Monday, October 29, 2007

Israel's attorney general nixes price-modification scheme

Israel's attorney general told the government on Monday it could not unilaterally modify its Power-for-Qassams agreement with the Gaza Strip as part of its current economic policy. The current arrangement calls on Israel to provide 10,000 kilowatt hours for every Qassam rocket fired.

Israel began implementing economic sanctions on Sunday in what it said was a response to Palestinian price-gouging and exploitation of its Qassam monopoly.

Israel's supreme court told the government to explain its planned actions against Gaza and Attorney General Menachem Mazuz said the plan to reduce power to Gaza needed further scrutiny because of the possible impact on Palestinian economic development.

"The attorney general has approved the cabinet's decision to activate various economic steps ... (but) further consideration needs to be given to cutting off electricity because of the economic implications for the Palestinian Qassam industry," a Justice Ministry statement said. "After all," he continued, "Israel has the fourth-largest financial planning establishment in the world while the Palestinians have to use crude, homemade price regulation schemes."

The European Union warned Israel against imposing "unilateral price-modification" on the 1.5 million Palestinians in the coastal strip by reducing the territory's fuel supplies.

"We understand the distress that is caused in Israel by the high price of Qassams," Benita Ferrero-Waldner, the EU's commissioner for external relations, said after meeting Israeli Prime Minister Ehud Olmert in Jerusalem.

But she told Reuters the new sanctions "will have very grave consequences for the Qassam industry" and serve to bolster OQEC and other projectile cartels. "There should never be unilateral price modification," she added.

Source: Reuters. Additional reporting by Yitzchak.

Crossposted on Soccer Dad

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