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Behind The Scene In the Middle East

September 11, 2020

Transparency is a rare commodity in the Middle East. I doubt that any of you have ever read The Petroleum Economist. However, in a recent issue I was in an article entitled Pharos’s Main Man Goes Back to the East Med Future-The Independent’s CEO was Making Oil Discoveries in the Gulf of Suez in the 1970’s and is Now Back in the Region. To add clarity to all of this unknown press, Pharos is the name we adopted for our company when we made a very decisive move to the Middle East/North Africa region. Nonetheless, we are still very active in Vietnam in our subsidiary, SOCO Vietnam. A further bit of clarity, the oil discovery in the Gulf of Suez was another company where I was a young employee though I was active in the project when I became Mr. Israel in the departure mop-up details.  
Last year, we acquired an oil company that was active onshore Egypt and separately were awarded a number of exploration licenses offshore Israel by the Israeli Government. For those of you historians, that would seem like a strange combination of assets to have a foot in two former enemy countries. Well, the world has changed dramatically from the old days of combat to a quiet but strong economic cooperation between them. In fact, when we made the oil discovery in the Gulf of Suez, we lit the flare on the oil well test which, in 1979, provided a guiding light for Israeli Prime Minister Menachem Begin to return home to Tel Aviv following the peace accord with Anwar Sadat of Egypt. One year later, the oil field was returned to Egyptian control though it was a successful venture for us.  
Before Pharos committed to purchase our operation in Egypt, I called a friend in Tel Aviv to inquire whether it would impact our ability to be in Israel. His response was “We are in Egypt-we have troops in the Sinai Desert alongside the Egyptians fighting ISIS.” I also learned that you can fly from Tel Aviv to Cairo and Amman, Jordan though the flights do not appear on any published schedule. Another Israeli connection is one of long-standing friends we met riding elephants in Thailand. They live in Tel Aviv and introduced us to a wonderful couple with a close historical connection to the Mossad. The wife’s father was the chief financial officer of the Mossad upon its creation and her husband computerized the Mossad records. They took us through the underground wine cellars where long ago the Israeli’s assembled Egyptian airplanes they had secretly purchased through an intermediary.  
Accordingly, the two countries are closely connected though separated by religion. There was a historical comment in Israel that God gave the Arabs oil and turned a blind eye to Israel leaving it only desert sand. However, that saying is woefully incorrect, in that, Israel has massive natural gas reserves to fuel its own economy as well as to export to Egypt and elsewhere for conversion into liquified natural gas. From a carbon emissions standpoint, natural gas is the fuel of the future until fossil fuels can be replaced. Therefore, economic synergies have overcome historic religious differences and the absence of oil in Israel just made them strong people. Therefore, we jumped into the Middle East/North Africa region with both feet and two-fisted gusto.  
Shown below at our Israeli signing ceremony last December in Jerusalem, the gentleman to my right is Ligad Rotlevy, Founder and Chairman of Ratio Exploration who pioneered the massive natural gas discoveries offshore Israel. To my left is Yuval Steinitz, Israeli Minister of Energy, who implemented far-reaching policies to support the export of Israeli gas to Egypt and Jordan. You will note the map on the wall portrays a map showing illustrations of pipelines to move Israeli, and potentially other gas, onward to Europe.  
Another flash back in time, some thirty years ago in another predecessor company, we had an office in Tunisia next to that of the Palestinian Liberation Organization headed by Yassar Arafat. The PLO were a rather unruly lot though always well-armed including when away from home. Once I asked a connected Tunisian associate when the “Palestinian Situation” would be resolved and he responded “Never - as Yassar Arafat makes a wonderful living from all of the wealthy Arab States though he can never spend more than one night in any one place.”  
Therefore, the leader of the unrecognized State of Palestine had to continuously be on the run despite the fact that the PLO, as shown below, were a rather vocal and aggressive lot. However, in 1993 following the PLO support for Iraq in the Gulf War, considerable Arab backing for Palestine fell away. Therefore, pressure was placed on Arafat and an agreement was reached with Israel under which the West Bank and Gaza would be gradually handed over to the Palestinian authorities in return for mutual recognition by both sides. That agreement is the nub of the “Palestinian Situation” as it has never happened. In fact, Israel has continued to build settlements on the West Bank and recently talked of annexing occupied West Bank territory.  
With this backdrop, Israeli Prime Minister Benjamin Netanyahu has maintained for over eleven years he could build full diplomatic and trade relationships with Arab countries in the Middle East without a “Palestinian Solution.” The perceived objective of Israel was viewed to be the establishment of sovereignty over the occupied West Bank territory which the demonstration shown below was in reaction to that belief.  
On the other hand, events in the broader Arab world were impacting the willingness of Arab states to continue to support the high road cause of an independent Palestinian State. First of all, the Arab Spring unsettled many of the oil rich countries in their cozy world. Secondly, the international retrenchment of the United States caused great concern whether the military power of the free world would step up to an aggressive Iran and protect the Arabs-"happy to sell tons of weapons but otherwise you are on your own.” The U.S. failure to take action against Iran following their attack on Saudi Arabia cinched that view.  
Well, in mid-August, Israel and the United Arab Emirates reached a landmark accord whereby the two countries agreed to “full normalization of relations” and that, in exchange, Israel would forgo for now “declaring sovereignty” over occupied West Bank territory. Shortly following the announcement, Netanyahu spoke proudly of his accomplishment, “I told you” to underscore that peace could be made within the broader Middle East without having to accomplish what was truly impossible, a resolution of the “Palestinian Situation” by providing the Palestinians statehood.  
Netanyahu is shown below at the United Nations in 2018 disclosing revelations of Iran’s nuclear project. It had the everlasting desired effect he wished within the Arab world. He has also been a frequent flyer to more friendly Arab states such as Oman, where we also had a corporate presence some years back. Moreover, Netanyahu is developing relationships with Arab states such as Jordan, which in addition to Egypt, purchases natural gas from Israel, Saudi Arabia, the Gulf Emirates and Morocco to name some of them. I failed to mention that Israeli Minister of Energy, Yuval Steinitz, was previously Minister of Intelligence and Strategic Affairs. It has been a shrewd and practical plan on Israel’s part which has worked well for the world, particularly as the government of Iran is in shambles and the dangerous Red Guard may assume control. If you have never been to Tehran, my one and only visit there was not particularly enjoyable.  
So, what is the solution to the question of a stable Palestinian state? Create an economic sense of purpose for the Palestinian people such as what happened to overcome the religious and political discord in Ireland-provide investment tax incentives, attract tech companies, create an Arab Disneyland or whatever. Give the people something else to do other than make bombs and plot assassinations. Most importantly, outline a path to prosperity and economic independence from handouts from the wealthy Arab world.  Bahrain seems to be joining the peace parade with Israel so the Palestinian people may become increasingly lonely.

Bring the luck of the elephant into your home with an elephant figure from The Elephant Story.
12 inch Carved Elephant
21 inch Carved Elephant
12 inch Carved Trunk Up Elephant
20 Inch Teak Elephant on Black Base
10.5 inch Carved Hanging Elephant
7 Inch Carved Elephant

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