GMF's Senior Advisor Sir Michael Leigh On the EIB, Israel
Natural Gas Europe had the pleasure to interview Michael Leigh, Senior Advisor to the German Marshall Fund of the United States, with a focus on European institutions, and the European Neighborhood Policy. We spoke about the European Investment Bank and the European Bank for Reconstruction and Development, before switching our focus to Israel.
During a recent conference, you referred to the intervention of the European Investment Bank and the European Bank for Reconstruction and Development. Do you think that those banks are investing in Bulgaria and Poland, because they are trying to avoid possible contagions? Are these banks trying to reassure Sofia and Warsaw that an eventual Grexit would not have serious knock-on effects?
Quite honestly, I think the European Investment Bank functions as a bank, with a bottom line. The senior staff of the EBRD are bankers. They have to show a positive bottom line at the end of the day. Certainly, their investments are supposed to reinforce broad EU policies. So for example, they have a mandate now in North Africa, in the Middle East, and it is meant broadly to strengthen EU policies towards those countries. But for each individual project, they really have to look at the bottom line. So I think it is somehow over-interpreting to attribute those motivations to that.
You also spoke about trust and the necessity to create trust to attract investors. Especially in a region where there is more than one election every year - I am referring to the East Med - to create trust is a difficult process. Given these natural intrinsic political instabilities, how to foster trust? Is it possible?
Trust is only created through long and patient efforts at conflict prevention, conflict resolution. We have seen partial successes. I mean. The fact that, for 40 years now, Israel has diplomatic relations with Jordan, and with Egypt, which permit them at least to consider energy cooperation. In the case of Cyprus, there has always been the question of confidence building measures. But. Confidence building measures have not really been implemented, except very modestly, unless there has been real political progress. So I am sceptic about using economic issues, or energy issues to try to overcome political conflict and to try to build trust. I think that trust comes from long, patient engagement, and political solutions to problems. Once that has been done, you open the door to energy cooperation.
On the other hand, distrust can also come in a day. No?
No. When you have long-standing conflicts that had gone on for decades, when you have populations mobilised, when you have hostile stereotypes of the other party, it is a long process.
What could be the main mistake that Israel could do with respect to Jordan. We know that the Tamar partners signed two Memoranda of Understanding with two Jordanian companies. One went through, and the other got stopped. Jordanian authorities then said that they would prefer to buy gas from Gaza.
Gaza is not on the stream, and it will not be any time soon.
Speaking with the Energy Advisor of the Quarter Representative Tony Blair, he recently told me that to develop Gaza is a priority in order to send positive messages to the region.
I am very sorry, but this is really not the case. We have a paper published by GMF about Gaza Marine. And neither Israel nor the Palestinian Authority have been ready to see the Gaza Marine field developed as long as Hamas, which is considered to be a terrorist organisation, is ruling Gaza. And for the time being, there is no prospect whatsoever to develop Gaza Marine. We have this lengthy study that I would recommend.
Anyhow, do you see any mistake, any policy that could endanger ties between Israel and Jordan?
This is mainly now a company-to-company arrangement, I mean, in which in fact an American company would sell gas to a Canadian company in Jordan. And even though, sometimes, questions are raised in the Parliament, it is absolutely clear that the King is very strongly committed to this. So, I think, any mistake would be to be discouraged by some popular protests from time to time, just as there are popular protests in Israel, and not to persist with the program. But this is a company-to-company arrangement. The government of Israel is not directly involved.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci