I think in that case, our chances in Lebanon of exploiting our natural resources and integrating into the area would be much, much greater.

Political Stability in Egypt and Lebanon

Robert R. Reilly:

Well, you mentioned Egypt a number of times. Isn’t it the most successful Middle Eastern country aside from Israel in meeting its domestic gas needs through its own production, in fact, to the point now that it is in a position to also export natural gas, which it is doing? Perhaps it is the political stability that Al Sisi has given Egypt that has allowed for this kind of development.

Short of political stability in Lebanon, and you mentioned the complicating factor of Hezbollah, and today you still do not have a president, or you have an acting president, is there any prospect for political stability in Lebanon developing to the point where investors would have the confidence to bid on those gas fields?

Dr. Basem Shabb:

Regarding Egypt – Egypt, I think, has been one of the quickest countries to make use of the gas discovery in the Zohr field. I think it took them only three to four years for the gas to be made use of domestically, and Egypt needs that gas domestically, but there is no doubt that the stability in Egypt has attracted major players, namely Eni, the Italian company, to go full speed ahead in Egypt. There is no doubt that geopolitical stability is a major factor for these big companies that are not willing to risk capital in areas where risk is abundant, to say the least.

Lebanon Must Reform

There is no doubt that the maritime agreement between Lebanon and Israel has mitigated geopolitical risks to a large extent, but we still have lots to do domestically, what Lebanon needs to do in terms of fighting corruption, passing legislation so we can get aid from the IMF and the World Bank, so we can resuscitate our banking sector. A lot of things have not been done, and the international community has been disappointed with the slow pace of reform.

Reform in Lebanon has been very, very slow and it has been hampered by a complicated political process, and this complication is partly because the elections in Lebanon produced a stalemate in parliament with no clear majority that can produce a president. And we have had that in the past and we have gone for almost two years without electing a president.

The last time around it was the JCPOA and the Iranian American agreement that facilitated an Iranian American agreement in Lebanon that produced the president, or ex-president, who was an ally of Hezbollah effectively. He is an ally of Hezbollah, and his election was the result of some external agreement, and so the Lebanese now are in this domestic stalemate, waiting for some international agreement to facilitate the process. But until then, we do not have a president, we have a government that is a caretaker government, and I think that is not a good recipe to attract international companies that want to invest in Lebanon.

Hezbollah’s Role in Lebanese-Israel Negotiations

Robert R. Reilly:

What do you make of the turn of events when Hezbollah was threatening to attack Israeli exploration or gas producing facilities in the Eastern Mediterranean if they began to produce short of this line of agreement but then supported the agreement when it was reached? What do you think of Hezbollah’s role in that? Why did it find it in its interest to agree to the agreement, to support the agreement?

Dr. Basem Shabb:

Hezbollah there is no doubt was a partner in the negotiations. The main negotiating partner was Hezbollah. There is no doubt that the agreement was done with the agreement of Hezbollah. Why would Hezbollah want this agreement? One has to look further than Hezbollah to Iran. Iran leaves a lot of domestic issues to Hezbollah, but when it comes to issues relating to the regional area, then it is Iran that makes those decisions, and so Iran felt it was a good time to have this agreement.

A Quid Pro Quo in Iraq?

And it is of interest that a few days later, [Mustafa] Al-Kadhimi was removed in Iraq and was replaced by a prime minister who is pro-Iranian. And I will tell you that people here were saying it was a quid pro quo, that Iran gave up something in Lebanon and picked up something else in Iraq. And besides, Hezbollah needs something domestically to show that it wants to create a regional calm that is conducive to making use of Lebanese gas. And at that point in time, they had no interest in continuing this confrontation with Israel, but there is no doubt that this agreement was done with the approval of Hezbollah.

Robert R. Reilly:

Even though the agreement is interpreted by some as a tacit recognition by Lebanon of Israel?

Dr. Basem Shabb:

It is it is not a tacit recognition; it is an open recognition. 27 times in the document, the state of Israel is mentioned as the State of Israel, not the Zionist entity or whatever Hezbollah calls it. And it was a little embarrassing, I think, for Hassan Nasrallah, so much so that he had to come up and explain to his followers, how come there is no recognition of Israel when Israel was mentioned 27 times in the agreement?

Everybody knows that, that this is an agreement with Israel, and a lot of people think it produced some normalization. It may not go a long way, but it is the beginning of normalization of relations, whereby even Hezbollah deals with Israel as a state, which was something new to Hezbollah, so there is something there, but more importantly, the border issue was resolved.

