Afternoon Tea in Jerusalem Blog

Life in Israel

Israeli commercial life and society

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.


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The Palestinian economy’s core problem

The Palestinian economy has never been large. Advocates of the cause of the Palestinian Authority (PA) have ritually blamed Israeli occupation for the financial woes of the people of the streets of Gaza and Ramallah. The threatened sanctions of the USA this month now force us to confirm the facts hidden behind the rhetoric.

There are two issues that cannot be disputed. The Palestinian economy is tiny compared to that of Israel. Exports in July 2017 were valued at a paltry US$8.1m, primarily to Jordan. And the continuing the struggle with Israel, especially through the use of terror from Gaza, understandably enforces the government of Jerusalem to restrict movement from the Palestinian territories.

Statistically, the economy is contracting again. GDP growth in 2017 was down slightly at 3%, and a further slow down is expected in 2018. There are few positives. West Bank residents have finally been allowed to receive 3G internet services in recent weeks. And overseas aid still plays a primary role is supporting key services. To take just one instance, The British Parliament reported in October 2017 that it funds “around 25,000 young Palestinians to get an education, provides up to 3,700 immunisations for children, and around 185,000 medical consultations annually.”

Therefore, it can only be assumed that if the USA is to cut at least US$100 million of aid to the Palestinians, that will be a significant blow for its social services. What is disturbing is how you have the feeling that the Palestinian economy could be managed so much more effectively and efficiently.

The World Bank long ago confirmed that under Israeli supervision the Palestinian GDP grew annually in real terms by 5.5% even beyond the Oslo Accords. That achievement is long forgotten. And corruption has long been endemic in Palestinian politics has closely documented in previous years by the Funding for Peace Coalition.

The evidence indicates that the pattern of poor financial leadership in Palestinian society has continued up to today:

  1. In 2017 alone, despite their meager funds, the PA under President Abbas paid out over US$350 to Palestinians convicted of crimes of violence against Israelis. The sums vary according to the amount of death caused.
  2. Earlier this month, Israeli customs officials:discovered the largest ever consignment – including thousands of items – of military clothing including vests for holding military equipment. Also seized were thousands of pairs of special military boots and winter jackets in camouflage colors. The Gazan importer of the consignment, which originated in China, was due to receive it via the Kerem Shalom crossing.

    Presumably, Hamas had paid for the goods.

  3. At the same time, we have learned that due to a power struggle between the PA and Hamas, people in Gaza are being forced to pay taxes. This will include the imposition of 17% VAT.
  4. And of course, there is the near-farcical news item earlier this week that “even as the Palestinian Authority faces major funding cuts from the US, it has purchased a new luxurious $50 million private jet to be used by President Mahmoud Abbas.”

I would love to read a serious analysis of how much the Palestinian economy could grow by over 10 years if (a) the struggle against Israel was political rather than a military conflict, and if (b) transparency and accountability could be truly applied.

Israel’s medical system: The Palestinian interface

During the month of December, the UN is expected to pass 15 resolutions condemning Israel. This is five less than in 2016, when the UNGA did find the time to tick off four other countries. Just how fair is this castigation of the modern Jewish state?

To answer the question in depth would take a book, of several volumes. So let us concentrate for three minutes on the medical sector.

In the past, I have written extensively about the Wolfson Hospital in south Tel Aviv, which hosts the Save A Child’s Heart scheme. Offering high level medical services for thousands of infants around the globe, roughly 50% have come from the Palestinian territories. For the record, the aid includes training for local doctors and hosting families of the children on site.

In the north of the country, Israel has treated a similar number of refugees from Syria since 2013. It is an operation that has no equivalent for all the world effort that has been distributed to tackle this humanitarian disaster. And it is even more remarkable considering how the two countries have no diplomatic relations.

And then there is little-known and near heroic story of Dalia Bassa. She is the health care coordination officer of the Civil Administration in the West Bank and Gaza (COGAT) , and is one of the few officials of either side to win the praises of just about everyone. Now 66 years old, Dalia has been working in this field for 47 years.

