Prime minister appears in court in unprecedented move, saying Israel had to act on its gas fields now, and arguing that ‘any further delay could lead to grave, significant and long-term damage to the State of Israel.’

Telem Yahav, Yael Friedson 02.14.16

In an unprecedented move, Prime Minister Benjamin Netanyahu arrived at the Supreme Court on Sunday to personally defend the natural gas deal signed in December with US and Israeli developers drilling offshore gas deposits, while the five justices deliberate on petitions against it.

The prime minister asked the judges to reject the petitions against the gas plan, warning that “with so many good intentions, we might miss a historic golden opportunity.”

While Netanyahu was delivering his testimony inside the courtroom, about 50 people protested outside. One wore a cape, a scepter and a mask of Netanyahu’s face, while another held a sign that read “selling the state.”

Israel announced the discovery of sizeable offshore natural gas deposits about five years ago. A partnership between Noble Energy and Delek Group, which is led by billionaire Yitzhak Tshuva, is the main developer at Israel’s two larger gas fields, Tamar and the heftier Leviathan. After the country’s antitrust commissioner determined the gas companies’ ownership constituted a monopoly, a government committee reached a deal with the firms to introduce competition.

Under the deal, Texas-based Noble Energy and Israel’s Delek Group, which discovered Leviathan in 2010, would retain control of the field but are being forced to sell other, smaller assets such as the nearby Tamar field that began production in 2013.

Critics, including the anti-trust authority, have argued that planned control of the country’s gas reserves by one consortium will limit competition and keep prices high.

Opposition parties Zionist Union and Meretz, and non-government organizations like the Movement for Quality Government in Israel and Adam Teva V’Din, filed petitions to block the deal because they said it favored the developers over the Israeli public.

Holding estimated reserves of 622 billion cubic metres, Leviathan will cost at least $6 billion to develop. It is meant to begin production by 2020 and supply billions of dollars worth of gas to Egypt and Jordan, and possibly Turkey and Europe.

The prime minister said that Israel was “at a critical point in time, both with regards to the risks and with regards to the opportunities relating to this issue. In the most concise way, we’re at the last minute with regards to our ability to realize the potential in the State of Israel’s gas reserves. As I’m about to elaborate, any additional delay, any backtracking, could lead to grave results that I doubt we could overcome.”

He argued the blueprint provided major opportunities for Israel’s foreign relations and significantly boost its economy, and noted that if Israel were to alter its deal investors could turn away and buy gas from Israel’s enemies instead.

Netanyahu said he had no intention of going into the legal arguments against the gas deal, noting he asked to appear in person in front of the extended panel of judges “to demonstrate the great importance I see in continuing the quick and smooth implementation of the gas plan. It’s important not just to the State of Israel’s economy, but also to its national security, its energy security and to our standing in the Middle East.”

He argued that there was “no realistic alternative to the approved gas plan and I’m anxious of the possible consequences of any further delay. It could lead to the collapse of the plan that has been formulated, which could lead to grave, significant and long-term damage to the State of Israel.”

The prime minister stressed that Israel “needed to create relationships of trust and long-term cooperation with international companies and foreign governments because developing the Leviathan field, much like other fields, necessitates massive investments of tens of billions of shekels. This requires long-term contracts to produce gas so we could fund the development of the gas fields.”

However, he noted, Israel’s rigid regulatory system has “undermined the trust of energy companies and the international banks that are supposed to fund the investments, as well as of those countries that are supposed to be the buyers of the Israeli gas. The development of the gas fields, much like the development of new gas fields, has completely stopped.”

“This isn’t another economic project,” Netanyahu said. “In order to develop gas that’s at a great depth of almost two kilometers under sea level, dozens of kilometers from the shore, that is a very complex operation that requires knowhow and expertise.”

The prime minister also defended the gas plan from claims that it was meant to help the wealthy and harm the rest of Israel’s citizens, saying that “A significant portion of the revenue from the gas plan has gone to the state, meaning to the citizens of Israel.”

“I’ve led many of the significant competitive reforms in the Israeli economy,” he went on to say. “I don’t need a push to promote competition and reduce centralization. I supported the gas plan because I realized that in this case, we are at a pressing situation and we do not have another realistic alternative. Without the plan, there will definitely not be any competition. I have no doubt about that.”

