Caspian Energy Journal Caspian European Club
Thursday, 10 March 2016 19:10

Trade can bring countries together and can revive economy - Dan Stav Featured

Caspian Energy (СЕ): Your Excellency, Baku has hosted the following meeting of the Advisory Board of the Southern Gas Corridor. To what extent is this project promising within the framework of expansion of the Azerbaijani-Israeli economic relations?

Dan Stav, Ambassador of the State of Israel to the Republic of Azerbaijan: I think that the SGC is a very important project. I think it has more than regional implication. It has almost global implication in the sense that when energy remains major source that human beings are so dependent on. Europe is a big consumer of gas and the Southern Gas Corridor is becoming especially relevant when efforts are made to move to use of cleaner energy due to the global warming. Azerbaijan has a very beneficial, strategic location in order to play an important role in providing Europe, one of the most important economic centers, with gas. We are following with the great interest the development of the SGC. Israel itself hopefully will start exporting  gas soon  and obviously we will be very much interested in duly consideration of the option to be part of this corridor and especially  gas transportation system TANAP. So for us this project is very important. Besides, we already get considerable part of oil from Azerbaijan, which is why energy issues in the bilateral cooperation are always in the center of attention of Israel.


CE: When does Israel plan to join in SGC?

Dan Stav: The issue of gas production in Israel’s agenda is relatively new. Broad-scale exploration work was carried out in the Israeli shelf of the Mediterranean Sea hardly  in the last 10 year. Since then there have been internal processes complicated by growing concern of the public that these huge natural resources do not adequately beneficial for the citizens. Israel is a democratic country and has a very vivid debate about how to use the gas, how much royalties the companies that are producing there will pay to the State Coffer, etc. Finally, the Government decided to put forward a certain framework for using the gas. Part of it will be reserved as strategic reserves for the future years of Israel in the coming decades, and part will be exported. However there are still debates in Israel, and now the issue has been moved to the Supreme Court, because certain groups of citizens assumed that the government is trying to expedite the process, violating certain rules. So once this ruling of the Supreme Court will come and there will be a green light for the project then Israel can try to really consider when and how to export whether it will be SGC or some other options, local customers in the region etc. So we are still waiting for the completion processes in the Supreme Court.


CE: Is it possible that Israeli companies, developing fields in the Mediterranean Sea, will take part in the projects in the Azeri sector of the Caspian?

Dan Stav: I think that historically Israel had not has the know-how for drilling and exploration. What Israel can offer, in fact mostly Israeli companies, are auxiliary services such as a monitoring, surveillance, security measures, detecting of leakage and all kind of comprehensive system solutions integrated, once that number of Israeli companies are very much interested in being part of it. It is not only the big project that you have in the Caspian sea, but all the routes, long routes, thousands of kilometers of oil pipeline and natural gas pipeline. All that offers a lot of opportunities and I think that a number of leading Israel companies are very much interested to take part in it.


CE: Israel possesses one of the highest security standards in the world. Can we say that the SGC is in the zone of regional security of Israel?

Dan Stav: I fully agree that for any project with the strategic value the issue of security has great importance.  It can be our gas platforms in the Middeterenean,  it can be pipelines anywhere,  LNG complexes. Everything can be hit by terrorists or insurgent groups. The importance of securing these installations cannot be underestimated. This is an area that involves a lot of costs. Because it is an ongoing struggle between those who want to maintain the security of the pipeline and the insurgent or terrorist groups that increasingly become more technically sophisticated. There may also be a certain other threat that is not a physical sabotage of such installation but also trying to sabotage cyber war. And this is another area of cooperation, I think that Israel has a lot to offer. But I fully agree that securing of all dimension of security of such installation which has such a big importance is vital and sadly it is so costly. I am sure that Israeli companies will have great interest in participation in tenders regarding this project. As I said before it is not only the SGC route, but also the installations that already exist. They also need protection and there are number of Israeli companies that genuinely possess state of the art technology, know-how experience sadly based on our own experience in the Middle East in securing the installations, whether it comes to cameras, to surveillance equipment and whatever you can think about. Therefore we are willing to offer this. Not only the government a government, private sector is very keen to participate in tenders and bids here.


CE: Can the present geopolitical relations between Turkey and Russia affect the SGC project?

