Israeli Natural Gas Lies (Part 6)

'Better to nationalize the gas' is the most bizarre and most dangerous lie in the gas debate, but the bottom line is still that this is the best possible plan.

Nehemia Shtrasler
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Minister Steinitz, holding data relating to gas prices, and PM Netanyahu at a recent cabinet meeting.Credit: Emil Salman
Nehemia Shtrasler

Zionist Union MK Eitan Cabel was beside himself. He could not believe what was happening to him. Like the biblical Balaam, he came to curse but was blessed instead. He invited the prime minister to the Knesset Economic Affairs Committee to pillory him, but Benjamin Netanyahu was prepared: He spoke confidently, answered as he please and delivered all his messages. Actually, Cabel won too. He wanted a personal forum and got it, in spades. And the gas deal? Everyone knows the committee hearing was a mere formality. The real decision will be made by the High Court of Justice.

So, on to lie No. 14 in our continuing series: “Even after the deal is signed, Leviathan will not be developed because the agreement does not provide for sanctions.” Nonsense. Leviathan will be Yitzhak Tshuva’s only remaining gas field. If it’s not developed, Tshuva is out of the sector. Does that sound logical? Nonetheless, there are indeed sanctions. Delek and Noble Energy must put in $1.7 billion dollars within two years and complete development of the field in four years. If not, the agreement’s stability clause would be invoked and their rights to the reserve revoked, in accordance with the terms of their license and the Petroleum Law.

Lie No. 15: “Better to nationalize the gas; it’s ours, after all.” That is the most bizarre and the most dangerous lie. The soil is also “ours,” as are the water and the air. By this Marxist rationale, concept, no developer may lease a lot, build a house and sell it for profit. If he does make a profit on it, it belongs to us.

The exploration companies, just like the developer, purchased concessions from the state and they found gas. Moreover, the state takes 55 percent of the income, which is, in fact, an elegant form of nationalization, because the companies are working mainly for us. They were the ones who took the risk and found gas, which the state was unable to do for 50 years, but they have to hand over most of their revenues to the Finance Ministry.

If the state nationalizes the gas industry, that will be the end of the story, like in Venezuela under Hugo Chavez. The foreign companies will leave, the state will be incapable of operating the fields. It will indeed get 100 percent — of nothing.

Supporters of nationalization, neo-Marxist MKs Dov Khenin (Joint Arab List), Tamar Zandberg (Meretz) and Shelly Yacimovich (Zionist Union) want somebody like Israel Electric Corporation union boss Miki Tzarfati to operate the offshore reserves, and when a storm breaks out at sea he will ignore the instructions of management. They even want somebody like the former Ashdod Port union chief Alon Hassan to advise Tzarfati on implementing a work-to-rule action twice a week or so. Or maybe they will emulate the corrupt Israel National Roads Company, or the paralyzed NTA light rail project, the proud product of government management.

Of all the individuals who are trying, even today, to cripple the deal, Finance Minister Moshe Kahlon and Environmental Protection Minister Avi Gabbay deserve special mention. Kahlon is hurting investment, growth and tax revenues, while Gabbay is reducing the chances for cleaner air. It’s high time to ignore them, after five years of debates, delays and many regulatory changes (mostly the fault of the previous Netanyahu government). Let’s get Leviathan and Karish-Tanin gas out of the depths of the sea. It’s true that this deal is not perfect (it bothers me that Noble Energy still controls Tamar) but I recognize that in a negotiation, you can’t have everything.

The bottom line is that this is the best possible plan. The fact is that industrialists, hoteliers and the heads of hospitals and many other institutions are begging for the gas to get here already.

If, despite everything, I have not managed to persuade you over the course of this six-part series, allow me one parting shot: Prof. Eugene Kandel, Prof. Eytan Sheshinski, Amir Levy, Karnit Flug, Michael Sarel, Assaf Eilat, Uri Schwartz and Avi Licht — economists and economic professionals of the highest caliber, honest, reputable people, are all in favor of the plan.

If they are, you should be as well.

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