Israel looking to appropriate funds owed to Iran over attack losses

Israel is reportedly considering appropriating billions of shekels from a fund owed to Iran held by the Eilat-Ashkelon Pipeline Co (EAPC) to compensate for the material losses incurred from Iran's Saturday retaliatory attack.

Israeli newspaper Yedioth Ahronoth reported on Wednesday that in recent closed sessions, high-ranking Israeli officials had suggested appropriating billions of shekels from Iran's share of the profits from EAPC to compensate for the damages.

While it is not yet clear how Israel will respond to Iran's attack last Saturday, which was launched in response to Israel's flattening of the Iranian consulate in Damascus on 1 April, Israel was reportedly studying several options, among them the above proposal.

Israel reportedly incurred the bulk of its losses due to the cost of deploying its interceptive weapons defence systems to block Iran's attack.

"The cost of defence last night was estimated at between 4-5 billion shekels ($1.08-1.35B)," Israeli General Reem Adminaoch said, according to Yedioth Ahronoth.

What's the Israeli-Iranian joint venture EAPC?

The EAPC, established in 1968, is at the root of a long-standing and bitter legal dispute between Israel and Iran.

The company was established as a joint venture between the two countries during the rule of Iran's Shah prior to the Islamic Revolution in 1979 – before which Israeli-Iranian relations were friendly.

The company was set up to transport fuel from the Gulf region to Israel and the Mediterranean Sea.

Egypt’s closure of the Suez Canal, which lasted from 1967 to 1975, had added impetus to the shared project, as Iranian oil could no longer be shipped directly to Europe, Consequently, Israel facilitated the transportation of Iranian oil to the Mediterranean via the Eilat-Ashkelon pipeline, for transfer to European markets.

However, Iran's 1979 Revolution saw the partnership come to a sudden end, with Israel seizing and nationalising the company’s assets and installations that had previously been jointly owned.

Since then, the EAPC has operated independently, with the two former allies entangled in a bitter, decades-long arbitration process over funds owed to Iran due to the seizure of the assets.

In 2015, Switzerland’s highest court, ordered Israel to pay $1.1 billion to Iran, determining that Israel was obliged to pay Iran compensation for the assets and oil installations that, until 1979, had been under shared ownership between the two countries.

Israel, however, refused to pay due to Iran being classified as an enemy state. Tel Aviv has also maintained high levels of secrecy around the company’s operations, even repeatedly placing gagging orders stipulating that those who leaked EAPC secrets could face up to 15 years in jail.

However, the EAPC has annually set aside 50% of its profits and placed them into a fund managed by Israel’s Ministry of Finance. Currently, the amount in this fund is believed to be over $1 billion.

Bombs, guns, treasure: What Israel wants, the US gives

How US efforts to shield Israel from human rights restrictions and guarantee its access to continued military aid go further than for any other country ⤵ https://t.co/hk2h84snpu

— The New Arab (@The_NewArab) March 18, 2024

Yedioth Ahronoth indicated that Israel had set aside the fund because, if there were a change of regime in Iran at some stage and friendly relations were restored, the funds might need to be transferred.

However, now there are calls for Israel to appropriate the fund to compensate for the damage caused by the Iranian attack on Saturday, with some Israeli estimates suggesting that intercepting the attack cost Israel between $4 billion to $5 billion US dollars.

But New York-based award-winning journalist and reporter Kourosh Ziabari, who covers Iran and the Middle East, told The New Arab he was sceptical of the narrative that Israel had been preserving the funds to hand them over to "an Iran not ruled by the clerics" and called the arbitration process around the dispute ironic since Iran doesn't recognise Israel.

He added that it would be "wishful thinking to say Iran and Israel are so brotherly and cordial that Iranians are prepared to embrace Israel as their most special partner in the aftermath of the departure of the Islamic Republic, and that Israelis are awaiting an opportunity to shower Iranians with billions of dollars of the money they're historically owed".

This article is based on an article which appeared in our Arabic edition by Nayif Zidane on 17 April 2024. To read the original article click here.