Nehemia Shtrasler Mar 04, 2016
A Polish woman decided to buy a present for her son-in-law. She bought him two ties, one red and one blue. One evening, she invited her daughter and son-in-law over for dinner, and the son-in-law, who wanted to make his mother-in-law happy, decided to wear the blue tie. But when she opened the door, the mother-in-law took one glance and complained, “I see you didn’t like the red tie.”
It’s the same story with the government’s deal with the natural-gas companies: Whatever happens with it is bad, according to the opposition. If Egypt found gas and no longer needs Israel, it’s proof the agreement is a bad one. But if Turkey, Greece and Cyprus are interested in buying Israeli gas that’s bad too, because we won’t have enough for ourselves.
If Leviathan isn’t developed, it’s bad. But if Delek and Noble Energy submitted a plan last week to develop the offshore field, that’s bad too, because it will undermine democracy. How? It’s unclear. The main thing is that it’s all bad, under any circumstance.
The deal is once again teetering on the edge. The ball is in the court of the High Court of Justice, which must rule soon on the legality of the agreement. A panel of five justices was assigned to hear the case.
Of the myriad arguments against the deal, the court eliminated all but one: the clause guaranteeing regulatory stability. In a normal country, such a clause would be unnecessary, because when the government promises to execute an agreement, it’s executed. But here, the situation is different. Stability is beyond us.
In our case, it’s the government itself that created the instability, by making numerous changes. It unilaterally raised the tax rate on the gas, from 25 percent to 60 percent. It restricted exports to just 40 percent of reserves. Then it came up with the gas deal, which forces Delek to sell its share in the Tamar and Karish-Tanin fields.
All these changes, however important they may have been, undermined the confidence of the investors and the banks that are supposed to finance the drilling so deeply that no other international investor has come to Israel to develop additional gas fields. They preferred to explore for gas in Lebanon and Cyprus. That is the origin of Noble Energy’s demand that a regulatory stability clause be added to the agreement, barring the government from altering its regulations for the next 10 years.
And here we come to the central absurdity in the story. It was Noble Energy that initially wanted the stability clause enacted by means of a new law. But National Infrastructure Minister Yuval Steinitz objected. He said it would be undemocratic to enact a law that applied only to Noble Energy, so the company would have to settle for a cabinet resolution, which is admittedly less binding. Noble Energy protested vehemently, but in the end it was forced to accept the decision.
But now everything has been turned upside down. The High Court is urging the government to consider enacting a personalized, undemocratic “Noble Energy Law,” and the opposition is supporting it enthusiastically. Its assessment is that the narrow governing coalition won’t manage to pass the law, and then the entire deal will collapse and the gas in Leviathan will remain buried under the sea.
If so, the monopoly will be restored to its original power, new investors won’t come, our budding ties with Turkey, Greece and Cyprus will wither and instead of collecting enormous tax revenues, we’ll pay billions in compensation in international arbitration proceedings. In other words, we’ll both lose money and fail to achieve energy independence, and the whole situation will be much worse. But as far as the deal’s opponents are concerned, the worse it gets, the better it is.
It’s worth adding that the legislative process would take a long time, and any delay would cause enormous damage to the economy and exports, while also incurring the risk of a lawsuit by Noble Energy.
The government recently told the court that it isn’t willing to enact legislation. In other cases, once the court reached the conclusion that the government’s solution wasn’t blatantly unreasonable, it has opted not to intervene. And that’s exactly the case here.
Nehemia Shtrasler, Haaretz Contributor
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