Two offshore natural gas discoveries in the Mediterranean have left Israel flush with energy reserves for decades to come, but the country is stalled at an economic crossroads with geopolitical consequences as it considers the best way to use them. Prime Minister Benjamin Netanyahu said on Wednesday that Israel will become an energy exporter, but Israelis, who have long bemoaned their lack of natural resources in the oil-rich Middle East, are debating whether that's the most prudent move. While focusing on exports presents the prospect of new political clout and will encourage investment in new exploration ventures, critics say it is more important to keep the gas for local use, ensuring IsraelÂ’s energy security for a longer time and lowering energy costs for the domestic market.
The US faces a similar dilemma regarding its domestic natural gas finds. There is reason for moving cautiously: Britain, Australia, and Egypt have all focused on exports, only to later find themselves saddled with energy shortages that have pushed up energy costs at home. "The balance between export and the domestic market is not clear cut," says Brenda Shaffer, a political science professor at Haifa University who focuses on energy politics. "Israel has to look at something nuanced: Does it want a quick buck from exports or do they want to think about long-term supply security?"
Extreme capitalism?
On Wednesday, flanked by economic ministers and Israel’s central bank governor, Prime Minister Benjamin Netanyahu endorsed a plan to export 40 percent of the natural gas reserves, a move he said would yield some $60 billion dollars for state coffers over 20 years while ensuring Israel’s energy needs for 25 years. The cabinet will vote on the plan on Sunday. The windfall is expected to be so strong that Israel’s government has set up a sovereign wealth fund to guard against currency appreciation that would hurt exporters. Soon after the announcement, critics protested in Tel Aviv, alleging that the government is allowing critical natural resources to be sold off to fill the pockets of business tycoons, something they say is akin to a "gas heist." Israel’s two-year-old social protest movement – which has brought tens of thousands into the streets this year – has homed in on the gas export issue as an example of alleged government favoritism toward Yitzhak Tshuva, a mogul who owns the rights to the fields, at the expense of the middle and lower classes. "There’s no reason to vote for exports.
The only reason why is that elected officials are chosing for Tshuva over the rest of the people. This is an extreme instance of capital and government’’ being in cahoots, says Shir Nosatzki, a spokeswoman for the social protest movement. The potential for exports has kicked up visions of energy companies building pipelines from the Israeli fields to pipelines in Turkey that would then relay the gas to Europe. Others have speculated it could be exported to China. The inaugural tapping of Israel’s Tamar natural field – with 8 trillion cubic feet of gas – in April 2013 is expected to add 1 percent to the country’s economic growth this year. Leviathan, a field with more than twice that amount, is expected to come online in the coming years.
Price tag disputes