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Israel bombs, we pay

The Gaza power plant was insured
Guess who's going to pay the cost of rebuilding the electricity plant in Gaza? We, the U.S. tax payers, will pay it. The power station was insured by a U.S. government agency. Perhaps the Israeli military didn't bother to look into that before launching their attack on the facility.

Well, that's what daddies are for--to pay the bill when junior goes out and breaks windows. Or, maybe it's about time we Americans wake up to the fact that we're supporting a full-blown, hardcore juvenile delinquent.

Below are two news reports, one from the Israeli newspaper Haaretz, the other from the Boston Globe:

Last update - 14:12 02/07/2006
By Akiva Eldar, Haaretz Correspondent and Haaretz Service

In the wake of international pressure, the government was to vote Sunday on a plan to supply electricity from Israel to the Gaza Strip, in order to resume the power supply, which was halted following an Israel Air Force strike on a major Palestinian power station there.

If approved, the Israel Electric Corporation will erect special electrical lines stretching from Israel into Gaza.

Government sources said that Israel had been forced to provide power to Gaza through the Electric Corporation due to American and British pressure. Nevertheless, the move requires special government approval so that work can begin immediately.

The Gaza Strip requires 200 megawatts of electricity, half of which is provided by the power station, and half which is supplied by the Israel Electric Corporation. After the IAF strike, the power station's capacity was cut by half.

United States officials said Saturday that U.S. funds would be used to pay for the damage caused by the strike. The power station was insured by a U.S. government agency, according to The Boston Globe.

The U.S. Foreign and Defense Ministry departments that oversee foreign relations were unaware of the decision to target civilian facilities in the Strip, or the decision to attack the power station. Because of this, officials did not know that the station was insured by a U.S. government agency. Israel did not inform the U.S. prior to attacking the power station.

The power station in Gaza was built over a period of five years, at a cost of $150 million. In 1999, the Enron Corporation, along with Palestinian businessman Said Khoury, began working on the project. In 2000, Khoury's Morganti Group purchased Enron's share of the project.

The power station began operating in 2002, reaching full commercial capacity in 2004. The owners of the power station insured it, through the Overseas Private Investment Corporation, for a sum of $48 million due to "political risks." OPIC is a U.S. government authority that insures U.S. investments in developing markets.

A spokesman for the agency said the insurance purchased by the Morganti Group covers instances of political violence, which include wars and acts of terror.

The plant supplies electricity to some 860,000 people.


Boston Globe

By Farah Stockman, Globe Staff | June 29, 2006

WASHINGTON -- The Palestinian power plant bombed by Israeli forces Tuesday is insured by a US government agency, and US officials say they expect American funds to be used to pay for the damage.

The destruction of the 140-megawatt reactor, the only one in the Gaza Strip, threatens to create a humanitarian disaster because the plant supplies electricity to two-thirds of Gaza's 1.3 million residents and operates pumps that provide water supplies.

But paying a claim on the plant, which was insured for $48 million, could prove problematic for the United States, which cut off funding for all infrastructure projects in the Palestinian territories after the militant group Hamas won legislative elections in January.

Administration officials said the restrictions on working with a Hamas-led government could further complicate the repair of the electric facility, which could take weeks, if not months, to fix because of the escalating violence in Gaza.

The bombing of the plant could become a lasting problem for the Bush administration, which is appealing for an end to the showdown between Israelis and Palestinians in Gaza.

Israeli warplanes hit the power plant two days after Palestinian militants attacked an Israeli Army unit, killing two soldiers and taking another one hostage. Israeli forces responded yesterday by entering the Gaza Strip for the first time since Israel's historic pullout from the territory nine months ago, bombing the plant and three bridges.

The power plant cost about $150 million and took more than five years to build.

Plans for it began in 1999, when two private investors -- the now-defunct Enron Corp. and a Palestinian-born construction mogul, Said Khoury -- laid down the blueprint for making the Palestinian territories less reliant on buying electricity from Israel.

The project faltered when violence broke out in Gaza in 2000 and when Enron collapsed into bankruptcy, but Khoury continued to push forward. His construction company's US subsidiary, Connecticut-based Morganti Group, bought out Enron's stake in the plant.

In 2002, the plant began operating, becoming the first such facility regulated by the Palestinian Energy Authority. In 2004, it reached full commercial capacity and its owners were able to purchase $48 million in ``political risk" insurance from the Overseas Private Investment Corporation, an arm of the US government that provides American businesses with financing abroad and promotes US interests in emerging markets.

The US Investment Corporation -- set up in 1971 with US taxpayer funds -- had been supportive of the project from the beginning, arranging the first meeting between investors for the plant, according to the Bloomberg news service.

Few commercial insurance companies insure such projects against political violence, but the US Investment Corporation does so to encourage development in emerging markets, according to Lawrence Spinelli, a spokesman for the Investment Corporation.

The insurance that Morganti purchased covers ``political violence," which includes ``wars, acts of terrorism, things like that," Spinelli said. To be paid for the damage, the company must file a claim, and the Investment Corporation must determine whether the claim is covered by the policy, Spinelli said.

The corporation raises its reserve funds through insurance premiums and other charges to its clients, but its funds are kept in the US Treasury and are controlled by Congress.

That could be a problem for those who want to see the power plant swiftly rebuilt.

After the election of Hamas in January, a host of congressmen introduced bills designed to freeze US assistance to the Palestinian territories to prevent any financial benefit from reaching Hamas, designated as a terrorist organization. In April, the State Department announced it would cut off all planned funding for infrastructure in Gaza and the West Bank.

But advocates for Palestinians say that the plant must be repaired, even if the US government is forced to pay for it.

``If you take out two-thirds of the power in a place like Gaza, and if this is the source of electricity that powers pumps for water, you may have a major crisis on your hand in short order," said Ed Abington , a former consultant to the Palestinian Authority.

 link to www.boston.com