A smoldering disagreement over whether to let the controversial ride-sharing service Uber X operate in Israel flared up in the cabinet on Sunday, with Prime Minister Benjamin Netanyahu exchanging harsh words over the issue with Transportation Minster Yisrael Katz.
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Katz set off the exchange by lauding his achievements in deregulating the aviation industry via the Open Skies agreement with the European Union and the creation of private ports to break the government monopoly. Netanyahu replied that Katz’s support of competition didn’t extend to backing Uber X’s request to operate in Israel.
“You’re saying this to me? Me, who is so open to the idea of competition? I have no problem with Uber, so long as it observes the law,” Katz responded. “If you want, you can take over the issue.”
Netanyahu answered back: “Maybe I will.”
To which Katz retorted: “My job is not to take care of foreign capitalists but the citizens of the State of Israel. Competition has to be fair and efficient.”
Katz was referring apparently to a meeting Netanyahu held with Travis Kalanick, the CEO of Uber, last week at the World Economic Forum conference in Davos, Switzerland. After some hesitation, the prime minster responded, “I don’t know the CEO of Uber at all.”
The cabinet exchange comes amid behind-the-scenes maneuvering by Uber inside Netanyahu’s Likud party. Uber has been operating in Israel for several years, but is restricted in Israel to offering its taxi-hailing service but is barred from offering its key product, which is ride-sharing by ordinary drivers.
Sources said that Transportation Ministry Director General Uzi Yitzhaki and the ministry’s chief scientist, Shai Sofer, both support Uber X, but Katz has been blocking any approval of the service for the last 18 months.
Both Uber, which is based in San Francisco, and the Taxi Drivers Association have been reportedly pressuring politicians, particularly in Likud, to come out in support of one side or the other.
Like elsewhere in the world, taxi drivers have opposed Uber X on the grounds that it will hurt their livelihood and pose unfair competition as well as safety risks to passengers.
“I’m the one who convinced him [Katz] personally to approve Uber’s entry into Israel – and I’m not even a member of the Likud Central Committee,” Yehuda Bar-Or, chairman of the Taxi Drivers Association, told TheMarker.
Bar-Or said his relations with Katz were purely professional, but sources said certain of his colleagues in the association were powerful Likud vote contractors who were engaging behind the scenes to pressure Katz and others to oppose Uber.
Meanwhile, Uber executives have also been lobbying Likud politicians to change the regulations and they have, in turn, been lobbying Netanyahu, who apparently supports Uber. Sources said they expected the company to mount a more aggressive campaign going forward, similar to one they staged against New York City Mayor Bill de Blasio.
Uber has sought to answer Katz’s objections to security concerns about Uber X drivers by offering to let the Transportation Ministry screen drivers for criminal backgrounds, substantive traffic violations or health issues, much as it does before it licenses taxi drivers. There are also precedents for setting up a fund to compensate taxi drivers for lost revenues; in Mexico, for example, Uber charges a 1.5% fee on all rides to go into such a fund.
Sunday’s cabinet debate ended with Katz offering to transfer the decision to the prime minister “on condition no conflicts of interest exist in the matter of public transportation.”
Netanyahu answered back: “There aren’t any conflicts of interest. I’ll consider positively.”