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Economic coexistence – a Middle East model

26 August 2010
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Categories: Business, Israel

Can Israelis and Palestinians work together?

My own work experience includes a 7 year stint with a multinational in Jerusalem. Employees included Israeli Arabs and Palestinians. I recall how we all shared a joke about our Christian colleagues. They had the best deal, as they did not work on Jewish and Muslim holidays, as well as Christmas.

A one-off freak affair? No way. One of Israel’s most successful independent businessmen is Stef Wertheimer. He has just launched a new Arab-Israel industrial park in Nazareth. It was less than a decade ago, when the Christian and Muslim communities in the city were at physical loggerheads over a visit by the Pope.

And Israel’s largest newspaper, Yediot, ran a feature this week on economic cooperation in the West Bank. For example, the newest branch of the supermarket chain, Rami Levy, is located near Bethlehem. Jews and Muslims work and shop together. About 15 miles to the north, the town or settlement of Psagot has set up a winery, where the staff is also “mixed”. etc etc.

In previous writings, I have mentioned the brilliant work of Save a Child’s Heart in south Tel Aviv, the Peres Center for Peace and the Abraham Fund – all these making a quiet but significant difference in health, commerce, education and social services.

Is there a catch? It is disappointing not to find a similar level of initiatives coming from ‘the other side of the fence’.

And it is with disappointment and irony how several international groups have been boycotting Israel in some form at what they see as Israel’s punishment of the Palestinian population. The latest examples include a cultural protest by 140 Irish artists and a Norwegian oil fund has dropped 2 Israeli companies from its portfolio.

These people are effectively erecting barriers to progress, the very act they accuse Israel of. Maybe hypocrisy is a more accurate description than irony. Their policy creates mistrust, if not hatred, simply watering the seeds of wars to come.

There is a message here. Numerous NGOs, politicians, artists and others wage a war of words against Israel. If they were to judge the country by her actions that do not make the main news programmes – the actions that make a difference – boycotts could be replaced by increased greater economic benefit for all.

Is that too simple a dream to hope for?

Israel acts to endorse wind energy

25 August 2010
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Categories: Business, Israel

A good friend of mine is director of business development at Leviathan Energy. Unlike competitors in the field of wind energy, Leviathan’s technology controls the air around the turbine rather than just improving the motor. The net result is a 20%+ benefit in extra energy.

Neat. So when the company invited me to attend a ceremony this week with the Israeli Minister of Infrastructure, I was curious to find out more. It turns out that Leviathan’s Wind Lotus turbine has been connected to the country’s national grid in a pilot project.

It is too early to assess the long term economic and social benefits of this new source of alternative energy. According to one report: –

The wind energy market was recently enabled by a new feed-in tariff of NIS 1.65 (US$0.40) per kilowatt hour for 20 years. A feed-in tariff is a guaranteed rate the government will buy all of the electricity produced for 20 years. It is a financial mechanism used to encourage renewable energy industries like wind and solar until the costs drop enough for them to become competitively priced with fossil fuels like coal and natural gas.

Leviathan shows what can be done when a determined entrepreneur struggles against the odds. We can look forward to seeing how it now moves forward as it looks to become an established company on the global cleantech scene.

Sea waves, rabbis and mentors

24 August 2010
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Categories: Business

So my rabbi was trying to be “cool” and connect his weekly sermon to the holiday season.

It turns out that Rabbi Lior Engelman was at the seaside last week, when he started contemplating the waves. Yup – some of them roll in with “whites” on the top, an expression of anger. And Lior reflected how the way people deal with waves (and their anger) is similar to how we can deal with life. He pointed out 4 situations.

  1. Some people just let the waves hit them. They take in a mouth full of unwanted salt water and are often pushed back to the beach where they do not want to be. But they do not try for anything else. For whatever, they do not try to control the issue.
  2. In contrast, some people are clever and heroic. They watch the tall wave approach, judge it carefully and try to go through it head-on with minimal “fall out”.
  3. Most of us turn our backs on the wave. We try to ignore it or pretend that it is not so bad..if fact anything so long as it will leave us alone. The problem will pass us by, won’t it?
  4. And a few clever people say “please hold my hand and let’s jump this together”. They look for support.

