Start-Up Occupation

Kerry's Gas Field Plan Won't Make Palestine a Better Place

Israel's electric automobile pioneer BetterPlace filed for bankruptcy on the day John Kerry announced his new Middle East peace plan. Kerry should learn from BetterPlace's mistakes, writes Matthew Kalman.

Mark Wilson/Getty

As fate would have it, Israel's electric automobile pioneer BetterPlace filed for bankruptcy on the day Secretary of State John Kerry announced his new Middle East peace plan to the same World Economic Forum where Shai Agassi first floated his battery car dream a decade earlier.

I’ve written extensively about BetterPlace, listened to Agassi set out his dream, test-driven the car, checked out their mission-control-style National Operations Center in Rosh Ha-Ayin and even had rare access to the closely-guarded bowels of a BetterPlace battery-switching station where technology once used to load bombs onto airplanes has been refined, computerized and beaten into environmentally-friendly ploughshares so drivers can swap a half-ton of charged lithium-ion in under five minutes.

I’m saddened by the failure of Agassi’s effort to create a world where cars run on clean energy, but the near-billion-dollar failure that made him the poster child of the Start-Up Nation bears lessons far beyond the business perils of green technology.Like the obscure car crash that sparked the first intifada in 1987, the BetterPlace pile-up is more than a traffic accident. The company's failure is a morality tale about what happens when a game-changing vision and brilliant theory collide head-on with entrenched realities and patterns of behavior.

Agassi made his pitch to the WEC on the mountaintops of Davos, while Kerry chose the depths of the Dead Sea, but there is poetry in the notion of Kerry unveiling his new vision of Middle East peace before the same gathering of business luminaries this weekend. Like Agassi’s electric car, Kerry's peace train rides in on solid theory mixed with a vision of a brighter, better future. But Kerry should stop and look at the failures of BetterPlace and learn some lessons for his own shiny new vehicle.

BetterPlace failed because of fatal flaws in the plan that was supposed to transform the business dream into a daily reality that would be seized with enthusiasm by ordinary Israelis. Instead of listening to what consumers wanted from an electric car, Shai Agassi and his colleagues preached their own green gospel. Instead of creating a range of vehicles for different lifestyles and pocketbooks, BetterPlace presented consumers with a single model and said: take it, or leave it. Instead of sharing the tax breaks and price-savings with customers, BetterPlace seized the money for themselves, resulting in a deal that made the cost of electric higher than gas. On top of that, drivers faced the daily uncertainty of never quite knowing if the company would last long enough to keep their cars on the road.

Does any of this sound familiar? On Sunday, Kerry set out a vision of economic prosperity for Palestine that was as relevant and real to most Palestinians as Shai Agassi’s battery switching stations were to most Israelis.

At the end of the day, Agassi’s cars were too expensive for ordinary Israelis and irrelevant to their transportation needs. Kerry’s peace plan ignores ordinary Palestinians and fails to address their political desires.

Ordinary Palestinians want an independent state based on the pre-1967 borders with East Jerusalem as its capital and the right of return to their former family homes now in Israel. Israel isn’t willing to grant any of that, but is prepared to tinker around the margins. Palestinian leaders tell their own people they are fighting for all those things, but tell the Israelis and others they are also prepared to tinker. Meanwhile, billions of dollars of foreign aid are pumped into a bottomless pit that most ordinary Palestinians never see.

Now Kerry has offered the Palestinians an unattainable electric car of peace. Instead of batteries and switching stations, his dream of increasing Palestinian GDP by 50 percent, reducing unemployment by two-thirds, and raising Palestinian wages by 40 percent is based on another kind of energy: natural gas.

The centerpiece of Kerry’s seven-point plan—which he did not unveil on Sunday—is the multi-million-dollar development of the first Palestinian gas field. In 2000, British Gas sank two successful wells off the Gaza coast that suggested reserves of a trillion cubic feet, worth $2.4 billion to the Palestinian economy. Kerry’s plan is to bring the gas ashore in Gaza, where he will also build the Palestinians’ first seawater recycling plant, before piping it across Israel to a 600-megawatt gas-fired power station in the northern West Bank near Jenin.

Kerry also foresees a Palestinian industrial complex on the northwest shore of the Dead Sea near Jericho to mine potash and mineral deposits. Other initiatives will boost tourism, agriculture, technology and construction.

"It is a plan for the Palestinian economy that is bigger, bolder and more ambitious than anything proposed since Oslo, more than 20 years ago now," Kerry told the audience in Jordan on Sunday.

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"Agriculture can either double or triple. Tourism can triple. Home construction can produce up to 100,000 jobs over the next three years, " said Kerry, adding that the plan would enable the emergence of an independent Palestine free from dependence on foreign aid.

Sounds great, but none of it will happen—at least not during Kerry’s term. The projects will require Israeli agreement allowing Palestinian access to areas of the West Bank currently controlled by Israel, as well as changes to the Oslo Peace Accords to ensure full Palestinian economic independence. This Israeli government will never agree to the Palestinians producing their own fresh water and electricity and thus ending their lucrative dependency on Israel for those basic needs. Nor will any Israeli government permit the vast infrastructure projects Kerry foresees arising near Jenin and Jericho. An industrial park backed by Japan on the Jericho site has been logjammed for nearly two decades.

And that’s before we even consider the fact that, as long as Hamas is in control, the Palestinian Authority can’t even swim off the Gaza Coast, let alone drill for gas there.

Even if Kerry can somehow turn Palestine into the Start-Up Occupation, none of this will bring a political solution any closer. It will not ease negotiations on borders, East Jerusalem or the right of return for refugees.

And the fact that none of it will actually happen, that Kerry’s shiny new peace train is unlikely ever to leave the station, will have both sides running for the battered, blood-guzzling, bullet-riddled jalopies that may drive round and round in circles, but at least give their drivers the comforting illusion of movement.