The agreement stipulates that the border issue would not be an area of contention at any time, and if it is, then it would be the United States who would resolve that issue, and not any other agency. The agreement is far from being a normalization with Israel, but to have a border delineated between Lebanon and Israel is something very, very important.

Could Europe Reconcile with Russia After the War?

Robert R. Reilly:

Dr. Shabb, you have indicated right up at the top that this renewed interest in Eastern Mediterranean gas was occasioned by a geopolitical factor that was the war in Ukraine, and of course, Europe losing its major gas supplier, cheap gas from Russia which runs its industries and heats its homes, so now with the effective gas shutoff, the destruction of three of the four Nord Stream pipelines, there seems to be a political determination in Europe to leave its dependency on Russia behind it.

But what happens when peace comes in the Ukraine war, and particularly what happens if there is a – well, not necessarily a regime-change in Russia, but if there is a change of the head of state and Putin goes, might Europe then find the excuse to get back in bed with its major gas supplier in Russia, and therefore that would deflate the geopolitical interest in that Eastern Mediterranean gas? Is that a danger?

Dr. Basem Shabb:

I do not think so. I think Russia has lost Europe as a customer, and I think many others are moving in quickly to fill the space, starting with Azerbaijan and other countries. But I think the trend in moving to liquefied natural gas is not reversible. I think the world has moved on to gas and even to liquefied natural gas, so much so that the Chinese were buying cheap Russian gas, liquefying it, and selling it back to Europe. So I think the world has moved on past gas and pipelines. The world has moved on to liquefied natural gas, and that is not reversible.

Getting on the LNG Bandwagon

I do not think the world is going to go back. Russia knows that, and they have a plant in Yamal. They have a big liquefied natural gas plant in the north, and they are accelerating it so they can get on the bandwagon. But in this bandwagon, you have the United States, Qatar, Australia, and Malaysia, the top four. And effectively, America controls the liquefied natural gas market of the world, which leaves Russia now in a very secondary role.

And this change to liquefied natural gas away from oil has also had its impact on the Middle East. Saudi Arabia, which was the main energy producer, and with the relations with the U.S. not doing that well, has now become maybe number two on the block. Number one is Qatar. Qatar, Jordan, Morocco, and Tunisia supported the U.S. in Ukraine, and recently we saw that Qatar provided or committed to provide natural gas to Europe, to Germany, and others. And these are long-term contracts, and it is going to be very difficult for the Russians to come back in with short-term contracts.

The Aftermath of the War is the Decline of Russia

I think the aftermath of the war in Ukraine on Russia when peace comes, whenever it comes, is going to be even worse than it is today, and we are beginning to see the price of oil coming down. We are seeing the price of gas coming down. Russia will have to sell its hydrocarbons in smaller quantities at huge discounts to fewer customers.

And the liquefied natural gas has changed the political balance in many areas. Egypt has become a very important strategic hub for the United States. Qatar, which was playing second fiddle to Saudi Arabia, now is really acting like a world power in energy, and we see this in Lebanon, actually, how the Qataris are being very active in Lebanese politics, and in a way taking the place of Saudi Arabia.

So I think the aftermath of the war in Ukraine is going to be apparent long after peace settles in Europe, but the most important thing maybe is the decline of Russia. With Russia losing in Ukraine, what is going to happen to the Russians in the Middle East, in Syria? Syria was the main reason that Russia entered the world stage as a superpower. And after Russia exits the world stage as a superpower in Ukraine, what is going to happen to Russia in Syria? Will Bashar al-Assad look for other sponsors after the Russians cannot support them with money or fuel?

We know that the economic situation in Lebanon is bad, but it is far worse in Syria, far worse in terms of energy costs, food, you name it, and so can Russia keep its grip on Syria like it did before? We saw the Turks dealing with Russia in a different manner. The Turks are behaving with the Russians in a more arrogant manner, if you wish. We have seen the Armenians refusing to sign a common communique with the Russians. We have seen Kazakhstan refusing to maintain Russian aircraft or refuel Russian aircraft. So I think the downhill course of Russia is going to continue after the war ends in Ukraine, and we may see a shift here. We may see a shift here.

Syria-Iranian Relations After the Russia-Ukraine War

Robert R. Reilly:

Won’t Syria always have Iran?

