Next Stop for the Gas Deal: The Knesset Economics Committee

Netanyahu will act to override antitrust objections to the gas framework but still must consult with lawmakers.

Benjamin Netanyahu and Arye Dery in the Knesset in 2015.
Ronen Zvulun/Reuters

In the next few days, Prime Minister Benjamin Netanyahu will begin the unprecedented process of circumventing the antitrust law.

Wearing the new hat he acquired Sunday as economy minister, Netanyahu will exercise his rights under Section 52 of the Antitrust Law. This would override the authority of the antitrust commissioner and enable the Delek-Noble Energy cartel to control virtually all of Israel’s natural gas reserves.

That Arye Dery is stepping down from one of the more influential ministries is the latest — but by no means final — piece of a puzzle Netanyahu has been assembling to get the gas framework cleared and let the Delek-Noble partnership begin work on getting the Leviathan gas field into production.

The process has been delayed as politicians, officials, the media and social activists have fought over what should be the determining factor in Israel’s gas policy. One side worries about the antitrust dangers from Delek-Noble’s control over gas, while the other wants to ensure that Israel has more than one gas field in production and can export gas to neighboring countries.

Reuters

Hanging over the process is the threat that Noble might seek international arbitration and that Israel may lose gas contracts to Egypt, which in recent weeks uncovered a major new gas field.

Prof. David Gilo, who was antitrust commissioner until September, declared in 2011 that the Delek-Noble group was a monopoly. That came a year after the group discovered the giant Leviathan reserve, which together with the Tamar reserve it discovered earlier leave it controlling nearly all of Israel’s proven reserves.

The government, concerned that Gilo would delay development of Leviathan, negotiated a compromise agreement known as the gas framework. But Gilo opposed the agreement, partly because it gives the cartel immunity from antitrust scrutiny for 10 to 15 years, leaving his ruling intact before he stepped down.

Thus Netanyahu, who has pushed hard to reach a compromise with the energy companies, was left with the choice of rescinding Gilo’s ruling or overriding it.

Section 52 lets the economy minister exempt a monopoly from the Antitrust Law if he believes it would impinge on Israel’s national security or foreign policy interests. But the minister must first consult with the Knesset Economic Affairs Committee.

In July, the security cabinet agreed that the gas framework was in the national interest based on opinions presented by the Foreign Ministry and the National Security Council. Dery, who was economy minister until Sunday, supported the framework but refused to exercise his powers under Section 52, arguing that he would not be the first minister in Israeli history to do so.

In the next few days, Netanyahu will present the economics committee with the framework agreement together with a formal request to consult the lawmakers about it. Opposition MK Eitan Cabel (Zionist Union) will want the committee to hear both sides of the argument and has the right to call the economy minister and other relevant officials to appear. However, the committee won’t vote on the matter.

It is not yet clear how long this process will take because there is no precedent. The government wants it completed within a month, but the committee is unlikely to allocate so little time to a decision so critical to Israel’s economic future.

If Cabel tries to filibuster he’s likely to run into opposition from the Knesset’s legal advisers. But if he puts together a serious series of hearings, inviting officials and outside experts to give testimony, it will be hard for the government to stop him.

Cabel has the backing of the High Court of Justice on this. While the court rejected a petition in July from the Movement for Quality Government to block hearings on the gas framework, Justice Noam Sohlberg said the decision assumed that the Economic Affairs Committee would engage in serious hearings.

After the economics committee completes its work, the gas framework will almost certainly face a challenge at the High Court. The odds that the justices will intervene aren’t high; if the court were inclined to intervene in the matter, it would have done so in July.