There could hardly be a worse time for Israel and the Palestinians to negotiate a long-term energy deal. The factional fighting in Gaza, the recent Israeli bombardments and the continuing spiral of violence in the region have so inflamed passions that any deal between Israel and the Palestinians could fall victim to popular anger on both sides.

Yet the deal represents one of the best chances that the Palestinians have of establishing a more normal relationship with Israel and of raising enough money to relieve the desperate poverty in Gaza, where almost three quarters of the population is unemployed. The sensitive negotiations have dragged on but, despite repeated outbreaks of violence, both sides have edged towards a compromise. What is pushing the deal forward is the realisation on the Palestinian side that money is the key to ending much of the violence and the urgent need by the Israelis for a reliable source of energy to fuel their booming economy.

Some of the sting may be taken out of the deal by the participation of Consolidated Contractors International Company (CCC), one of the largest contractors in the Arab world. This Palestinian-owned company, with operates in almost every country in the Middle East and has an annual income that exceeds $2 billion (£1 billion), already has a large presence in Gaza and is a partner with the Palestinian Government in the main electricity-generating authority.

Ironicially, that plant was hit in an Israeli airstrike, which left Gaza with only limited power supplies for several months. The presence of CCC as a partner of British Gas will do much to reassure Palestinians that their interests will be secured by the deal.

A striking feature of the Middle East today is the economic boom despite the political turmoil. Both Jordan and Israel are growing at rates of about 6 per cent a year. At a conference of the World Economic Forum in Jordan last week, business and political leaders from across the Arab world – and Israel – agreed that the region faced an unprecedented surge of economic activity, despite the political stalemate and the failure in many Arab countries to push through democratic reform. Business may now be the real motor that is changing and liberalising society in much of the Middle East.

Moreover, despite the failure of the Israelis and the Palestinians to agree an overall political settlement, the economic links are growing steadily (although both sides are unwilling to speak openly of this).

This is creating a new realism among business elites, who say that peace will come only when each side has an economic stake, as well as a political stake, in closer relations.

The massive new offshore gas contract will lock the Palestinians and Israelis into a dependent relationship, which will make it more difficult for the extremists to sabotage any eventual peace deal.

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