Members of the Economic Arrangements bill inter-ministerial committee are seeking to postpone as much as possible, or even cancel, the decisive discussion of the Sheshinski 2 Committee's recommendations on the state's share of natural resources. As of now, no date has been set for the discussion, although the matter has been made exceedingly complicated by the intervention of Prime Minister Benjamin Netanyahu, who wants to consider changes in the recommendations, and by the fact that the inter-ministerial committee is scheduled to finish its work by the end of August.
Nevertheless, it now appears that the discussion of Sheshinski 2 and the amendment in the Law for the Encouragement of Capital Investments, in which the state is expected to eventually grant Israel Chemicals (TASE: ICL: NYSE: ICL) hundreds of millions of shekels annually in tax breaks, will be unofficially linked to the discussion of the gas plan in what amounts to a political deal. The delay in making progress on the gas plan (Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz was quoted today as saying, "The talks with Noble Energy have gone awry") are putting off still further the minister's discussion of the Sheshinski 2 recommendations. The announcement by Knesset legal advisor Eyal Yinon directed against the scope of the proposed Economic Arrangements bill also enables the ministers to further put off the discussion, and it is possible that it will not take place at all in the end, unless political stipulations related to the gas plan are accepted.
The emerging arrangement is as follows: the cabinet, with Netanyahu's consent and as guided by him, wishes primarily to go ahead with the gas plan, will approve the demands by Minister of the Economy Aryeh Deri, who bowed to pressure from the leader of the Israel Corporation (TASE: ILCO), headed by Nir Gilad, to grant an array of concessions to Israel Chemicals, claiming that "We must not leave the company out in the cold and sacrifice 5,000 workers in the Negev to unemployment." The government will thus crown Deri as the main guardian of the Negev and employment in outlying areas. At the same time, perhaps as tit-for-tat, Deri will undertake to vote in favor of and act effectively on behalf of - in the cabinet, the Knesset, and before the public - the gas plan when it is completed.
Already at Netanyahu's meeting several weeks ago with Idan Ofer and Nir Gilad, and even earlier at the cabinet meeting that adopted the Economic Arrangements bill containing the Sheshinski 2 recommendations, Netanyahu appeared distant, impatient, and even cynical in his attitude towards Israel Corporation's demands. The prime minister also emphasized at the beginning of the cabinet discussion that he had received a letter from the workers' committees and the local authorities' heads in the Negev, and was seeking to further expand the discussion only for their sake. Over the years, and even more so during the election campaign, Israel Chemicals and Israel Corporation customarily used the workers as a tool (some use the term "incited") against any revision proposed in the cabinet aimed at increasing the share of the public, the owner of the property called the Dead Sea, in the large revenue and profits of Israeli Corporation, the franchise holder.
At the same time, given the consolidation of Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva and Noble Energy's gas monopoly, it is urgent for Netanyahu to pass the gas plan now, even if it requires a compromise on the state's interests vis-a-vis Israel Corporation.
What the inter-ministerial committee thinks
An inter-ministerial committee for the Economic Arrangements bill is established every year by cabinet decision when the budget is approved. Now this committee, headed by Minister of Justice Ayelet Shaked is set to consider the batter of regulations and reforms in the bill as formulated by the Ministry of Finance and submitted to the cabinet. In addition to Shaked, the committee members are Minister of Environmental Protection Avi Gabai (Kulanu), Minister of Public Security Gilad Erdan, Minister of Immigration and Absorption Zeev Elkin, and Minister without Portfolio Ofer Akunis. Like the other members of Kulanu, Gabai clearly supports the Sheshinski recommendations and the Law for the Encouragement of Capital Investments in its current form. Erdan is thought to support the Sheshinski recommendations, and Elkin and Akunis will apparently formulate their views in coordination with the prime minister. The committee is scheduled to take a position and complete its job by the end of August, several days before the scheduled September 2 discussion in the Knesset plenum.
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2015
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