Deri may quit Economy Ministry to allow gas deal through

Shas party head tells Netanyahu he won’t use his office’s antitrust-busting powers to pass controversial natural gas accord, but also won’t stand in way

Economy Minister Aryeh Deri. (Yonatan Sindel/Flash90)
Economy Minister Aryeh Deri. (Yonatan Sindel/Flash90)

Economy Minister Aryeh Deri may opt to leave his government position rather than use its power to approve a controversial natural gas deal championed by Prime Minister Benjamin Netanyahu.

In a dramatic signal of how politically toxic the gas deal has become, Deri told Netanyahu on Saturday night that he would not use his ministry’s legal powers to give special exemptions from Israeli anti-monopoly regulations to the US-Israeli concern developing Israel’s recently discovered natural gas fields.

Under the terms of the deal, the government plans to give an international consortium led by Israel’s Delek Group and the American company Noble Energy rights to the largest gas reserve yet found in Israeli territorial waters, the Leviathan field, in exchange for a scaling back of their involvement in the currently operational Tamar field or the smaller Tanin and Karish fields.

Currently, Tamar’s single pipeline to the Israeli coast is the Israeli economy’s only source of natural gas, and development of the remaining fields has stalled over regulatory troubles.

The Leviathan find, thought to contain 18.9 trillion cubic feet (535 billion cubic meters) of gas, is considered a bonanza for the country, turning it into a major natural gas supplier and providing hundreds of billions for state coffers, according to Netanyahu.

But in December, then-antitrust commissioner David Gilo ruled that the Delek-Noble conglomerate may constitute a monopoly, sparking a vociferous national debate on the terms given to the energy companies.

Under Article 52 of the Antitrust Law, only the economy minister may override the antitrust commissioner’s ruling and give a special dispensation to a monopoly to operate in Israel. For much of the year, Deri has refused to give that dispensation, and Netanyahu failed over the summer to pass a Knesset vote transferring his “Article 52 authority,” as it is known, to the broader cabinet.

On Saturday, Deri said he “would be the last to torpedo the deal,” despite his opposition to its provisions. He told Netanyahu he was not opposed in principle to leaving his cabinet post in favor of another, clearing the way for Netanyahu to appoint himself interim economy minister with the power to approve the deal.

“I told the prime minister I’m willing to leave the Economy Ministry in order not to stop the adoption of the framework,” he told Channel 2’s Meet the Press.

Sources close to Netanyahu told the Haaretz daily that “any solution to this issue will be taken together with and in coordination with Deri.”

According to officials, no decisions have yet been taken on a possible cabinet reshuffle. The prime minister is considering taking some of the Economy Ministry’s responsibilities, including Article 52’s antitrust powers, to the Prime Minister’s Office and leaving Deri in a slightly reduced Economy Ministry, though it is likely that would require the same kind of Knesset vote Netanyahu failed to garner support for earlier this year.

Deri is not the only minister troubled by the deal.

Finance Minister Moshe Kahlon (Kulanu), Housing Minister Yoav Galant (Kulanu) and Welfare Minister Haim Katz (Likud) have all reported they have a conflict of interest in voting on the issue due to financial investments in the gas companies or long-time friendship with major investors.

Deri has drawn criticism from many for his agreement to leave the ministry. Opponents of the deal, such as Knesset Economy Committee Chairman MK Eitan Cabel (Zionist Union), accused Deri of effectively joining the “tycoons” and enabling the deal’s passage.

Supporters in Likud, too, mocked him for both refusing to approve the deal and refusing to stand in its way. A party source said he was “running from the leadership he spent the election campaign begging for.”

An aerial view of the Tamar gas-processing rig 24 kilometers off the southern coastal city of Ashkelon, June 23, 2014. (Moshe Shai/Flash90)
An aerial view of the Tamar gas-processing rig 24 kilometers off the southern coastal city of Ashkelon, June 23, 2014. (Moshe Shai/Flash90)

Deri responded to the wave of criticism late Saturday in a Facebook post, taking credit for forcing a Knesset debate and public scrutiny of the deal, noting that the deal’s stipulations were only publicized by Netanyahu and Energy Minister Yuval Steinitz when they were seeking votes from Knesset members to transfer Deri’s powers.

“I improved the gas framework. Thanks to me, the whole process was carried out with transparency,” he wrote in the Saturday statement. “Even after seven changes I forced into the deal, it is still now only the lesser of possible evils, but it is the only option to implement the framework and bring billions of shekels into the state’s coffers in this difficult economic period. Despite all that, I won’t overrule the antitrust commission and won’t activate Article 52.”

Citing his “responsibility for Israel’s economy,” he concluded the statement with an apparent hint that Article 52 powers would be taken away from him. “I leave to the prime minister the decision how to solve the [problem] of Article 52.”

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