Think about it: On natural gas and democracy

Something approximating the government’s imperfect policy outline will undoubtedly be approved.

By
July 5, 2015 21:00
Israel's natural gas

Israel's natural gas. (photo credit: MINISTRY OF NATIONAL INFRASTRUCTURES)

 
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In the current debate on Israel’s natural gas reserves and how best they should be utilized so that everyone gains and no one is done an injustice, we suffer from an excess of biased information which makes it very difficult, if not impossible, for the layman to reach a balanced and unbiased opinion as to how the issue ought to be resolved.

What further complicate the issue are authentic ideological differences and politics that frequently has nothing or little to do with the gas issue itself, or ideology for that matter.

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What do we know? Firstly, that in the past decade vast gas reserves have been found off the shores of Israel that ought to supply all of Israel’s gas needs for decades to come. The questions emanating from this fact are how much of this gas ought to be set aside for Israel’s own present and future use, how much should be exported and how much of the profit should go to the state (and its citizens) in the form of taxes and royalties. An additional question is how the price of the gas ought to be determined, and whether the price should be controlled.

Secondly, that until vast quantities of gas were actually found no one was concerned with the risk that a gas monopoly might be created, and nobody gave any thought to the question of how such a monopoly, if and when created, ought to be dealt with. One of the major problems in this connection is that by the time the issue emerged, various agreements had been signed with the companies involved, and by them with other states, and the reopening of signed agreements is always problematic.

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Thirdly, that the government’s handling of the issue, on the decision making level and the negotiating level, has been amateurish and inconsistent, without clear goals or red lines.

It is not that serious experts, representing different approaches, haven’t been involved along the way in advising the government. Professor Eitan Sheshinski, appointed in 2011 to head a public commission to examine an appropriate taxation policy vis-à-vis the gas producing companies, and Professor Eugene Kandel, head of the National Economic Council and the prime minister’s economic adviser since 2009, who in recent weeks has led the move to get the revised gas market policy outline approved, are but two of them.

The problem is that Prime Minister Benjamin Netanyahu chooses to ignore advice that doesn’t correspond with his own immediate wishes. Within the next few weeks State Comptroller Yosef Shapira will be publishing a highly critical report on the government’s performance in the negotiations with the gas monopoly, and the policy of the National Infrastructures, Energy and Water Ministry and the Prime Minister’s Office on the issue.

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As a social democrat I am naturally concerned that the Israeli population at large should get its share of benefits and favor effective state control over private monopolies and oligopolies.

However, I feel there is a lot of demagoguery and exaggeration around the gas issue on both sides, and I somehow have difficulty viewing tycoon Yitzhak Tshuva, the owner of the Delek Group, which is one of main actors in this saga and who will be earning billions as a result of the proposed policy outline, as nothing but a ruthless villain.

I just hope that whatever finally emerges from the current messy debate will be reasonable, less tilted in the direction of the natural gas companies, and will not necessitate the establishment of a commission of inquiry in future.

What really disturbs me, though, is that Netanyahu wanted all the decisions on the natural gas policy outline negotiated with the gas companies to be taken without effective Knesset oversight.

It is understandable that in a reality in which the coalition is supported by only 61 MKs Netanyahu should want to avoid, as far as possible, Knesset intervention, and the risk of his policy being rejected by it, especially in a situation in which some of his ministers have reservations about the policy as well. However, this doesn’t mean that he should be allowed to get his way.

Fortunately for Israel’s democracy Netanyahu failed to prevent the Knesset from becoming involved in the approval of the policy outline. The reasons for his failure have to do not only with the policy outline itself but also with Netanyahu’s general and personal modus operandi.

Basically what happened was that four members of Netanyahu’s government – Economy Minister Aryeh Deri, Finance Minister Moshe Kahlon, Construction and Housing Minister Yoav Galant and Welfare and Social Services Minister Haim Katz refused to toe the line, while two leaders of opposition parties, who basically agree with the policy outline – Avigdor Liberman and Yair Lapid – refused to support the government as part of a personal vendetta against Netanyahu.

Deri refused to assume the responsibilities of the resigning director of the Israel Antitrust Authority, Professor David Gilo, and enable the gas monopoly to continue to thrive to the detriment of Israel’s “transparent” citizens, whom he claims to represent. He insisted on transferring the responsibilities to the government as a whole, thus forcing Netanyahu to bring the issue to the Knesset for approval.

Kahlon, Galant and Katz, declared that due to “conflicts of interests” they would not vote with the government in the Knesset to approve the transfer of responsibilities to the government, but did not reveal what was really bugging them.

Liberman declared that he would join the “Bolsheviks,” even though he supports the policy outline, in order to force Netanyahu to get his act together within his own government. Lapid emphasized that he would only support the policy outline if the Knesset is involved, and if the price of the gas is controlled. He has also insisted that the government should raise the barriers that currently prevent most industrial firms in Israel connecting to gas.

Efforts by the American embassy to convince the Arab MKs to vote in favor of the policy outline failed.

Apparently the US administration is opposed to the more extreme efforts to force the American company Noble Energy, which is one of the companies involved, to give up part of its lucrative holdings in the gas fields, and to any changes in existing agreements that might sabotage the sale of gas by Noble Energy from the Leviathan gas field (which hasn’t yet started production) to Jordan.

As things look at the moment, the vote Netanyahu was hoping to pass in the Knesset last Monday to enable the government to implement the agreement it concocted with the gas monopoly will be delayed for a while. In the meantime the Knesset Economics Committee, under Labor’s Eitan Cabel, will hold some serious deliberations on the whole natural gas issue.

In all likelihood the government’s policy outline will finally be adopted, albeit with some modest changes.

Rumors have it that the main change will be a lower price for the gas sold than that to which the government agreed in its negotiations with the Delek Group and Noble Energy, which was $5.4 per unit of gas (the production cost is around $0.5). It should be noted that the price Noble Energy is reported to have closed on with the Jordanians is somewhere between $6.5 and $7.5.

Though something approximating the government’s imperfect policy outline will undoubtedly be approved, much to the chagrin of its opponents, democracy will have won a victory, at least on the formal side.

The writer is a political scientist and a retired Knesset employee.

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