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UAE Deal Boosts Israeli Oil Pipeline Secretly Built with Iran

By ForeignPolicy.com
A desert oil pipeline that Israel once operated as a secret joint venture with Iran could be a major beneficiary from the Trump-brokered peace deal with the United Arab Emirates. With the UAE formally scrapping the eight-decade Arab boycott of Israel—and other oil-rich Gulf neighbors likely to follow suit—the Jewish state is on the cusp of playing a much bigger role in the region's energy trade, petroleum politics and Big Oil investments. It starts with an under-used but highly strategic pipeline. Stepping cautiously out of the shadows, the Israeli managers of Europe Asia Pipeline Co. (EAPC) say their 158-mile conduit from the Red Sea to the Mediterranean Sea provides both a cheaper alternative to Egypt's Suez Canal and an option to connect to the Arab pipeline grid that transports oil and gas not just to the region, but to the seaports that supply the world. "It opens a lot of doors and opportunities," the pipeline company's CEO, Izik Levi, told Foreign Policy. He reckons that the pipeline, which connects Israel's southern port of Eilat with a tanker terminal in Ashkelon on the Mediterranean coast, could nip off a significant share of the oil shipments now flowing through the nearby Suez Canal. While much of the hoopla over the UAE-Israel pact has focused on other sectors such as technology, health care, education, and tourism, the Eilat-Ashkelon pipeline brings the deal into the realm of petroleum, the beating heart of the Persian Gulf economy. Now that the Emiratis have broken the ice, opportunities for Arab-Israeli energy deals are broad and lucrative, ranging from investment in the Israeli pipeline itself, to adapting it for carrying natural gas or connecting it to pipelines across Saudi Arabia and the wider Middle East. "If they're doing partnerships with Israelis, there's tremendous potential for all kinds of business," said Marc Sievers, a former U.S. ambassador to Oman, where Israeli Prime Minister Binyamin Netanyahu made a groundbreaking visit two years ago. Just over 60 years ago when it was built, the Eilat-Ashkelon pipeline was a massive national construction project aimed at guaranteeing Israel's and Europe's energy supplies in the wake of the 1956 Suez crisis. Egyptian President Gamal Abdel Nasser had restricted shipping through the canal, triggering an invasion by Israeli, British and French forces. Subsequent efforts by Egypt to block the 120-mile artificial waterway also played a role in Israeli-Arab wars in 1967 and 1973. Most of the oil flowing through the pipeline came from Iran, which had close but discreet relations with Israel for decades under Shah Mohammad Reza Pahlavi. In 1968, the Israeli and Iranian governments registered what was then called the Eilat-Ashkelon Pipeline Co. as a 50-50 joint venture to manage the export of Iranian crude through Israeli territory and onward by tanker to Europe. Much of the early oil flow appears to have been brokered by billionaire commodities trader Marc Rich, who was later indicted in the United States for continuing to trade with Iran after the 1979 Islamic revolution, when it was declared an enemy state. Rich was pardoned in 2001 by former U.S. President Bill Clinton, who said he was moved in part by appeals from Israeli leaders and intelligence chiefs. The rogue trader's backers, including former Israeli Prime Ministers Shimon Peres and Ehud Barak, said he had repeatedly rescued the Jewish state from efforts to destroy it. Rich, who was never convicted, died in 2013. A Swiss court ordered Israel in 2015 to pay Iran compensation of about $1.1 billion as a share of profits from the joint ownership of the pipeline since the two enemies broke off relations in 1979, but Israel has refused to pay up. While the company's main 42-inch pipeline was built to transport Iranian oil north to the Mediterranean, it now does most of its business in reverse. It can pump oil unloaded in Ashkelon from ships sent by producers such as Azerbaijan and Kazakhstan to tankers in the Gulf of Aqaba for transport to China, South Korea, or elsewhere in Asia. Running parallel to the crude pipeline is a 16-inch tube carrying petroleum products such as gasoline and diesel. The company also makes money from operating storage tanks at its shipping terminals. The lengths to which its pipeline's customers go to obscure their identities are legendary. The pipeline's advantage over the Suez is the ability of the terminals in Ashkelon and Eilat to accommodate the giant supertankers that dominate oil shipping today, but are too big to fit through the canal. Known in oilspeak as VLCCs, or very large crude carriers, the ships can transport as much as 2 million