Tensions are rising in the eastern Mediterranean between Israel and Lebanon, this time over roughly 430 square miles of contested waters that contain considerable underwater gas reserves. Iran, Hezbollah and Syria are all interested in a war with Israel, each for their own reasons. Tehran and Damascus want to save the embattled regime of Bashar Assad, while Hezbollah seeks to protect its top officials from charges that they were involved in the assassination of late Lebanese Prime Minister Rafik Hariri. A new war in the Middle East would aid all these goals—and be a disaster for the U.S., already embroiled in withdrawals from Afghanistan and Iraq and a military operation in Libya.

Both Israel and Lebanon have trillions of cubic feet of underwater natural gas and can benefit tremendously from these resources. All they need is the goodwill to negotiate a sea-border demarcation agreement. This usually occurs through bilateral negotiations or mutually agreed arbitration—not through U.N. border-dispute mechanisms, as Lebanon is now demanding.

In 2000, the U.N. meticulously traced the Israel-Lebanon land border when Israel withdrew from southern Lebanon. At the time, the U.N. did not establish a maritime border between the two countries and no one seemed to mind. Lebanon has made no hydrocarbon discoveries since, but it does seem eager to discover another border conflict: It's only now that Israel has identified substantial natural gas in the Tamar and Leviathan fields that Hezbollah, the Iranian and Syrian regimes' long arm in Lebanon, has decided to make an issue of the maritime borders.

Lebanon's Hezbollah-dominated government has called Israel's proposed border an "aggression" and is now threatening to attack any Israeli gas projects—even those in undisputed waters. It wants the U.N. to arbitrate the border dispute under the Law of the Sea Treaty, to which Israel is not even a party. More troubling still, the U.S. State Department has reportedly endorsed Hezbollah's preferred solution of throwing the matter to the U.N.—despite the fact that the U.S. never ratified the treaty either.

The stakes are high for the U.S. and Israel. Hezbollah is armed with Chinese-designed, Iranian-made C-802 anti-ship missiles that could be devastating against future Israeli off-shore gas platforms and tankers. Hezbollah also has sea-born commando units.

The State Department's fear of a flare-up in the Mediterranean and its newfound preoccupation with the Law of the Sea Treaty should not result in coddling a terrorist organization and the state it is running. Washington would do better to stand by its democratic ally and reject Hezbollah's Tehran- and Damascus-inspired position, which can only further escalate tensions in the Levant. Washington should clarify that the two countries need to settle the border dispute between themselves—and both enjoy the benefits from their underwater natural resources.

Mr. Cohen is senior research fellow at the Heritage Foundation.