Politics: What’s keeping our gas under the sea?

Political chaos, zig-zagging, populism infused mania and faux legal caveats are all playing a part.

Arye Deri
Just as a sandstorm from Syria brought Mad Max-levels of dustiness and suffocating yellow air to Israel, the coalition descended into disarray and mutual recriminations for the same reason behind the chaos and violence in the Australian dystopia: fuel, or more specifically, a lack of it.
No, we haven’t seen warlike tribes fighting over the natural gas that is somehow still stuck under the Mediterranean Sea, and National Infrastructure, Water and Energy Minister Yuval Steinitz isn’t riding around the Negev in a crazy souped-up heavy-metal mega-car like the characters in the latest Mad Max installment, but you can hear the frustration and perhaps desperation rising in his throat with each new interview he gives on the subject.
As Economy Minister Arye Deri seems unprepared to waver from his latest stance – after wavering several times on his previous stances – to not make the necessary move for the government’s gas outline to be implemented soon, rather than in a year, Steinitz took to haredi radio station Kol Barama to invoke divine intervention: “Deri made a commitment on three occasions....
I hope that before Yom Kippur, if he wants to be inscribed in the Book of Good Life, he will sign the gas deal.”
In another interview, Steinitz complained that it can’t all come down to Deri. One minister cannot impede another, he said.
And yet, one is.
HOW DID we get here? The story is very long, starts when the Leviathan gas field was found in 2010, and involves myriad changes to the government’s deals with gas companies – mainly Delek Group and Noble Energy, mainly to increase the government’s revenue – but we’ll start from last year and focus on politics, which is what is holding gas development up at this point.
In March 2014, then-antitrust commissioner David Gilo reached an agreement for a consent decree with Noble and Delek, mostly involving the sale of the Karish and Tanin gas fields, to prevent their deal with the government from being considered a “restrictive agreement.”
In December, Gilo changed his mind, with some government officials blaming the flip-flop on public pressure from leaders of the charge against the government’s gas policies, such as MK Shelly Yacimovich (Zionist Union), activist Or-ly Barlev, columnists in economic newspaper TheMarker, and others. Gilo did not officially declare the agreement restrictive, in hopes that the government would negotiate a tougher agreement, rather than have the gas companies go to arbitration.
The government had to put a pin in that issue, though, because there was an election coming up. Gas was not a major election issue. Deri, who ran on defending the “invisible people,” his term for the poor, campaigned on canceling value-added tax on basic food items, which he has since decided is not actually helpful for the poor.
Gas came up in a Channel 2 interview with now-Finance Minister Moshe Kahlon, who is friends with Kobi Maimon, a partial owner of the Tamar gas field, but Kahlon said that is not a conflict of interest, and he will be involved in the issue, adding: “Monopolies must be dismantled.”
Six months after Gilo decided not to support the government position, the new government was formed and within days, National Economic Council head Eugene Kandel and others briefed Deri on the gas outline, which the Shas leader openly admits he knew little about. Gilo resigned, but his resignation would take effect only in September.
This was also when Deri learned about the now-notorious Article 52, the current bane of Steinitz’s existence.
Article 52 of the 1988 Restrictive Trade Practices Law (the Antitrust Law), which has never been invoked before, allows an economy minister to circumvent the objections of an antitrust commissioner in matters of foreign relations or national security.
The gas outline is included in those matters because of exports to Jordan and Egypt.
Meanwhile, Kahlon was told by the government’s legal advisers that he does, in fact, have a conflict of interest and cannot vote on gas-related issues, and the same went for Construction Minister Yoav Galant and Welfare Minister Haim Katz, who have investments in gas companies.
In July, the gas outline was brought to a cabinet meeting. Deri voted in favor.
Deri sprung a new idea on the Prime Minister Benjamin Netanyahu: Yes, I voted in favor of the gas plan, he said, but I don’t feel comfortable taking responsibility for Article 52, so let’s transfer that authority to the whole cabinet. Sources in the cabinet said that it was clear that Netanyahu was surprised and angry, because that would mean he would have to bring the matter to the Knesset, but he went ahead with it.
A week later, the transfer of authority on Article 52 was put on the Knesset’s docket and removed late at night, because the 61-seat coalition, minus the three ministers who refused to vote, were not enough for a majority. Knesset Legal Adviser Eyal Yinon said the three ministers could vote on the transfer of authority, because the kinds of conflicts of interest that apply to the cabinet do not apply in the same way to the Knesset, and because in any case, it is not a vote directly about the gas plan, but the ministers would not be convinced.
Deri then said that if the Knesset approves the gas plan, he would sign Article 52 on his own. The gas outline was changed yet again, and Steinitz held a press conference to present it. The Knesset Economics Committee held meetings to discuss it. Yinon said that even though the outline is not a bill, the Knesset can hold a vote that would simply express its position on the matter.
In late August, in a briefing with the Knesset Reporters Association, Deri dropped a bomb: He will not sign Article 52 on his own. He doesn’t want the responsibility of being the first person to ever do so. Instead, the government should wait for a new antitrust commissioner to be appointed and for him or her to have a say on the gas outline.
