This is the peculiar and infuriating story of how then-Minister of National Infrastructures Ariel Sharon succeeded in blocking a customized, available, and financed natural gas deal with Russian company Gazprom. Now, today, Sharon will propose to Russian president Vladimir Putin that Israel buy gas from Gazprom.
It all began in 1994, when Major Yossi Ram (res.), a former Israel Air Force pilot, who dealt in gas for cooking and heating, initiated a project to import gas from Russia’s huge fields. He wanted to transport the gas through a land-based pipeline that would cross through Turkey, and through a pipeline under the Mediterranean Sea to an Israeli port, or to a pipeline in Israel.
He worked on and invested in the project, mostly by himself, but also with a few professionals. He traveled around the world, until he had formulated and designed a multinational project on a high level. Several of the world’s largest concerns in the field were involved in the venture. TransCanada Pipelines, one of the Western world’s largest gas transportation companies, undertook to raise financing for the entire project.
But who’ll grease my friends’ palms?
BOTAS, the Turkish national natural gas company, was ready to assume responsibility for the land-based pipeline. Gazprom, the world’s largest natural gas company, was slated to supply the gas, and Israel was the potential purchaser. Management of all the companies involved discussed the plan, and approved it. Papers were signed, and the project was shown to the responsible Israeli government authorities in 1997. Benjamin Netanyahu was prime minister, Sharon was Minister of National Infrastructures, and Avigdor Lieberman was director general of the Prime Minister’s Office.
Everyone was enthusiastic about the plan. No one remained unconvinced Israel would move in the direction of power production from natural gas, with all of the accompanying advantages. Everyone who saw that details, the signatures of multinational companies, understood that on this scale, even the Israel Electric Corporation (IEC), which was slated to use the gas in its power stations, could have been persuaded to agree.
There were, however, several problems with the project. Neither the government ministers nor their cronies had designed the project. A Turk, a Russian, and a Canadian were all very well, but the Israeli involved should have been one the gang - a former senior official, a semi-retired politician, a senior officer in the IDF reserves on the make, a friend, an interested party, someone with the right connections one of those.
The beginning of the end - everyone starting talking about Gazprom. IEC sent its representatives, Lieberman held talks, the Dankner group called Vladimir Gusinsky directly, etc., etc. They all had the same problem, though they knew that Gazprom would sell, and that the government/IEC would buy, but who would finance the link between the Russian reserves and the Israel port? All this time, Ram’s orderly and organized deal was ready and available.
Intriguing entourage
Then Sharon went to Russia on a state visit. Together with political meetings, he held meetings about natural gas with both then-Russian prime minister Viktor Chernomyrdin and with Gusinsky, now co-owner of “Ma’ariv”. At the time, Gusinsky headed the Most banking group, which was Gazprom’s main banker.
Several intriguing people were invited to accompany Sharon. One was Shmuel Dankner. A company under his control had registered, together with Gusinsky, a company in Israel named DanMost (Dankner-Most). This company had already expressed great interest in natural gas. Another member of Sharon’s entourage was Major General (res.) Avigdor (Yanoush) Ben Gal, then chairman of the Tahal group, which was a government company. Ben Gal was taking an interest in private natural gas business.
It’s not clear how, why, or to what extent, but in high-level talks, in which senior Russian government and gas officials and their Israeli guests were present, the Russians got the impression that they shouldn’t work through Ram’s international group. It seemed likely to be much more convenient to work with other Israelis, perhaps those present Dankner and Ben Gal, for example. The Russians took the hint. The Russian-Canadian-Turkish-Israeli venture collapsed and died.
Several months later, a police investigation began. Several matters were looked into. How could Ben Gal, the chairman of a government company, talk about private business on the business trip of a government minister? How could a government minister include private businessmen who were interested parties in official talks, when the initiators of the deal about which he was speaking, who had submitted a joint official offer to with Gazprom to the government, remained out of the picture, without any access?
Without indictments
Another matter was also investigated. Not long after returning from Russia, Ben Gal testified on Sharon’s behalf to the Supreme Court at the trial of Sharon’s libel suit against the “Ha’aretz” newspaper concerning the war in Lebanon. His testimony was considered astonishing, since it contradicted a statement signed by Ben Gal eight years before.
This was referred to at the time as the Sharon-Ben Gal affair. Incidentally, it was later reported that all the talks in Russia were recorded, as is the usually practice there. The transcripts are still in the Kremlin, and have not reached Israel.
During the investigation, on March 16, 1999, Chernomyrdin, by then a former prime minister, sent a letter to Netanyahu, and asked the latter to deliver it to then-Attorney General Elyakim Rubinstein and Israel Police investigators. Netanyahu was due to testify several days later in the affair, following testimony and questioning of others involved. In his letter, Chernomyrdin denied all the allegations made against Sharon in Israel, claiming that the accusations “appeared ridiculous”, and that “Mr. Sharon had made no concrete recommendation concerning the selection of an Israeli partner for Gazprom not in meetings with me, or with any member of the Russian government.”
The police investigation ended. The police recommended an indictment of Sharon and Ben Gal. Rubinstein, today a Supreme Court judge appointed during Sharon’s period as prime minister, decided against filing indictments.
Since them, parties have spoken periodically with Gazprom. In July 2003, for example, a discussion took place in the Knesset Economics Committee, where it was reported that Gazprom had offered to supply natural gas to Israel, and to finance the laying of a pipeline from Russia to Israel by way of Turkey and the Mediterranean. The Russian representatives claimed that they had made a detailed offer several months previously, but had encountered foot-dragging, and had received no answer. In response, Ministry of National Infrastructures director-general Eli Ronen gave the Economics committee the following crushing response: “The offer was general, and mostly conceptual.”
They’ll talk with Gazprom again today. They’ll ask again for natural gas, and tomorrow everyone will sink back into their own little mud-hole of private interests.
Published by Globes [online] - www.globes.co.il - on April 28, 2005