Former Interior Minister Blames Bureaucracy for Scuttled Fiber Optic Project

Former Interior Minister Moshe Arbel revealed last week that a major fiber optic project, intended to run from Ashkelon to Eilat along the Eilat-Ashkelon oil pipeline, has stalled due to low-level bureaucratic hurdles within the Interior Ministry. The project, announced by Prime Minister Netanyahu in 2023, was envisioned as an alternative to existing undersea fiber optic cables connecting the Red and Mediterranean Seas via Egypt, potentially transforming Ashkelon and Eilat into hubs for data and AI.

Arbel, who now chairs the agricultural real estate company Madrin, stated that despite efforts to advance the project initiated by the Eilat-Ashkelon Pipeline Company (EAPC) during the Bennett government, bureaucratic inefficiencies prevented its realization. He specifically cited the Planning Administration's inability to approve an exemption path for the additional fiber optic lines as the primary obstacle. Arbel took personal responsibility for the failure, expressing disappointment that a national mission to deploy fiber optics and establish data centers in the periphery was hindered by a lack of forward-thinking.

The article also touches upon broader issues discussed at the Israeli Data Center Association conference, including the electricity grid's capacity and the challenges of establishing new power plants and data centers. Professor Avi Simhon, the Prime Minister's economic advisor, countered some of Arbel's points, attributing delays in energy infrastructure and data center development to the Treasury, the Energy Ministry, and opposition parties, rather than low-level bureaucracy. Simhon argued that the Treasury is hesitant about data centers as they represent an "export of electricity," while the Energy Ministry views them as a strain on the national grid.

Simhon also criticized the opposition for hindering legislation aimed at streamlining data center construction and blamed the Electricity Authority for halting new electricity permits for data centers. Yoni Goldberg, chairwoman of the Israeli Data Center Association, highlighted the industry's frustration with the sudden halt in electricity permits, emphasizing the need for regulatory certainty. Yariv Gesser, deputy director general of the Energy Ministry, indicated that future electricity permit approvals for data centers would be based on criteria such as contribution to the economy, impact on the electricity grid, and proximity to infrastructure, moving away from a first-come, first-served system.