Now, I could take this far and deep, but I will concentrate on the last point. So long as we are not talking about Hawaiin or Australian beaches, jumping waves can be fun. Yet amazingly not everyone likes to do it by themselves, and few of this group reach out for help.

In the world of sport, there is hardly a top personality that does not have their own trainer. However, when it comes to the world of commerce and business, few take on a mentor or consultant. 

Ask yourself why is that? And then contemplate how many companies you know could do so much better with an external person looking in, offering a few words of guidance. You never know; the added value generated might encourage the boss to give the staff an extra day off at the beach.

Israeli economy on the move upwards

23 August 2010
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Categories: Business, Israel

It’s official. The Israeli economy is doing well.

Gross domestic product rose 4.7% on an annual basis in the second quarter, faster than the first three months’ growth rate of 3.6%. It was the fastest growth in more than two years. In the first six months of the year, the economy expanded 4.1%.

That is excellent by any standards, especially at a time when Europe was hit by the “Greek crisis”. Exports have continued to rise at over 15%. The heavily reliable “purchasing manager’s index” is also moving in the right direction.

It was only last week that the Finance Minister released a series of other stats, mainly painting a very healthy picture.

Evaluations based on initial data from various sectors of the economy suggest unemployment rates will decrease to 6%, reduced from the 7% forecast at the beginning of the year. Poverty rates are also expected to decline significantly for the first time in years.

 One figure of particular importance for me and which has received little coverage is the anticipated fiscal debt. In the UK, the coalition government is striking at several “holy cows” in order to control the excessive spending. In Israel, the figure will reach around 4%, and not 8% as originally feared by many.

The rate of interestlooks to remain unchanged for the short term at least. The shekel has ceased (temporarily?) to gain in value against the main trading currencies. So all-in-all, a good mid-term report.

So what’s really going on in the Palestinian economy?

22 August 2010
4 Comments
Categories: Business, Palestinian Society

Whether you look at Gaza or the West Bank, it is difficult to get a true picture of economic progress. The story is often heavily clouded by the spin of politicians protecting their own agendas.

Fox News reports of the spanking new shopping mall in Gaza. Erected despite the Hamas claims that there are no materials to build new homes, it remains debatable if local purchasing power is strong enough to provide profits for the retailers of fila shoes and barbie dolls.

Khaled Abu Toameh, a Palestinian journalist writing in the Jerusalem Post, takes another angle.

…the Orjuwan Lounge in the fashionable neighborhood of Al-Masyoun in Ramallah has become a symbol of the dramatic change that has taken place in this city in the past three years.

The improved security has encouraged Palestinians and foreigners to inject money into the city or even move to live there. Luxury apartments are on sale in most parts of the city.

(For example): Sources in the Ramallah Municipality revealed that more than 100 Palestinians from Jerusalem have relocated their businesses to Ramallah in the past few months. “Here they pay less taxes and have more customers,” the sources said.

And that is not all. The Abraaj equity group from Dubai will operate a US$50 million investment fund from Ramallah. Toameh goes on to describe how international hotel chains and “embassies” are moving into Ramallah, effectively converting the city in to a de facto bourgois capital.

It is interesting to note that the July inflation stats revealed a sharp rise in prices in the West Bank region, indicative of the reduced fighting and increased prosperity.

Meanwhile, in Hamas controlled Gaza, prices changes were flat. What has yet to be concluded is whether this deflation is a result of continuous authoritarian rule. On the other hand, the trend could be explained by the continued heavy flow of goods into the region via tunnels and Israel’s relaxing of border restrictions, which have thus combined to increase supply and reduce prices. 

Either way, the shouts of deep poverty and “woe is me” in these territories are becoming more exaggerated by the day.