It is estimated that she is responsible for coordinating the medical attention received by around 5,000 Palestinians every year in Israeli hospitals. These are mainly life-threatening situations. Just as significant, COGAT makes strenuous efforts to ensure that Palestinian doctors are also trained. Hundreds of training sessions take place annually.

To make the point, the Israeli newspaper “Yediot Ahronot” was allowed to accompany Bassa last week on a visit to a 150-bed private hospital just outside Ramallah. 14 floors high, Istishari was opened in 2016 and has treated such notables as President Abbas. A further 850 beds are planned.

During the trip, Bassa sought to help a doctor extend his visa. She also looked for ways to extend cooperation. After all, the hospital lists several doctors who have been trained in Israeli hospitals, such as Hadassah in Jerusalem. Its PGD unit is so advanced that a few Israelis have found their way there to test the state of difficult pregnancies.

And meanwhile, this week, you can expect further condemnation of Israel at the UN. Makes sense, don’t it?

Is Israel a model state?

According to Emily Thornberry, the British Labour Party’s Foreign Secretary-in-waiting, Israel is not a model state for its neighbours to emulate. And her core argument is based on her judgment of Israel’s occupation of the West Bank and the Golan Heights.

Thornberry is a lawyer, possessing a strong background in human rights. So, what she says does not just sound politically correct. Clearly, she knows what she is talking about.

But I could not believe her logic was that simple. First, it makes those countries surrounding Israel less of pariah states. Strange that. Check out for yourselves on Google what Thornberry herself has said about Egypt and Saudi Arabia, to name but two. Nothing very complimentary. On the other hand, she never complains about the abuse of human rights by the Palestinian Authority or Hamas.

Second, if Israel is not her model state, then who is? I assume from the interview with her that is not referring to any members of the Arab League. I assume she is not referring neither to China nor to Russia. Obviously, she detests the policies of America under Trump. And she is so critical of her own government, that she has effectively ruled out the UK.

In other words, she does not have a model country in mind. Her statement is purely designed to denigrate the state of Israel, the sole democracy in the Middle East. What we are left with is a politically correct stance that is acutely ridden with poison. Next she will be asking us to believe that her leader, Jeremy Corbyn, is a Zionist, when the man cannot even utter the word “Israel” in a civil manner.

I am reminded that last year at Cambridge University, a motion was debated suggesting that Israel is a rogue state. The pro Israel supporters encouraged the audience to vote ‘yes’ on the grounds that Israel is so different – ie so much better – than its neighbours that it is obviously rogue. For example, according to Freedom House, Israel is the only country int the Middle East that is ranked as “free”.

I will leave you with a taste of Israel and how its Arab citizens view their country. I hope this will allow you to assess for yourselves if it is a model for democracy. (My thanks to bloggers Ellis Simpson and IsraellyCool).

Palestinian economy; and the good news is…….

The World Bank’s latest report on the Palestinian economy points describes 2% growth rate in Gaza, trying to support an unemployment rate of over 40%. Clearly this is unsustainable. What can be done?

The recent moves of reconciliation between Hamas and  the Palestinian Authority (PA) offer some hope. According to Doron Peskin from Concordmena, The agreement should lead to an extra US$165 m of support from the UAE. This will be in addition to the current annual payments of:

  • US$140 m from Iran
  • US$120m from the PA, primarily for salaries and electricity
  • US$100m from Qatar
  • US$50m from Turkey

Tax revenues are rarely revealed but Hamas leaders clearly find a way to finance their own lavish life styles, assumedly from willing local contributions.

Clearly all of these amounts are fickle. For example, the UAE contribution is apparently dependent on former Gaza bully and aspiring successor to President Abbas, Mohammed Dahlan, being handed some level of power in the territory. So, what other revenue sources can emerge?

One possibility is the extraction of the estimated 32 billion cubic meters of national gas just off its coast line. There are rumours that an agreement has been signed with a Greek developer and a contractor called CCC. However, concrete details remain sketchy.

A second source of relief could come from “impact investing“. For example:

A project to produce tablets for schoolchildren and their parents, a company that reduces the need for pesticides, an IT development centre in a crisis-ridden location and a bond to fight type 2 diabetes….They are all cited by investors and entrepreneurs as examples of impact investments in Israel and the Palestinian territories.

