Blair Inc--The Man Behind the Mask

by Francis Beckett

  The Wataniya phone network had been built but was not operational until Tony Blair’s intervention with Israeli ministers. Israel expected the Palestine communications group Paltel to share its 900-range frequency with the competitor Wataniya. Paltel was refusing to agree and Tony Blair had again to intervene to push for a ‘creative solution’.

  ‘I would say his prime contribution to Wataniya was negotiating the release of the frequencies. That was a milestone, obviously,’ says Bassam Hanoun. It made Wataniya’s shareholders very rich. ‘November 2009, we were nothing … And since then we have done fantastically well. We have captured 23 per cent of the market.’

  Blair says that he raised the issue of Wataniya with the Israelis at the request of the Palestinian Authority. He has said that there was no conflict of interest at all, and that he did not know that JP Morgan, the bank he works for, helped finance the deal he rescued.

  The extent of this lobbying was revealed in a previously undisclosed confidential letter Blair sent to Hillary Clinton on 17 September 2009, using the notepaper of the ‘Office of the Quartet Representative’. The letter was obtained using US Freedom of Information provisions and was declassified on 9 August 2012.

  The letter from Blair, which is also copied to Ban Ki-moon, Secretary General of the United Nations, Sergei Lavrov, Foreign Minister of the Russian Federation, Carl Bildt, Swedish Minister of Foreign Affairs, Benita Ferrero-Waldner, member of the European Commission and Javier Solana, High Representative of the European Union, Brussels, Belgium, was sent in advance of a meeting that the Quartet principals were holding in Trieste.

  The letter starts by referring to a ‘transformative change agenda’ which embraces ‘economic development including a number of “flagship projects”.’ The ‘transformative change agenda’ is referred to many times in the letter, suggesting a Blairite, third-way mantra. The letter proceeds to give a round-up of some of the more mundane work that Blair’s office has been doing, in terms of improving the flow of trade through the checkpoints between Israel and the West Bank, and the state of relations between the Palestinian government at the time and the government of Israel. The letter up to this point is relatively low-key. At the end of the second page, we then read, ‘below I set out some of the key issues which, if delivered on soon, can give impetus to the change agenda.’

  What are these projects that can radically change the economic, and implicitly political situation in the Middle East conflict? The first is bringing in a second mobile telephony operator for the Palestinian market. The second, the proposal to build a new town in the West Bank.

  The letter cannot over-emphasise the significance of bringing in Wataniya as the second mobile operator. Clinton is told that this is a ‘major project, which if successful would entail the largest investment in the Palestinian economy to date.’ The price of failure, says the letter, would be grave indeed, no less than the collapse of the entire ‘transformative change agenda’. The letter reads, ‘Conversely, its failure would send entirely the wrong signal about the prospects for the transformative change agenda, and would deter sustained foreign investment in the Palestinian territories.’

  Blair admitted that the Wataniya project was encountering some resistance at that time from the Israeli government, which appeared reluctant to give Wataniya a mobile bandwidth. But he said he had everything under control. ‘The Government of Israel has yet to allocate the necessary 4.8MHz bandwidth … I have recently received an assurance from Minister Barak that the necessary bandwidth will be allocated and I hope we can now resolve this on that basis.’

  Why does Blair emphasise to Clinton the importance of Wataniya? He may feel strongly that the people of the Palestinian territories deserve a second mobile operator, and it is a matter of adding to their choice. By the same token, he may feel that his ‘transformative change agenda’ needs a trophy project to sell to the Quartet, to show his level of activity – which otherwise may be less than impressive – and Wataniya is it. Or could he be a little less confident than he claims about getting Israeli support for the bandwidth and he wants Clinton’s support for the bandwidth allocation, perhaps to put in a word with Jerusalem? The more Machiavellian interpretation sees Blair serving his paymasters’ interests, and indirectly his own, in the pushing of Wataniya, and the profound ‘transformative’ impact it will have on the Palestinian territories.

  Aside from the mobile phone project, we hear about Blair’s support for the creation of a new town in the West Bank called Rawabi. The letter referred to above describes it also as a ‘major project…the first new Palestinian town in modern times.’ It continues, ‘Investors are ready to back an estimated $1 billion investment.’ Some roads are needed to enhance access to the site and this requires Israeli re-designating land for Palestinian use, previously reserved for Israel. The letter cites Rawabi as a case where ‘transferring designation of small, limited areas of land would unlock progress on the change agenda. My team have identified a number of specific examples …’ Rawabi is the largest private sector project in Palestinian history. It was initiated at the Palestine Investment Conference, which took place in Bethlehem in 2008. Rawabi’s development, near Ramallah, is linked to a $500 million affordable mortgage scheme. The Washington Post reported that Rawabi ‘is specifically designed for upwardly mobile families.’ The total cost of the development, mostly funded by the Qatari company LDR and Palestinian multimillionaire Bashar al-Masri, is estimated at $850 million. Al-Masri is the founder and managing director of Bayti Real Estate Investment Company. Bayti, jointly-owned by Qatari Diar Real Estate Investment Company and Massar International, was created to build Rawabi. Blair has spoken approvingly of Masri in a publication issued by Lloyds Bank. ‘It is his combination of resilience, commitment and refusal to bow to the forces of cynicism that makes his work so valuable.’

  The Rawabi project involves a public-private partnership with the Palestinian Authority responsible for providing off-site infrastructure, while Bayti is tasked with the design and development of the city. The Rawabi economic growth strategy has the aim of creating 3,000 to 5,000 new jobs in ‘knowledge economy’ industries including information technology, pharmaceuticals and health care.

  Blair’s letter to Hillary Clinton ends with an extraordinary incursion by the Quartet representative Tony Blair into Middle Eastern politics. Breaching his mandate to reserve his activities to the economic development of the West Bank and Gaza, Blair makes some overt references to the political situation.

  On the issue of security sector control and strengthening the rule of law, there continues to be notable improvement in Palestinian security capacity. But the PA’s capacity to deliver a coherent Rule of Law effort remains more limited. Progress on reform in the security and justice sectors has been slow, as has legal reform within both sectors. Israeli Defence Forces continue to mount incursions into West Bank urban centres and maintain curfews on movement of PA security personnel. Nor can PA security and criminal justice personnel move freely between Areas A, B and C. The United States Security Coordinator and the EUPOL COPPS mission [the European Union Co-ordinating Office for Palestinian Police Support] continue to provide invaluable support to the security and rule of law sector. My primary task here is to put the arguments to the PA and the GoI on enabling actions each must take to allow the Rule of Law sector to thrive.

  The situation in Gaza remains unsustainable in the medium term and highly combustible. Yet there appears to be no prospect of a substantive change in GoI policy, so long as Corporal Shalit remains in captivity. While there appeared to be a prospect of limited easing over the summer, including by allowing reconstruction materials through crossings, this has not happened.

  The letter ends with some further references to the Blairite mantra of the ‘transformative change agenda’ and signs off with a reference to a meeting he is having with Hillary Clinton in New York.

  GAZA’S GAS AND BG GROUP

  Another client of JP Morgan is British Gas. While Blai
r was still Prime Minister, he promoted the purchase of a gas field off the coast of Gaza by British Gas. Then, as Middle East envoy (and as a JP Morgan board member), he lobbied the Israelis to allow development of the site, to the potential benefit of both British Gas and JP Morgan. How far Palestine stood to benefit is hotly disputed, and it is by no means clear that the proposed deal was fair to Palestine.

  British Gas owns the rights to operate the field – thanks to the Blair deal – but Israel, which controls Gaza’s waters, refused to allow any further development. In Gaza – the only Palestinian territory with access to the sea – Israel has prevented the Palestinians from developing their fields, and the gas continues to lie, undisturbed, under Palestinian waters.

  In November 1999, Yasser Arafat signed a twenty-five-year contract for gas exploration with British Gas. BG had discovered a large gas field between seventeen and twenty-one nautical miles from the Gaza coast, three-quarters of it in Palestinian waters. The Oslo accords gave the PA maritime jurisdiction over its waters up to twenty nautical miles from the coast.

  In July 2000, Israeli Prime Minister Ehud Barak authorised BG to drill the first well, although companies in the Yam Thetis consortium, which was set up to operate in adjacent Israeli gas fields, petitioned the Israeli government to stop the Palestinians from developing the fields.

  On 27 September 2000, on the eve of the second intifada, Arafat, accompanied by Palestinian businessmen and the media, lit the flame proving the presence of gas at the BG offshore exploration platform. Arafat declared that the gas was ‘a gift from God to us, to our people, to our children. This will provide a solid foundation for our economy, for establishing an independent state with holy Jerusalem as its capital.’

  Barak’s authorisation to drill the second well, and the successful gas strikes at both, seemed to promise a potential windfall for the PA. According to the 1999 contract, BG holds 90 per cent of the licence shares and the PA 10 per cent until gas production begins, at which point the PA’s share increases to 40 per cent, of which 30 per cent would be held by Consolidated Contractors Company (CCC), a very big, privately owned construction firm (and a client of Tony Blair Associates). We shall meet CCC again.

  To reduce the investment risk – since Palestine is only a small gas consumer – BG sought long-term advance gas purchase commitments from other clients, starting with Israel. In June 2000, BG proposed to supply gas from Egypt, Gaza and Israel to the state-owned Israel Electric Corporation (IEC). But the IEC refused to buy gas from Gaza, saying that it was more expensive than Egyptian gas. The real reason for the refusal, according to Israeli newspapers at the time, is more likely to have been political. Israel’s new (as of spring 2001) Prime Minister, Ariel Sharon, had vetoed purchase of Palestinian gas.

  In May 2002 the veto on Gaza gas was lifted, at least partly at the urging of British Prime Minister Tony Blair. But the next year there was another Israeli veto: Sharon refused to allow funds to flow to the PA lest they be used to support terrorism. Yet it had been agreed, and Israel had announced, that gas revenues to the Palestinians would be transferred to the special account that was already being used for international aid and tax-clearance revenues remitted by Israel to the PA.

  Arafat died in November 2004. Mahmoud Abbas was elected PA President in January 2005, and Ariel Sharon was replaced by Ehud Olmert as Israeli Prime Minister a year later. A PA reform cycle that won Israeli and international acceptance was implemented, and, on 29 April 2007, the Israeli cabinet approved Olmert’s proposal to authorise renewed discussions with BG. Abbas and the Israeli government secretly agreed that the PA share of the revenues would be transferred through an international account that would be inaccessible to the official PA government, dominated by Hamas since the PA legislative elections in January 2006. So the government the Palestinians had elected would not be able to touch a penny of it.

  On 14 June 2007, Hamas seized power in the Gaza Strip. The new government in Gaza declared that it would change the terms of the contract, and in particular ensure that the Palestinian share, 10 per cent, was increased.

  Negotiations between Israel and the PA in Ramallah continued, bypassing Hamas. But, in the end, BG and the Israeli government announced that they would delay any signing until the end of the year. In December 2007, BG officially announced the end of the negotiations with Israel on grounds of insurmountable disagreements, and just over a year later BG closed its office in Israel, while keeping its office in Ramallah and retaining its concession for the gas fields.

  However, Egypt’s cuts in the volume of gas being sold to Israel following the Egyptian Revolution of 2011 showed the Israeli government that it needed to have more sources of energy, to lessen its dependence on Egyptian gas. So Prime Minister Binyamin Netanyahu revived talks with Mahmoud Abbas about a possible gas purchase contract.

  On 4 February 2011, Netanyahu announced, with Tony Blair (in his new incarnation as QR) at his side, that the time had finally come to develop Palestinian gas. He said, ‘There is a Palestinian Authority gas field adjacent to an Israeli gas field. We need to develop both simultaneously.’ A new round of negotiations between the PA and Israel began in September 2012, with Hamas reiterating its rejection of any agreement on Gaza gas reached without its participation. But the negotiations went nowhere. The military occupation enables Israel to prevent Palestinians access to their offshore resources, including their gas fields. This makes civil or commercial navigation to or from the Gaza Strip impossible.

