Cabinet approves Dead Sea royalties deal

Adam Teva V'Din says the agreement is a severe blow to the public interest.

By NADAV SHEMER
January 1, 2012 23:02
4 minute read.
The Dead Sea

The Dead Sea 311. (photo credit: Marc Israel Sellem)

Amid heavy criticism from environmental activists, the government on Sunday approved the agreement reached last week between the Finance Ministry and Israel Chemicals, which stipulates the division of costs toward a full salt harvest of the Dead Sea’s southern portion.

Under the agreement, Israel Chemicals unit Dead Sea Works will contribute NIS 3.04 billion – 80 percent of the total cost of the project.

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The state will fund the remaining NIS 760m., of which NIS 337m. is its share of the current value of a $30m. dividend it withdrew in 1992 to finance the sea’s protection. The state’s share of potash sales will rise from 5% to 10%, with the extra royalties to be designated to a Dead Sea rehabilitation fund.
Environmental activists and various politicians slammed the cabinet’s decision to approve the agreement, charging that the royalty figures were way too low.

“I regret this decision – this is an historic miss,” said Environmental Protection Minister Gilad Erdan, in a statement released by his office. “Israel Chemicals is getting a unique natural resource and its stakeholders have profited from it in huge sums, while the public’s portion was very small.

Today was an historic opportunity with the opening of negotiations, to increase significantly the portion of the public, and unfortunately, [the government] did not do this.”

Labor leader Shelly Yacimovich echoed Erdan’s condemnation, saying the agreement was passed with no transparency, and it would leave the public with just “a few small scraps” of the revenues derived from one of its greatest natural resources. But she said the public had “matured,” and would not accept the government’s decision.

While highly critical of the agreement, Erdan did acknowledge that some successes came out of its approval, as result of pressure from his office and environmentalists. For example, after years of dawdling on what to do about the overflowing waters of the southern basin, the government did finally decide the company would bear most of the fiscal responsibility for the salt harvest, he said.

The government also made a clarification to the agreement, stipulating the current level of royalties will not be valid for the long-term, and can be reopened for discussion again in the future, according to Erdan.

In the event that an expansion of pumping activities or the construction of an additional mineral extraction pool occurs, a substantial rise in taxes will be imposed upon the company immediately, in order to give the public their fair share of the profits, he explained.

A third positive element, in Erdan’s opinion, was the decision that a team must be established within 45 days to designate the portion that Israel Chemicals will pay toward an environmental rehabilitation fund, he said.

Adam Teva V'Din (Israel Union for Environmental Defense), along with the Movement for Quality Government, has pledged to fight against the government’s decision in the High Court.

“The government support for this agreement constitutes/ is a severe blow to public interest at large, and the approval of the continued exploitation of the Dead Sea resources in insignificant payment sums that do not reflect public ownership of the resource,” said Adam Teva V'Din Executive Director Amit Bracha.

The two groups had already sent a letter to cabinet officials a few days prior to the vote, warning them that if they approved the agreement the groups would take legal action.

“Unfortunately, the government chose to support the agreement that was made far from the public’s watchful eye, behind closed doors and based on false assumptions,” Bracha said.

“The decision to accept the agreement is an extremely unreasonable decision and is based on a disproportionate agreement that contradicts the principle of distributive environmental justice.”

MK Dov Henin (Hadash) charged the government with “abandoning” the Dead Sea to the “mercy of tycoons.”

The royalty levels, he said, are far less than what they should be, lower even than those charged to natural gas developers, Henin argued. Royalties should actually be higher among Dead Sea enterprises, as their activities do not require the same types of risks as does natural gas exploration, Henin said.

With the ever-worsening environmental threats on the Dead Sea, there is an urgent need to enact legislation that will protect the dwindling resource, he said.

To accomplish this task, he called for an increase in public pressure on the government to remove its opposition to his and Adam Teva V'Din’s comprehensive Dead Sea rehabilitation bill during next week’s cabinet meeting – a bill that the cabinet had initially rejected at a first vote over a month ago.

Likewise, Friends of the Earth Middle East Israel Director Gidon Bromberg said there was “no achievement” in raising the royalties to 10% since this was actually the amount determined by the government in the 1960s, though never enforced. While Bromberg praised the government for requiring Israel Chemicals to pay the brunt of the salt harvest – adhering to the “polluter pays” principle – he criticized the Finance Ministry for making such a deal “in the dark, away from public view.”

Urging cabinet members to vote in favor of Henin’s proposed bill next week, he added, “Only legislation that offers comprehensive solutions to the distress of the Dead Sea will save the dying sea.”


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