A Firm Handshake: States, Corporations, and Diplomacy in the Levant

Water and energy scarcity in the Levant poses an increasingly urgent security challenge that incentivizes cooperation between Israel and Arab states. Yet even when these national interests converge, cooperation remains rare due to political opposition, legal constraints, and barriers to implementation. This thesis investigates how states overcome these hurdles by instrumentalizing firms as tools of diplomacy. The analysis draws on three cases of Israeli-Arab water and energy cooperation between 2016 and 2023 across varying diplomatic contexts. Based on thirty-five semi-structured interviews with government officials, corporate executives, and civil society actors, alongside analysis of official documents and media coverage, I develop a typology of how states utilize firms to enable diplomatic breakthroughs. First, as political buffers, states utilize firms to frame politically contentious state-to-state cooperation as private sector agreements, allowing governments to manage domestic opposition and bypass institutional constraints. Second, as political firewalls, states use firms to structure agreements in a manner that preserves necessary political and legal distance. This function is particularly relevant when diplomatic relations between states are absent. Finally, as communication intermediaries, firms (particularly those that are state-owned) offer channels for political exchange between negotiating parties. These mechanisms have gained renewed relevance in the wake of the 2023 Israel-Hamas war, which has made overt Arab cooperation with Israel more politically costly even as incentives for cross-border diplomacy persist. In this context, firms offer states a mechanism to overcome political constraints, enabling cooperation on matters related to national security.