A senior investment banker has warned that a revocation of government agreements with Delek Group and Noble Energy will have a devastating effect on Israel’s economy, Globes reported on Monday.
“The bureaucrats and politicians who come along with populist ideas need to understand that . . . no international investor will put a cent into oil and gas as long there is uncertainty in the industry,” says Edouard Cukierman, chairman of Cukierman & Co. Investment House Ltd., and joint manager of the Catalyst funds.
Referring to antitrust commissioner David Gilo’s decision to void the licensing deal with the two energy companies, Cukierman said, “We are freezing the growth of the State of Israel’s economy for many years ahead because of this wretched decision.”
Cukierman painted a bleak picture of trying to attract investment to Israel at this time:
“This affair is prompting sharp reactions chiefly among investors who know Israel. There are in any case many challenges in connection with investment here: the geo-political environment, the political environment, the state of war, the opportunities that crop up in other places, and now, on top of all this, comes the regulatory risk.
“These days we aren’t trying to raise money in Europe at all, but last week I spoke to Chinese investors whom we are trying to attract to Israel to invest in oil and gas. If you want to attract them to Israel, uncertainty is the thing investors hate most.
“The worst thing that can happen to a foreign investor is that he doesn’t know what will happen tomorrow.
“Will there be a new regime? Will there be some bureaucrat who wants to be popular and decides to limit the profit to three or four times the investment?
“In the oil and gas industry, Israel basically has one serious international investor, Noble Energy, who invested even though they aren’t Jewish.
“I have no business dealings with Noble Energy or with Tshuva, and I have no shares in Noble, but this investor was fortunate enough to obtain one of the biggest discoveries in the world, and what does he get? Restrictions on exporting in an economy with very limited demand; he gets a change in the taxation method, and now the straw that breaks the camel’s back.
“It’s exactly the same story, because here too you have bureaucrats who want to be popular. Who will pay the price of Israel making a mockery of itself before the international investment community? The public will pay it,” concluded Cukierman.