Saving industry

We are in the middle of a major crisis that could have been avoided if government officials had been more proactive.

June 13, 2017 21:33
3 minute read.
THE ENVIRONMENTAL PROTECTION MINISTRY will not renew the toxin permit for Haifa’s ammonia storage ta

THE ENVIRONMENTAL PROTECTION MINISTRY will not renew the toxin permit for Haifa’s ammonia storage tank when it expires on March 1.. (photo credit: MATAN NAIM)

Prime Minister Benjamin Netanyahu likes to talk to world leaders about Israel’s unique culture of innovation and how the Jewish state has turned into the “Start-Up Nation.” But while technology accounts today for over 50% of Israel’s exports, not everyone in this country works in hi-tech.

Most work in traditional industries such as Haifa Chemicals which, due to ongoing governmental failures, is set to shut down, a move that would be a stain on the government and, more important, damage Israel’s economic growth. Here is why: For years, Israelis have warned about the danger the company’s ammonia tank poses to the Haifa Bay region.

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A particularly alarmist report authored by Prof. Ehud Keinan of the Technion-Israel Institute of Technology’s chemistry department was brought to the attention of the public at the beginning of the year. Keinan, who wrote the report with 10 other experts last year, warned that an attack on the storage facility could result in an explosion exceeding the power of Hiroshima or Nagasaki.

Last year, Hezbollah head Hassan Nasrallah threatened to target Haifa’s ammonia facility with rockets. “This would be exactly like a nuclear bomb, and we can say that Lebanon today has a nuclear bomb, seeing as any rocket that might hit these tanks is capable of creating a nuclear bomb effect,” he said.

In contrast, National Security Council’s deputy head Ze’ev Tzuk Ram wrote a letter to Haifa Mayor Yona Yahav in October 2016 arguing that the chances of a scenario similar to the one described by Keinan and Nasrallah were very low. He included in his letter expert opinions that discounted the dangers of the ammonia tank and of the ships that transport the ammonia to Haifa from abroad.

In any event, at least since the aftermath of the 2006 Second Lebanon War there has been talk of either moving the ammonia tank or finding an alternative.

Big-league economic interests are involved. Haifa Chemicals, which owns and operates the tank, is a profitable company that has revenues of around $700 million a year. The company employs 900 people directly and has generated work for thousands more. It is one of Israel’s biggest exporters and the fertilizer it produces from the ammonia accounts for 2% of Israel’s industrial exports. Its contribution to the GDP is said to be NIS 1.5 billion and it pays income and local property taxes of around NIS 150m.a year.

By the end of the week, though, all of this might disappear.

Back in October 2013, the cabinet decided, unanimously, to move the tank to the South of the country, and that Israel would begin producing its ammonia in a plant that would be powered by natural gas.

But the tender to locate a business concern willing to run the plant was doomed from the outset. Limitations were placed on the volume of ammonia that could be produced and little leeway was given to produce other substances.

There was also uncertainty regarding gas prices. While seven companies expressed interest in the tender, all eventually pulled out.

No other solution has been offered, the Supreme Court has ordered the storage tank emptied, and now Haifa Chemicals has been forced to cut production. In the absence of a solution, the company is scheduled to shut down on Sunday. Hundreds of workers will be fired.

We are in the middle of a major crisis that could have been avoided if government officials had been more proactive.

Hundreds of people in danger of losing their jobs and an important industry is going to close shop? Why? Because no one is willing to make a decision.

Netanyahu’s government, which made the decision to close down the ammonia tank, has no excuses. The Environmental Protection Ministry, the courts, the Finance Ministry and the Public Security Ministry are supposed to be running the show. They are ultimately responsible for the endless delays. It is the state’s obligation to implement its own decisions, and in deciding to close down the Haifa tank, it needs to come up with an alternative. Its failure to do so will significantly harm the economy.

If doing business in Israel is so difficult and if state institutions are unable to provide viable alternatives that balance the need for security and safety with the need to provide a supportive business environment, international firms will choose to invest elsewhere and local businesses will transfer operations abroad. There is still time to prevent that from happening.

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