What can make you a successful start up

20 August 2010
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Categories: Business, Israel

The dream of a lifetime? Drop out of university. Start up a business in a garage. Work hard for 8 years and then find you can raise US$ 60 million. Well it happened this year to an Aussie software vendor called Atlassian.  

Me too?

In Australia itself, there are loads of other potential wunna-bees in the pipeline. And not all of them are to be found in the computing field. Tiffany Trelaor has combined a family know-how in textiles with a passion for digital printing. The adventure began 10 years ago and has since sprouted several shops and exhibitions.

Another classic start up is “Shake Weight“. At heart, this American concept is simply a different way to look at a couple of dumbbells. Selling a set for less than US$20, the owner is now a very well off individual. And the list goes on.

What’s the secret?

Luck? That’s always there. Timing? Certainly true for Shake Weight, as the company waited for the right moment to enter the market.

As I was preparing this item, I read a fascinating blog from Morgan Cradock – 5 typical mistakes of businesses. The article discussed: –

  1. Confusing “Strategy” with “Tactics.”
  2. Sacrificing long-term strategy for short-term planning
  3. “Everything” is not an option
  4. Being too risk-averse
  5. Lack of accountability for strategic planning

Personally, I would add 2 other factors to the list. First, in addition to point 2 above, I always demand to see a clear vision in mind. It needs to be a statement that has sense – practical meaning which is not wrapped in cloudy phrases.

And then, I ask people to consider their roles as leaders and as managers. Quite often in young companies, the CEO has to be both and then gets the roles confused. That is a mistake.

This week, I had the pleasure of meeting a lady with a pending patent in the cleantech arena. She lives on the edge of a desert in Israel. For all of her academic achievements, she recognises her limited commercial experience.

And yet, she does have directed business plans and working papers galore. She is currently pulling together resources and teams that will support her ambitions. At this early stage, she fits most of the categories described here. I have marked her down to do well.

When a consultant needs a consultant….

18 August 2010
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Categories: Business, Israel

Let’s not hide it. Even consultants need to check themselves and make sure they are getting it right.

Last week, I received a complaint from a client. Naturally, I believe I am right and they are not, but that is not the point. Nor is it merely a case of analysing why the matter arose. The question is what is the quality service I wish to provide and what is the best manner to deliver it.

With magnificent timing, I was reading an interview with Philip Kotler, Distinguished Professor of International Marketing at the Kellogg Graduate School of Management and a recognised top thinker on this issue.

In effect, the discussion turns out to be a fascinating outline for both client and for consultant – what they should both seek from each other in order to draw up a balanced relationship.

Sure, the client is right to demand value for money against specific milestones, which are then to be agreed in writing. Many issues focus on how they wanted to be branded and positioned.

Kotler is unrelenting in what the consultant has to provide in return. Most crucially, Kotler suggests that there is a need to develop a relationship that transcends the regular professional interaction.

Some people have a natural aptitude for gaining trust and respect from their clients. They are caring and sensitive people, good listeners and learners, and good problem solvers……Build a good database on each client’s activities, interests, opinions, and other pertinent information. This will enable you to customize your services and communications to each client.

Kotler refers to 3 other key points for the consultant:

  • Show how the work or project will save time and money
  • Document the use of time. Do not be afraid to do so nor update the client.
  • Show on-going concern for the client, such as sending articles of general interest.

It is a mute consideration if Kotler’s advice would have saved my relationship with my client. What is available is to continue improving communication channels with clients for the benefit of all parties.

Prague 1 Jerusalem 0 in the Tourism Cup

10 August 2010
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Categories: Business, Israel, Jerusalem

Israel has a population of 7.5m people and hosts approaching 3m tourists every year. The Czech Republic boasts around 10m people, but entertains over 6.5 m tourists annually.

Both countries have much to offer travellers in order to grab hold of their spending money. However, they also have one unusual feature in common. Amazingly, Prague does it better.

