Shraga Biran is full of optimism about the future of the Middle East. The deep pessimism that prevails among top commentators and policy-makers in Israel who focus on the progress of Iran's nuclear program and the rise of the Muslim Brotherhood makes no impression on him.
Biran insists that the Middle East is on the verge of a new era of peace and rapid economic development, that OPEC is about to collapse, the Arab world's political power will dissipate, and that management of the region will pass to the hands of the two superpowers. The new rules of the game will be set by the coordination of the economic interests of the US and China, and that Israel should start getting ready.
"The Arab-Israeli problem will be dwarfed by global interests," Biran tells "Globes". His prediction, which "Globes" is unveiling, is the result of more than a year of research at the Institute for Structural Reforms, a think tank he founded in 2010 as a non-profit organization to benefit the public.
Biran's interest in an energy vision for the Middle East is based on genuine interests and curiosity. The sparkle in his eyes and his youthful enthusiasm belie his 80 years. He could be accused of naiveté and hallucinating, but the charges are hard to pin on a man who built a fortune of hundreds of millions of dollars.
Biran, a Holocaust survivor and a communist in his distant past, owns 79.4% of Bielsol Investments Ltd., which he founded with his nephew, David Wiessman. Bielsol owns 50.3% of Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL), the controlling shareholder in Alon Natural Gas Exploration Ltd. (TASE: ALGS), which owns 4% of the Tamar gas field, as well as Alon USA Energy Inc. (NYSE:ALJ), which owns four refineries and other interests.
It is also possible to make the opposite charge, and accuse Biran of cynicism and theoretical sophism to promote personal business interests, but he could not care less. "Let people think what they want; I couldn’t care less," he says.
The thing that can pull Biran out of his equanimity is an attempt to classify his theory as part of the "New Middle East", promulgated by President Shimon Peres. "Don’t you dare put me into that pickle barrel!" he responds furiously. "I am talking about real peace based on real interests, and not about declarations by Nobel Peace Prize Laureates."
Oil is one of the biggest thefts invented by man
Biran likes to use the Silk Road as the basis for his theory. "The Silk Road is reopening, and Jews have a historic opportunity to get on it," he says. His path to this conclusion is drawn from numbers. "Oil is one of the biggest thefts invented by man. Oil costs $20 a barrel to produce, refining adds another $5, transport adds a further $2-3, and storage maybe $1 more. But because of a cartel called OPEC, the final product price jumps to $120 a barrel."
Biran believes that this is all about to change, thanks to technological breakthroughs which enable US and Canadian companies to exploit huge reserves of shale oil, oil and gas into oil and gas reserves.
"Today, China is buying US and Canadian energy companies for billions to learn about their new production technologies," says Biran. "The development of new gas fields in the US has already cut the connection between the price of oil and the price of gas, which existed for the previous 80 years. OPEC still controls the price of oil, but it cannot control the price of gas, and gas competes with oil."
"Globes": Where is this headed?
Biran: "OPEC is about to collapse, and they know it. All the political power of the Arab world accumulated since 1973 is about to explode. This is a change in the global rules of the game that goes far beyond the borders of the Middle East. This process creates opportunities for a new energy world and sophisticated gas market with competition between the new oil and the old oil."
Biran challenges two basic assumptions of mainstream energy commentators and experts about geopolitics and energy and their interdependence. The first assumption holds that the US will greatly reduce its involvement in the Middle East and may even lose interest altogether. In the past decades, the US has waged two wars and spent trillions of dollars in the Middle East to secure its energy sources, but within a few years, it will be free from its dependence on Middle East oil.
The second assumption contends that the US and China will struggle over the world's energy sources as part of a global struggle between them.
"The US isn't about to leave the Middle East, but will stay here to manage it together with China," declares Biran. "The US is still interested in the Middle East. US companies consider the Middle East a key market for the sale of their advanced technologies. Saudi Arabia invests billions in building refineries in places like Yanbu on the Red Sea, and US oil majors compete against Chinese companies in these projects. US boys won't come to fight in the Middle East, but the US has invested its military power to keep open the oil sea lanes to China."
What is the US interest in defending China's oil imports?
"US corporate giants want to maintain price stability. The Middle East will continue to supply a third of the world's fuel consumption through oil and refineries, and any war in the region threatens to send the price of oil skyrocketing. There is a new reality in which the two biggest players want peace instead of rivalry and conflict. This is a revolution that will be waged by peaceful means."
On the Sino-American map
As for the future rules of the game for conflict-filled Middle East, Biran considers Europe's recovery after World War II as a model for harsh terrain of the Middle East. He has tried to win interest for a new Marshall Plan for the Gaza Strip as the first step toward the creation of a Middle East common market modeled on the EU. For example, construction of an oil export terminal in Gaza would fit in with his geopolitical ideas. For Israel, this would resume historic oil flows through the Iraq-Haifa pipeline and the pipeline owned by Eilat Ashkelon Pipeline Company.
"There is a network of pipelines around us which should be on the Sino-American map," says Biran. "Israel has huge strategic potential created by Sino-American cooperation. The problem is that we're up to our necks in garbage, and we don’t realize that flowers can grow on the dump."
"Globes": What is your message for the prime minister?
"If I were an Israeli politician, I'd put on the agenda a peace agreement which would serve the interests of America and China. Oil and shale gas are what most interest the Americans and Chinese today, and no Israeli leader anticipated this."
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2013
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