Israel’s Supreme Court on Sunday accepted some of the petitions against the Netanyahu government’s natural gas outline which included development and exploitation of the country’s newly discovered off-shore deposits by Texas-based Noble Energy and Israel’s Delek Group.
In a four to one vote, the justices specifically ruled against the “stability clause,” which blocks any government regulatory changes to the off-shore gas outline for the next ten years – something that Netanyahu had promised the energy companies, in order to guarantee them stability in return for their massive investments.
This clause is considered legally problematic as it obligates future governments and Knessets, without actually having been passed via legislation.
The court ruling means the entire signed deal is suspended until the Knesset has a chance to review and amend the law. The court gave the Netanyahu government one year to fix the clause, or the deal would die.
Out of all the petitions that had been submitted to the high court after the law had been approved, the court embraced most decidedly the appeal from three good government groups — Movement for Quality Government, Association for Environmental Defense, and Israel Energy Forum — who also argued against the validity of the clause 52 maneuver, which was used by Netanyahu in an elaborate process that involved firing the state regulator, handing a government minister the Interior portfolio from which he had been removed in disgrace over embezzlement, and the Prime Minister’s claiming for himself the Economy portfolio.
Clause 52 permits the economy minister to bypass the objections of the state regulator and create a de facto monopoly, for security reasons.
Many observers had been placing small bets on whether or not the Prime Minister’s complicated political circus act would land him in front of a Supreme court veto. Surprisingly, it didn’t. In the end, the court did not challenge Netanyahu’s masterful maneuvers, but by striking down the stability clause, it may still kill the deal.
The good government groups argued the PM lacked the authority to approve the gas outline; pointed to supposed deficiencies in the approval process; claimed the absence of a relevant factual basis to establish the outline; decried an assault on the rule of law; cited violation of the principle of distributive justice; claimed injury to the intergenerational justice; accused the PM of violating the public trust; said the law had a lack of proportionality; and declared it was an extremely unreasonable legislation. The only thing missing was the kitchen sink.
But the court only accepted their argument regarding the stability clause.
Still, the three judges who voted to suspend the law were adamant in their condemnation of the Netanyahu government’s lack of respect for the democratic process. Justice Esther Hayut, who is slated to become the next Chief Justice, wrote regarding the stability clause that it is the most excessive overreach by the Prime Minister, in that it ties up government’s hand for a decade against changes in regulating and taxing the natural gas exploitation.
Israel’s energy minister Yuval Steinitz (Likud) said that the Supreme Court made an “unfortunate decision” in blocking the government’s plan to develop the offshore natural gas fields, warning it could cause irreversible damage to Israel’s energy sector. “The decision’s negative consequences on the development of the gas market, on energy security, on the Israeli economy and on the lost revenue for the state of Israel and its citizens, could be very tough, and even irreversible,” Steinitz said in a statement.
At this point it is unclear whether Netanyahu would be able to fix the stability clause in the current political reality of the Knesset.
Two ministers, Galant (Kulanu) and Katz (Likud) have had to recuse themselves from the debate for reasons of a conflict of interests, as would, possibly, Finance Minister Kahlon. This leaves a tie of 59 to 59. A lot will depend on MK Avigdor Lieberman’s Israel Beiteinu opposition faction, who may not be so eager to lend a helping hand to Netanyahu. And even if the PM manages to pass an amended bill, it is to be expected that the left in the House would take it right back to the Supreme Court.
PM Netanyahu said he would find a way to overcome the damage the court’s ruling just did to Israel’s economy. But for the time being, the gas will continue to remain stuck under the sea.