Netanyahu to Disclose `Significant' Development on Iran Pact

(Bloomberg) -- Israeli Prime Minister Benjamin Netanyahu will make a statement Monday evening on a “significant development” regarding the Iranian nuclear pact, his office said, as rising tensions between the two Middle Eastern powers stoke fears they're headed for a military showdown in Syria.

Israel has obtained a trove of documents that officials say prove Iran has misled the world about its nuclear program, Channel 2 reported, without saying how it got the information. Oil prices gained and Israeli stocks dropped after the announcement.

Netanyahu's statement comes less than two weeks before President Donald Trump is to decide whether the U.S. will pull out of the international agreement to curb Iran's nuclear program in exchange for sanctions relief. The accord lifts restrictions on Tehran's nuclear activities beginning in 2025, and Trump has warned he'll withdraw unless the deal is revised to bar Iran from ever developing nuclear arms. Iran denies it's developing a nuclear weapon and says its nuclear program is for energy and medical purposes.

Israel has said it won't allow Iran to expand its military presence in Syria and in recent years has carried out dozens of attacks against Iranian weapons shipments through Syria that it says were bound for Hezbollah, its proxy militia in Lebanon. Overnight Sunday, at least 26 people were killed in a missile attack on Iranian and Syrian military positions in Syria that set off huge explosions, suggesting the site was a weapons depot.

Israel, which traditionally declines to comment on such attacks, hasn't said whether it was behind the assault. Israel's Security Cabinet held an emergency meeting Monday afternoon in Tel Aviv.

Drone Attack

The New York Times, citing an unnamed Israeli military official, reported Israel carried out an April 9 strike on an air base near Damascus that was said to house an Iranian military drone program. That came after Israel shot down an Iranian drone inside its airspace in February that the Israeli military said was armed and on its way to carry out an attack. Iran has denied dispatching the drone.

Israel sees Iran's nuclear program as an existential threat and Netanyahu went to the U.S. Congress to give a controversial speech against the nuclear deal -- the signature foreign-policy initiative of then-President Barack Obama -- arguing that the deal legitimizes Iran's nuclear program and won't prevent Iran from getting a bomb. He has found a more receptive ear in the Trump administration, with new Secretary of State Mike Pompeo saying during a visit to Jerusalem on Sunday that the U.S. will pull out of the “flawed” 2015 deal if it can't be fixed.

Trump so far has failed to sway key European allies. French President Emmanuel Macron and Iranian President Hassan Rouhani on Sunday agreed to work together to preserve the accord. Days earlier, Macron told German Chancellor Angela Merkel and British Prime Minister Theresa May that he stressed during a trip to Washington last week that the U.S. must stay in the deal and integrate it in a larger framework, rather than walking away.

Rouhani has said Trump's insistence on changing terms of the seven-party deal were in violation of the agreement and suggested Tehran isn't interested in changing it. In a readout posted on Iran's official government website, he was quoted as saying Iran won't accept additional restrictions and that the deal is “by no means negotiable.”

Red Lines

A senior adviser to Netanyahu on Monday laid out four “red lines” he said the country will enforce in Syria. If Iran tries to build underground factories to upgrade less sophisticated missiles to precision-guided weapons, Israel will stop them, “even if those factories are beneath densely populated areas,” Michael Oren told foreign journalists. Israel also won't tolerate Iranian attempts to equip Hezbollah with precision-guided missiles or build an air base or naval port in Syria, and it will attack Syria or Iran if fired at, Oren said.

“Israel is committed to enforcing and holding its red lines,” Oren said. “If that leads to an escalation, it will be on the heads of Iran and not the State of Israel. We have to defend ourselves.”

The TA-35 Index fell as much as 1 percent Monday afternoon in Tel Aviv, before closing down 0.6 percent at 1465.24.

There are “a few jitters around, certainly,” said Guy Cordovi, head of international trading at Excellence Nessuah Brokerage Ltd. in Tel Aviv. “The escalating tension with Iran is raising concerns of a military confrontation between two regional powers, something that would drain Israeli resources and could lead to economic slowdown."

--With assistance from Yaacov Benmeleh Alisa Odenheimer and Gwen Ackerman

To contact the reporter on this story: Michael S. Arnold in Tel Aviv at marnold48@bloomberg.net.

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Amy Teibel

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