Yet again, the question remains if political stability will allow enough such entrepreneurs to come forth? There are already reports of the PA arresting Hamas representatives.

Another angle could be a hoped for relaxation of central control of the Palestinian economy. One small indication of change is entrance of a second mobile provider in Gaza. The hope is that prices will drop, service will improve, and thus improved corporate taxation will allow the exchequer to benefit.

The reality is that Gaza needs open borders with its neighbours. This is unlikely to happen so long as Hamas considers Israel to be a pariah state and wages war against it. This policy was most clearly indicated last week, when the Israeli army destroyed a tunnel from Gaza. Those Palestinian soldiers killed had crossed the border, underground. (It should also be noted that it takes considerable investment and raw materials to construct such tunnels.)

The unfortunate bottom line is that the Palestinian leaderships can always blame Israel for their woes. With a willing international community and a supportive set of UN institutions, this stance absolves them from any form of responsibility. Hoorah!

And meanwhile most people in Gaza will continue to be dependent on handouts.

Israel’s contrasting economy – not what you may expect from intelligence

Israel’s economy is a study in contrasts“. Thus headlined “The Economist” magazine a few days ago.

The article is wide in its scope. For example, it highlights the desert city of Beersheva as a world leader in creating cyber technology. And that is just for starters. The economy grew at 4% last year. Unemployment resides at a lowish 4.3%. Public debt at 62% of the GDP is one of the best ratios in the OECD. The shekel currency has appreciated by 13% against a basket of leading global currencies. And so on.

The magazine does feature the weak side of the Israeli economy. Restrictive import and licensing practices keep the cost of food unnecessarily high. Productivity stats are poor. And with boring predictably, the authors cites Israel’s defense policy for the main cause of the a weak Palestinian economy. Thus, in real terms, “Gazans are about 25% poorer today than they were at the time of the Oslo Accords”.

This is an argument that sounds politically powerful. However, it bares up, neither in the numbers game nor against the facts on the ground. First, as I have mentioned in the past, when the World Bank examined the Palestinian economy prior to 1994, when it was governed by Israel, “the annual growth rate (for the period 1968 to 1999) establishes itself at 5.5%.” As the author Sebastian Dessus observed, this was one of the highest rates in global terms, even allowing for substantial population growth.

The point is that this begs the question as to why the Palestinian politicians refuse to allow cooperation with Israel.

And then there is 8200, renowned as Israel’s high-tech unit in the army, whose geeks produce software and hardware that James Bond filmmakers cannot even dream about. In parallel, for some years, many of the alumni of this elite group have struck out in the start up world. And it is no secret that against what might be considered assumeded norms from around the globe, they have been openly seeking cooperation with the Arab sector in Israel.

Well the 8200 “Hybrid Accelerator” has just initiated its latest round of intakes. They include SAF, Brainkos and Shareshipper to name just three of the seven involved. One cardinal condition for acceptance into the programme is that each team must include at least one Arab member on its staff.

It is this form of contrast which sets the Israeli economy apart, especially from those of its neighbours. This approach, embracing the views of all religions and backgrounds, that is one of the key reasons why Israel has become known as the start up nation. And that is why “The Economist” is able to report on such positive economic stats for the Holy Land.

Israel’s independence and the relevance of Zionism today

Earlier this week, I wrote how Israel’s 69th birthday party, the celebrations for Independence Day, reflect its amazing economic progress over the decades. In this third and final review, I want to look at one of the lesser known aspects of Zionism – how to relate to Arab minorities.

While pre-state / pre 1948 Zionist leaders fought amongst themselves, many accepted that there must be room for non Jews to play a full roll in the new country. Given geopolitical dynamics, that statement has not been easy to fulfill all the time and there is still much to be done. What can be said is that today, about 25% of the population is not Jewish and this is roughly represented in  the Kenesset, the Israeli Parliament.

How does this outreach manifest itself outside the realms of politics? I want to delve into the complex situation in Syria. The international media, even those outlets known to be hostile to Israel, has often reported and filmed how Israel has been treating thousands of wounded civilians fleeing from the battles in Homs and elsewhere.

