In his Weekly Address today President Barack Obama had glowing words for a company called BrightSource and how a subsidized loan program established by his administration is helping BrightSource to create US jobs:
I want to share with you one new development, made possible by the clean energy incentives we have launched. This month, in the Mojave Desert, a company called BrightSource plans to break ground on a revolutionary new type of solar power plant. It’s going to put about a thousand people to work building a state-of-the-art facility. And when it’s complete, it will turn sunlight into the energy that will power up to 140,000 homes — the largest such plant in the world. Not in China. Not in India. But in California. (transcript)
While the project — supported by the US government will apparently create jobs in the US (it sounds like they are mostly temporary construction jobs) — Obama did not disclose that BrightSource has its roots and main facilities in Israel, and as well as creating jobs in California, the US government might be directly subsidizing jobs in, and technology transfer to Israel.
A story last March on the website Israel21c Israel Innovation News boasted “BrightSource gets a billion” and noted, “With over $1 b. in US government loans, Israel’s BrightSource will build the world’s largest solar energy project in California, doubling the solar thermal electricity produced in the US today.”
The company, the story says, “maintains its headquarters in the US and runs an Israeli subsidiary based in Jerusalem, where its R&D is centered.” It is indeed clear that the center of BrightSource’s technological development and main activities to date is not in the Untied States, but Israel.
BrightSource does have many US-based and international investors including Google.org, BP, Morgan Stanley, Chevron, StatOil, and was formed with seed capital from VantagePoint Venture Partners.
According to BrightSource’s own website, both BrightSource Energy Inc. and BrightSource Industries (Israel), Ltd. were founded by Arnold J. Goldman. Goldman was also the founder and CEO of Israeli firm Luz International Ltd.
Indeed, BrightSource seems to be little more than a rebranding of Luz. As the BrightSource website explains: “In 2006, LUZ II joined a world-class finance and development team and became a wholly-owned subsidiary of BrightSource Energy. In December 2008, Luz II changed its name to BrightSource Industries (Israel), Ltd. (BSII).”
According to a promotional video from Israel21c, all the development work has been done at a full-scale solar site in Rotem Industrial Park in the Negev desert near Israel’s Dimona nuclear facility. This solar array, according to Goldman, who is seen in the video, is the prototype for the very project that Obama is touting in California’s Mojave Desert.
Indeed, there are more jobs currently advertised on the company website that are based in Jerusalem (13) than in the United States (4). Will the subsidized loans supplied by the Obama administration go to support more high-tech Israeli jobs and Israeli research and development while creating jobs in the US that are mostly lower-skilled and temporary? President Obama did not say.
BrightSource founder Arnold Goldman was born in the United States and emigrated to Israel where he recently received a “Builder of Jerusalem Award” from the extreme Zionist and pro-settlement organization Aish HaTorah. Aish HaTorah, incidentally is the organization that runs the Hasbara Fellowships along with the Israeli foreign ministry.
Goldman himself began his career designing electronic circuitry for Minuteman interncontinental ballistic nuclear missiles and worked for other military contractors. He founded a successful firm, Lexitron, in the 1970s which he later sold to military contractor Raytheon. Goldman is a Founding Member of the International Board of Governors of the Jerusalem College of Technology (JCT) which boasts that it is “Vital to the State of Israel & the IDF” and that:
During the recent conflict with Hezbollah, JCT’s graduates and students comprised a strong and sizable percentage of the IDF’s officers involved in directing the technology-based air and ground war, especially in the critical areas of military intelligence, communications, and reconnaissance. JCT is known particularly for its expertise in the fields of electro-optics and is the leading provider of specialists and engineers in this area to Israel’s defense forces and industry.
BrightSource Energy appears to be another example of the attempt to “greenwash” Israel — just like BetterPlace. While BrightSource may indeed have come up with useful solar technologies, Israeli firms hardly work on a level playing field. They clearly have high-level access to the US government as well as US funding, and benefit from the hugely US-subsidized Israeli research and development infrastructure which is inextricably tied with Israel’s military.
BrightSource is testing its technologies at the Rotem Industrial Park, which the JTA reported on a year ago:
“We definitely leverage a lot of know-how in a variety of disciplines — including materials, chemistry, thermal dynamics — accumulated from our experience with military and homeland security technology for developing renewable energy technologies,” said Meni Maor, vice president of business development for Rotem, a Dimona-based company that commercializes technologies first used in Israel’s defense industry.
The company is something of a case study on the subject. In the past three years, Rotem has begun to focus on renewable energy technology with projects on solar and hydrogen power, wind energy and bio-fuel.
BrightSource Energy, which is developing the world’s largest solar thermal plant in Southern California, is piloting its technology at Rotem.
In his Weekly Address, Obama accused Republicans of wanting to shut down programs like the one that is providing a billion dollars to BrightSource, with potentially disastrous results:
This doesn’t make sense for our economy. It doesn’t make sense for Americans who are looking for jobs. And it doesn’t make sense for our future. To go backwards and scrap these plans means handing the competitive edge to China and other nations. It means that we’ll grow even more dependent on foreign oil. And, at a time of economic hardship, it means forgoing jobs we desperately need. In fact, shutting down just this one project would cost about a thousand jobs. That’s what’s at stake in this debate. … And we can spur innovation and help make our economy more competitive. We know the choice that’s right for America. We need to do what we’ve always done – put our ingenuity and can do spirit to work to fight for a brighter future.
But in light of the fact that BrightSource is effectively based in Israel — and that’s where all the R&D happens — the president’s claim to be supporting ‘American innovation’ is at best disingenuous. Obama is scaring Americans about “handing the competitive edge to China” while quietly giving it to Israel.
