Churning water

The declaration by Minister of Interior Eli Yishai of his intention to exempt local authorities from setting up water corporations is just one chapter in a story that seemingly no one wants to put an end to.

Yishai's predecessor Avraham Poraz recently said, in an interview with "Globes", that setting up the corporations is forced by reality because of the extended neglect by local authorities of water infrastructures. Yishai though prefers to stay in line with the opinion of the Union of Local Authorities in Israel, which takes care to claim that water prices rose in order to finance bloated mechanisms in the corporations.

The Water Authority and Ministry of Finance hold a totally opposite opinion, saying that there is no connection between the rise in the price of water and corporations, and that water prices reflect the cost: When Israel is drying up, saving is a necessity. When prices are raised, wasters are held back and take shorter showers.

It is difficult to accuse one specific side of exploitation or malicious intent. The local authorities bristle at the authority to manage the water economy that was stolen from them. The water corporations claim that they provide service to the public according to an efficient and much better business model, through noticeable improvement in collection rates for water consumption. In addition, they invest in upgrading the infrastructure that was already old decades ago.

It is fair to assume that in a few more months the ambitious State Comptroller will compose a report which will try to make some sense of what is going on in the water economy. Until then, a committee led by the Treasury's budget department director Udi Nissan is trying to settle the argument between the local authorities and the corporations, and arrange their stands one against the other.

During the past two weeks the committee actually seemed to be on the way to agreements and compromise. Now it is not clear if Yishai's strong stance will lead to reaching those agreements. It may well be that at the end of the day Yishai will understand that without the Minister of Finance he cannot do much.

The same committee is also a bit confused now. A few weeks ago it invited the main players in the 2011 water war in order to understand who is against whom, and even the committee's members were confused due to the partial figures with which they were presented, and the countless versions and numbers, which most have a hard time understanding.

And of course, there is also the political angle. Yishai and Shas, which he heads, hold the Interior Ministry portfolio, the Housing portfolio, and the Israel Land Administration (ILA). Yishai, with his decision, is not talking to the local authorities. Yishai is talking through his post, as is fellow Shas MK Ariel Atias, directly to the public. It is a war over water, a war over housing, and other socio-economic battles. If they succeed - good for Shas. If they don't - bad for Shas. Follow-up will be crucial.

Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2011