The Heavy Light Rail

If Tel Aviv wants a subway system, it should trust the private sector to do the job.

In Cairo they built a subway, in Athens too. But in Tel Aviv people have been talking about it since the state was founded, and nothing happens. Residents and the million vehicles that enter the metropolitan area each day continue to sit in endless traffic jams, to waste gas looking for parking and to swear at the whole world because the light rail project is stuck yet again.

subway - AP - August 20, 2010

Last week, about four years after the MTS consortium was awarded the tender to build the light rail system for greater Tel Aviv, it was informed by the accountant general in the Finance Ministry that its franchise agreement was being terminated because it had violated the terms of the contract. The accountant general also announced that the state-owned Metropolitan Mass Transit System (known by its Hebrew initials, NTA ) will take over the project. It is to issue tenders for digging the tunnels, then tenders for the purchase of passenger cars and then tenders for the actual operation and maintenance - all with state funding that will come out of the national budget.

MK Dov Khenin (Hadash ) was quick to celebrate: "Here's proof that the private sector is incapable of carrying out this kind of infrastructure work and there's no alternative to putting the project in the hands of the state." It seems that Khenin has selective vision; this colossal, decades-long failure is actually the failure of the state, not of the private sector.

The idea of building a subway in Tel Aviv was discussed by state institutions even before there was a state, in the mid-1930s when the city's population was just 150,000. In the 1960s international companies were invited to Tel Aviv to suggest public transportation solutions, but their proposals were shelved. In the 1970s then transportation minister Shimon Peres appointed a "mass transit" team, and in April 1973 Golda Meir's cabinet approved a plan for a state-built subway. That was 37 years ago.

In the 1980s more cabinet resolutions were passed and not implemented. In August 1996 Tel Aviv mayor Roni Milo and Prime Minister Benjamin Netanyahu held a cornerstone-laying ceremony for the train. That, too, went nowhere.

In 1997 the government company NTA was founded with the aim of providing a solution, but came of it with the exception of some high-budget PR videos. Not until the start of the previous decade did the state reach the conclusion that it was incapable of carrying out such a complex project on its own and must issue a tender to the private sector. It hoped to repeat the success of Route 6, which was built quickly by a private consortium.

In December 2006 a contract was signed with MTS to build the light rail project in Tel Aviv. But in the wake of the global economic crisis financing costs increased and MTS missed its construction milestones. Then the state announced the termination of the contract.

MTS did not meet all its contractual obligations, but such things happen in the business world. In any event, handing the project over to NTA is a historic error. As has been proved repeatedly over decades, the state is not up to the job. If the project is nationalized, it will be killed by politics and bureaucracy. A train to Nablus is more important to Transportation Minister Yisrael Katz, while a train to Beit She'an is more important to Netanyahu. The Tel Aviv rail system will take years to complete, and the cost will increase by billions.

A senior government official told me recently that it will cost another two or three billion shekels if the state builds the project. Former NTA general manager Yishay Dotan said "the option of a private company is preferable."

That's because every two or three years there are new finance and transportation ministers, and they have no interest in long-term projects. Why should they invest in something their successors will dedicate? In addition, Israel bounces from one crisis to the next, and sometimes budgets must be trimmed. The budget for infrastructure is always a handy target, so it's obvious that the funding for the Tel Aviv rail project will be suspended over and over, and it will bog down. That's what happened with the building of the Ayalon Highway.

So instead of scrapping what has already been achieved, the accountant general should sit down once more with the people from MTS, and hammer out a solution. This time the gap is just NIS 300 million in an NIS 11 billion project, and sometimes you don't have to be right. Sometimes it's best just to be smart. Like in Cairo, or Athens.