A fight Netanyahu cannot win

Netanyahu Tries to Bust Up Israel's Port Monopoly

By David Wainer and Calev Ben-David 

Two years ago, Alon Hassan, the union chief at Israel’s Ashdod port, wanted to invite work colleagues to his daughter’s bat mitzvah. When he and his co-workers walked off the docks during a weekday, they nearly paralyzed one of the country’s largest trade gateways, enraging importers whose cargo was left stranded offshore.

Israel’s high-tech companies have earned a global reputation for their business acumen. Yet when it comes to raw economic power, it’s hard to beat the unionized port workers calling the shots at the country’s dominant ports in Haifa and Ashdod. These state-owned facilities process about 90 percent of the nation’s exports and imports—and their inefficiency is costing businesses, according to the Manufacturers Association of Israel.

Even so, dockworkers enjoy the fruits of this powerful duopoly. Port hands earn average annual salaries of about 450,000 shekels ($123,000), the highest among state-owned company workers and more than four times the nation’s average salary. When 45 openings for stevedores were announced this year, 3,000 job seekers applied. The port employees and other public sector workers are represented by Israel’s organization of trade unions, Histadrut, which declined to comment.

Israel’s government has struggled for years to weaken the port unions for a simple reason: More than 40 percent of the country’s $247 billion in gross domestic product comes from exports. A port strike could pummel Israel’s economy, which is isolated because of its lack of trade relations with most of its Arab neighbors.

In April, Prime Minister Benjamin Netanyahu’s government pledged to end the port stranglehold on the economy. He called for the expansion of privately run piers that would in theory lower the cost of shipping goods and boost the productivity at Haifa and Ashdod by increasing competition. Both operate 30 percent less efficiently than similarly sized facilities elsewhere, according to a report by the Israel Antitrust Authority, which is trying to officially designate the ports as monopolies that damage business productivity. “Almost everything you see before you, products that are here or that we export to world markets, pass through the ports,” Netanyahu told his Cabinet on May 19 as he outlined plans to promote competition at the ports.

The tough stand on dockworkers reflects a shift in the national mood. As Israel’s middle class struggles under rising housing and food costs, its rage is being directed at special interests—be it business tycoons, tax-evading companies, or entrenched unions. Netanyahu’s finance minister, Yair Lapid, has tried to channel populist anger by promising structural changes at the ports. His ally and fellow newcomer, Economy Minister Naftali Bennett, says if workers decide to strike because of the reforms, Israel might well recruit soldiers to man the ports. Transportation Minister Israel Katz has also said the government “is prepared to fast-track legislation outlawing strikes in essential economic sectors and bring in foreign workers if needed to run the ports. That’s our ‘nuclear weapon.’ ”

The dockworkers show little sign of backing down. In a public letter to Bennett released on May 16, Ashdod port union chief Hassan wrote, “I understand that in order to please capitalists like yourself you need to find a victim, and I understand you’ve decided to use us as a punching bag. We’re not a punching bag; not yours, not the state’s.”

In the past few years, the government has opened a small, privately managed port in Haifa, and it sold the franchise for the Red Sea port of Eilat last year to the Israeli shipping company Papo Maritime. Katz says the government will accept bids for a new deepwater port in Haifa, Ashdod, or both within months, and foreign companies have expressed interest, he says. “Introducing more competition is the best way to reform the ports, since just privatizing the existing ones won’t end monopolistic practices.”

Diminishing dockworkers’ power isn’t easy for a country built by Zionists from Russia and Eastern Europe who held socialist principles dear. “This government is promising to wage a war against the poor, and it’s our role to protect them as much as possible,” says Merav Michaeli, a Parliament member from the opposition Labor Party. Still, she says, “in some cases, if there are groups with excessive power and influence, appropriate measures that take into account workers’ welfare should be taken.”

The bottom line: Israeli dockworkers make $123,000 a year, more than four times the nation’s average salary.