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Doubts About Proposed Mediterraneandead Sea Canal Halts International Campaign to Raise Runds

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The international campaign to raise funds for a proposed Mediterranean-Dead Sea canal has been halted amid uncertainty over whether the $1.3 billion project should go ahead.

Sources at the European headquarters of the State of Israel Bonds Organization confirmed here today that it had suspended “some time ago” sales of low interest shares in the scheme, intended to generate cheap electricity at a hydro-electric station on the Dead Sea.

The Bond Organization has already raised about $100 million world-wide to be used as “seed money” for feasibility studies. Its decision to drop the canal from its fund-raising programs followed fierce disagreement over the canal project scheme between Israel’s Finance Ministry and the Energy Ministry.

Prior to Premier Menachem Begin’s resignation, the Finance Ministry had been pressing for a two-year postponement of the project because of Israel’s perilous economic situation. This was resisted by the Energy Ministry which wanted the feasibility studies to proceed.

FIRM GOVERNMENT DECISION EXPECTED IN 1985

During a visit to London this week, Israeli Energy Minister Yitzhak Modai told the Jewish Telegraphic Agency that he expected a firm government decision in 1985 on whether the canal should be built. The decision originally was to have been made next year.

It will depend in part on three related reports currently being carried out at the cost of $30 million. They deal with the canal’s effects on Israel’s underground fresh water table; on the geological difficulties of building a tunnel through the Judean mountains; and the effect of diluting the Dead Sea with less saline water from the Mediterranean.

A final report on the first of these was almost ready, Modai said. He expected it to conclude that the risk of damaging the sweet water aquifers would be “almost eliminated” if the sea water canal followed a route preferred by the government, in the region of the Gaza Strip.

The report on the geology of the 81-kilometer route of the tunnel which would carry the water under the Judean mountains will be due in another year, Modai said. It would indicate whether the tunnelling costs could be reduced to one-third of the total capital cost, a key financial condition for its construction.

The third, and most crucial report, would examine possible damage to the Dead Sea’s valuable potash deposits.

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