Israeli Report Reveals How the Yemeni Blockade Exacerbated the Crisis at Eilat Port, Leading to Its Complete Shutdown Amid Compensation Disputes

NYN | Reports and analyses

Amid the multiple crises engulfing Eilat Port, the conflict over compensation owed by the port’s management to cover employee expenses is intensifying. According to a recent report by the Israeli economic newspaper *Calcalist*, the ongoing blockade imposed by Sanaa forces in the Red Sea for the past nine months has severely worsened the port’s situation, leading to its complete shutdown.

In a report titled “The Struggle Over Eilat Port Compensation Intensifies,” the newspaper explained that the port, which serves as the main maritime gateway for southern Israel, has been abandoned and entirely paralyzed for nearly nine months. The continued Houthi threat, which began with a series of sporadic attacks following the outbreak of war, dealt a devastating blow to the port within a month. The last vehicle-carrying ship entered the port on November 20, just one day before the partial capture of the “Galaxy Leader” vessel owned by businessman Rami Ungar while it was sailing in the Red Sea. Since then, no vehicles have been unloaded at the port, deepening the current crisis.

The report added that vehicle unloading operations at Eilat Port have completely ceased, in stark contrast to the 150,000 vehicles unloaded last year, resulting in ongoing monthly financial losses for the port.

The report highlighted that this complex crisis is escalating tensions and disputes among the port’s management, the Israeli government, and the Histadrut labor union. Since the port’s privatization in 2013, the rights to operate it were transferred to Papo Shipping, owned by the Nakash brothers. As the paralysis of the port, which is considered a strategic asset for Israel, continues, serious questions are being raised about the nature of the financial relationships between the government and the private companies managing the country’s vital infrastructure.

The report went on to explain that Eilat Port, once a thriving and stable company managed by owners with personal wealth estimated in the billions of shekels, achieved a profit of 50 million shekels in 2023, with a total profit of 162 million shekels over the past four years. The port operation rights were acquired in 2013 for 120 million shekels, an amount considered modest by industry sources.

Discussing the port’s economic returns, the report noted that in the decade following its privatization, the port’s profits were estimated in the hundreds of millions of shekels. Furthermore, security risks were an integral part of the decision to purchase the port, clearly reflected in the cost of the deal.

In this context, the report clarified that Papo Shipping, which manages the national infrastructure on behalf of the Israeli government, has faced difficulties due to security conditions beyond its control, not because of irresponsible economic behavior. Consequently, the Israeli government bears a special responsibility to support the company during this difficult period.

The report further elaborated that part of the wage agreements between the port and the Histadrut stipulates that workers cannot be placed on unpaid leave. As a result, the port is compelled to continue paying salaries to 146 employees, amounting to nearly 3.5 million shekels monthly. Simultaneously, the port’s monthly expenses reach around 8 million shekels.

The report emphasized that these high expenses, combined with the loss of revenue due to security conditions, have resulted in the port incurring losses amounting to 56 million shekels since last December.

In this context, the report noted that while the Israeli government acknowledges its responsibility to support the port, it opposes the method suggested for providing this support. The government believes that effective assistance should include loans and deferred payments to facilitate cash flow at the port.

Regarding the financial support provided by the Israeli government to the port, the report indicated that the government has so far extended a loan of 16 million shekels to the port, and currently, an additional loan of 14 million shekels is being prepared to support the port’s financial situation.

In addition to these loans, the Israeli Ports Company has deferred the payment of royalties and usage fees that the port was supposed to pay, totaling 11 million shekels. This deferment is expected to continue as long as the war persists, alleviating financial pressures on the port.

Under the general compensation scheme established by the government for companies affected by the war, the port received financial compensation of 5 million shekels. This compensation is intended to cover part of the revenue shortfall that occurred between October and February. However, since March, companies in Eilat are no longer included in this scheme, meaning the port has not received any additional compensation since that time.

Regarding financial demands, the report mentioned that Eilat Port’s CEO, Gideon Golbar, is demanding monthly financial compensation of at least 3.5 million shekels, the full amount required to cover employee wages. Failing to meet this demand could force him to lay off a significant number of workers.

In another move, the report stated that Golbar is urging the government to utilize a temporary import-export order, requiring ships arriving from the Far East to unload their cargo at Eilat Port. This order could revive port operations but may also increase import costs.

The report also mentioned that Golbar is seeking flexibility in paying employee wages.

The report pointed out that the Israeli Ministry of Finance opposes the first two demands: financial compensation and the requirement for ships to unload at the port. Ministry representatives argued in Economic Committee sessions that the port is attempting to exert pressure through these demands.

From the ministry’s perspective, there are simpler measures that the port could take to reduce its losses, according to the report.

In recent developments, the newspaper reported that “the primary issue currently under discussion is the payment of workers’ wages.” In this context, the Histadrut (Labor Union) plays a role, as the port is negotiating with the Histadrut on reducing wages for workers who are not required to report to work due to the lack of activity. Additionally, the Histadrut is proposing to fund accommodation expenses for about 30 workers who will be temporarily relocated from Eilat Port to Ashdod Port. The Histadrut is also proposing to release surplus funds accumulated in the port’s pension funds, totaling approximately 6.5 million shekels, allowing their use for other purposes.

The report noted that “the Histadrut’s proposal comes with conditions,” with the Histadrut demanding that the port commit to refraining from laying off employees for four months.

The report added that “behind the scenes, there is also additional tension.” Although the existing agreement with the Histadrut prevents the port from placing workers on unpaid leave, Golbar announced during a Knesset discussion that he had already placed 30 workers on unpaid leave. If these workers are not paid, it could further complicate negotiations with the Histadrut.

The report stated that during a discussion before the Economic Committee earlier this month, Golbar presented his position on wage costs, noting that the cost of workers’ wages for four months amounts to 14 million shekels. In this context, he criticized the Histadrut’s proposal to release only 6.5 million shekels, stating, “If this is the case, I don’t want the money. Who conducts business like this?”

In response to this request, the chairman of the Economic Committee, David Bitan, clarified, “You have earned for a long time, and we are asking you to give the workers another four months. In three months, we will sit down and see what the situation is.”

The report concluded by noting that “in light of Bitan’s response and other members of the Economic Committee, Golbar was urged to accept the current plan for the coming months.”

The report explained that “the port has exhausted its ability to exert pressure at the moment, so it is believed that the Histadrut and the port will sign an agreement that includes not laying off port workers over the next four months. With the war and the Houthi threat continuing into 2025, Israel will have to reconsider how to provide support and assistance to the port.”