Saturday, April 26, 2008

Israel buys Iranian Oil

Note: An edited version of this report was published under the headline, Israel kauft Erdöl aus Iran, on page 20 of Sonntag/Mittelland Zeitung (Switzerland) on 30 March 2008. The text which was not published in the Swiss newspaper is coloured gray below.

Israel buys Iranian Oil

In spite of Israel's own calls for a boycott of Iran, its citizens profit from the black gold of the arch enemy, delivered via Europe.
Israel protested strongly against the gas deal between Iran and the Swiss company, Elektrizitaetsgesellschaft Laufenburg. But investigations show that Israel itself gets oil from its enemy.

by Shraga Elam
March 2008

Israel imports Iranian oil on a large scale even though the country and its products are officially subject to an Israeli boycott. Israel gets around the boycott by having the oil delivered via Europe. A reliable Israeli energy newsletter, EnergiaNews, reported this trade last week (18 March 2008). The newsletter is produced by experienced business journalists, while renowned politicians and business people sit on its editorial board.
EnergiaNews got the information about the Iran trade from sources with ties to the management of the Israeli company Oil Refineries Ltd. And these know for sure where the black gold comes from -- after all, the company processes it. According to EnergiaNews, the Iranian oil is highly valued in Israel because its quality is better than that of other crude oils.
The report, by EnergiaNews editor Moshe Shalev, states that the Iranian oil is shipped to various European ports. The Israelis buy it mainly in Rotterdam, getting suitable bills of lading and insurance papers. Then the oil is transported to Haifa in Israel. The importer is the Eilat-Ashkelon Pipeline Co. (EAPC), which conceals the sources of its oil.
Half of EAPC actually belongs to Iran, as it was founded in 1968 by the Shah, jointly with the State of Israel. In order not to embarrass Iran, the legal work was done through a company in Geneva, Trans-Asiatic Oil. Since the fall of the Shah, Iran has taken legal proceedings against the company, because Israel refuses to recognize Iranian claims of debts to the extent of several billion dollars.
In the mid-1990s, the Israeli foreign minister, and later PM, Ariel Sharon believed that a solution to this problem might help peace negotiations between the two countries. But Sharon was blocked by the US administration and by the Israeli finance ministry, which did not want to pay the billions involved.
It is not clear if the Iranian exporters know about Israeli purchases of their oil. At the other end, the Israeli buyers and governmental offices are well aware of where the high-grade oil comes from, although it is in blatant defiance of the boycott. The EnergiaNews article even made it through Israeli censorship, which asked only for some changes in the text. The fact that the report cleared the censors increases the reliability of the information. In the 1990s such reports were forbidden.
When questioned for this article, an energy expert from one of the leading Israeli papers confirmed the EnergiaNews report: Israel has been importing Iranian oil for many years. The expert stressed, however, that the purchases were made on the free market and not directly from Iran.
Although the report concerns importing a commodity which is the subject of a boycott campaign that is driven by Israel, the EnergiaNews scoop was not picked picked up by the Israeli media.
The spokeperson for Oil Refineries Ltd, Moshe Debby, denied that his company imports and processes Iranian oil. His statement contradicts articles which were published in Israel in October 2006. At that time censorship policy was relaxed and one could, for example, read in the October 5th, 2006, issue of Ha'aretz that the Israeli company Paz planned to import Iranian oil for refining in Israel; some of this oil was to be delivered to the Palestinian Authority and some was to be sold on the Israeli market. Ha'artez was aware that this plan might be complicated by a regulation dating from 1939 which forbids trading, directly or indirectly, with the enemy.
In another article the Israeli energy minister Benjamin Ben Eliezer said pragmatically: "Every attempted contact with an enemy state that serves Israeli business and economic interests, strengthens the stability of the region." And the Israeli foreign ministry said that it was not their business to look into the sources of oil [1].
The oil import described in the EnergiaNews report fits into an old pattern of trade between the two countries. While the pro-Israel lobby AIPAC led a campaign for sanctions against Iran in the 1990's, Israel extended its trade with the country, a trade estimated by Jane's Defence to be worth several hundred millions UD dollars. Israeli goods such as chemicals produced by the Carmel Chemicals company were exported to Iran with governmental permission (the author possesses relevant documents from the Israeli trade ministry). The chemicals were sent to Europe; there, they received new documentation and were sent onwards to Iran. In the early days of the Islamic regime that took over Iran in 1979, European intermediaries were used but, by 1996, Carmel Chemicals had decided that it could deal directly with the Iranians.
Besides, Israeli weapon systems were also sold to Iran in the 1990's; the Israeli media contain some reports about these deals.

[1] This information was published in two articles in the Hebrew edition of Ha'aretz which were not translated for the English edition; these articles can be read online, here and here

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