PM to lawmakers: ‘Ideal’ gas deal doesn’t exist, don’t drive away investors

Prime Minister Benjamin Netanyahu defended the contentious gas deal on Tuesday, arguing that it is “essential” to Israel’s national security, considerably boosts its international standing, and is a safeguard against international boycotts.

In a raucous hearing at the Knesset’s Economic Affairs Committee punctuated by considerable heckling by opposition lawmakers, the prime minister said the Israel Defense Forces had urged the development of the Leviathan offshore gas field in April.

Questioned by lawmakers, Netanyahu accused them of driving away investors and giving Israel “a bad name.” The proposed deal is “optimal,” the prime minister repeated multiple times during the hearing, maintaining that an ideal agreement “does not exist.”

“In this case, it is the best alternative,” he said.

The testimony by the prime minister and energy minister came after nearly three weeks of heated debate about the gas deal in the committee. The deal has been criticized by some as giving away too much of the country’s resources to business interests and creating a monopoly in control of Israel’s gas resources. Near weekly protests have been held in Tel Aviv against the proposal by activists who say the deal is too favorable to an international consortium at the state’s expense.

In his remarks, Netanyahu linked Israel’s national security to its ability to develop more than one offshore field, noting that its offshore resources and power stations had already been targeted during the 2014 Gaza war with Hamas and will likely be again in the future.

“We need to ensure our energy security,” Netanyahu said, adding that Israel being dependent on a single offshore gas field “is liable to significantly harm our national security.” He proceeded to read out a declassified recommendation from the defense establishment from April 2015, urging the government to develop the Leviathan field in the interest of Israel’s security.

Energy Minister Yuval Steinitz interjected to note that the paper “is the IDF’s position.” The prime minister was responding to Israeli media reports this week that indicated that Israeli defense establishment was opposed to the gas agreement.

“The security considerations force us to develop more fields and more rigs. It strengthens the alliance of the moderates in the region, and therefore this deal is essential for the future of Israel,” the prime minister said.

Netanyahu said there has been a flurry of international interest in Israel’s gas field, including from Turkey, Greece and Cyprus, but “all the interest in Israel dissipates if we don’t” develop the rigs.

“A state that exports critical resources to other countries has much more power,” he asserted. “The stronger you are, the more they [other countries] seek you out.”

“Our ability to export gas empowers the State of Israel,” he added, making Israel “more immune to international pressure,” and it “complicates boycott efforts.”

Netanyahu said that while Cyprus found far less gas in its offshore reserves, companies were flocking there en masse while avoiding Israel, which the prime minister said had gained a reputation of “becoming a country of overregulation, of politicization” with regard to gas. What pushes an economy forward, argued Netanyahu, is the level of freedom given to the private sector.

“We are in a great danger of companies not coming to invest here,” he said, due to the “unceasing” political involvement. He accused the politicians present of giving Israel’s economy a “bad name” worldwide, both with regard to the gas and other issues.

The prime minister also stressed that developing additional rigs was the most important issue, and denied that the deal does not impose sanctions on Nobel Energy in the case of violations.

He also briefly touched on the “challenge” raised with Egypt. Cairo earlier this week suspended all talks with Israel about gas imports after it was ordered to pay a $1.76 billion fine for halting its gas supply to Israel in 2012. Netanyahu said he was sending a representative to Cairo to resolve the dispute.

Steinitz, meanwhile, defended the deal as “the best possible deal,” noting that it had received the backing of the Bank of Israel.

The prime minister’s remarks did not appear to sway the opposition lawmakers present, with opposition leader Isaac Herzog accusing the prime minister of ignoring the deal’s ramifications for the Israeli public.

“I don’t understand what this detailed lecture has to do with the price of gas for the consumer, to developing the energy market. None of your comments have anything to do with this,” he said. MK Shelly Yachimovich said the prime minister failed to address any of her questions.

MK Eitan Cabel (Zionist Union), the head of the committee, opened the session with a sharp critique of the “radical” and “unprecedented” gas deal, which he said anchors a monopoly. Article 52 — which says that the economy minister can override the Antitrust Authority’s ruling against the deal — must only be implemented if there are issues of national security or harm to Israel’s international standing, Cabel said, but that “isn’t the situation, not even close.”

Closing the session, he remarked “we didn’t get any answers,” while praising Netanyahu’s rhetorical skill. “You know how to talk,” he told the prime minister. “We know how to talk, and know how to act,” Netanyahu replied.

Under the terms of the proposed deal, which was approved by the Knesset in September, the government plans to give an international consortium led by the Delek and Noble Energy companies the rights to Leviathan, the largest gas reserve yet found in Israeli territorial waters.

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

Critics of the deal, including former anti-trust commissioner David Gilo who resigned in May over the matter, have expressed concern that it creates a de facto monopoly that would lead to high gas prices for Israelis. They have accused the government of capitulating to gas companies’ demands.

However, politicians have balked at green-lighting the controversial measure.

The economy minister has the power to sign off on bypassing the Antitrust Authority but former economy minister Aryeh Deri, who had long refused to exercise the right, eventually resigned from his post in November, which he said was in order to not stand in the way of the deal.

Stuart Winer contributed to this report.