Gas and the blockade: Egypt's economic plan for Gaza

The Egyptian government is busy building a seaport off the coast of Port Said, renovating the Arish International Airport, and paving the long roads connecting the Gaza Strip and Cairo.

Such infrastructure work comes amid plans to increase commercial traffic with the Gaza Strip, under a joint Israeli-Egyptian blockade since 2007, and facilitate the movement of Palestinians to and from Cairo.

After years of arduous journeys, some Palestinians say they are already seeing the benefits. Mariam al-Hwaiti, a mother of four, arrived in Gaza from Cairo in ten hours with few issues.

"Egypt is leading intensive negotiations between Palestinians and Israel to reach a long-term truce agreement"

"In the past,” she said, “it used to take between two or four days. An arduous journey punctuated by many difficulties and obstacles during our return to the Gaza Strip. We used to feel that the Egyptian army deliberately insulted and punished us collectively," she told The New Arab.

For Palestinians in Gaza, this is the first time in years that Egypt has approved new facilities for them, but there is also a political context.

Infrastructure improvements come off the back of ceasefire arrangements between Palestinian factions in Gaza and Israel, with multiple rounds of negotiations held between Egyptian intelligence and leaders from Fatah, Hamas, and Islamic Jihad, with leaders from Gaza and abroad attending.

A long-term truce

Egyptian officials close to President Abdel-Fattah el-Sisi, who preferred to remain anonymous, told The New Arab that Egypt is leading intensive negotiations between Palestinians and Israel to reach a long-term truce agreement, hoping to obtain a final accord between the two parties before any official announcement.

The officials explained that negotiations are being held under American auspices to create a new environment in the occupied Palestinian territories, especially the Gaza Strip, which brings more short-term stability. Egypt is currently working on arranging economic, political, and social conditions to serve the interests of Gaza, the officials added.

Early in June, Egypt held intensive meetings with leaders of Hamas and Islamic Jihad to discuss reaching a long-term truce in return for gradually easing the blockade over the coming months and eventually lifting it within two years, a Hamas official who attended the Cairo meetings told The New Arab.

In parallel, Egypt is conducting further consultations with Iranian security officials regarding the situation in the Gaza Strip and the occupied Palestinian territories, due to Tehran's role in supporting Hamas and Islamic Jihad, to urge them not to escalate militarily in Gaza, at least for the time being, and to support economic projects in the region, the source added.

A seaport and airport for Gaza

The Hamas source revealed that Egypt is currently working, as proof of goodwill, on final arrangements to expand the volume of trade with the Gaza Strip, starting from the Egyptian port of El-Arish, through the establishment of a subsidiary port in Gaza under Egyptian supervision and management.

This would be in addition to a highway linking the Gaza Strip and the city of El-Arish, with goods transported by land from Gaza to the port, and from there to international markets.

Mohammed Abu Jiyab, an economist from Gaza, told The New Arab that expanding trade with Egypt, facilitating the movement of travellers, and easing the blockade on the Gaza Strip would speed up the restoration of long-term calm in the region.

"Gazans are eager to live in safety and to rebuild their lives and the lives of their children in an economically and politically stable situation, which allows them to create a prosperous future for future generations,” Abu Jiyab said. 

"Gaza's gas potential may be enough of an incentive for Fatah, Hamas, Islamic Jihad, and Israel to agree to a long-term truce, according to Palestinian officials and political analysts"

“Constructing a seaport means that a large commercial movement will take place on a daily basis between Gaza and Egypt and the countries of the world as well, and this means that millions of dollars will be pumped on a daily basis into the Gaza Strip, helping the Gazans to overcome the severe poverty that they have suffered from for years,” he added. 

Abu Jiyab explained that economic stability would help strengthen the political situation, "so that the Palestinians can finally accept a semi-final political agreement with the occupying state, in the event that Israel pledges not to launch military attacks on the Strip".

PA also takes part in the negotiations

Officially, for the first time, the Fatah-led Palestinian Authority has joined negotiations with Egypt regarding improving conditions in Gaza. Palestinian Prime Minister Mohammed Shtayyeh visited Cairo recently and held meetings with Egyptian officials to discuss a solution to the electricity problem in Gaza by supplying power, which could be increased in subsequent stages.

