"Gas is a strategic resource"

Decisions about gas cannot be left to market forces and the private sector, argues MK Isaac Herzog.

In the past century, the balance of power in the Middle East was largely based on the access to the oil fields discovered in it. The next half century will be the era of natural gas as a strategic asset. In contrast to the oil era, Israel has the potential of being a major player in the gas era. This is an opportunity that must not be missed.

The discovery of huge Israeli offshore gas fields are justifiably at the heart of a public debate. This is a strategic turning point, which turns Israel from a resources-poor country, which relied on human capital and knowledge-intensive industries, into a country with important strategic national resources. Just as the development of exports and high tech required long-range investment and planning, the same is true for gas.

The wise use of natural resources can contribute to national strength, grow the economy, and change the regional geopolitical balance of power. The wrong policy could cause severe harm: the costly waste of infrastructures; widening the gap between the rich and the poor; addiction to the easy money that will flow into the economy; the neglect of human capital and longstanding industries; diplomatic damage; and the loss of geopolitical opportunities.

Until now, the public debate has focused on questions about sharing the pie: what the government's take from the gas revenue will be; who will pay for protecting the facilities; and what percentage of gas will exported. These are important issues, which should be examined in view of the needs of Israel's people, and as a lever for advancing the next generation, but they are only part of the story.

The gas fields are more than an economic resource - they are primarily a strategic resource. Decision-makers should therefore decide to whom to export, and under what regional terms and arrangements.

The Middle East has been undergoing dramatic changes in the past few years, and they are far from over. The US has gradually withdrawn from policies of military and political intervention which characterized it in the previous decade, and its ability to influence regional governments is sharply waning. In this geopolitical climate, Israel needs new collaborations and stable alliances, and the gas fields could be an important part of this aspect, and be tangible fruits of peace with value among the nations that surround us.

Israel could learn from the model for the use of oil developed by the countries of the Persian Gulf, which they used to buy positions of international influence. From the diplomatic and economic aspect, Israel could, for example, use gas to tighten relations with the Palestinian Authority, Jordan, Egypt, Turkey, and even countries with which we do not currently have diplomatic relations. This does not necessarily mean to export gas to all these countries. Some of the levers of influence could exist as part of regional arrangements or through third parties. For example, Israel could use gas to promote a diplomatic solution with the Palestinians and the Arab world, on the basis of the Arab initiative. Gas could improve Israel's bargaining position in negotiations, and the mutual interest in economic deals could help maintain stability after the signing of diplomatic agreements.

Exports to the other neighbors - Greece, Turkey, Bulgaria, and Cyprus - could be a gateway to Europe. Similarly, an agreement with Egypt is an opening to Africa. Exports to Jordan could lower the price of electricity in the kingdom and contribute to closer ties with Amman. The gate to Russia and the former Soviet republics should also be found.

Obviously, assessments of regional rivalries should be part of the equation. Israel should ask itself who are the forces that will most endanger it in the long term, and use gas to build coalitions with potential allies.

These decisions cannot be left to market forces and the private sector, which will strive to export gas on the basis of cost and profit calculations. Therefore, assessments, planning, and supervisory agencies are needed - from the National Economic Council through government ministries and to the Knesset Foreign Affairs and Defense Committee - to devote resources to create a strategic plan for the proper and effective use of gas fields in order to strengthen Israel's standing in the region. Research institutes, the press, and the public should think beyond tax rates and foreign currency inflows. Without reducing their importance, we should also ask ourselves how we imagine Israel's position in another generation, and how the gas fields can help us get there.

The writer the Labor Party parliamentary group chairman.

Published by Globes [online], Israel business news - www.globes-online.com - on July 9, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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