Dr. Basem Shabb:

Well, Iran was hoping for the JCPOA that would open up two or three million barrels of oil a day, and that has not happened. And Iran is selling oil at a discount, and now Iran is selling oil to India and China and finds that the Russians are competing with it for its customers. And you have the turmoil, the revolution, if you wish, in Iran is starting to have some effect. There was this basiji officer meeting with university students in Iran, and one of them said we are having a hell of a time and how come you are sending free fuel and oil to Lebanon?

And the basiji officer said no, we are not, we are going to sell it to them. And so, the idea that Iran could become overextended with this economic situation and internal turmoil is also questionable, and so I think we are truly at a turning point. We are truly at a turning point not only in energy, but also in politics.

And now that you mention it, who wants to buy Russian weapons? The Egyptians gave up on the Sukhoi Su-35s. Even the Algerians gave up on the Sukhoi Su-35s, which the Russians gave to the Iranians in exchange for these suicide drones, so Russia lost its arms market, and Russia is not going to do well with its energy market. And are these things going to affect us in the Middle East? Yes, I think they will.

Robert R. Reilly:

Well, some say that Russia has not suffered in the oil market and that it has done actually rather well in selling its oil. And oil is, I believe, a far more fungible commodity than is natural gas. Would you agree with that?

Dr. Basem Shabb:

I think the numbers are correct, but the numbers were based on when oil was up to a hundred dollars, and oil is now much lower than that. And it is said that the Russians are selling their oil at a discount, and so I think the Russians are going to have a hard time selling their oil, and they are going to have a hard time getting much out of it. I think already there are indications that in the last quarter, Russian oil exports have maybe come down a little bit, and the revenue has come down, so I am not so sure that the Russians are going to continue to do economically well. But also, they lost their arms market. You know, the second source of income for Russia after oil is the arms industry, and I think they have lost that. They have lost that.

India’s Relationship with Russia

Robert R. Reilly:

Well, as you know India was for many, many years one of the biggest purchasers of Russian arms. I do not know whether that has changed as it has increased its purchase of Russian oil.

Dr. Basem Shabb:

India has been moving slowly towards the United States. You know that India has bought the P-8, the maritime patrol aircraft. They have bought the helicopters. They are thinking of buying the F-18 for their new aircraft carrier, and the Indians are worried that Russia, now being weak, cannot act as a buffer vis-à-vis China. Should India have a conflict with China, the Russians are not going to be neutral. They are too weak to be neutral.

And I think if you look at the relations between India and Taiwan, they see that these relations are warming up, and so I do not think you can put India vis-à-vis Russia in the place that it was several years ago. India is moving away, and I think India, seeing Russia weakened by this war, knows that China has the upper hand and the final say in this relationship, historic relationship between India and Russia, may be not as strong as it used to be.

Robert R. Reilly:

Regardless, it does seem that Russia has been able to still move its oil, even if it – well, perhaps at a discount. But it is harder to imagine how it is going to replace Europe as a major gas consumer because I do not believe it has sufficient pipeline access to China to move natural gas in those quantities. Really, there is no way for Russia to make that up.

Concomitantly, it seems very hard for Europe to make up the shortage it now suffers in Russia gas. You mentioned Qatar, the long-term Qatari agreement, but that is just a tiny percentage of the gas Europe used to get from Russia. There will need to be far more supplies, and people say that Europe, Germany, is going hell-bent in its development for renewable energy in order that fossil fuels will diminish in its future. I do not know how quickly that could happen. I think people may be a little overly optimistic about it, but it is still curious.

Germany, as you know, did fill its gas storage tanks for this winter. Many people are worried about next winter even though the price of natural gas has come down. China is opening up again because it changed its COVID policy, so its demand for resources is going to rise. So that exactly explains the phenomenon you have been describing of this increased interest in Eastern Mediterranean gas, whether it is Egyptian, Israeli, or Cypriot. It is the pace of development, the future of geopolitical stability in the area, and the amount that the exploration and development corporations would be willing to invest to develop it. And then comes the big question of how to move it.

Now, you mentioned LNG, which is expensive and an open market in which prices could fluctuate fairly wildly, so some kind of price stability also would seem to be required for the kind of long-term investment that the development of those gas fields [requires], plus the pipelines or the LNG facilities for them to be creative to do this, so what kind of timeline would we be looking at there?

The Timeline for LNG

Dr. Basem Shabb:

It seems the timeline is being very much compressed, that Germany has finished an LNG terminal in record time, and I think they have several more that are going to come on board in the next few months.