Zafer Melhem, the head of the Palestinian Energy Authority, told TNA that the new Egyptian-Palestinian project will contribute to addressing the electrical deficit in the Gaza Strip. Soon, Melhem says, technical teams affiliated with electricity in the Gaza Strip will start developing networks and power lines along the borders in the El-Arish and Rafah regions. 

"Such vital projects will be developed continuously, to provide larger quantities of electrical energy to the Gaza Strip, which may reach 300 megawatts."

These agreements between Egypt and the Palestinian Authority come after Hamas provided tacit approval to its arch-rival, the Palestinian Authority, while Israel also agreed, according to Egyptian and Palestinian officials.

First and foremost, Gaza's gas

In 2000, British Gas and its partners (Consortium of Contractors CCC) discovered a gas field 36 kilometres west of Gaza City.

Later in the same year, the company succeeded in drilling two wells there, Gaza Marine 1 and Gaza Marine 2, and determined the existing amount of gas at around 1.4 trillion cubic feet. That would provide enough energy for the Gaza Strip and the West Bank for 15 years, according to current consumption rates.

However, all subsequent political and diplomatic efforts have failed to develop and extract gas due to obstacles created by Israel as an occupying country, fearing Palestinian economic independence.

What has made matters worse is the political division between Fatah and Hamas since 2007, following rounds of internal fighting and Hamas' total control of the Gaza Strip, prompting Israel to impose a tighter blockade, including on the sea, which prevented any attempts to extract gas.

However, Gaza’s gas potential may be enough of an incentive for Fatah, Hamas, Islamic Jihad, and Israel to agree to a long-term truce, according to Palestinian officials and political analysts.

Extensive negotiations are taking place under American auspices between Egypt, Israel, and the Palestinian Authority regarding the management of Gaza’s gas, which would be operated jointly between Cairo and Israel, with Hamas and the PA receiving part of its revenues.

Sources close to Hamas and the PA confirmed that Egypt had succeeded in persuading Israel to start extracting gas from the Palestinian field after its development, and there were external pressures linked to the European need for gas in light of the current crisis due to the Russian invasion of Ukraine.

The sources said that the negotiations currently taking place are related to mechanisms, quotas, and revenues, and that there has been positive progress. The Palestinians hope that the negotiations will be finalised by the end of the year with an agreement satisfactory to all parties.

PA prime minister Mohammed Shtayyeh had previously said that he hopes that Palestinians will be able to start selling gas at the beginning of 2025, with negotiations nearing completion and the project becoming feasible.

Esmat Mansour, a writer and political analyst, told The New Arab that gas development is a primary tool for Egypt, the PA, Hamas, and Israel to solve their economic and political crises.

"The Egyptian government is busy building a seaport off the coast of Port Said, renovating the Arish International Airport, and paving the long roads connecting the Gaza Strip and Cairo"

"If Israel is sincere in its intentions to grant the Palestinians the right to excavate and obtain it, this will force the disputing Palestinian parties to reach a reconciliation agreement, because this will serve all parties economically, and certainly Egypt will have a major role in completing the reconciliation, as it is the supervising authority on prospecting, which you will also sell,” he said.

"Although Egypt participated in the siege of Gaza, it now finds itself with a difficult choice, which is to ease the siege and prove to the Palestinians that it will work to improve their humanitarian and social conditions in Gaza (...) But the truth is that it wants to invest in Gaza's gas for its economic benefit and exchange those benefits with the Palestinians.”

Elian al-Hindi, a Ramallah-based political expert in Israeli affairs, says that gas is one of the most critical issues for Palestinians, especially since they need natural resources that provide income for the government treasury and fill the deficit in the amount of gas imported, whether from the Israeli or Egyptian side, at high prices.

He pointed out that the global energy crisis has also reinvigorated the issue of gas and energy in the Middle East. 

“Israel is taking advantage of the state of international silence and inaction, and seizing all the fields that border Palestine from the sea, such as the Mari Bey field. It was drained by Israel in 2012 after it exhausted all the quantities in it, and it contained 1.5 trillion cubic feet of natural gas, which is enough for the Palestinians to supply themselves with gas for at least 15 years,” he told TNA. 

But there will likely be no possibility for gas extraction without a Palestinian political consensus, which would require reconciliation, so that agreements on dividing revenues can be reached to bolster the Palestinian economy, particularly in the Gaza Strip.

Sally Ibrahim is a Palestinian reporter with The New Arab based in the Gaza Strip.