Knesset Defeats Motion on Nationalization of Haifa Refineries
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Knesset Defeats Motion on Nationalization of Haifa Refineries

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The Israel Parliament overwhelmingly rejected today a Communist demand that the Haifa oil refineries, owned in part by Shell Oil Company, be nationalized because of the company’s decision to withdraw from sales operations in Israel.

The Knesset defeated a motion, introduced by Communist deputy Esther Wilenska, to debate the question. Finance Minister Levi Eshkol said that even a debate was unnecessary since up to this point all crude oil brought to the refining plants had been processed.

Meanwhile, A. P. de Boer, resident representative of Shell Oil Company, began discussions today with Israeli officials on problems flowing from the company’s decision to end its operations in Israel within six months.

At the same time, Israel continues its efforts to convince the British Foreign Office to reverse the decision, which is generally considered to have been motivated by a desire to court the favor of the Arab states.

Similar negotiations with the Netherlands Government ran up against the blank wall of a rejection, on the grounds that the Dutch Government has rather limited control over the decisions of the company, which is partly owned by the government. At the same time, The Hague expressed in the strongest terms criticism of Shell’s knuckling under to the Arab boycott.

In Israel, criticism has been mounting against the “policy of silence” clamped down on unfavorable developments in the Arab boycott of Israel. What has come in for particular criticism is the silence which surrounded negotiations in which Socony Vacuum withdrew from the Israel market, handing over its interests to a newly formed Israeli company. Silence on this matter, the critics insist, was a contributing factor in Shell’s acquiescence to Arab demands.


However, observers here note that there was an important difference between the American and British oil companies’ behavior. Socony informed Israel in advance of the growing Arab pressure and conducted lengthy consultations with the Israelis on how to withdraw with the least harm to Israel. In these discussions acceptable arrangements were found before Socony announced its withdrawal.

Shell, on the other hand, negotiated no such arrangements nor showed any interest in minimizing damage to Israel resulting from its action. Another fact of importance, is that Shell’s property and interests in Israel are several times greater than Socony’s were.

Of particular significance in the oil picture is Shell’s interest in the Haifa refineries. Officials maintain the question of the refineries has not yet been touched in the Shell-Israel discussions. It is clear, however, that Shell is not free to close down the refineries since the Israel Government has the legal authority to operate them in behalf of any owner as a vital industrial enterprise.

Moreover, Israeli legal experts are studying the complicated clauses of the concession under which the refinery was built. They provide that the companies cannot dispose of the installations without the consent of the government.

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