Israeli Economy Minister Reconsiders Controversial ZIM Shipping Deal

Israeli Economy Minister Nir Barkat has shifted his stance on the proposed sale of ZIM Integrated Shipping Services, signaling a potential approval of the deal despite initial professional opposition within his ministry. Barkat's change of heart reportedly followed a meeting with Yishi Davidi, CEO of the FIMI fund, who is a key player in the acquisition.

The deal, valued at $4.2 billion, involves the German company Norddeutsche Reederei Hastedt (part of the Zeaborg Group, formerly Hapag-Lloyd) and FIMI acquiring ZIM. The Israeli government holds a "golden share" in ZIM, requiring Israeli ownership and specific conditions. FIMI plans to establish a new entity, "ZIM Israel," which would operate a smaller fleet of 12 owned and 4 chartered vessels, compared to ZIM's current 99 ships.

Previously, the professional echelon of the Economy Ministry, led by Foreign Trade Administration head Roee Fisher, opposed the deal in May, citing risks to Israel's maritime traffic and economic interests. Their concerns included the transfer of core operations to a German entity partially owned by countries without diplomatic ties to Israel, such as Qatar and Saudi Arabia, and the creation of a potentially unviable "ZIM Israel." Barkat initially aligned with this view, particularly due to his opposition to any Israeli ties with Qatar.

Davidi has been actively lobbying for the deal, arguing that ZIM's current exposure to potential Qatari and Saudi involvement through stock market purchases is greater than under the proposed acquisition. Barkat also received assurances regarding employee layoffs, with Davidi promising favorable compensation packages. Security concerns were reportedly addressed by the Defense Ministry, which found no security challenges with the proposed sale.

However, some issues remain unresolved. Barkat is seeking further data on the viability of the smaller "ZIM Israel" and wants extended financial guarantees from Hapag-Lloyd beyond the initial ten years. The deal faces opposition from ZIM's workers' committee and the Shipping Authority, primarily due to the sale of a major Israeli company and expected job losses. Barkat stated that as long as national security interests are preserved and employee conditions are improved, selling a large Israeli company is permissible.

The final decision rests with the Companies Authority, with potential escalation to a government cabinet meeting, possibly after the upcoming elections, given the differing opinions among ministries.