I have read an analysis on the activity of the hospital in Nahariya. This is located near the Israeli-Lebanese border and whose managing director is Dr Masad Barhoum, an “Israeli, an Arab and a Christian – in that order“. Since 2013, the hospital has looked after about 1,600 Syrians, roughly 70% of those treated in Israel. The average period of hospitalisation is about 23 days, which reflects the seriousness of the injuries. And the cost of this treatment, estimated in the hundreds of millions, comes out of the purses of the taxpayers.

Remember, from time immemorial, Syria in its various forms has displayed nothing but outright hostility to Israel. And it is difficult to latch on to similar outreach work from Arab countries in the region. In the worst case scenario, Iran is investing its precious oil revenues in strengthening the armies of Hizbollah and Hamas, the very opposite of what Israel is practicising.

My hope is that when there is a Palestinian leadership that comprehends what this form of Zionism can offer them – as per Egypt and Jordan previously – then the path to peace can open up for all.

The business of the Israel business boycott

Boycotting Israeli businesses has been a policy of Arab nations since May 1948, when the State of Israel was founded. Just how effective is it today, nearly 70 years on, in a period of globalisation?

The boycott has seen many forms. Initially, the Arab League simply adopted the methodology of the Nuremberg Laws from Nazi Germany. And for decades, most Japanese companies stayed away from the Holy Land. Since the year 2000, the BDS campaign has taken up the call, demanding a disassociation from anything to do with Israel, including overseas players who visit the country.

Surely, over the years, there has been an unmeasured level of success of the messages of such policies entering the minds of neutral thinking people. The result is an increased distrust or worse of Israelis for some. But more than that?

My wife was recently talking to a leading techie in one of Israel’s premier IoT companies. He frequently travels to exhibitions, where Israeli companies are sought after. Any talk of a boycott is simply a joke. Business is business, and political vicissitudes have no place. And that is good for all of us.

As proof of that, look at today’s announcement by SAS to relaunch its flight schedule between Sweden and Israel. Now the Scandinavian country is no friend of Israel’s on the diplomatic scene, to say the least. However, the combination of tourism and business disrupts those paths towards hatred.

To quote from today’s announcement coming out of Israel’s Ministry of Tourism:

The following companies (have also) announced the opening of new routes(to Israel): WOW, Ryanair, Wizz Air, Hainan Airlines and Air India………..Incoming tourism increased 24% in the first quarter 2017 on the same period in 2016.

“Boycott” was a term born in violence in the 1880s. It was hijacked by the revolting racism of the Nazis. It is now employed by the enemies of Israel, hatred wrapped in politically platitudes. Ironically, BDS has a lot of support amongst leading Swedish politicians.

Let us hope the new trade and transport agreements show the way forward for all towards peace for all.

The conflicting trends of the Palestinian economy

For years, the Palestinian economy has been a dominant theme on the minds of international politicians and diplomats. Ironically, in an era of ‘fake news’, it seems to have fallen down in the pecking order of world issues. Is that because the champions of the Palestinian cause like Presidents of Syria and North Korea are more demanding, or has the reality on the ground changed?

There is no doubt that there is increasing evidence that the Palestinian economy has been on the up for some time.

And so the list goes on. However, in the opposite corner, there are plenty of downers, not helped by the insistence of Hamas in Gaza to devote resources to war rather than basic human development. For example: –

And meanwhile, in defiance of American law and European directives, the PA continues to fund the families of Palestinian martyrs and the welfare of cell mates in Israeli prisons. Officially, this was valued at US$180 million in 2016 alone. And it should be pointed out that much of the PA budget comes from overseas donations, which means the pockets of Western taxpayers.

In truth, the average Palestinian is still very poor. The official GDP is less than that of Egypt. And yet, the weaponry of Hamas becomes more sophisticated by the month. Leaders of the PA and Hamas live a life of luxury. Corruption is never far away from the talk of the day.

It is sad to see. The Palestinian economy, that could be so vibrant as its nascent high-tech industry is testing, continues to be doomed by leaders concerned with violence rather than people.

BDS? Those surprising Palestinians who do not boycott Israel.

I have just returned from a visit to a large medical in clinic in Jerusalem. People of all persuasions and languages – pensioners, soldiers, Arabic, English, Hebrew and Russian.