Last year, the Knesset narrowly approved the deal but the anti-trust commissioner resigned in protest. The deal still needed anti-trust approval or for the economy minister to sign a waiver to bypass the Anti-Trust Authority.

The minister, Aryeh Deri, refused and ultimately resigned and Netanyahu took over as economy minister. In December, he invoked a never-before-used clause in the anti-trust law that allows for decisions of the Anti-Trust Authority to be overridden in the name of security and international diplomacy.

“Until a year ago, I’ve allowed the different regulators to act independently, but the decision of the previous antitrust regulator to go back on a contract has led to a serious crisis of trust, almost irreversible, not just with the energy companies but also with the relevant countries.

“We had an agreement with the Kingdom of Jordan to sign a contract on the supply of Israeli gas (to Amman) and everything was ready, and then the surprising decision came to cancel the agreement. This was an important security, geo-political and economic contract. Had this contract been signed a year ago, it would’ve helped a lot to the economic stability of Jordan, which is facing the significant and difficult challenge of hundreds of thousands of refugees. It strengthens our relations of peace, relations that are very important to the State of Israel.”

Netanyahu had defended the deal in an affidavit to the Supreme Court last week and requested appearing in front of the judges before they make their final, binding ruling.

“This is the first time I’ve asked to appear in front of the court in the 10 years I’ve served as the prime minister. To the best of my knowledge, this is the first time in the history of the State of Israel that a prime minister asks to appear in front of the court,” Netanyahu said at the beginning of his testimony.

Energy Minister Yuval Steinitz was present during the prime minister’s testimony, as well as representatives of the petitioners: MKs Shelly Yachimovich (Zionist Union), Zahava Galon (Meretz), Ayelet Nahmias-Verbin (Zionist Union), Prof. Manuel Trajtenberg (Zionist Union), Eitan Cabel (Zionist Union) and Tamar Zandberg (Meretz).,7340,L-4766053,00.html

Reuters and the Associated Press contributed to this report.
Netanyahu to High Court: Gas deal helps chance of peace with many countries
PM confronts High Court to defend natural gas policy in unprecedented personal appearance.
Prime Minister Benjamin Netanyahu on Sunday became the first sitting Israeli leader to personally appear before the High Court of Justice as he defended his natural gas policy from five petitions filed by Zionist Union, Meretz and various NGOs in what has now become the most dramatic legal affair of our time.

Netanyahu spoke bluntly, telling the expanded five-justice panel, presided over by Deputy Supreme Court President Elyakim Rubinstein, “We are in the 90th [last] minute in terms of our ability to realize the potential of the State of Israel’s gas… every additional delay… could lead to grave results and it is doubtful if we could recover from them.”

Last week, Netanyahu took his first unprecedented move, filing a personal affidavit declaring emphatically to the High Court that, “there is no other realistic option” to exploit the country’s natural gas resources beside the one he has chosen.

The main purpose of the affidavit and then the personal appearance was to justify Netanyahu’s first-ever use of the power of the economy minister (a role he recently took over) to bypass the antitrust authority’s objections to the policy under Article 52 of the relevant law.

MK Shelly Yacimovich (Zionist Union), who has led the opposition to the deal, stated, “The appearance of the prime minister before the High Court was empty of any truthful substance; its entire purpose from beginning to end was not directed at convincing the court, rather to intimidate the court by virtue of the appearance occurring.”

She added, “The emphasis over and over from his [Netanyahu’s] own mouth about the unprecedented and rare nature of the appearance was designed to drill home the message and to deter the judges.”

She said the prime minister’s message and facts were “cut off from reality and full of intentionally misleading information.”

The petitioners’ lawyer, Avigdor Feldman, questioned how a democracy could operate with the prime minister making such a raw power grab, as he viewed the government’s actions of side-stepping the antitrust authority.

While he spoke, Netanyahu seemed to command the rapt attention of the justices. He was barely interrupted the entire time and was not pushed around by a single question of the type that lawyers are generally bombarded with.

It seemed like a special platform for him to give a public speech in favor of one of his key policies, with him turning side to side to the audience and the press as he spoke, not focused solely on the justices as is customary.

On the other hand, Rubinstein made Netanyahu wait for nearly 15 minutes before he and the other justices entered the room, something the prime minister is not used to. Then Rubinstein noted attendance of several dozen lawyers before recognizing Netanyahu, and after around 30 minutes he also twice lightly encouraged the prime minister to wrap up his remarks.