barrels of petroleum. The 150-year-old Suez Canal, on the other hand, is only deep and wide enough to handle so-called Suezmax vessels, with just half the capacity of a VLCC. Oil traders thus have to charter two ships through the canal for every one they send via Israel. With one-way fees through the Suez reaching $300,000-$400,000, Levi says the pipeline allows Israel to offer a significant discount. The company's business has always been one of Israel's most closely guarded secrets. Even today, EAPC releases no financial statements. Levi says he can't disclose the names of customers—though he says they include "some of the biggest companies in the world." What little information that is publicly known only came to light as the result of legal battles following a 2014 rupture in the pipeline that caused the worst environmental disaster in Israeli history, spilling more than 1.3 million gallons of crude oil into the Ein Evrona desert nature preserve. If EAPC's books are opaque, the lengths to which its customers go to obscure their identities through multiple registrations and other corporate cloaking techniques are legendary. The boycott enforced by Saudi Arabia, the UAE, and their oil-producing neighbors meant that tankers acknowledging their docking in Israel would be barred from future loadings in the Persian Gulf, effectively destroying their business. The details are highly confidential—but generally the ways ships can obscure their activities include turning off their transponders, repainting, reflagging, reregistering, and faking their docking records. Levi, a retired captain in the Israeli navy, told Foreign Policy that the required secrecy made the pipeline route too expensive for most shipments. "Many ships that came to Eilat and Ashkelon had to do such and such operations in order that they would not be boycotted in one or another port. If the ship fears it will be blacklisted and boycotted, that gets priced in. All that costs me money so the price for transportation will go up." EAPC's business model improves dramatically with the erosion of the Arab boycott. "If the concerns [with secrecy] go down significantly, the price will drop significantly," Levi said. "Then it becomes economically feasible and even more worthwhile." Once political barriers to using Israel as a transshipment hub are removed, business could boom. After the Israeli-UAE deal is formalized, other members of the Gulf Cooperation Council are likely to follow, most likely Bahrain and Oman. Saudi Arabia has indicated it won't establish formal links until the Palestinian conflict is resolved, although its business connections with Israel are plentiful and growing. Levi says his goal is for the pipeline to capture between 12% and 17% of the oil business that now uses the Suez. Because of the canal's limitations, much of the Gulf crude bound for Europe and North America gets pumped through Egypt's Suez-Mediterranean Pipeline, in which Saudi Arabia and the UAE hold a stake. Egypt's pipeline, however, operates in only one direction, making it less useful than its Israeli competitor, which can also handle, for example, Russian or Azerbaijani oil heading to Asia. The loser will be Egypt, which will see business siphoned off and have less control over prices now that there is competition. Even as it makes new friends in the Gulf, the Israeli company needs to be careful about biting too deeply into the revenue sources of Egypt, the first Arab state to make peace with Israel in 1979, and one of the poorest. "I don't think it will make the Egyptians happy," says Sievers, the former ambassador. Israeli-Emirati cooperation in shipping is not entirely new. A precedent to smoothen the way is Israel's Zim Integrated Shipping Services, which has been docking at ports managed by Dubai shipping titan DP World for more than 20 years, and has invested in joint ventures with the Emirati company. The relationship between Zim owner Idan Ofer and DP Chairman Sultan Ahmed bin Sulayem is so strong that the Israeli billionaire lobbied the U.S. Congress on the Dubai company's behalf in its unsuccessfully 2006 bid to buy terminal operations in the United States. Even more possibilities arise from Israel's discovery of a bounty of natural gas deposits off its Mediterranean coast that can supply far more than Israel's own needs. Bringing in Gulf investors in addition to Israel's current partners such as Chevron, and the possibility of connecting to the Middle East's gas pipeline grid, would open yet another new horizon for Israel's nascent energy industry. As the Eilat-Ashkelon pipeline emerges from its carefully nurtured obscurity, the UAE peace deal offers Israel a gateway into the high-stakes club of oil trading where hiding its flag was until now the price of admission.

