The Gas: Plutocrats, Democracy, Monopolies and Bureaucracy

The topic of conversation in Israel this week is The Gas. Well, it has been the topic of conversation for some years but maybe this week the Government will make a decision. While the Government is dithering the people are demonstrating. However they are demonstrating without having grasped the nature of the issue. The true story of Israel’s gas discovery and its future industry is one of bureaucracy and not of plutocrats, democracy or monopolies. Hence the demonstrations mainly against the “Monopoly” will have no effect on the decision of the Government.

The Sheshinski Committee provides an insight into the wheeling and dealing of a democracy that has created a bureaucracy. Most democracies have them. The sentiment that prevails is that Israel has survived for years without Gas so a few more won’t make a difference. Years of debates and indecisions detailed show that successive governments, prime ministers and ministers are still not awarding any company a contract to bring the gas out off the water. However the indecision has resulted in what might have been a viable and immediate industry becoming a dreamlike project.

The indecision and delay has resulted in the withdrawal of many potential companies leaving only a potential monopoly situation. The government has only one company or consortium that is still willing to invest one million shekels a day without a contract. However this is not a true monopoly. This consortium has Israel, American, Egyptian and Jordanian contractual clauses for production and export. The companies of this consortium are listed on the stock exchange. So there are no big owners or Plutocrats to benefit. Any Israeli can purchase shares, sell the shares and collect the dividends.

The details are yet to be worked out, but now the Government has no option, because it delayed while considering the options. No additional company is about to appear to sign a contract. The demonstrators can neither influence nor alter this outcome.

About the Author
Dr Glen Segell is Fellow at the Ezri Center for Iran & Persian Gulf Studies, University of Haifa.