Fortunes Diverge for Dubai, Turkey Firms Bidding on Israeli Port

Israeli officials have cleared United Arab Emirates port operator DP World to move forward in the privatization of Israel’s largest seaport but kept Turkey’s Yildirim Holding AS under further scrutiny.

DP World received security clearance to move forward in the bidding process for the port in the northern city of Haifa, according to two people familiar with the matter. Local representatives for Yildirim lodged a complaint about unfair treatment in the process, according to a letter it sent to Israeli officials that was seen by Bloomberg.

The Government Companies Authority, which is running the privatization, said Israel is making necessary regulatory checks as part of confirming investors’ participation in the Port of Haifa privatization and that it expects the sale to be completed in a few months. Representatives for Yildirim and DP World declined to comment.

DP World’s progress is an important indicator for Israel’s new normalization agreement with the UAE, which the countries announced last summer. It marks a key nod of approval from Israel when it comes to Emirati involvement in strategic assets. Israel hopes to sell the facility for as much as 2 billion shekels ($612 million).

Fortunes Diverge for Dubai, Turkey Firms Bidding on Israeli Port

“We look at Israel as a very important logistical place,” DP World’s Chairman and Chief Executive Officer Sultan Ahmed Bin Sulayem said Thursday in a Bloomberg TV interview. “We have approval like everyone else. We are still bidding.” DP World, based in the UAE emirate of Dubai, is complying with local partnership requirements, he said.

But while Israel draws closer to some Gulf Arab nations, relations with former close ally Turkey have been sour for years over Israel’s policy toward the Palestinians. Turkey, which recalled its ambassador to Israel two years ago, is currently seeking to repair its ties but said barriers remain to improving relations.

Economic links between Israel and Turkey have been resilient throughout the estrangement, but the port sale suggests that politics may still play a role. In a Jan. 11 letter sent to Israeli ministers overseeing the privatization, local representatives for Yildirim said the requirement “is very puzzling in our eyes.”

The company has previously been cleared by security services in Europe and the U.S., they said.

Yildirim entered the process in a group with Israeli industry veteran Eli Tilles, U.S.-based GraeStone Logistics LLC and cruise port operator Global Ports Holding Plc.

“This examination is even more puzzling since a partially governmental Dubai company is participating after the ink dried on the normalization agreement,” Yildirim’s representatives said in the letter.

The sale has been shadowed by geopolitical jousting beyond the Middle East. The administration of former U.S. President Donald Trump pressed Israel to be wary of Chinese influence, as a second, Chinese-run port prepares to open in the same city. Israeli and U.S. officials sought American firms to participate in the contest, which has drawn expressions of interest from more than a dozen parties, including companies in India and Belgium.

No Chinese firms joined the bidding.

The port focuses largely on container shipping, and its new owners will have the opportunity to improve operations, according to London-based Drewry Shipping Consultants. While Haifa’s productivity is in line with the industry average, a new concessionaire will be able to invest to improve its processes and equipment, Drewry said in an email.

Officials from DP World and its local partner Israel Shipyards Industries Ltd. got access to in-depth data this week to support their bid, according to Shlomi Fogel, who co-owns Israel Shipyards. Fogel said the venture is currently an equal partnership between his firm and DP World.

©2021 Bloomberg L.P.

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