Steinitz to OECD: We won’t let gas kill hi-tech

Despite the discovery of vast offshore gas deposits, Israel says it will not abandon its booming export industries.

By NADAV SHEMER
OECD 311 (photo credit: Sharona Mazlian Levy)
OECD 311
(photo credit: Sharona Mazlian Levy)
Israel is sitting on at least $150 billion in future revenues following the discovery of vast offshore gas deposits, but it will not make the same mistake as other countries and abandon its booming export industries, Finance Minister Yuval Steinitz has told Reuters.
Speaking in Brussels, where he was on his way to Paris for a meeting of Organization for Economic Cooperation and Development finance ministers, Steinitz told the news agency, “I have said very clearly: We won’t let those very good [oil and gas] discoveries kill our exporting industries. We are not Kuwait; we are not Abu Dhabi.”
“Human capital is still the most important capital for this country,” he said. “The gas is just a nice addition; it’s not the main thing... it’s really for the people’s benefit.”
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I assume that we will decide to put a lot of the money in some kind of sovereign wealth fund, an Israeli fund that will invest elsewhere,” Steinitz said, adding that a portion would also pay down government debt of about 75 percent of gross domestic product.
Prime Minister Binyamin Netanyahu is slated to appoint a committee later this year to advise on how to invest gas and oil revenues.
Two huge natural-gas reservoirs have been discovered off the northern coast of Israel in the past two years. Together, they are the two biggest deepwater gas discoveries in the world in the past decade: Tamar, at 8.7 trillion cubic feet, which analysts believe will be used primarily for domestic consumption; and Leviathan, at 16 trillion cubic feet, which it is believed will turn Israel into a natural-gas exporter.
Drilling has so far only taken place in 20%-25% of Israel’s territorial waters, Steinitz said in the Reuters interview. “There might be some other discoveries as well,” he said.
On Wednesday, Steinitz spoke about innovation and growth at the opening ceremony of the OECD conference, which is being held in Paris to commemorate 50 years since the organization’s founding.
Israel was accepted into the 34- nation organization for developed economies last year.
“Innovating is the best way to utilize human capacities in order to upgrade the value of human labor and natural resources,” he told the conference.
“Small countries with limited natural resources must put special efforts on innovation if they want to compete with the giants. Hence it is mandatory for small countries like Israel to put special emphasis on promoting innovation and R&D activities in order to develop their economies.”
Steinitz said the Israeli government believes its most important role is to function as a first-tier safety net. For those purposes, he said, it has identified three main areas that need to be strengthened: linkages between basic research and applied research; the need to mitigate the risks taken when investing in preliminary research; and the need to increase collaboration between national and international institutions.
Steinitz also spoke about the importance of international cooperation.
“Israel understands the benefits of differing world views,” he said, and recent R&D cooperation deals with foreign countries and large multinationals “will assist in building strong links between innovative partners, while integrating research, higher education and industry.”
Later, Steinitz presented OECD Secretary-General Angel Gurria with an enlarged copy of a stamp Israel will produce in September to mark the organization’s 50th anniversary.
Reuters contributed to this report.