Ah, the Dead Sea. Four hundred meters below sea level lies Israel's greatest (and arguably its only) natural treasure. Dotted with the ruins of monasteries, palaces, synagogues and mosques, this biblical geological wonder, has, for thousands of years, been a pilgrimage sight for the Greeks, the Persians, the Romans, the Christians and Jews.
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It can barely sustain life, but it sustains plenty of tourism: hundreds of thousands of tourists from all over the world flock to the Dead Sea each year, many lured by purported health qualities. An entire mini-industry is devoted to the production of cosmetic products based on the mud, minerals and salts found in the Sea of Death.
The Dead Sea is also the site of massive potash production. Potash is a key ingredient in fertilizers used to increase food productivity and feed hundreds of millions.
This sea is the lowest point on the earth. It is the saltiest point on earth. A truly natural wonder.
No wonder Israelis are quite fond of it, and no wonder they are a wee bit fearful of turning it over to the Canadians.
This week, the newly minted Finance Minister Yair Lapid made headlines when he declared that he "vigorously opposes" the impending sale of Israel Chemicals to the Potash Corporation of Saskatchewan.
Israel Chemicals, also known by the acronym ICL, is Israel's largest industrial company by sales. It achieved that status by milking the Dea Sea for potash and other minerals, through its subsidiary Dead Sea Works.
Selling ICL, which has been in the works since November, would transfer Israel's only real natural resource into foreign hands. Naturally, it is highly controversial. This is the deal is all about.
Since November 2011, PCS and ICL have been discussing a merger. PCS already owns 14% of ICL and now wishes to acquire outright ownership.
ICL is the sixth largest potash manufacturer in the world, and PCS is the second biggest. ICL's potash production company, Dead Sea Works, can produce at roughly the lowest cost in the world per ton. So in the highly concentrated global market for potash, buying ICL would give PCS a significant boost.
Meanwhile, as the argument in Israel rages, ICL CEO Stefan Borgas recently claimed in an interview with Bloomberg that Potash and ICL are currently not in negotiations.
If there are no negotiations, why the sudden flareup?
ICL is owned by the Ofer Brothers group, through their holding company The Israel Corporation. Lapid's comments this week were directed at Idan Ofer, who controls the group (and who is reportedly thinking of moving to London for tax purposes). If Ofer moves to London and then sells ICL, the tax bite would be a lot smaller.
But as Lapid said last week, the Dead Sea is not Ofer's to sell. Or is it?
Who owns the Dead Sea?
Here's where it gets complicated. On the surface of things, Israel and Jordan share the land rights over the Dead Sea, which has been the biggest industrial site in the Middle East since the late 1920s.
Dead Sea Works was founded by the State of Israel in 1952 as a state-owned enterprise. It was based upon the remnants of The Palestine Potash Company, chartered in 1929 by Jewish engineer Moses Novomeysky, which was ruined during the Independence War of 1948.
In 1968 the government moved Dead Sea Works to become a unit of Israel Chemicals, which was founded as a state-owned holding company for Israel's chemicals and phosphate industries.
In the early 1990s ICL was privatized and is now a subsidiary of Israel Corp., Israel's largest holding company, which is controlled by the Ofer family. ICL, with a market cap of $17 billion (NIS 50 billion), has exclusive rights to mine the Dead Sea.
The State of Israel still owns a golden share in the company, which makes any deal to sell it dependent on the government's stamp of approval.
So while Israel and Jordan are the owners of the Dead Sea proper, ICL has the exclusive rights to mine the Israeli side until 2030, when its lease will be up for review.
Why is the deal being delayed?
While PCS and The Israel Corp. both want the deal, but it touches upon not a few nerves.
ICL is responsible for about 14% of Israel's exports, and employs thousands of people. Sale to PCS endangers all of that, plus it puts a strategically important and highly lucrative resource in the hands of a foreign company, whose interests don't necessarily correlate with those of the Israeli taxpayers.
Prime Minister Benjamin Netanyahu supported the merger with PCS, saying it complies with the government's policy of attracting foreign investors, but the consensus was that he couldn't approve the deal before the elections. But with the elections over, Lapid as finance minister upped and surprised pundits and politicians alike when he stated clear opposition to the deal. ICL's shares promptly dropped 6% on the Tel Aviv Stock Exchange.
Meanwhile, for two years now a bitter battle has been waged over ICL's royalties to the State of Israel.
The original contract gave Israel a share of 18.5% of ICL's profits from the Dead Sea. Following a reform, that share is due to increase to around 35%-45%.
What exactly is the current status of the deal?
While both companies deny negotiations at this time, it was reported last month that PCS will make the state a better offer. This improved offer, reportedly, will include a promise not to fire any employees in Israel, to ramp up environmental protection budgets and to list PCS's stock on the Tel Aviv Stock Exchange (if it does, it will be the biggest company on the TASE. Teva's market cap is $33.6 billion. PCS's is $34 billion).
Still, the political hurdles are significant and Lapid's objection only adds fuel to the fire. Both opposition and coalition MKs are vehemently against the deal and while Netanyahu supports it, there is no guarantee it will be approved.
But since this is a huge deal for all parties involved, it is a pretty safe bet to assume we'll be hearing about it in the future.
Israel and Canada are friendly. This isn't really about the Dead Sea, is it?
It is. But it is also about the rest of Israel's natural resources, most notably the natural gas money that's going to flow into Israel soon enough. It's about revisiting somewhat shady deals done long ago between Israel's governments and private businessmen who were put in charge of its national treasures and paid very little back over the years in terms of taxes.
But it's mostly about fair compensation for the people of Israel, who have the right to enjoy the fruits of their natural resources.
Last week Lapid announced a decision to set up a committee that will discuss the state's rights regarding natural resources managed by private enterprise. In other words, in the near future, ICL and other companies may have to pay higher taxes on their profits. And as for who owns the Dead Sea, now you know.