Dan Stav: I think that relations between Russia and Turkey should be solved between these two countries. But I don’t think that SGC should have anything to do with that. It is a mega project, it has particular importance to so many crucial countries. So from my point of view I don’t see any reason why the project might be  affected now.


CE: What prospects do you see for improvement of the economic relations of Israel with Turkey?

Dan Stav: I think that if you leave aside the political differences that Israel has with Turkey, on which both sides are working to fill in the gap, Israel is certainly interested in coming to term with Turkey. Economic relations are very good. I think that volume of bilateral trade is enormously high and estimated at 5 bln dollars, which further encourages cooperation between Turkey companies and Israeli companies. So on all we fully understand the importance of Turkey and we are hopeful, that bilateral relations with Turkey would be improved.


CE: What do you think about the Great Silk Way project from China to London, crossing Azerbaijan, Georgia and Turkey? Can Israel also join in the transport corridor Baku-Tbilisi-Kars?

Dan Stav: It is a very interesting question, because until now most of our export to Asia is done through the Southern port of Israel in the direction of the Red Sea and from there to the Indian Ocean. The GSR is a very interesting option that I think should be explored. Obviously here we are following with the great interest this corridor and if it is feasible, Israeli companies may consider also shipping their own transferring goods through this corridor. We are hopeful that this corridor will be completed; I understand certain segments are yet to be completed.

I was interested when hearing reports about the first container that came from China through Azerbaijan to Europe. And I am hopeful that it would be a success. I think that trade can bring countries together and can revive economy and I think that Azerbaijan is indespensible transportation hub and will benefit a lot if large volumes of goods is going to pass through Azerbaijan. So I hope that this project turn out to be very important component in the economic success of Azerbaijan.


CE: What do you think about the formation of the North-South Corridor from Russia to Iran through Azerbaijan?

Dan Stav: One of my previous posting was in India from 1998 to 2003 and I remember how they attached a lot of importance to this North South corridor, transporting goos from Mumbai port through Chabahar in Iran. So I am fully aware of the expectation here of the great benefit, that Azerbaijan is important and indispensable country for such route, may gain from it. And I understand that here are ceratin challenges. I saw the reports of the President of Azerbaijan Ilham Aliyev committing Azerbaijan to complete the railway  in Azerbaijan. I understand that more segmnets are yet to be completed in Iran.


CE: President of Azerbaijan Ilham Aliyev declared about measures on revitalization of the small and medium business, invited foreign companies to invest into the non-oil sector of economy, implemented a number of institutional reforms. How will these measures reflect upon the present and future economic relations between Israel and Azerbaijan?

Dan Stav: We are following with the great interest the economic policies of President Aliyev government because we think that in the time of remarkable drop in energy prices the decision to diversify the economy is very justified and we think that as a friend of Azerbaijan, Israel can offer certain cooperation in small and medium size businesses, in various disciplines. We forward all the information about the new development changing policies, regulation in Azerbaijan to the relevant head offices in Israel, ministry of trade, ministry of economy, ministry of foreign affairs. And I think it really offers great opportunities for Israeli companies to fit in, for example in the agricultural sector. Azerbaijan I think has basically very good conditions, very rich soil, abundance of water, diverse climate zones and hardworking people. And I think with good technologies and our experience combined with the Azeri’s excellent knowledge of their own soil, agriculture in Azerbaijan can really flourish. And this is one area that I touch a lot of importance and we are trying our best to develop this cooperation not only on the commercial basis but also on the academic. We are trying to offer joint project in the agriculture investing Ganja as part of it. Another area is pharmaceutical sector. We are also very interested in having ties up between Israeli companies and we have big one such Teva and others which showed the interest in coming to the Azeri market. I am very much encouraged by the fact that Azerbaijani government is trying to upgrade business environment. So I think it will make Azerbaijan very more lucrative business opportunities for the companies. Another area obviously is information technology, communication and the homeland security which I think sadly in the global reality of today terrorism or criminal threats should get due consideration by governments and I think we have a lot to offer.


CE: How much investment did Israel have to make to turn the desert into a flourishing garden? And how much investments will Azerbaijan need to make the same thing in the regions with a desert climate?

