Eastern Mediterranean Geopolitical Risk Outlook 2024

The East Mediterranean (EastMed) region continues to grapple with a dynamic geopolitical and economic environment as 2024 draws to a close. This article reflects a culmination of the insights, posts, and analyses we've shared throughout the year, offering a short review of the region's trajectory.

Our year-long observations highlight one dominant theme: the energy sector has become the key factor shaping geopolitical and economic changes in the EastMed. From significant natural gas discoveries to the ongoing transition towards renewable energy, energy developments have played a central role in driving alliances, sparking tensions, and enabling collaboration among both regional and global powers.

Country-Specific Insights

Egypt: Strengthening Its Role as a Regional Energy Hub

• Energy Sector Struggles: The decline in production from the Zohr gas field—the largest discovery in Egypt's history—has created challenges for the country's energy output. Despite this, Egypt has been proactive in seeking foreign investment to develop new fields and renew its energy capacities, including a growing focus on renewables.
• Suez Canal Vulnerabilities: The Suez Canal has faced significant disruptions in 2024 due to Houthi maritime attacks in the Red Sea, costing Egypt at least $7 billion in lost revenue.
• Energy Transit Role: Egypt's involvement in the proposed pipeline linking Cypriot gas fields to its LNG facilities highlights its growing role as a regional energy transit hub.

Israel: Between Energy Ambitions and Security Risks

• Energy Reserves: Israel's Leviathan and Tamar gas fields provide energy security and export potential.
• Security Concerns: Tensions with Hezbollah remain a significant risk, with Chevron's temporary pullbacks from the Tamar field highlighting operational vulnerabilities.
• Regional Role: The Gaza conflict has strained regional relationships despite earlier diplomatic progress.

Cyprus: Aspirations Amid Territorial Disputes

• Energy Discoveries: The Aphrodite gas field represents a major opportunity for Cyprus to become an energy exporter.
• Strategic Partnerships: Collaboration with Israel and Greece on projects like the Great Sea Interconnector remains vital.

Syria: Rebuilding Amid Political Uncertainty

• Reconstruction Challenges: Political instability continues to hinder reconstruction efforts.
• Geopolitical Shifts: Diminished influence of Russia and Iran creates opportunities for other regional players.
• Energy Transit Potential: Location offers significant potential for energy transit projects, pending political stability.

Turkey: Driving Regional Influence

• Energy Strategy: Turkey balances traditional gas projects with renewable energy investments, with 43% of electricity from renewable sources.
• Regional Influence: Active involvement in regional conflicts while pursuing energy partnerships.
• Infrastructure Developments: The reopening of the Nasib border crossing offers new opportunities for regional integration.

Lebanon: Crisis and Energy Potential

• Economic Instability: Ongoing economic crisis affects investment and reform potential.
• Offshore Energy: Significant untapped reserves amid maritime disputes with Israel.
• International Support: Future depends on external support and regional cooperation.
• Hezbollah's Influence: Complicates energy development and regional stability.

The Role of External Actors

The EastMed region continues to attract significant interest from external powers:

• European Union: Seeks energy diversification through projects like the EastMed Gas Pipeline.
• United States: Focuses on security cooperation and energy market stability.
• China: Growing involvement through infrastructure investments and the Belt and Road Initiative.
• Gulf States: Increased influence through economic ties and energy projects.

Regional Infrastructure and Connectivity

Key infrastructure projects transforming the region include:

• Suez Canal Modernization: Enhanced capacity to handle disruptions and maintain global trade flows.
• Great Sea Interconnector: Linking electricity grids of Greece, Cyprus, and Israel.
• Pipeline Projects: Proposed pipeline from Cyprus to Egypt's LNG terminals.
• Gulf-to-Mediterranean Routes: Reopening of trade routes through the Nasib border crossing.

Conclusion

The East Mediterranean's geopolitical landscape remains complex and dynamic, with energy developments at the heart of most key trends. The past year has demonstrated how energy, territorial disputes, and shifting power balances have shaped the region's political environment, with long-term implications for stability and prosperity.

As 2024 closes, the region's ability to foster collaboration and navigate these challenges will determine its trajectory in the coming years. The role of energy, in particular, will remain pivotal in driving both opportunities and risks as both regional and global players seek to assert their influence in an increasingly interconnected global order.