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Middle East Amp North Africa
Conflict threatens $15bn Jordan gas deal
From the Financial Times of Thu, 20 Nov 2014 09:55:09 GMT
A masked Palestinian youth throws a rock during clashes with Israeli security forces in east Jerusalem on October 30, 2014. Clashes raged in east Jerusalem after police shot dead a Palestinian accused of trying to kill a Jewish hardliner, prompting officials to close the flashpoint Al-Aqsa mosque compound. AFP PHOTO/ AHMAD GHARABLIAHMAD GHARABLI/AFP/Getty Images©AFP

A Palestinian man throws a rock during clashes with Israeli security forces in east Jerusalem

A proposal for Jordan to buy $15bn of natural gas from Israel is facing strong opposition in the kingdom because of the intensifying Israeli-Palestinian conflict, which officials fear could delay or even scupper the deal.

Jordan this month took the unprecedented step of recalling its ambassador after Israeli security forces entered Jerusalem’s al-Aqsa mosque to subdue protesters angered over a move to end a longstanding deal prohibiting Jewish prayer at the site. It was the first time Jordan has officially recalled its envoy to Israel since the two countries signed a peace treaty 20 years ago.

The controversy over the gas deal highlights the high stakes in a sensitive bilateral relationship that sees Jordan’s government co-operate closely with Israel on water, security and other issues, despite widespread public antipathy toward the Jewish state and its policies toward the Palestinians.

Following a summit last week convened by US secretary of state John Kerry, Jordan’s King Abdullah and Israeli leader Benjamin Netanyahu agreed undisclosed measures that cooled tensions over al-Aqsa, for now.

According to Jordanian officials, the 15-year deal to buy gas from Israel’s offshore Leviathan reservoir remains on track.

However, they warn that any renewed tensions over al-Aqsa would jeopardise all areas of economic co-operation – tacitly including the gas deal, which awaits final government approval.

Mohammad al-Momani, Jordan’s information minister, said: “The peace treaty between us and the Israelis organises all sorts of bilateral relations. If the escalation continues, all sorts of co-ordination and co-operation regrettably might be affected.”

Noble Energy of the US and Israel’s Delek Drilling initialled the deal – an anchor for their $6.5bn Leviathan project – with Jordan’s National Electric Power Company (Nepco) in September.

Before the clashes at al-Aqsa began last month, Jordan’s energy minister said the country was on track to sign the gas agreement in November. The deal would end Jordan reliance on patchy supplies of gas from Egypt and reduce its annual energy bill by an estimated $1.4bn.

However, opposition to the agreement is building among civil society groups and politicians.

Yahya Mohammad Al Saud, an MP and president of the Jordanian parliamentary committee on Palestine, said: “The Jordanian [people are] not willing to accept this agreement. I will return to riding on a donkey and heating my house with wood before I would consider taking gas from Israel.”

At a protest on Sunday in front of Nepco’s Amman headquarters, protesters held up placards opposing “the Zionist gas deal”.

“You cannot depend on the Israelis; they have breached all agreements. And you know what’s going on in Jerusalem and at al-Aqsa,” said Rima Abad, one of the demonstrators. “We cannot give them money to support the settlements and the occupation.”

The Jordanian [people are] not willing to accept this agreement. I will return to riding on a donkey and heating my house with wood before I would consider taking gas from Israel

- Yahya Mohammad Al Saud, MP and president of Jordanian parliamentary committee on Palestine

Fellow protester Fadi Nashashibi, an engineer who is among the roughly half of Jordanians who are of Palestinian descent, added: “We are building a very good terminal in Aqaba where we could buy liquid gas from anywhere in the world.”

Jordan is constructing a new liquefied gas terminal in the southern city that could allow it to bring in product from Qatar or elsewhere, but officials and analysts say Israeli gas is the cheapest source.

Jordanians have watched with alarm the ascendance of extreme rightwingers in Mr Netanyahu’s government and the ruling Likud party, who have called for the annexation of further Palestinian lands and a change in the status quo at al-Aqsa.

In a speech this month, King Abdullah deplored “Israeli unilateral policies and measures in Jerusalem”.

The situation is complicated by the fact that Jordan’s Hashemite monarchy is custodian of the sensitive holy site, a status enshrined in the peace treaty that analysts say bolsters its standing both at home and in an increasingly unsettled Middle East.

Oraib Al Rantawi, director of the Al-Quds Centre for Political Studies in Amman, said the dispute was causing “serious damage to the treaty”.

“It affects Jordanian security and stability and the king’s credibility and legitimacy,” he added, particularly relevant at a time of rising Islamic extremism.

The deal matters to Israel too, and highlights the risks to its economy posed by the ongoing unrest in Jerusalem. The country is counting on its recently discovered offshore gas to support investment and growth in coming years, but investors in the sector have voiced concern recently over perceived regulatory and political risks.

Leviathan’s partners are trying to line up the Jordanian contract along with another $30bn proposed deal to pump gas to a facility in Egypt operated by the UK’s BG Group. The smaller Tamar field, which began producing last year, alone contributed half a percentage point of Israel’s 2013 GDP.

“It is going well,” an industry figure close to the Leviathan consortium said of the gas deal. But he also acknowledged the uncertainties over Jerusalem that have threatened to delay it: “It is the Middle East.”

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