(Substitutes Israel for Tel Aviv in paragraph 10)
By Ari Rabinovitch and Tova Cohen
HAIFA, Israel, July 1 The hydraulic ramp of a
Turkish freighter taps down on the eastern Mediterranean port of
Haifa and, under a full moon, 37 trucks roll off onto an
otherwise empty pier.
In a convoy that stretches hundreds of meters, the trucks
travel east across northern Israel, bringing goods from Europe
to customers in Jordan and beyond.
Until three years ago the cargo these trucks carry - fruits,
cheese, raw material for the textile industry, spare parts, and
second-hand trucks - would have come through Syria. But civil
war has made that journey too perilous.
"Too much problems, too much guns, too much fighting," said
Ismail Hamad, a 58-year-old Romanian driver. Hamad has driven
through Syria for three decades, he said; now, only Israel.
Three years after Syria plunged into violence, Israel is
reaping an unlikely economic benefit. The number of trucks
crossing between Israel and Jordan has jumped some 300 percent
since 2011, to 10,589 trucks a year, according to the Israel
Airports Authority. In particular, exports from Turkey - food,
steel, machinery and medicine - have begun to flow through
Israel and across the Sheikh Hussein Bridge to Jordan and a few
Arab neighbours. Turkey's Directorate General of Merchant
Marine, part of that country's transport ministry, said that
transit containers shipped to Israel for passage on to other
countries increased to 77,337 tonnes in 2013 from 17,882 tonnes
The trade, though still small, is growing enough to encourage
long-held Israeli hopes that the Jewish state can become a
commercial gateway to the Arab world. Israel plans to invest at
least 6 billion shekels ($1.7 billion) in infrastructure over
the next six years to improve the trade route. In the past, some
Israeli businessmen and diplomats have lamented the way politics
have hurt economic opportunities; others have kept any trade
with their Arab neighbours quiet so as not to upset them. Now
they see a chance to boost economic and political relations.
"Israel is returning to its historic role, as a transit
country, as a bridge between continents, where historic trade
routes passed through," said Yael Ravia-Zadok, head of the
Middle Eastern Economic Affairs Bureau in Israel's Foreign
Ministry. She leads a group of Israeli government and security
officials trying to figure out how best to encourage trade.
The logic is simple: Goods from Europe and elsewhere
destined for the wider Middle East are usually unloaded in Egypt
before they make the several-hour drive to a Red Sea port, where
they are loaded onto new vessels and shipped to their final
destination. The routes from Haifa in Israel to Jordan, Iraq and
even Saudi Arabia - used by the Ottoman and British empires up
until Israel's founding - are potentially much quicker and
cheaper, shaving days, if not more, off a trip between Turkey
and Baghdad, for instance. Costs could be cut in half.
But opening up routes will not be easy. Politics and
generations of enmity are difficult to overcome. Iraq itself is
on the brink of civil war. Jordanian trade figures show a sharp
rise in trans-shipments through Israel in 2012, but a fall in
2013. Jordanian officials say that Israel is overstating its
role in the trade and point out that the vast bulk of
re-directed goods still goes via Egypt.
But Israel's gain, small though it may be, is far more
surprising because countries such as Saudi Arabia and Iraq spurn
official relations with Israel.
"A lot of secrecy still surrounds the topic and it is
probably premature to speak of a blossoming and fast-growing
trade route," said Coline Schep, Middle East analyst with
consultancy Control Risks. She nevertheless described the
traffic through the Haifa-Jordan River Crossing trade corridor
over the past two years as "almost unprecedented."
David Behrisch, managing partner at Tiran Shipping, an
Israeli shipping agency, says business sprang to life in 2011
when organisers of the Jordan Rally found they couldn't bring
race cars in from Italy through Syria.
"Somehow we put our hands on (them)," he says. "We handled
37 trucks we had to move to Jordan and then back." Behrisch
would not go into details. "Somehow, somebody connected us. You
know how things happen."
As the number of motor vehicles crossing from Turkey into
Syria plummeted - by close to 50 percent, from 106,750 in 2010
to 55,701 in 2013, according to Turkey's International
Transporters Association - most of the trade was diverted to
Egypt. But thanks to a new Turkish route by sea to Haifa, some
shipments also began crossing through Israel.
"The reason this Haifa route has opened is entirely due to
the war in Syria," said an official at the Turkish company U.N.
Ro-Ro that runs the new line.
Tiran Shipping now runs 40-50 trucks a week to Jordan and
moves 2,500 containers, or roughly 37,000 tonnes.
Though the amount Tiran carries is only a tiny sliver of the
$35.6 billion worth of goods Turkey exported to the region in
2013, it is up from zero a few years ago.
