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Wednesday, February 26, 2014

Israel Electric: The 'Palestinian Authority' is too big to fail

The 'Palestinian Authority' owes the State-owned Israel Electric Corporation a whopping NIS 1.4 billion (about $400 million at today's rates), which you and I and everyone else who pays an electric bill in Israel are covering. But the 'Palestinian Authority' - unlike Mrs. Cohen who can't pay her bill - isn't worried about its electricity being cut off. That's because Israel Electric Corporation has apparently decided that the 'Palestinian Authority' is too big to fail, and is therefore being offered better rates and more credit.
"The electric company hasn't threatened to cut off the PA from electric supply," said the senior official to Arabic news source Ma'an.
According to the official, the IEC offered the PA was to sign a new agreement by which it would be given the status of a country, with an accompanying reduced rate.
IEC Director Yiftah Ron-Tal on Tuesday spoke in the Knesset’s Finance Committee, where he said that if IEC were privately owned, it would have cut off the PA long ago.
"Despite the immense financial debt that we have accumulated, we are obligated to continue to provide electricity to the PA. The State of Israel owns our company and it has to make a decision on the matter. We must collect this debt,” Ron-Tal added, noting that the PA has ignored repeated requests to pay its debts.
The PA acquires 95% of its electricity in Judea and Samaria and 75% of its electricity in Gaza from Israel.
In response to Ron-Tal's appeals, Finance Committee head MK Nissan Slomiansky (Jewish Home) said, "if the state does not assist the IEC in collecting the debt from the PA, the Finance Committee will consider an appeal to the High Court, so that [the court] obligates the state to address the problem."
I don't know whether to laugh or to cry. Why would anyone think that the 'Supreme Court' - which is made up of Leftists - would issue such an order? Who would obey it? And even with the  best of intentions, what makes anyone think that the government of Israel could collect a debt from the 'Palestinian Authority'?
Making the idea that the PA will come clean on its debts less likely is the fact that it is in the midst of a financial crisis; as of last July the entity owed $4.2 billion in internal and external debts.
PA Chairman Mahmoud Abbas signed a $1 billion energy deal in Russia during January. Russian state news agency ITAR-TASS reported that Russia's natural gas giant Gazprom intends to produce 30 billion cubic meters of natural gas off the Gaza coast, in addition to talk of an oil development project near Ramallah.
The only way to collect this debt is (a) to cut off the electricity until it is paid (unlikely because the 'international community' would go ballistic) and (b) to withhold the transfer payments that the government of Israel makes to the 'Palestinian Authority' (unlikely because the 'international community' would go ballistic).

What could go wrong?

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At 10:14 PM, Blogger free` said...

Carl, I would offer a third option, deduct 10% from the money Israel collects, before sending the money to the PA. Do you think the international community would still be outraged?


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