And this started me thinking how some of those in the waiting room might define themselves as Palestinians. Surely there are other areas of cooperation between the sides that the world media just does not allow others to learn about. A quick consultation with Rabbi Google, and I was stunned to learn just how embracing are the joint areas of activity. For example: –

  • Let us start with a practical example of everyday life. A dog sanctuary, located in Beit Sahour near Bethlehem, is often short of resources. A way has been found by the Palestinian Authority (PA) to enable Israeli animal lovers to help out.
  • The Negev desert has seen many projects involving both Israelis and Jordanians. Much of the effort is focused around the Arava Institute For Environmental Studies. With nearly a thousand graduates over two decades, “about 29 percent are Israeli Jewish, and about 24% are Arabs from Israel, Jordan and the Palestinian Territories“.
  • Israel’s scientific partnerships with the EU are well documented. However, I came across this EU sponsored consortium, the SESAME Project – Synchrotron Light for Experimental Science and Applications in the Middle East.

Based in Jordan, it is an independent laboratory formally created under the auspices of UNESCO nearly 15 years ago. The founding members of SESAME include Israel and countries that do and some that don’t have diplomatic relations with each other, including Iran, Bahrain, Cyprus, Egypt, Iran, Jordan, Pakistan and Turkey, as well as the PA.

  • Water has often been a cause of sharp rhetoric for those campaigning against Israel. Last Sunday, “Israel and the PA signed a water cooperation agreement , the fourth major infrastructure deal agreed to in the past year and a half.” Other accords refer to electricity, mobile phones and mail distribution. Significantly, the document on water takes a long term approach, allowing for parallel changes in population for many years to come.
  • And finally, if all of that is a tad too gentle for you, yes, cooperation between Israel and the PA exists over security issues. Maj. Gen. Majid Faraj is the powerful head of President Abbas’ General Intelligence Service. He has also been seen as a potential successor to his octogenarian boss. Interviewed by “Defense News” last year, at the height of tensions with Israel, Faraj confirmed that in previous months “PA intelligence and security forces have prevented 200 attacks against Israelis, confiscated weapons and arrested about 100 Palestinians – claims that were not rejected out of hand.”

The past month has revealed a flood of stories from university campuses in the USA and the UK, where Jewish and Israeli students are physically and verbally abused. This is part of the  BDS campaign to boycott anything remotely resembling a link to the Jewish State.

As I have frequently observed, such a campaign is nothing short of anti-semitic. It is certainly hypocritical because has less to do with Palestinians and more to do with denigrating Israel. And BDS proponents simply lie, because they will not admit that Palestinians – from top leaders down – are also working, very well, with their Israeli counterparts.

BDS – has it done its dash?

BDS – Boycott, Divestment and Sanctions of Israel – has been around for about 15 years in its present structure. Formally, it calls on the world to punish Israel on behalf of the Palestinians.

There is no doubt that its politically correct slogans have attracted many to its cause. Occasionally, a pop group may cancel a tour of the Holy Land. A company may reduce or cease trading with counterparts in Tel Aviv and Jerusalem.

On the other hand, as I have repeatedly pointed out, it is a movement founded upon hypocrisy. Its leader studied at Tel Aviv University with all facilities open to him. It is a movement that fails to condemn human rights abuses by Palestinian leadership. Above all, it is not looking for change in Israel, but its obliteration from the map.

In the past year, there has been a wake up move, rejecting the fallacy of the BDS argument. Four Spanish cities have reversed resolutions, which had called for sanctions against Israel. A guitarist from the Bruce Springsteen outfit notoriously used an expletive to dispel any notion that he would support a ban on visiting Israel. And foreign investment continues to pour into the Holy Land, as the seen by the growing list of over 350 multinationals with R&D centres in the country.

In parallel, it is fascinating to note the increase in demand for space in industrial areas, located in the West Bank. Ostensibly, these would be the first companies to be face boycott calls if their exports were to reach overseas markets. And yet, we learn that the opposite seems to be true, especially when the trade is directed to the very countries BDS supporters had seen as natural allies; China, India and much of Africa.

