EU-Israel trade predicted to grow despite diplomatic tension

Noble Energy executive says encouraged by Treasury talk of deregulation.

November 23, 2016 14:15
3 minute read.
Economic panel

The Jerusalem Post Diplomatic Conference Economic panel brought together EU Ambassador Lars Faaborg-Andersen with Chairman of the board of Bank Hapoalim Yair Seroussi, Director of Noble Energy Israel Binyamin A.Zomer, head of the Foreign Trade Administration at the Israeli Ministry of Economy Ohad C. (photo credit: MARC ISRAEL SELLEM)

European Union Ambassador to Israel Lars Faaborg-Andersen pushed a positive message at the Jerusalem Post Diplomatic Conference on Wednesday, predicting that trade with Israel will continue to grow despite diplomatic tension between the EU and Israel.

“The EU and Israel might have disagreements and just like friends and families we might have emotionally charged arguments, but this should not overshadow the deep and close relationship we enjoy and have had over the decades on economic and trade matters,” Faaborg-Andersen said during the conference’s economic panel.

He was joined on the panel by Chairman of the Board of Bank Hapoalim Yair Seroussi, Israel Country manager for Noble Energy Binyamin A. Zomer, head of the Foreign Trade Administration at the Economy Ministry Ohad Cohen and Finance Ministry director-general Shai Babad.

One of the major disagreements on trade between Israel and the EU is over the EU Commission’s decision last year to start labeling products originating from settlements. When asked about this during the panel, Faaborg-Andersen dismissed it as a “minuscule issue.”

“About product labeling, we have to keep a sense of proportion here: We have a €30 billion a year trade between us, settlement products on a good day constitute €200 million a year, it’s minuscule in the larger picture. But the general economic situation is great, trade is improving and growing by the day,” said Faaborg-Andersen.

Babad did not disagree with the ambassador in his list of challenges and problems facing the country.

“When we look at growth, Israel is strong, but in productivity we are about 25% below the OECD average. Two of the three main challenges of Israel that the Finance Ministry is focusing on are the cost of living and closing the social gaps and inequality in the Israeli economy,” Babad said.

According to Babad, in terms of growth Israel has been on the upwards path in recent years, and indicators are better than expected by the ministry, with unemployment rates at a record level low of 4.7%-4.8%, and the debt-to-GDP ratio improving.

To continue growth, all panelists agreed that Israel needed deregulation and increased competitiveness.

Companies need to feel that “uncertainty and bureaucracy are being reduced, this is the major issue for this government,” said Seroussi.

“One of our main challenges is that on the one hand we want free competition” and we want to make sure that we keep imports “coming to Israel and reduce customs and quotas, but on the other hand we want to protect the local industry so it will be able to export as much as it can,” said Babad. “We will need to see how and in which ways it’s correct for Israel to support its export industry.”

Added Cohen, “Israel is trying to diversify its markets, and while the EU is and will remain an important partner, we must also look east and south. In the past few years we started negotiating free trade area agreements with China, the customs union of Russia, Belarus, Kazakhstan Armenia and Kyrgyzstan, with South Korea, with Vietnam, and with India, in order to diversify our exports.”

According to Zomer, Noble Energy has been hindered by over regulation.

“The role of regulators is to make sure that businesses can move forward and create jobs; therefore hearing what Shai [Babad] said here I am leaving more optimistic than when I came, and I was already optimistic,” said Zomer. “Noble is in the middle of some important investment decisions regarding the Leviathan gas field. These will provide Israel with energy security, a better environment and the potential to improve its geo-political standing, in this region and beyond, with export to Europe as well.”

At Noble we are, “as we say, ‘Energizing the world and bettering people’s lives,’” Zomer concluded.

Speaking from the perspective of banking, Seroussi agreed that big business has the moral obligation to give back to the country and the community, not only for moral reasons but also because it is better business.

“When you are the major bank you must deal with all of society and really feel part of it,” said Seroussi. “Banking and finance is all about people, people from all sectors of society. We must deal with different populations.”

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