Israel has "not even begun to scratch at the potential," the
Foreign Ministry's Ravia-Zadok told a recent economic
Plenty of political and practical obstacles remain.
The port in Haifa is state-owned and has limited capacity, a
history of labour unrest and cumbersome security.
Freighters in Haifa bay are typically forced to wait hours
to dock. Trucks and containers have to pass through Israel's
lengthy security checks and scanners. The drivers, carrying
international permits, meet passport agents onboard. Only after
that can they take to the roads.
An hour later the freight reaches the Sheikh Hussein Bridge
and passes into Jordan. Normally, Jordanian law requires
containers to be unloaded in the country's Red Sea port of
Aqaba, but that doesn't apply to those passing through Jordan in
transit or those that are stripped and moved onto Jordanian
trucks at the border.
According to numerous international businessmen who spoke to
Reuters on condition of anonymity, goods continue from there
into Iraq and Saudi Arabia.
Documentation often shows the origin of goods but not their
transit route, so the receiving authorities either don't know
about or ignore Israel's role, according to Shlomi Fogel, owner
of the Haifa-based Israel Shipyards. One example: steel from
Ukraine, which is shipped to Iraq through Israel with Ukrainian
Return cargoes from the Arab world into Israel are inspected
with even greater scrutiny. This is perhaps the weakest link in
the trade route. Merchants say they could easily sell more from
the Arab world through Israel were it not for Israel's security
procedures. Only 90 or so trucks from Jordan can cross the
Sheikh Hussein Bridge each day and they routinely wait all day
while Israeli officials check their contents.
Fogel is working to ease that strain. He wants to expand a
free trade zone called the Jordan Gateway, which sits 6 km (4
miles) south of the Sheikh Hussein Bridge and straddles the
One afternoon a few months ago, he stood on a hilltop above
a rundown Jordanian army barracks and gazed at the 300 acre (121
hectare) park. The sluggish Jordan River that marks the border
snaked through the green valley below.
"Up here we will build a cafe and people from around the
world will come and do business," he said.
Working with the family of late international financier
Bruce Rappaport in Switzerland and with the wealthy Dajani and
Kawar families in Jordan, Fogel wants to create a customs-free
zone, where cargo can be dropped off or picked up from either
side 24-hours a day, companies can build factories, and
everything, including security, is managed privately. Already it
is one of five such zones in the country from which goods
manufactured in collaboration with Israel can be sold to the
United States without tariff or quota restrictions.
Seven factories are up and running on the Jordanian side of
the zone, an increase from just four factories at the start of
this year, the park's Jordanian general manager Qasem al-Tbaishi
said. The planned industrial park will bring a boost to
Jordanians nearby who depend on farming and are much poorer than
the Israelis across the river.
Israel has given approval and budgeted 60 million shekels
($17 million) to build a bridge directly into the trade zone.
The gateway group hopes Jordan will approve the plan within
Israel's Zoko Enterprises moved its car filter plant to the
Jordanian side of the zone three years ago to save on labour
costs and gain access to Arab markets. Gilad Hadassi, general
manager at Zoko's Israeli subsidiary Gur Filter, says companies
from countries like Saudi Arabia and Qatar, which don't have
diplomatic relationships with Israel, are willing to buy from a
"Customers from all over the world, a lot of customers from
Iraq and other Middle East countries at exhibitions come to our
booths to talk business. They don't care about politics."
Israel plans to build two $1 billion ports to be run by
foreign operators - one in Haifa, the other 80 km (50 miles)
south in Ashdod. The new Haifa port will have a capacity for 1.5
million containers a year, roughly doubling current levels.
A railway from Haifa to Beit Shean, not far from the Jordan
border, will be completed this year, and a final leg is being
planned, so that by 2017 a steady flow of containers could
travel by train all the way to the border.
"We can be an alternative for an individual producer, but
for the big picture we won't replace the Suez Canal, which is
something huge," said the CEO of the Jordan Gateway, Yuval
The most ambitious plan is a $400 million, 400-megawatt
power station run on Israeli natural gas to generate electricity
for both countries. Spearheading that proposal is Shimon
Shapira, a former military secretary to Prime Minister Benjamin
Netanyahu who together with Fogel has been meeting Jordanian
officials. "Jordan today suffers from blackouts and has a big
shortage of electricity," Shapira said. "They are paying about
12 cents per kilowatt, and we will be able to provide it to them
for a lot less."
The developers hope for approval from Amman this year. The
project would take up to five years to build. Some analysts
remain sceptical that Jordan will agree to use Israeli gas. But
in February the partners in Israel's huge Tamar field signed a
15-year deal with two Amman-based companies to supply $500
million worth of gas.
(With additional reporting by Jonathan Saul in London and
Humeyra Pamuk in Istanbul; Edited by Simon Robinson)