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Sunday, October 21, 2007

Why Israel isn't invading Gaza

With Kassam rockets being shot at Israel's western Negev region every day, I know a lot of you must be wondering why Israel has not launched a massive ground operation into Gaza to clean the place out. Until today, I thought that it was because Olmert just didn't have the you-know-whats to do it. But it seems that there may be a more sinister reason and like much else that goes on in this country, it may be lining Prime Minister Ehud K. Olmert's pocket.

According to an article published today by former IDF Chief of Staff Moshe "Boogie" Yaalon, the invasion of Gaza is not taking place is because of Israel's gas deal with British Gas and the 'Palestinians.'
It is possible that the prospect of a major natural gas transaction with the Palestinians has been a factor in the Israeli cabinet's refusal to launch a Defensive Shield II operation in Gaza. This concern is a result of the high price Israel has already paid for its relatively muted responses to Palestinian rocket attacks from Gaza. The September 11, 2007, rocket attack by the Iranian-commanded and financed Palestinian Islamic Jihad, that wounded 61 IDF soldiers asleep in their Negev base, is a recent example. Despite hundreds of rockets and mortars, and various terrorist infiltration attempts against Israel from Gaza, there still has been no comprehensive military response by Israel.21
I discussed the British Gas deal at great length in July, just after the Hamas takeover of the Gaza Strip. Here's some of what I wrote then:
Thinking as an international business transactions lawyer, if Hamas actually owns the gas, how can paying the money into this 'international bank account' result in ownership being transferred to Israel (which is essentially what's happening here - the Brits are being paid for their work)? The answer is that it cannot, and there is a major risk here that Hamas will turn to the International Court of Justice and that the court will decide that Hamas has to be compensated by turning the 'international account' over to them or - if Israel has no means of doing that (it's not clear to me who will have title to the account) - by paying them over and above the account. That's a crazy risk to take! I would never advise a client to do this!

It gets worse: Hamas isn't happy with the 10% share allocated to the gas' owner:
"It is unreasonable that the owner of the gas, Palestine, gets 10% only," Mohammed al-Madhoun, the director of Hamas leader Ismail Haniya's office, told the Palestinian Information Center, a Hamas Web site. "The government has no problem cooperating with the British gas company but only after modifying some points of the 1999 contract."

Earlier this week, Finance Ministry Accountant General energy coordinator Uri Shusterman confirmed that a dispute over prices is the official cause for the delay in the signing of a contract with British Gas, and that statement was the first comment by a government official about the negotiations with BG Group.

"Despite the disagreement, the government is determined to buy gas from the company's reserves offshore from Gaza, as an alternative to Egyptian gas," said Shusterman. [But if you look later in the article, at a part that I do not quote below, there is also an Israeli group - Yam Thetis - that has gas in the same area. Why not buy from them? CiJ]

Six years ago Ariel Sharon, the Israeli Prime Minister at the time, vowed that Israel would never buy gas from its neighbour. The project also was held up by a legal challenge in the Israeli Supreme Court to establish whether the Palestinians had any right to the discovery. Last year BG Group was close to signing a deal to pump the gas to Egypt before Tony Blair intervened and asked the company to give Israel a second chance. Three weeks ago the Israeli Cabinet approved a proposal by Ehud Olmert, the Israeli Prime Minister, to buy gas from the Palestinian Authority. The Cabinet recognised the need for new energy sources to feed Israel’s rapidly growing economy. But here's the biggest farce in the whole thing:
Israeli defence authorities want the Palestinians to be paid in goods and services and insist that no money go to the Hamas-controlled Government.
Someone needs to tell these baboons that it's the British who are going to pay the royalties to the 'Palestinians' and not the Israelis. The British are not going to shut off the money pipeline every time the 'Palestinians' misbehave. If Israel goes through with this deal, we give up any control we have over the funding of the 'Palestinian Authority.'
Yaalon adds a number of other reasons why this deal ought not to be done. Those reasons include:
Hamas, in anticipation of its participation in BG negotiations, has confirmed its capability to bomb Israel's strategic gas and electricity installations in Ashkelon.10 This type of threat is a pressure tactic against Israel that will most likely increase if the BG deal moves closer to completion. It is clear that without an overall military operation to uproot Hamas control of Gaza, no drilling work can take place without the consent of the radical Islamic movement.


