Obama let 40-year-old oil supply guarantee to Israel expire in November 2014

Obama let 40-year-old oil supply guarantee to Israel expire in November 2014
(Image: Wikimedia Commons, John Hill)

The Obama administration should give lessons in passive aggression.  Eying the impending Israeli election as a political influence operation wasn’t the only thing it was doing in November 2014.  It was also letting a 40-year-old strategic guarantee to Israel expire.

The guarantee, which says the U.S. will ensure that Israel has access to oil in case of security emergencies, dates originally to September 1975, when Israel and Egypt were negotiating elements of an Israeli withdrawal from the Sinai after the 1973 War.  Throughout those negotiations, which culminated in the 1979 peace treaty, the status of the Sinai oil fields was a core issue.  Israel had obtained oil from them since occupying the Sinai after the 1967 War, when an Arab coalition attacked, and Israel seized territory to maintain a defensive perimeter.

The U.S. oil guarantee was instrumental in giving the Israelis a secure basis for withdrawing from the Sinai.  The use of the oil fields was one aspect of that dynamic; another was Egypt’s closure of the Suez Canal from 1967 to June 1975.  The Canal closure affected trade of all kinds, and specifically had the potential to disrupt Israel’s energy supplies – as effectively, by driving prices up, as they would be disrupted by an actual cut-off.

Because of this dual vulnerability, the U.S. guarantee looks not only at whether Israel is able to obtain oil, but how much it costs her to.  The guarantee can kick in for either reason.  (It entails ensuring that Israel can buy oil; it’s not a guarantee that the U.S. will supply oil for free.)

A Congressional Research Service study done early in 2014, before the most recent agreement expired, can be found here.  It outlines the history of the guarantee.  The agreement was formalized in 1979, with an initial period of 15 years, ending on 25 November 1994.  It was extended twice after that, each time for 10 years, and most recently expired – without renewal – on 25 November 2014.

Interestingly, Reuters cited an unnamed State Department official on that date claiming that State was “working on” renewing the agreement.  It never happened, however, and on 12 March, Senators Lisa Murkowski (R-AK) and Mark Warner (D-VA) sent a letter to John Kerry requesting that he attend to the matter immediately.

It’s not clear what “work” would have to be done to renew this agreement.  It is clear, on the other hand, that it’s an agreement that was made for important reasons, and that those reasons are not only still valid: they are more of a concern today than they were 10 years ago.  Since the last renewal in November 2004, Israel has pulled out of Gaza; the Arab Spring has thrown the region into tremendous turmoil; the threat of terrorism and guerrilla action in the Sinai has increased; and Iran’s navy has extended its operations dramatically, into the Red Sea and even the Eastern Mediterranean.  The potential threats to Israeli trade, and specifically to Israel’s energy imports, have increased significantly since 10 years ago.

Israel has huge reserves of natural gas, but remains dependent on foreign sources for oil.  The U.S. guarantee has never had to be invoked, but keeping it in place is far from an academic exercise.  The Globes report quotes an Israeli source:

Israel has never invoked the agreement, but Israel sources say that its importance lies in its very existence. An Israeli source compared the oil supply agreement to the loan guarantee agreement between the two countries that enables Israel to obtain commercial loans at low rates of interest. “Israel used the loan guarantee agreement very sparingly, but it is important that the loan guarantees agreement should exist, and the same applies to the energy agreement that guaranteed a regular supply of oil,” the source said, “We never used it, but it’s important that it should lie signed in a drawer.”

The importance goes beyond the specific relevance to the energy sector.  Guarantees like this one are precisely the agreements that enable smaller countries to subsist in peace, without having preemption or the defensive seizure of territory constantly on their minds.  The point of these agreements is to be evidence of will and determination on the part of the great powers: the evidence that prevents wars.

The record of what happens when great powers abandon such agreements has been an awful one, over the last century.  Besides lessons in passive aggression, the Obama administration should give them in irresponsibility too.

J.E. Dyer

J.E. Dyer

J.E. Dyer is a retired Naval Intelligence officer who lives in Southern California, blogging as The Optimistic Conservative for domestic tranquility and world peace. Her articles have appeared at Hot Air, Commentary’s Contentions, Patheos, The Daily Caller, The Jewish Press, and The Weekly Standard.


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