Steinitz: Develop Tamar - or give it back

Finance Minister: It is unacceptable that someone who receives a holding in a natural resource of Israel should use it to pressure the state.

Minister of Finance Yuval Steinitz has strongly defended the goverment's policy on natural resources, and sharply warned energy companies not to delay their work. Steinitz spoke on the second and final day of the "Globes" Israel Business Conference today.

Steinitz dismissed the harsh criticism by oil and gas exploration companies of the Sheshinski committee's interim recommendations to raise taxes on future revenue from oil and gas discoveries, saying, "This is the time. It should have been done long ago, as in all Western countries. Companies tax is falling, and will fall further. Other countries that cut corporate tax did so while simultaneously raising oil and gas royalties. We're the only ones for whom this is forbidden?" he asked rhetorically.

"After ignoring the flaw for 60 years, the State of Israel finally decided to review its royalties regime. How can anyone object?"

Steinitz claimed that Israel "finally" appointed a professional committee with members who do not have industry interests, headed by Prof. Eitan Sheshinski of the Hebrew University, which will soon submit its final report. Steinitz asked, "What's all the shouting about? In Western countries, these measures were taken 30 years ago. When a country discovers that its share of natural resources is lower than that of other countries, and is effectively zero, after deducting companies tax, is it forbidden to make changes?

"I want to remind you all that the most objective parties, including the Bank of Israel and the IMF, welcomed the committee's interim report. The IMF said that Israel should bring its royalties on natural treasures in line with Western norms. The OECD secretary general, who visited here and who does not belong to the local political swamp, said that if Israel was a properly run country, it should not surrender to pressures and should raise taxes and royalties to equalize them to Western levels. What's right for the US, Canada, Australia, and Norway, is also right for Israel."

Without mentioning names, Steinitz told the oil and gas exploration companies, "You've crossed the line. The witch-hunting of Sheshinski is beyond the pale and intolerable. It's wrong in a democratic country to try to break a committee and the man who heads it."

Commenting on the announcement by the Israeli partners in the Tamar gas license - Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) - that they were reviewing the possibility of delaying development of the Tamar field, Steinitz said that they had two choices: either develop the gas field, or return the license to the state.

"Anyone who receives a holding in a natural resource of the State of Israel must treat it with awe and reverence. It is unacceptable that anyone who receives a holding in a natural resource of Israel should use it to pressure the State of Israel. It's improper and maybe even illegal. No one can use the fact that he has a license to a natural resource of Israel to dictate to the country's leadership. So either use the gas resources, or give them back to the state. We will not accept someone holding a license to a natural resource and delaying its development until matters are clarified. I call on all the parties to develop the fields as fast as possible, and if there is a problem with financing - turn to us."

Steinitz began his talk with a rundown of statistics showing the economy's emergence from the economic crisis. "The Israeli economy emerged from the worst crisis since World War II in good shape," Steinitz said. "There's no doubt that, in an international comparison, the Israeli economy emerged well from the crisis."

Commenting on the labor market, Steinitz said, "When we talk of narrowing gaps, we must first of all talk about reducing unemployment, because unemployment is a disease." Steinitz said that the rise in unemployment was halted in late 2009, and by mid-2010 it returned to its pre-crisis level of 6.2-6.5% - "Few countries have succeeded in this area."

On the integration of haredim (ultra-orthodox) and Israeli Arabs into the workforce, he said, "The level of participation is an important factor, and we have a problem here. I am pleased to tell you that, in 2010, there was a significant increase in participation in the Israeli labor force. We can see that, at the end of 2010, measures taken in 2009 are bearing fruit. We have increased participation in the labor force from 56.5% to 58% today, and the trend is upward. It's not enough; we should exceed 60% in the coming years, but it's a major improvement. We also see some growth in haredim and Arabs in the workforce."

He added that Israel created 100,000 new private and public sector jobs in 2010, compared with 7,900 new jobs in 2009.

Published by Globes [online], Israel business news - - on December 13, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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