  Within months of the disengagement, Hamas won the Palestinian legislative elections, which led ultimately to the political separation of the West Bank and the Gaza Strip under rival Palestinian governments. Israel therefore felt the need to tighten its stranglehold on Gaza’s maritime access. From the twenty nautical miles established by Oslo, the area was reduced to twelve nautical miles, to six nautical miles following the Hamas electoral victory in 2006, and finally to three nautical miles in the aftermath of Israel’s assault on Gaza in 2008–9.

  The Israeli navy controls all maritime routes, and over the years has killed a number of Palestinian fishermen who strayed beyond the three-mile limit and within range of its gunboats. Such rules clearly make any Palestinian access to the wells impossible.17

  In 2013 and 2014 there was talk of reviving the project yet again, according to the Financial Times (FT). It would have been the largest yet of several big economic projects in Secretary of State John Kerry’s $4 billion plan to lift the Palestinian economy out of its dependency on foreign aid and Israeli energy, which was to be overseen by Tony Blair.

  Blair was furious that this activity was questioned in the Channel 4 Dispatches programme. It pointed out that JP Morgan advised the British Gas Group – which, as we have seen, had an interest in the Gaza Marine gas development – which he was promoting as QR. Blair told the FT’s Lionel Barber that JP Morgan advised BG elsewhere in the world, that he had never discussed the matter and that Gaza Marine was potentially a vital source of energy to the occupied territories: ‘That ridiculous Channel 4 programme that should never have been made and was a complete waste of public money …’ he said.18

  But, whatever he says, many Palestinians think the deal is to the benefit of everyone except them. It has been described as an ‘act of theft’ by Ziad Thatha, the Hamas economy minister, who claims it should be up to the Palestinians alone to decide what to do with the gas, and who should benefit.19

  One significant beneficiary will be Kurdish tycoon Mohammed Rashid, who has already made millions from the deal. Blair dealt with Rashid while still PM, when promoting the British Gas purchase of the gas field. Rashid has excellent connections across the Middle East, and was also financial adviser to Arafat.

  Arafat appointed Rashid head of the Palestinian Investment Fund (PIF), a £1 billion company set up to make use of Palestine Liberation Organisation (PLO) funds. Rashid brokered the Gaza gas consortium – composed of British Gas, which holds 60 per cent of the shares, the PIF (10 per cent) and
the construction multinational CCC, which has subsidiary firms in the Middle East, Britain and America.

  Security and political issues blocked progress on the development of the field, but, by the time Blair left office, the gas deal had given him access to Mohammed Rashid, and, through him, a route to Libya – and his relationship with the Libyan leader the late Colonel Muammar Gaddafi.

  As so often with Blair, one activity impinges upon another, and it is not always easy to see where each fits into the overall pattern; Blair’s dealings with Libya will be unravelled in a separate chapter.

  The Mohammed Rashid story comes to a sticky end. The man who was Mr Ten Per Cent in the Gaza gas deal between Israel, British Gas, the Palestinian Authority and the CCC, was sentenced to fifteen years in prison by a court in Ramallah in 2012 for embezzling millions of euros. He and two other businessmen were ordered to return €33.5 million in stolen funds.20

  Blair also regularly visits Abu Dhabi for the Quartet. At the same time, his consultancy company, Tony Blair Associates, was and is providing ‘global strategic advice’ to the Crown Prince’s sovereign wealth fund, Mubadala, which invests Abu Dhabi’s oil profits.21

  THE KUWAIT DIMENSION

  Perhaps the most serious potential for a conflict of interest comes in Blair’s dealings with Kuwait. These also properly belong to a later chapter about his commercial activities, and will be covered there; but, as so often happens with Blair, it is not entirely clear when one role ends and another begins, and the start of the Kuwait contract needs to be reported here.

  On 26 January 2009, when Blair was in Kuwait for the Quartet, he met with the Emir. The former British PM was accompanied by his new senior adviser Jonathan Powell, which was odd because Blair was there officially on behalf of the Quartet, and Powell – who had been Blair’s chief of staff during the Iraq war – did not work for the Quartet: he worked for Blair’s personal consultancy.