Daily Israel Report

Suspicion: NIF Involved in Gas Royalties Debate

Is Israel's gas boon a chance to fix society? Or is talk of higher royalties a mask for an agenda that pushes Arab oil?
By Maayana Miskin
First Publish: 8/9/2010, 12:25 AM / Last Update: 8/9/2010, 12:50 PM

Israel news photo

The discovery of a massive gas field off the Haifa coast has sparked a fierce debate over the royalties rate on natural resources. The Land of Israel Forum says that while proponents of higher royalties argue they are fighting for social welfare, they may actually be playing into the hands of a campaign that seeks to undermine Israeli industry.

In April, Finance Minister Yuval Steinitz appointed a committee to suggest a new policy regarding gas and oil finds, and to research the ways in which current findings could affect the Israeli economy. The committee is headed by Professor Eitan Sheshinki of Hebrew University.

Several MKs from across the political spectrum have called to increase taxes on natural resources, among them MK Shelly Yechimovich of Labor, MK Moshe Gafni of United Torah Judaism, MK Nitzan Horowitz of Labor, and MK Aryeh Eldad of the National Union.

What worries the Land of Israel Forum is the support that proposals to increase royalties and taxes are receiving from another source – the New Israel Fund. The NIF is known for funding organizations on the extreme left of the political spectrum. In recent years, the groups it funds have testified against Israel before the UN's Goldstone Commission, called for IDF soldiers to be tried for war crimes, and condemned Israel following a clash between IDF soldiers and members of a Turkish terrorist group.

The NIF recently turned to the Sheshinski committee with a request to increase gas and oil royalties.

The issue of the NIF's involvement is complicated by the fact that among the senior NIF members requesting higher royalties is Ruth Sheshinski – Eitan Sheshinski's wife. Eitan Sheshinski, for his part, is a long-time member in the far-left group Peace Now.

Land of Israel Forum activists are concerned that the extreme Left is using social causes as an excuse to undermine Israeli industry. By increasing royalties, they would in effect push companies away from investing in Israel, and would create a situation in which Arab oil remains dominant, Forum members said.

Activists held a protest Sunday outside Sheshinskis' home, calling upon the professor to step down. Some waved Egyptian flags. “The Arab gas belonging to Sheshinski and the New Israel Fund stinks!” read one poster waved at the rally. Another said, “Sheshinski, step down! Blue and white is worth more,” a reference to Israeli industry.

However, those who say the state should charge more for use of its resources believe they are only bringing Israel in line with the rest of the world, as Israel currently charges less than many European countries for oil and gas. By charging more, supporters of the higher rates argue, Israel could gain funds to fight social ills and could create a national investment fund that would provide dividends for years to come.

The gas companies, for their part, strongly object to any tax increase on fields that have already been discovered. They argue that they searched for gas and began developing the fields they found while operating under the belief that they would be charged a certain percent in tax, and any change to that rate would constitute an unfair change of rules that deters future investment in the search for gas and creates instability on the market.