The U.S. has moved to become really the number one LNG exporter in the world. And to think that one of the main companies, one of the companies, Cheniere [Energy], for example, which many years ago was a company to receive LNG, is now an exporter of LNG. The war has made the U.S. a superpower in LNG, and if there were enough terminals in Europe, there is enough LNG to support Europe. The rate limiting – I am not an expert in the technical issues, but the rate limiting step is the LNG ports to receive these shipments.

And also, there is an accelerated move for renewables and nuclear power. I think there is going to be a discussion on nuclear power. Germany has kept the three nuclear power plants open, so will Europe do well this winter? Yes. This idea that the Russians would weaponize energy against Europe and against the trans-Atlantic alliance is going to fail and it has failed. Is Europe looking for other venues? Yes, the East Mediterranean is one of them. It is a small source compared to the U.S. and Qatar.

Qatar’s customers usually were in Asia, not in Europe, and so this is a new field for Qatar. Qatar just decided on a plan to boost their production by about 70 to 80 percent, and so Qatar is trying to keep up with demand in a short period of time and develop whatever fields it has at an alarming rate, actually. So I think the view is positive, not negative, that the suppliers would have in a compressed time accommodate the market.

Qatar’s Relationships with the Arab World

Robert R. Reilly:

Do you believe that it is the energy issue and the liquefied natural gas issue that may have changed the attitude toward Qatar, along with the World Cup maybe, when just a short time ago there was the attempt to cut Qatar off with relations with Saudi Arabia, Egypt, and so forth, a diplomatic embargo which has now pretty much dissipated, mainly because of Qatari support of radical Islam and its support for the forces of radical Islam.

And I mean, I remember so well when I was in the Middle East in 2003, watching Al Jazeera as it reported on Iraq. It was a highly destabilizing influence, and it has been characterized as the Muslim Brotherhood television station. And that as you know is supported by the ruler of Qatar.

Dr. Basem Shabb:

It is true. There is a change towards the Muslim Brotherhood in the Middle East, and even Turkey has distanced itself from the Muslim Brotherhood, which allowed for rapprochement with Egypt and allowed for rapprochement with other countries, so there is a change, and that change is also in Qatar to some extent.

But I think what puts Qatar aside, Qatar and Jordan in particular, in that in the war in Ukraine, they were not on the fence. Qatar and Jordan stood by the United States and Europe, Jordan sending ammunition, whatever it could, and Qatar supplying gas where it was needed, and even Al Jazeera. You mentioned Al Jazeera.

Al Jazeera has quite a bit of coverage on the Ukraine war, and it is biased towards Ukraine, whereas the UAE is voting in the UN Security Council, and the Saudi Arabians with their neutral policy with Russia, cutting production, and the Chinese summit has put Qatar on a different scale vis-à-vis the United States and the West. And so yes, they have supported radical Islam, but in the war that is facing Europe and the West, Qatar stood on the right side of history, if you wish.

The Role of Turkey

Robert R. Reilly:

Can we talk a little more about the role of Turkey here? Turkey will not recognize the Exclusive Economic Zones (EEZs) of some of its neighbors, pointedly Greece and Cyprus. While it did reach an agreement with Libya on a maritime border, this certainly compromises the ability of the Cypriots to develop their oil fields. I believe on occasion Turkey has even sent a warship to prevent such exploration, so is it correct to say Turkey has turned into an energy hub? First of all, can an agreement be reached with it on these still volatile issues? And can it along with Egypt be an energy hub through which these enormous gas finds in the Eastern Mediterranean can be sent to Europe?

Dr. Basem Shabb:

Turkey has a problem in that its Exclusive Economic Zone is very, very limited because of the Greek islands, so the only area that is reasonable [for Turkey to claim as Turkish territory] is north of Cyprus, but so far this area has not been shown to have much gas in it, and so Turkey has moved its attention to other areas, to the Black Sea and to be a conduit from Azerbaijan and from Kurdistan. [In] Kurdistan, the pipeline goes to Jihan.

Turkey until now has been a conduit of energy. If Israeli gas goes to Turkey, then it can easily connect to the European network. And there is a change also in Turkish policy that has become more pragmatic. It seems that Erdogan has sort of lessened his Islamic credentials and moved to a more nationalistic attitude, if you wish, before the 2023 elections.

