Peace pipelines and the role of oil trade in the Israeli-Egyptian peace negotiations in 1979

What is it about?

Can rival countries be persuaded to depend on one another when it comes to their most vital commodity—oil? This question puzzles both liberal theorists and practitioners as they seek ways to promote peace through the trade of energy. But attempts to create binding and interdependent oil trade during peace negotiations consistently fail. The 1979 Israeli-Egyptian peace deal stands as an exception to this rule, since the inclusion of an oil trade agreement did not cause the negotiations to break dow. However, this success stemmed not from interdependence, as liberal theorists sometimes argue, but from its avoidance. US oil guarantees given to Israel in case of a disruption liberated the two sides to trade freely with one another, diffusing the tensions that interdependence often brings.

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Photo by Zbynek Burival on Unsplash

Photo by Zbynek Burival on Unsplash

Why is it important?

This case demonstrates that, in contrast to conventional liberal wisdom, energy trade agreements are more likely to facilitate peace agreements when mutual dependence is avoided, not pursued, in the initial phase of trade. Otherwise, concerns about vulnerability to cutoffs from supply trump the expected benefits of the trade due to oil’s critical industrial and military role. We argue that third-party guarantees can address, and mitigate, such concerns over initial dependence and vulnerability under certain conditions