Israel's Finance Ministry Warns Against ZIM Shipping Deal Over Qatar, Saudi Stakes

Israel's Ministry of Finance has voiced strong opposition to the proposed sale of shipping company ZIM Integrated Shipping Services to Germany's Hapag-Lloyd and the Israeli investment fund FIMI. In a professional opinion submitted to the Government Companies Authority, the Ministry outlined significant economic and security concerns, primarily stemming from the involvement of Qatar and Saudi Arabia as major shareholders in Hapag-Lloyd.

The Ministry warned that Qatar holds approximately 12.3% of Hapag-Lloyd's shares, and Saudi Arabia holds about 10.2%. This foreign ownership, the Ministry argued, creates a "real concern" that external influence could be leveraged during political or diplomatic crises to harm operations directed at Israel or to exert foreign pressure. The deal, valued at an estimated $4.2 billion, plans to split ZIM into two arms: most global operations would go to Hapag-Lloyd, while activities touching Israeli shores would transfer to a new entity, "ZIM Israel," managed by FIMI.

However, the Finance Ministry cautioned that "ZIM Israel" would not be fully independent, relying on Hapag-Lloyd for crucial services like container capacity and other logistics. This interdependence, coupled with the fact that both companies would compete on the US route, creates a conflict of interest, according to the Ministry. They also highlighted that if Hapag-Lloyd breaches or narrowly interprets the agreements, "ZIM Israel" could collapse within a few years.

Further concerns relate to Israel's vital trade routes. Under the proposed plan, "ZIM Israel" would not operate independent routes to the Far East, which accounts for about 35% of Israel's container imports. The Ministry warned that relying on space on foreign vessels could become a major problem during emergencies, as foreign insurers might prohibit ships from docking at Israeli ports, while operational control remains with Hapag-Lloyd.

The Ministry emphasized ZIM's critical national and security role, responsible for 20-25% of ship calls at Israeli ports and ranking second in container activity. The deal's structure with FIMI also drew criticism, as FIMI's full payment is deferred, potentially limiting their exposure in a crisis while the state might need to intervene. The Ministry also found the business plan's revenue projections overly optimistic, predicting potential losses for "ZIM Israel" in the long term.

In conclusion, the Ministry recommended against approving the deal in its current form, but did not rule out a future agreement that significantly reduces risks, safeguards Israel's vital interests, and lessens dependence on entities deemed hostile by the state.