Dan Stav: creating flourishing garden is a many decades long process and involves a lot of efforts.  Not all of them are economically successful. So I think it is very hard to measure the amount of investment needed in order to transform Israel to what it is. But certainly it is still a very big challenge, time consuming, energy consuming, ingenuity consuming process and we still have not exhausted it. When it comes to Azerbaijan, in addition to what I have just said, the other important thing is the awareness of the government about the importance of uplifting the agriculture. Moreover, the location of Azerbaijan on the major trade routes, their close location to each other, will enable to ensure economic effectiveness of production. And the fourth one is the determination to really cut the red tape and make investments in Azerbaijan more lucrative as I said before. I think that there are already Israeli companies which are working here and there are Israeli experts, especially in the field of drip irrigation, greenhouses, cattle breeding etc. And I think that the best proof for the viability of this cooperation is the lion share of it is done by the private sector. And believe me that private sector will not come if it doesn’t offer genuine economic opportunity.


CE: Do think there will be a need for much broader liberalization?

Dan Stav: As a newly appointed Ambassador, I am not in a position yet to comprehensively response on that.  What I see is that the government is determined to liberalize economy and I understand that there are certain challenges that the government is fully aware of the need to generally tackle and profoundly tackle. The main idea is that it should be more competition; the sector of SME businesses should be enhanced and encouraged. Because after all for healthy economy and diversification of economy you need to create more competition and I think that Azerbaijan is moving on the right direction in this regard.


CE: You have already mentioned about water desalination. Are there plans to attract Israeli companies into this sphere?

Dan Stav: What I know is about my own country’s experience is that every year we cope with the daunting task of maintaining the water level in our main sweet water reservoir on the eastern part of Israel, the Sea of Galilee, in addition to the western aquifer along the seacoast, in the reasonable level. I remember from my childhood that we have always been educated that save every drop of water. Because if you overuse certain resources, the inevitable result is the desalination of these resources and sometimes it is irreversible phenomena.  Israel is country that is located on the coast of Mediterranean. One of the solutions for the shortage of water is desalinating complexes. And I think that Israel has very good technologies and a lot of experience. I think we are one of the countries that have a relatively big share of the water in the system that comes from desalinating projects. Another one that I think is crucially important is the water recycling. I visited such installations in Israel and I know that it is of a great importance when you attach a lot of importance to the use of water, to recycle whatever that can be recycled. The third thing is still to go back to the issue of using water wisely. Because even if you have abundance of water at certain region and you waste it unwisely, the problem is that you have big volume of water to treat later for next years. And this is waste of money of energy and work. So I think the solution of combining of these three ingredients together.


CE: How does Israel view the global warming problem, to what extent will it affect the economy of the country?

Dan Stav: As an OECD and developed country, Israel has certain responsibilities and we are perfectly aware of  the global warming challenge. Although Israel’s industry volume is not that big to majorly influence the global warming process, still Israel took upon itself commitments in order to reduce the emission of contaminating practices to the atmosphere. It is a very expensive project. I was born in Haifa – a city in the northern part of Israel - which is well known for its refineries. And the whole bay of Haifa is badly polluted and the air quality is very bad. Thus, apart from the global warming, contamination of soil and air is another problem for the state.  The government perfectly knows that sooner or later it will have to solve this problem because the more you wait the more expenditures are rising.


CE: What capacities and potential do you see in the alternative energy field?

Dan Stav: To me it was very encouraging to see that Azerbaijan despite being very important oil and gas producer is attaching such a big importance to alternative energy. I think that also in this regard there are certain opportunities, we have a vast experience in solar energy, after all I think this is one of the common things between Azerbaijan and Israel, that big section in both countries that enjoys maybe too many sunny days and this should be utilized in order to harvest free energy coming from the sun. Thanks God, nobody till now has taxed this sunshine. So, why not making use of it? And another option that I see is the use of wind energy. One to me that is very interesting, before leaving Israel, one Israeli company was asking whether it’s possible to utilize waves in the Caspian Sea in order to generate energy. So I think that there are some areas which can be explored and there is an interest in production of energy by your products is also feasible. All in all it doesn’t mean that once you have oil-gas it is redundant. The contra if you produce more clean energy and you can produce more fossil energy, you can earn both by improving your own environment and also generate more income. Not to mention the also one byproduct of cleaner energy is that by decreasing health hazards it saves extra expenses to the health sector.


                                                                                                                                                                  Thank you for the interview


                                                                                                                Interview done by Sabina Mammadova and Emil Mammadov

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