And at the end of the day, the U.S. has some influence over Turkey. Turkey threatened to move into Syria, and the U.S. did not approve, and at the end of the day, the Turks did not move in to extend their security zone in Syria, so Turkey is not an energy hub so far. Turkey is unlikely to be self-sufficient in energy. And so far there is not much evidence of gas in North Cyprus, and apparently this deal between Libya and Tripoli has been put aside in order to improve relations with Egypt.

So Turkey is probably now for the next few months going to be looking internally, and Erdogan is preparing himself for elections in Turkey. And it is not sure that he is going to [win]. The results are not predictable, and the Kurdish vote is a considerable vote in Turkey, and any activity in Syria would bring him closer to the nationalists but would bring him further apart from the Kurdish vote in Turkey. But it is interesting that this rapprochement with Israel was, let us say, accelerated by the events in Europe.

Robert R. Reilly:

I read one rather interesting remark about Turkey being the conduit for a great deal of natural gas supplies to Europe, that Europe would not want to find itself dependent on Turkey as a conduit for those supplies because it has learned its lesson from having become so dependent upon Russia, and therefore a diversification of supplies is in its interests, and pipelines to Italy are far more attractive than ones to Turkey or through Turkey. But then again, it is a matter of the expense of expanding or developing those undersea pipelines. Do you think that is an accurate reflection of some of the thinking?

Dr. Basem Shabb:

I think that is accurate. The pipeline from Israel to Cyprus, to Greece, to Europe has been put aside because of cost and because of LNG taking over. But what of Greece? Greece also seems to have a large supply of hydrocarbons, and these could be easily sent to Italy through a pipeline, so I think we have to wait to see what the Eastern Mediterranean uncovers in time, but I think there is more gas and [there are more] hydrocarbons in the Eastern Mediterranean than what people think. And I do hope that in this rush to sell gas to Europe and develop gas, that Lebanon would overcome its geopolitical and domestic hurdles so we can be on the bandwagon.

Lebanon’s Relationship with China

Robert R. Reilly:

It is interesting that the leader of Hezbollah, Hassan Nasrallah, made the statement that the future of Lebanon is China.

Dr. Basem Shabb:

Yes, it is interesting that he said he is against any deal with the IMF or the World Bank. There is no doubt that part of Hezbollah’s plan is to dissociate Lebanon from the West, and mostly financially, and so the banking crisis in Lebanon does serve Hezbollah in many ways.

The interesting thing is Hezbollah may be interested in the Chinese, but the Chinese do not seem to be interested in Lebanon. The Chinese do not seem to be interested in Lebanon. The Chinese Ambassador in Lebanon is unheard to do any activity, and China is becoming one of the leading trading partners of Lebanon, if not the first, so China in Lebanon is behaving like a company. They sell products, and they are not interested in getting involved in politics as long as they are their number one trading partner. China is not interested in politics in Lebanon, and I think Hassan Nasrallah said that as a reflection of the Iranian Chinese strategic plan.

Robert R. Reilly:

Maybe that is why China is not interested politically in Lebanon, because it is deferring to Iran, which is a big supplier of energy to China, or has signed long-term contracts with China. Is that possible?

Dr. Basem Shabb:

True, that is possible, and also the Chinese feel that [they should] leave that space to Russians. The Russians have signed a lease on fuel tanks in North Lebanon. The Russians for a while showed interest in the Greek Orthodox community. The Russians gave the Lebanese Army 100 trucks, and so I think the Chinese did not want to step on the toes of others in Lebanon.

But I wonder what Hassan Nasrallah would think after the meeting with Saudi Arabia, the Chinese meeting with the Saudis. Hmm? Wow! I mean, if China had to choose between the GCC and Iran, surely, they would choose the GCC. So the Iranians were not very happy, and you know, they called the Chinese ambassador to protest the final communique, which stated that the three islands, the UAE Islands, belong to the UAE. So we will see. The Chinese are like water, they go where the resistance is least, and now it seems to be heading towards Saudi Arabia.

Halting Lebanon’s Downward Spiral

Robert R. Reilly:

Could we close with a reflection from you as a very experienced Lebanese legislator on the condition of your own country? Has the spiral downward been arrested? If not, what could arrest it, and what forces are there coalescing for a recovery and a rebuilding of what was once this jewel of the Mediterranean?

Dr. Basem Shabb:

Well, one can single out individual factors and say, well, it is corruption, or it is Hezbollah, or it is this, or it is that, but what I see as the main problem is Lebanon’s slow, deliberate drift away from the West. It is going to be very difficult for Lebanon to regain its position either culturally, or financially, or economically unless it is part of this, of the West-GCC alliance of sorts.