Israel's experience during the Oslo years indicates Palestinian gas profits would likely end up funding terrorism against Israel. The threat is not limited to Hamas. Since the establishment of the PA in 1993, monies that flowed into the Palestinian Authority from international donations, tax revenues, or profits from business with Israelis and other international investors - such as the Jericho Casino and other transactions - have ended up funding terror groups such as the Al Aksa Martyrs Brigades, Fatah Tanzim, and others. Simply put, once the funds reached the PA in the past, they could not be controlled by any outside authority.


BG's negotiations with Israel, that have the full backing of the British government, have already helped unshackle Hamas from political and diplomatic isolation. While British Prime Minister Gordon Brown's official position is that Britain will not talk to Hamas as long as its goal is to destroy Israel, a number of prominent voices in Britain including the House of Commons Foreign Affairs Select Committee are calling for reengaging with "moderate" Hamas elements.13


The Israeli government reportedly intends to deploy IDF naval combat vessels to protect a future British-Palestinian gas installation about 800 feet below sea level. According to this strategy, the BG installation would be guarded against above sea terror attacks while diver terrorists would not be able to execute attacks so far below sea level.19

However, even with IDF protection, the sea-based British gas installation will be a very attractive target for both local and international terror groups. Al-Qaeda's deadly "rubber dingy" attack in 2000 against the USS Cole is just one illustration. Hamas has announced the formation of a 150-man light naval force that will be deployed to protect "Palestinian interests" in Gaza's territorial waters.20 Hamas has also smuggled high-quality weaponry into Gaza via underground tunnels from Egyptian Sinai, including medium-range Katyusha rockets, much of it supplied and financed by Iran. Some of the weaponry captured on the Karine A weapons ship in 2002 by the IDF included 22-km.-range Katyusha rockets and amphibious equipment that could be effective in attacks against an off-shore gas installation. Moreover, the tens of tons of heavy weaponry that have been smuggled into Gaza since 2006 alone via the Rafah tunnels include Katyusha rockets.

Al-Qaeda would also clearly be interested in sabotaging gas flow to Israel. Global Jihad groups, particularly al-Qaeda, would also be interested in attacking British targets, as was illustrated in the London attacks of July 7, 2005, and the ongoing al-Qaeda operations against British forces in Iraq. Hamas, Palestinian Islamic Jihad, the Al Aksa Martyrs Brigades, and other local terror groups will be highly motivated to attack BG gas drilling installations, particularly to sabotage a multi-billion dollar deal that excludes them.


Israel must consider whether it can afford to be dependant on the Palestinians for such a critical energy asset as natural gas. If Israel becomes the Palestinians' main gas customer in a multi-year agreement, the PA or Palestinian terror groups could use the continued supply of gas as a lever to pressure Israel to make additional concessions and "gestures" as part of political negotiations. More significantly, the Palestinians could threaten to cut off the natural gas supply to Israel to prevent the IDF from responding to terror attacks and other threats emanating from Gaza or the West Bank.
There's one other factor that Yaalon's analysis does not consider: Money. Typically, in a deal such as this one, there would be brokers who put together the deal and are paid commissions. The commissions could be quite substantial. There's 1.4 trillion cubic feet of gas there. A commission as low as one cent per cubic foot (which would be well within the ball park) would yield an astounding $14 billion in commissions. Given what we already know about Ehud Olmert, could he be in on the take?


At 6:42 PM, Blogger Dave in Pa. said...

Now, that is interesting. As Deep Throat kept saying to Woodward and Bernstein, "Follow the money."


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