Videos included at – http://alethonews.wordpress.com/2010/10/04/obama-uses-weekly-address-to-lobby-for-israeli-firm-brightsource/
Update – October 3, 2010:
While BrightSource claims to have pioneered unique solar technologies, its inventions are proprietary and difficult to verify. What we do know is that before it was BrightSource, the company was called Luz Industries – also founded and based in Israel. Luz which had built solar plants in the U.S. for years filed for bankruptcy in 1991.
Yet another disturbing angle to this story has emerged. BrightSource has, according to media reports been “quietly” preparing for an IPO – an initial public offering. It is surely inappropriate for Obama to have used his Weekly Address to boost the firm under these circumstances.
An IPO is the process by which a privately-held company sells shares to the public, usually large institutional investors such as pension funds. The immediate beneficiaries of the IPO are the current private owners who usually receive huge payoffs and the investment banks that are hired to carry out the IPO and recruit potential investors (“BrightSource Energy quietly moves toward IPO in 2011,” 22 September 2010).
According to Reuters the investment banks retained to prepare for BrightSource’s IPO are Morgan Stanley and Goldman Sachs — both beneficiaries of government bailouts and largesse. Goldman Sachs is particularly notorious for its incestuous insider relationship with successive US administrations including Obama’s.
Obama’s Weekly Address (transcript) touting the supposed virtues of BrightSource can now in effect be used as a commercial to sign up large investors for a BrightSource IPO. The explicit backing and prestige of the President of the United States will no doubt be a great selling point for some investors and has potentially greatly boosted the market value of BrightSource when it goes public, despite its unproven technologies and its reliance on US government financial support.
The website Israeli21c which boosts Israeli high tech companies, including BrightSource, celebrated Obama’s “endorsement” of BrightSource and called it a “feather in its cap” as the firm reportedly prepares for an IPO.
Obama apparently knows that it is not exactly appropriate for a president to wade into an IPO — because of the market implications. In August, Obama was asked by CNBC’s Phil LeBeau about a potential IPO of General Motors (GM) which was taken over by the government to stave off bankruptcy. Look at this exchange:
But there’s an interesting question about the GM IPO many investors would like the President to address. Why not make the GM IPO open to taxpayers? After all, the taxpayer money (almost $50 billion) saved GM. Shouldn’t they get a chance to truly own GM and profit if it succeeds?
When I asked President Obama this question, he said, “Well, here’s the thing about the IPO. I am hesitant to talk about details on an IPO because it has to go through the Securities & Exchange Commission process of registration and so forth, so I’ve got to be careful where I tread here.”
The President added, “GM has indicated that it is going to move forward with an IPO at some point later this year. When it does so, we expect that taxpayers will get back all the money that my administration has invested in GM. Over time, that is going to be extraordinarily significant, because what it means is we’ve stood up for this industry, and you know what, we got a good return. But the general point about who’s participating in the IPO, who can potentially be an owner in this company and also make some money on that investment over the long-term, beyond my looking out for the interests of taxpayers, I’ve got to be careful about what I say as regarding individual investors.”
So I pressed the President again, “But would you be open to the idea of a Dutch auction, if you will, an open IPO so that the average investor might have an opportunity?”
This time the President was more direct saying, “You’re not going to get anything out of me on this one because as I said, I want to make sure that we are not breaching any registration rules or any requirements on the SEC. What I know is that as a general proposition, taxpayers can be made whole as a consequence of the good decisions that we made last year, even though those decisions were unpopular.”
While I understand the Presidents position about not commenting on GM’s IPO, it is a fair question that should be addressed by someone in Washington. If there are specific reasons for not having an open IPO, tell us what those reasons are so people will understand.
(“One on One With Obama–The President Steers Clear of GM IPO Issue,” 5 August 2010)
In his Weekly Address, Obama did not say anything about a BrightSource IPO, but nevertheless his boosterism about the company in a presidential address clearly has market implications. Obama’s intervention on behalf of BrightSource seems particularly odd and inappropriate. He touted it as an example of creating American jobs with American technological ingenuity, and specifically warned against allowing jobs and “competitive advantage” to flow to India, China or other foreign countries. But as an example of supporting domestic clean energy industries, BrightSource is at best a dubious case. Many of the jobs will be created and stay in Israel, and the high-tech benefits and patents are also being developed in Israel.
How much does Obama know about BrightSource? Who is benefitting and what benefits will his administration receive for shamelessly promoting private interests under the guise of helping the US economy?
The blog Future of Capitalism raises some other pertinent question regarding Obama’s support for BrightSource:
The Brightsource Energy Web site lists the company’s investors, including Chevron, BP, and Morgan Stanley. Sometimes it’s hard to follow this president. Half the time he’s telling us that Morgan Stanley are Wall Street “fat cats” who don’t deserve tax cuts and that BP is responsible for the worst man-made environmental disaster in American history; then he turns around and tells us that the rest of us taxpayers ought to be subsidizing some investment that BP and Morgan Stanley have made in some solar energy company. If this solar energy is such a great idea, can’t BP, Chevron, Morgan Stanley, and the other investors find a way to make it a success without help from the taxpayers?
Good questions indeed. Don’t expect “real” journalists to ask them, or for Obama to answer them any time soon.
Displacing Palestinians and Native Americans
BrightSource has developed its technology in the Negev desert in southern Israel, an area where Israel has over decades ruthlessly ethnically cleansed the indigenous Bedouin people in an ongoing process. It would appear that the company’s Obama-administration financed project in California’s Mojave Desert threatens indigenous people there as well. In September, members of the Colorado River Indian Tribe protested the BrightSource project. Phillip Smith, a Chemehuevi elder told the Las Vegas Review-Journal that the project would destroy the habitat in which his people and the local wildlife have lived for centuries.