Why would one of Israel’s most powerful firms be helping out Iran? Why don’t we hear more about the grip on Israel’s economy and political system of a handful of firms? And why don’t we hear more, in general, about private companies’ behind-the-scenes influence in the world’s democracies?

Curious goings-on between Israel and Iran

Here’s an important piece from the New York Times, with the real interesting stuff buried—as is so often the case. (Save the best for last—where only the most discerning will spot it!)

U.S. Announces Sanctions Against Israeli Company


JERUSALEM — Even as Prime Minister Benjamin Netanyahu was praising the United States in a speech on Tuesday for imposing tougher sanctions on Iran for its nuclear activities, the State Department announced that it was imposing sanctions on a leading Israeli company, Ofer Brothers Group, for activities supporting Iran’s energy sector.

While the State Department’s decision caused Israel considerable embarrassment, it was the timing that created the greatest stir. It came soon after Mr. Netanyahu’s friction with Mr. Obama over using the 1967 borders as a basis for solving the Israeli-Palestinian conflict.

“Nobody wants to over-interpret the choice of timing,” said an Israeli official who was speaking on the condition of anonymity for diplomatic reasons, “but there was no objective reason for the State Department to come out with the announcement on that precise day.”

“Does this carry meaning? I am unable to tell you. But you cannot blame anybody for being suspicious,” he said.

The Obama administration dismissed any connection between the sanctions and Mr. Netanyahu’s visit. “These sanctions take months” to work through the Department of Treasury’s vetting process, a senior administration official said. “There is a process.”

Still, the awkward fact remains that a corporation owned by one of Israel’s most prominent business families has been blacklisted for dealings, however indirect, with Iran.

According to the State Department, the Ofer Brothers Group and its Singapore-based subsidiary, Tanker Pacific, are being sanctioned along with Associated Shipbroking of Monaco for their roles in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines.

The shipping company has been cited by the United States and the European Union for its role in supporting Iran’s proliferation activities. Deputy Secretary of State James B. Steinberg told reporters in Washington that “Iran uses revenues from its energy sector to fund its nuclear program, as well as to mask procurement of dual-use items.”

The State Department determined that Tanker Pacific and Ofer Brothers Group “failed to exercise due diligence and did not heed publicly available and easily obtainable information” that would have indicated that they were dealing with the Iranians. As a result, the two companies are barred from security financing from the Export-Import Bank of the United States, from obtaining loans over $10 million from American financial institutions and from receiving United States export licenses, the State Department said.

Tanker Pacific issued a statement saying that it was “startled to learn” of the sanctions over the sale of one of its tankers, the MT Raffles Park, and that it believed the American decision was taken “in error.”

The company said that it had been working closely with American authorities since it first received inquiries relating to the sale, and that it had taken “all appropriate action” at the time of the transaction to ensure that the parties involved were not connected with Iran.

Motti Scherf, the media adviser of the Ofer Brothers Group, at first went on Israeli television and described the allegations as a misunderstanding. Reached by telephone on Thursday, Mr. Scherf refused to comment.

The Israeli news media have reported that the tanker eventually ended up in the hands of Crystal Shipping, a company based in the United Arab Emirates, and that from there it went to Iran.

The Tel Aviv-based Ofer Group, founded by the brothers Sammy and Yuli Ofer in 1956, is a multibillion-dollar global holdings group. Its growth is “a classic tale of a family’s journey from rags to riches,” according to its Web site.

There have long been grumblings in Israel about how a small business elite wields disproportionate power in the national economy. The Ofers are counted among the top 20 families, which together control 25 percent of the country’s listed companies.

Whoops! When have you ever heard that before? Maybe there have long been “grumblings” in Israel, but those have not been well reported in the US.  (Though, to be consistent, how often do you hear corporate-owned American media talking about how in the United States there are “grumblings…about how a small business elite wields disproportionate power in the national economy”? Really not very often.)

However, the Israeli official said that the Ofer family would have to deal with American authorities themselves.

Yeah, right. And that’s the end of that, in the New York Times.

But it needn’t be. In a thoughtful book that has received almost no attention at all, The Rise of Israel: a History of a Revolutionary state, professor Jonathan R. Adelman describes the early idealism and socialistic inclinations that in many ways characterized Israeli society, and then describes the country’s transformation into a US clone:

By the 1990s, [Israel] had created a centralized transnational ruling elite that was part of the transnational capitalist class. Massive capital inflow in the 1990s, attracted by the peace dividend, high technology and capital flight elsewhere, promoted the conversion of the Israeli economy to globalism and transnationalism. The older ideal types have been replaced by new ideal types of entrepreneur, high technologist and lawyer. Egalitarianism has given way to a highly differentiated socio-economic structure where the top 10 percent of the population make almost $7,000 a month and the bottom 10 percent a mere $323 a month. Admiration of socialist sacrifice has been replaced by an open admiration for wealth and the United States.

There has been a growing concentration of power and wealth in a new ruling class. The high-technology boom and massive foreign investment of the 1990s promoted the predominance of a small number of firms in the economy. Five private groups (Israel Discount Bank, Ofer Group, Koor, Dankner Group and Arison Holdings) owned companies worth 41 percent of the capitalization of the Tel Aviv Stock Exchange (TASE)….

Clearly, we need to understand much more about why one of the most powerful companies in Israel has had connections to Israel’s arch-enemy, Iran.

We also need a tough look into domination of the Israeli political culture by a handful of firms—and how this might have an impact on the perpetual inability to find a peaceful solution to the Mideast tumult. Just as we need to better understand the real influence and impact of financial interests in the United States, and how they create perpetual crisis right here at home.

What we don’t understand about the true nature of power, and about string-pulling behind the stage set of vigorous democracy, could….fill a newspaper.



  • Russ Baker

    Russ Baker is Editor-in-Chief of WhoWhatWhy. He is an award-winning investigative journalist who specializes in exploring power dynamics behind major events.

Comments are closed.