That process could take a year or more, considering that even a committee to find a new commissioner has yet to be appointed.
This week, there was déjà vu from July.
After hours of negotiating and cajoling, Netanyahu and coalition chairman Tzachi Hanegbi (Likud) just couldn’t get the votes to approve transferring authority over Article 52. The Knesset voted in favor of the gas plan, with support from four Yisrael Beytenu MKs in the opposition, but, no matter how many times Netanyahu calls that a victory, it is purely a symbolic one. It may improve the gas outline’s image in the eyes of the public, but the gas is still stuck, deep down under the Mediterranean, and apparently only Arye Deri’s John Hancock can release it.
WHAT IS Deri’s motivation here? He voted in favor of the gas plan both in the cabinet and in the Knesset, so why won’t he sign Article 52? Deri says his reason is that he does not think he should be the person to set the precedent of using the work-around. Leviathan’s gas has been underground for six years after its discovery, and it can stay there another year until a new antitrust commissioner lets it out, is his explanation.
However, Deri never really says why he doesn’t want to take responsibility. He doesn’t say it’s because he thinks it’s a dangerous economic precedent for the government to start overruling the person who declares whether there are monopolies. If he actually thought the gas deal created a monopoly, why did he vote in favor of it more than once? There is clearly something else in play, which brings us back to the “invisible people” of the Shas election campaign.
Deri prides himself on representing the poor, on being in touch with the common man, on being social-minded, which in Israeli parlance is basically socialist-minded.
But the “social” people – Yacimovich, Barlev, who was also a leader of the 2011 housing protests, radio hosts with left-wing economic opinions such as Israel Radio’s Keren Neubach and Army Radio’s Rino Tzror – are all against it. TheMarker meanwhile has been at the forefront of opposition to the gas framework.
The reason Deri does not want to take responsibility for the gas plan’s implementation is simple. He is now the savior of the gas plan’s opponents. Like Batman, he is not the hero they want – after all, he voted in favor of the outline – but he’s the hero they need right now. And by being the hero of those who are against the gas plan, he can still say he is looking out for the “invisible people.”
Of course, that is purely populist reasoning.
The longer the gas stays under the sea, the longer it will take for the government to have that extra income, which, as Steinitz and Netanyahu keep pointing out, will go to education, welfare and health; money that would help the “invisible people.”
But the “social” people don’t like the plan, so Mr. Social himself, Arye Mahlouf Deri, cannot support it.
Deri is not the only one apparently bit by the populist bug. Kahlon, Galant and Katz could have voted for Article 52. Yinon and Attorney-General Yehuda Weinstein said they have no problem with a conflict of interest for that vote. And yet, the three ministers refuse to do it and help get things going.
Only a few years ago, Kahlon and Katz were known as the most social-minded people in Likud. Katz even used to be an MK in a socialist party led by eventual Labor leader and now-Zionist Union MK Amir Peretz.
Kahlon formed an entire party, Kulanu, based on the ideas of economic reform to lower the cost of living and housing, and he has been single-minded in pursuing that mission since becoming finance minister.
And Galant, ever the military man, seems to be following in the spirit of his commander, as Kulanu’s second minister.
How can they, “social” ministers, vote for a plan the “social” people strongly oppose? They avoid the conflict by continuing to hide behind an excuse that has no legal validity, calling it an ethical problem.
AFTER THE government pulled the transfer of authority over Article 52 from the Knesset’s agenda this week because the coalition and opposition reached a tie, Deri said he is sure that it will come back, and it will pass.
Netanyahu thought it would pass this week, that he would convince an opposition MK to just walk out, to be in the latrine or something while the vote took place, but it didn’t happen.
Still, the prime minister said that evening that “when I want something, I get it.”
There’s little indication that the situation won’t repeat itself if the government brings the motion to the Knesset in October, when it begins its winter session. But perhaps Netanyahu has something up his sleeve that could get some opposition MKs to change their minds.
Maybe Netanyahu will use his powers of persuasion to change Deri’s mind. Maybe he can sway Kahlon, Galant and Katz, or at least one of them. The final budget vote is on November 20, and the Likud has plenty of other MKs who can be used to make things difficult for each of their ministries until they change their minds.
Netanyahu also has a little-mentioned doomsday weapon. The prime minister can force Deri to sign Article 52. The terms of the government’s formation give Netanyahu that authority, which he has yet to use or even threaten to use, but that could be the “drastic measures” Steinitz referred to in a recent interview with Channel 1 that the government would take if Deri does not budge.
The worst option, as far as Netanyahu and Steinitz are concerned, would be to just listen to Deri and wait for a new antitrust commissioner to make a decision. In their view that would be bad for the country, because it would keep the gas and, therefore, income from gas, from flowing, and it could lead Noble and Delek to turn to arbitration, because they don’t want to wait another year or more.
If they wait that long, the ministers’ blame game may turn into full-fledged Mad Max fuel-deprivation mania.