Lebanon has drifted away from the Arab Gulf. Hezbollah has alienated the Saudis and everybody else, and then we have alienated the West, and now that we have little strategic interest, little political interest in Lebanon, at least we can maintain some cultural interest in Lebanon, and that is the only thing that is still hanging in there.

We have good institutions. We have good universities. We have good American universities. We still have partially a liberal educational system, and we have an army. And it is not a surprise that the bulk of U.S. aid to Lebanon and Western aid is to support institutions of liberal education and the Lebanese Army. But until there is a tilt in the country towards the West, it is going to be very difficult to achieve much.

Robert R. Reilly:

Well, the prerequisite for that would seem to be escaping from the grips of Hezbollah. And whereas the Lebanese Army for so many years stood as a guarantor for Lebanese independence and integrity, it seems that it more or less is under the thumb of Hezbollah rather than functioning as a national army anymore. Is that too grim an assessment?

Dr. Basem Shabb:

Yeah, it is, actually. I think the Lebanese Army has some independence. The Lebanese Army has a role to play in security and stability, but being in Lebanon with Hezbollah, they will have to collude with Hezbollah and reach an understanding, which is understandable. And I think the U.S. administration understands that.

But in answer to your question, yes, as things are, the possibility of change in Lebanon is not great, but change in Lebanon has come as a consequence of geopolitical shifts in the Middle East. We have seen the Syrians pull out of Lebanon, we have seen Israel withdraw from Lebanon, and now we have Iranian influence in Lebanon. Should there be a change in Iran, that would reflect on us. Should the Russian presence in Syria weaken and therefore weaken the Iranian presence, that would reflect on us.

And should the Abrahamic Accords, like I said, extend to Saudi Arabia or Oman, then that would change things, but I do not expect change to come from inside Lebanon. I cannot see what we Lebanese can do at this point under tremendous Iranian influence to do to change this situation.

I do not think elections can make a difference. We have had elections, and we saw it did not make a difference. We can elect a new president, and we can go by the Constitution, but unless a geopolitical shift happens, we are going to be in the same situation.

And I dare say that the JCPOA did not reflect kindly on us. The JCPOA did not reflect kindly on Lebanon because it gave Iran more influence in Lebanon, and that is a fact, so even if we wanted to do whatever we could, and there was an agreement with the United States that gave Iran more leeway in Lebanon, then what could we do as legislators? Not much.

But I do not want to sound too pessimistic, so I am going to end on an optimistic note. And I think Ukraine is going to be a point of inflection, and not only in energy but also in politics. And when it happens, a lot of things are going to change, and I would not exclude Iranian influence in Lebanon being one of them.

Lebanon and the United States

Robert R. Reilly:

Let me sneak in one last question. What is your assessment of the role of U.S. foreign policy regarding Lebanon and the region, and of course it played a major role in fathering in the Abrahamic Accords? Has that changed under President Biden? How do you assess the effect of U.S. foreign policy currently?

Dr. Basem Shabb:

I would say that America’s policy in Lebanon is reasonable, to invest where you think investment pays off, and that is in social projects, NGOs, universities, education, and the Lebanese Army, so I cannot be critical of that. I think it is the right thing to do. One thing that has changed is that in many ways, Lebanon has become a fault line between the U.S. and Russia.

We have an American presence in Lebanon, and it is very close to the Russian presence. The largest naval base outside Russia is 20 miles from the Lebanese border, so this continued interest in Lebanon was partly to train the Lebanese Army to fight ISIS, to counter Hezbollah, but to some degree it is also to counter Russian influence in Syria.

Lebanon has become a fault line, so I think the policy is prudent. It is a continuation, actually, of the previous policy. I cannot say it changed much from President Trump’s time, and I think until there are new parameters in the area, this policy is not going to change.


Robert R. Reilly:

Well, great. I am afraid we are out of time right now, but I would like to thank our guest from Lebanon, Dr. Basem Shabb, for joining me today to discuss energy issues in the Eastern Mediterranean, particularly in light of the war in Ukraine. I invite our audience to go to the Westminster Institute website and to our YouTube channel where you will see our other offerings and publications, programs, a number of them on the Russia-Ukraine war, on China, Taiwan, Japan, and other issues in the Middle East. Thank you for joining us. I am Robert Reilly.