The EconomistOctober 5th 2019 Middle East & Africa 43T
he firstten days of the Jewish new
year, between Rosh Hashanah and Yom
Kippur, are known as the days of atone-
ment. It is a time in which observant Jews
take stock of their sins in the preceding
year. That Israel’s attorney-general, Avichai
Mandelblit, a deeply devout man, decided
to hold the country’s most important legal
proceeding during this period hardly
seems coincidental.
On October 2nd lawyers representing
Binyamin Netanyahu, the prime minister,
began making the case that their client
should not be charged with corruption. Mr
Mandelblit, who will make the final deci-
sion, has already said there is enough evi-
dence for indictments on counts of bribery,
fraud and breach of trust. The hearing,
spread over four days, is Mr Netanyahu’s
first chance to challenge that evidence—
and last chance to avoid going on trial. He
would be the first sitting prime minister
put in the dock.
The potential charges stem from three
cases assembled over three years. In two Mr
Netanyahu is accused of trading, or at-
tempting to trade, regulatory favours for
positive press coverage. In the third case
prosecutors assert that Mr Netanyahu ac-
cepted gifts from wealthy businessmen in
return for political favours. Three former
close aides to the prime minister will serve
as witnesses for the state. Mr Mandelblit
himself was Mr Netanyahu’s cabinet secre-
tary before the prime minister appointed
him attorney-general.
The hearing is closed, but Mr Netanya-
hu’s lawyers are expected to claim that
there is no evidence he traded favours, that
most politicians seek better press coverage
and that the prime minister’s wealthy pa-
trons are also friends. “The hearing has the
potential to change everything,” says Uri
Korb, a former state attorney who success-
fully prosecuted Ehud Olmert, a former
prime minister, on corruption charges.
“The strength of the state witnesses’ testi-
mony has yet to be tested and the evidence
is largely circumstantial.” (Mr Korb says he
declined a request from Mr Netanyahu to
help with his defence.)
Even if he is indicted, Mr Netanyahu in-
tends to stay on as prime minister. The law
does not require him to step down until a
final conviction. His opponents or public
watchdogs, however, may ask the Supreme
Court to intervene. As it is, Mr Netanyahu is
holding on by his fingertips. In an election
onSeptember17thhiscoalitionofright-
wingandreligiouspartiesfailedtowina
majority,a near-repeatoftheresultofan
electioninApril.Butthefracturedopposi-
tionalsolackstheseatsneededtoforma
governmentandremoveMrNetanyahu.
The political and legal timelines are
converging. The attorney-general is ex-
pectedto announcehisdecision within
weeks.It wouldbea shockif hedoesnotin-
dictMrNetanyahuonatleastsomechar-
ges.AroundthesametimeMrNetanyahu
willfacea deadlinetoforma government.
Hisremaining supportersmay begin to
havesecondthoughtsaboutstickingwitha
primeministerabouttostandtrial.Hisday
ofjudgmentisdrawingclose. 7JERUSALEM
An embattled prime minister’s last
chance to avoid indictment
Israel
Bibi makes his case
A
huge jetof flame bursting from the
Kaombo Norte oil platform lights up
the sea some 260km (160 miles) off the
coast of Angola. The processing platform,
part of a $16bn project that takes oil from
wells drilled under nearly 2km of water,
ought to be one of the crowning achieve-
ments of an industry that has endured 27
years of civil war. Instead, it may be a swan-
song for sub-Saharan Africa’s second-big-
gest oil producer: Angola’s offshore oil
fields are running dry.
Daily oil production has tumbled from
its high of almost 2m barrels a day in 2008
to around 1.4m today. Since oil provided
95% of export revenues and almost two-
thirds of government revenues, the fall in
output—as well as a slump in the price of
crude—has thrashed the economy. gdphas
shrunk for three years in a row. This year
the imf expects growth of just 0.3%. Thefall in output is not because the country
has no oil—its reserves are second only to
Nigeria in the region—but because of un-
derinvestment.
The government is trying to reverse the
decline in oil production. It has slashed the
tax rates on smaller oilfields from 20% to
10%. And the agency in charge of auction-
ing oil blocks recently went on a roadshow,
hoping to drum up investor interest. Mean-
while Sonangol, the state-owned energy
giant, plans to sell off some of its eclectic
collection of assets—which include a con-
vent in Portugal and stakes in the state dia-
mond miner and state airline—in order to
free up money to invest in oil production.
Yet no matter how much Angola might
sweeten the terms of new investment, it
may not be able to lure back all of the inter-
national oil companies that once flocked to
the country’s oil-rich offshore basins.
Firms including ExxonMobil and France’s
Total spent freely, ordering hulking off-
shore rigs in the 2000s when oil prices ap-
proached and then exceeded $100 per bar-
rel. Prices crashed in 2008, but were back
above $100 by 2011. In 2014 they plummeted
to less than half that. Most oil firms retreat-
ed from big risky projects in deep waters to
focus on the shale fields of Texas and North
Dakota, where capital investments are
smaller and operating costs are lower.
By contrast production and capital costs
in Angola have been stubbornly higher
than the oil price (see chart). Unless high
prices return, oil companies may not, ei-
ther. “From the moment oil prices go down
or flirt with $50, deep and ultra-deep off-
shore investments such as the ones that
Angola has been offering become less at-
tractive,” says Gonçalo Falcão, head of the
Angola practice at Mayer Brown, a law firm.
A handful of new projects are in the works,
but America’s Energy Information Admin-
istration expects their completion merely
to sustain current levels of output.
Angola’s government has not prepared
the country for this slump. Between the
end of its civil war in 2002 and 2014, gdp
rose from $15bn to $146bn. José Eduardo
dos Santos, president for 38 years, squan-
dered the wealth, turning Luanda into a
gleaming capital but investing in little else.
João Lourenço, who took over as president
in September 2017, is trying to diversify the
economy, but progress is slow.
Last December the imf agreed to lend
Angola $3.7bn on condition that it imple-
ment tough economic reforms. The fund
has already handed over more than $1.2bn,
but the reform programme has fallen far
behind schedule. For instance, the govern-
ment promised that it would introduce a
value-added tax in January, but delayed the
implementation twice before finally bring-
ing it into force on October 1st. With oil pro-
duction falling steadily, it does not have
time to waste. 7Angola’s main source of wealth is in
steep declineAngola’s oil declineAfter the flood
The price isn’t rightSources:Sonangol;IMF *State-ownedoilcompanyAngola, $ per barrel
Sonangol*coststructureBrentcrudeoilprice02550751001252011 12 13 14 15 16 17 18Capital expenditure Operational expenditure