It is noteworthy to look at the Barkan region, where there is a waiting list of 60 factories. Many of the current facilities ensure that Arabs and Jews work together. And by law, all employees have to receive full employment benefits, which far outweigh anything offered under the Palestinian Authority.

BDS is replete with the bile and hate of the worst elements of politically correct movements. It has impacted on specific individuals, companies and artists. Fortunately, it worst aspects seem – for now – to be over.

As a final thought, maybe if Israel’s detractors would lay down their weapons, then the Palestinian economy would achieve the  3.8% economic growth that Israel reached in 2016. Now that would be a true and direct benefit to the average person on the street in Gaza and in Nablus.

7 facts which show why Israel has a stand out economy this December

December 2016 – It is nearly time for those end of year celebrations; Christmas and Chanukah fall on the same day this year. So lots of candles to light.

The economy of the Holy Land also stands brightly. I have not hidden my complaints about how certain population sectors have been ignored during recent booms nor how restrictive practices remain in place, such as in the ports. That said, just have a look at this impressive list of achievements as we prepare for a new year.

  1. Israel’s economy is growing at a little over 3% per annum. This is a real increase, factoring in the rise in population. Further, it is close on double the average rate for the OECD.
  2. Unemployment is at a 30 year low, around 4.5% of the work force. Again, this is a stat that other countries can only be jealous of.
  3. Despite a rise in the cost of commodities and the internal growth mentioned above, Israel has managed to ensure that inflation has been kept within reasonable and acceptable limits.
  4. Looking ahead, a strategy is emerging to lower taxes, particularly in the corporate sphere. This will encourage direct foreign investment and thus feed into further growth.
  5. The Palestinians are also set to benefit from this good news. An additional 22,000 daily work permits will be issued for them to cross over from the West Bank and from Gaza. (It is just a shame that they refuse to reciprocate and formally allow in Israeli exports, which would enhance the peace process).
  6. Jordan too is expected to benefit. It will receive cheap gas from new reserves developed by Israel. Jerusalem also intends to double its supply of water to the Hashemite Kingdom in the next few years.
  7. Large conglomerates are continuing to invest in Israel. I mentioned last week that Microsoft is about to invest US$0.25 billion in a new campus, just north of Tel Aviv. GE, BMW, Tata are just some of the other world leaders that have been in the news during the past month, when it comes to extending their activities in Israel.

All in all, 2016 has turned out well for the Israeli economy. I just hope more people can be part of that triumph. Meanwhile, there is cause for optimism regarding 2017.

Minority groups in Israel – something’s changing

For a country of a little over 8 million people, Israel has more than its fair section of minority interest groups.

It is not just that about 25% of the populace is not Jewish. There are Muslim Arabs, as well as Christian Arabs. Bedouins and Druze do not see themselves as Arabs. Moving along, you have the ultra orthodox people, who can then be subdivided, and so the listings go on. And all of this is wrapped around the geopolitical instability of the region.

And through all of this, Israeli society has some amazing positive things to teach others. Last week, I mentioned the amazing work at Beit Issie Shapiro – teaching autistic kids of all backgrounds to communicate via an Ipad. this work has received the blessing of the UN. Previously, I had referred to the ever increasing role of women in Israeli society, despite many internal religious pressures.

What is pleasing to see is that these patterns of change are continuing. In the past two weeks, different news agencies have informed us that:

A) There is a special business accelerator for start ups led by Israeli women. To date, participants in the programme have raised US$20 million.

B) Lucy Aharish is an amazingly talented TV presenter. She has been prominent in celebrations of Israel’s Independence Day. And she is very proud of her Arab heritage, which she uses to break down barriers presented by all sides. Her story and triumphs should be an inspiration for all.

C) And then there is the university scene. The latest set of stats refer to 2014, when 3,600 additional students enrolled. Most of these come from the ultra orthodox sector, which are not normally associated with tertiary education. In total, females make up nearly 59% of the numbers, again somewhat surprising as there are so many conservative forces at work.

What does this all add up to? No, Israeli is not a perfect society, although I have yet to find such a thing. On the other hand, the efforts to create a pluralistic society in the Holy Land, where opportunity is available for all, are truly producing results that need to be observed if not copied by others.