Lebanon says maritime deal 'make or break' after Israel snubs request for changes

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By Dan Williams and Timour Azhari

JERUSALEM/BEIRUT (Reuters) -Lebanon said U.S.-brokered talks to demarcate its maritime border with longtime foe Israel were at a "make or break" point on Thursday after Israel rejected revisions to a draft deal requested by Beirut, throwing years of diplomatic efforts into doubt.

The draft deal, which has not been made public, had a warm preliminary reception from the Israeli and Lebanese governments. But amid domestic opposition in both countries, Lebanon on Tuesday sought several amendments from the U.S. envoy.

On Thursday, Israeli Prime Minister Yair Lapid "was updated on the details of the substantial changes Lebanon is seeking to make in the agreement and instructed the negotiating team to reject them," an Israeli official said.

According to Israeli media, a main sticking point was over recognition of a line of demarcation buoys Israel has strung out to sea from its coast. Lebanon worries about any action that may connote formal acceptance of a shared land border.

Beirut has also balked at Lapid's assertion Israel will earn partial royalties from Lebanese extraction in the Qana prospect.

Top Lebanese negotiator Elias Bou Saab told Reuters on Thursday that he would only respond to official statements and not to media reports on Israel's stance.

He said the deal "is 90% done but the remaining 10% could make it or break it," adding that he was in constant contact with U.S. mediator Amos Hochstein.

GAS RIG PLAN

Israel has been preparing to activate a gas rig, Karish, that it says is outside Qana. Lebanon's Iran-backed Hezbollah made veiled threats about Karish that lent urgency to the talks.

Israel previously presented the draft deal with Lebanon, if finalised, as securing Karish. But on Thursday, it changed tack.

"Israel will produce gas from the Karish rig as soon as it is possible to do so," the Israeli official said. "If Hezbollah or anyone else tries to damage the Karish rig or threaten us - the negotiations on the maritime line will stop immediately."

Defence Minister Benny Gantz further hardened the tone, saying in a speech that "the state of Lebanon will bear a heavy military price" if Hezbollah attacks.

There was no immediate response from Hezbollah.

With the centrist Lapid serving in a caretaker capacity ahead of a Nov. 1 election, the political opposition had demanded parliamentary ratification for the deal.

Lapid's main rival, conservative ex-Prime Minister Benjamin Netanyahu, had argued that the deal could benefit Hezbollah.

Despite its own misgivings, Lebanon is keen for any sign of relief from a spiralling economic crisis, and its president, Michel Aoun, wanted to secure gas rights as a political win before he steps down at month's end, according to political sources.