But the most surprising and possibly fateful move of the justices came hours later when they asked the state attorney to respond within seven days as to whether the aspect of the deal, which freezes the price of gas for 10 years could be passed in the Knesset instead of being authorized merely on his authority in his capacity as economy minister.

The policy and deal in question – a comprehensive accord aimed at settling disagreements between gas developers and the government – were officially activated on December 17 after Netanyahu signed a controversial legal clause enabling the framework to move forward.

Commonly known as the gas outline, the deal received cabinet approval in August, but faced additional obstacles due to failures to receive the antitrust commissioner’s approval.

Full realization of the gas deal ultimately required that the economy minister – a role currently being filled by Netanyahu – invoke a legal clause to circumvent the commissioner’s objections – Article 52 of the Restrictive Trade Practices Law (1988) and that the gas price and some other items be frozen for 10 years.

As part of the process of employing this article, Netanyahu was required to conduct consultations with the Knesset Economic Affairs Committee, chaired by MK Eitan Cabel (Zionist Union). While committee members voted against recommending the use of the clause, their conclusions were in no way legally binding and Netanyahu moved ahead without their approval.

All of this background plus the fact that with a mere one-vote majority in the Knesset – and two members of Knesset, who would likely be unable to vote – means that the state will likely need to tell the High Court that legislation is not an option.

The two Knesset members have a conflict of interest on the issue.

Though they were cleared by Knesset legal adviser Eyal Yinon to vote on a procedural issue related to the gas deal, they were concerned enough about the conflict that they did not even vote on that – meaning they would be even less likely to vote on the substance of the deal.

But this is only part of the issue, according to sources close to the deal, who indicated even more emphatically that there was no chance this would go back to the Knesset because the investors would then guaranteed walk away and bring the case to international arbitration where they would likely beat Israel.

The sources further added that without the 10-year price and other issues such as the stability clause, which they said were approved by the Knesset, the investors would never have agreed in the first place.

Finally, with the government having done everything it possibly could to facilitate the country’s energy security, if the High Court stops the deal it must take full responsibility for the consequences, said the sources.

As in his affidavit, the prime minister explained to the court that he had decided to use his authority under Article 52, after he was convinced that only “by intervening” could he “rescue the natural gas market in Israel from the freeze it went into after the former antitrust commissioner decided to withdraw support from the executive order to which he had agreed” with the developers of the Tamar and Leviathan reservoirs.

Also, as in the affidavit, he referred to January and February meetings he held with US Vice President Joseph Biden, the leaders of Greece and Cyprus and with contacts with Egypt and Turkey as enhanced relations – all due to anticipation from these countries that the gas deal is on the verge of moving forward.

Noting that 50 percent of the state’s electricity now flows from natural gas, the prime minister said that having only one reservoir running, Tamar, which is under potential threat of attack, leaves the country too exposed from a national security perspective.

Rejecting accusations that his gas deal empowers monopolies, Netanyahu held himself up as an ardent supporter of competition for 20 years and countered that the unlocking the current freeze on gas exploitation will encourage currently stifled competition.

Yacimovich contradicted the national security argument, saying his real motivations were related to satisfying his economic allies – developers.

Mor Gilboa, director of Green Course, said Netanyahu’s fearmongering had reached its peak and called his use of the word “security” during the proceedings “wild and unadulterated.”

“It will go down in history that [the deal] was served on a silver platter to Yitzhak Tshuva and Noble Energy.”

Despite attacks on his claims of national security and foreign policy concerns, the justices seemed to come to the prime minister’s defense.

One point Netanyahu emphasized more in his remarks than in his affidavit was the importance of keeping trust with the country’s private sector partners. He told the High Court that at the end of the day, successfully exploiting the state’s natural gas comes down “to one word – trust, international trust, trust of the investors, trust of the banks, of other countries, and I can say that during recent years, unfortunately [through all the delays to the deal] we have squandered this trust.”

He said that in recent months, he had rebuilt the trust, but it was still shaky and that the deal must be grasped speedily to maintain that trust.

Returning at the end of his speech to a catchphrase he once used for the Palestinians, he said, “if you give, you will receive” – meaning if Israel gives a green light to developers with the conditions that have been negotiated, the developers will exploit the natural gas for the state’s