Iran: `American Soil is Now Within the Range of Iranian Bombs'

By Majid Rafizadeh, The Gatestone Institute (Commentary) One day after the United Nations Security Council voted in favor of lifting the arms embargo on Iran, the ruling mullahs unveiled a ballistic missile that reportedly can reach the United States. Those who advocate pursuing a policy of appeasement toward the ruling mullahs as a means of changing the Iranian regime's behavior fail to understand that the more the international community will give the mullahs, the more Tehran will become belligerent and emboldened. One day after the United Nations Security Council voted in favor of lifting the arms embargo on Iran, for instance, the ruling mullahs unveiled a ballistic missile that reportedly can reach the United States. The headline of a report by Iran's state-controlled Afkar News read in Farsi, "American Soil Is Now Within the Range of Iranian Bombs." The report boasted about the damage that the Iranian regime could inflict on the U.S: "By sending a military satellite into space, Iran now has shown that it can target all American territory; the Iranian parliament had previously warned [the U.S.] that an electromagnetic nuclear attack on the United States would likely kill 90% of Americans." The report also threatened the EU, which voted in favor of lifting the arms embargo against Iran: "The same type of ballistic missile technology used to launch the satellite could carry nuclear, chemical or even biological weapons to wipe Israel off the map, hit US bases and allies in the region and US facilities, and target NATO even in the far west of Europe." This is not the first time that the Iranian regime has become more aggressive after the international community pursued policies of appeasement with the mullahs. Recall when, upon the JCPOA's agreement, former President Barack Obama pointed out that he was "confident" that the lifting of sanctions and the nuclear deal would "meet the national security needs of the United States and our allies." It was even outlined in the JCPOA preamble that all signatories — which, again, Iran was not — "anticipate that full implementation of this JCPOA will positively contribute to regional and international peace and security." What, though, was the outcome? The international community witnessed a greater propensity for Yemeni Houthi rockets launched at civilian targets, the deployment of Hizbullah foot-soldiers in Syria, and increasing attacks by the Iranian-funded Hamas into southern Israel. With billions of dollars of revenue pouring into the pockets of Iran's Supreme Leader Ayatollah Ali Khamenei and the Islamic Revolutionary Guard Corps (IRGC), Tehran did not change its behavior for the better. Instead, it became more empowered and emboldened to pursue its revolutionary ideals of anti-Americanism and anti-Semitism. Iran became, according to the U.S. Department of State, "the world's worst state sponsor of terrorism."

UAE Uses Koran to Justify Peace with Israelis and Jews

By Elder of Ziyon, Algemeiner
For years, I've been reading articles in the Arabic media where the Koran is often used to justify hating Jews and Israel. Suddenly, articles are originating from the UAE that say the opposite — they are using the Koran to justify making peace with Israel. This week, Al Bayan had an article by Ahmed Mohammed Al Shehhi where he methodically goes through the arguments against peace with Israel and uses the Koran to demolish them: "Among their arguments is the claim that reconciliation with Israel is a breach of belief, and this is a false claim that is contained in the texts of the Qur'an and the Sunnah that say that reconciliation with non-Muslims is permissible, and that this comes under the heading of dealings entrusted to the guardians of the matter. Another argument against Jews [distorts] the verses from what they want, such as their inference by the Almighty saying: "So that you find the most hostile people to those who believe the Jews." This inference is invalid. The Quraysh were among the most hostile people to Muslims, and they were idol worshipers, and despite that the Prophet, peace be upon him, favored them out of consideration for public interests. Therefore, the scholars deduced from this that reconciliation with the Jews is permissible, for they are the People of the Book. … They argue that there are no private interests of states under the pretext of taking into account the interests of the entire Ummah. This is a false understanding of legitimate policy. Sheikh Ibn Baz said: "Every state considers its own interest, and if it sees that it is in the interest of Muslims in its country to reconcile with the Jews in exchanging ambassadors, buying and selling, and other transactions. That which is permitted by the purified law of God, there is nothing wrong with that." Those who reject peace among those who oppose peace have no argument. Rather, they are far from the spirit of Sharia and the light of reason." There are a few other arguments that I don't quite understand, but the upshot is that the UAE is going on the offensive and saying that those who oppose peace with Israel are in fact the ones who are not following the Koran. This is truly remarkable. For decades, there was only one narrative in the Arab Muslim world about Israel, and any other side was hushed up. Now the other side is being trumpeted, and this is what is truly upsetting to the Palestinians and their terrorist-supporting allies. (Elder of Ziyon has been blogging about Israel and the Arab world for a really long time now. He also controls the world, but deep down, you already knew that.)


















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