Israel is the world centre of Judaism. The Wailing Wall is infamous. The Old City of Jerusalem is bursting at the seams during the Holy Festivals. As you walk around the city, you are surrounded by biblical and historical events that can link thousands of years in literally a few footsteps. New visitors never cease to be bemused.

And for all that, even if I was to stretch the stats, a little under 3m people come to see this celebration of Judaism every year.

Prague is a 3.5 hour flight away. It is known is the city of the 100 spires, a reference to the churches that decorate the sky line. It is a city where tourists come from all over Europe; Brits, Italians, all parts of Russia, and the rest.

And here’s the point. Prague is littered with tour companies wishing to take you on a different outings around the city. All offer a 3 hour tour of the Jewish Quarter, which dates back hundreds of years and which has survived the Nazis and the Communists.

The guides explain the history, the customs, the food, and the famous Jewish sons of the region, including Kafka, Moser, and numerous rabbis. The story of the Golem originates from Prague, and is recalled in Czech, Russian, Italian, Armenian, Chinese, Korean and many many many other languages.

In other words, more people are exposed to Judaism and its meaning in Prague than in the heart of the Holy Land. More than in Israel, it is in the Czech Republic that outsiders receive a first and positive impression about the Jewish people.

That has been going on for years. So why does it appear that nobody in Jerusalem is trying to copy this successful model?

Yet another stupid meeting?

9 August 2010
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Categories: Business, Israel

Many of you will be reading this during your holiday time. And at some point during this period of relaxation, your mind will drift over to that meeting, which you don’t want to have or regretted attending. Yet another meeting, which goes down as a waste of your time.

And you have to ask the question; with all our experiences in life, how is that we all spend so much time preparing or taking part or following up on hours of discussion round a table, where nothing has happened…with the exception of the release of hot air into the atmosphere.

For the sake of everybody’s sanity, and cleaner air, what can be done? What resolution can we all take in order to make our lives in meetings much happier?

Amazingly, some of the solutions are very simple. Both chairperson and participants could take 5 minutes to prepare themselves; no – not just going over what the agenda should be etc, but by considering in advance how people are going to react to prepared statements. It’s a caseof patiently employing some 101 phsychology.

Then consider your own persona – different meetings have different purposes; decision-making, brain storming, planning, finalising, etc. Most of us have different characteristics, suitable or otherwise for each stage. Be prepared.

And if you are the chairperson, I would point you to some useful tips from Josh Spiro:

  • Define the purpose of the forum
  • Ensure that everyone is on the same page in advance
  • Clarify that the key people will attend
  • Ensure that the meeting runs to a set time schedule

Spiro also refers to the need of strong interpersonal communications. How true!

I was told of a recent get-together of some senior businessmen, whose combined experience comprised hundreds of years of leadership. Half way through, the chairman unexpectedly turned his anger on one of the fellow members of the steering committee. I understand that a few minutes later, people began to leave the room. No conclusions or follow-up moves were reached. The only mutual feeling was confusion rather than direction. 

And so another silly meeting was recorded in the annals of world history. When you combine the time of all the those in the room, hours of work was lost. And that is amazing when you consider how an extra 5 minutes of lucid preparation would have produced a different and more positive result for all.

Should I offer a discount to clinch the deal?

4 August 2010
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Categories: Business, Israel

Most service providers have been in this situation.

You “chat up” your prospect. You agree on the framework of the project. All sounds great, and then they announce that they cannot, will not, or simply want to pay the price you have asked. What do you do?

Yes, each situation is different. Are they bluffing? How badly do you need a contract at any price? What is the competition like? etc etc.

But let’s be honest. These types of questions should have been evaluated in advance. They are predictable and thus you can have your excuses well prepared.

So what’s missing? You are providing a service of value and of quality. That is why your prospect is talking to you. If that message has been delivered correctly, there should be no need to give a price reduction. There should be no need to back down.

However, it is more than delivering value that counts here. The latest edition of the “Guerilla Consultant” newsletter makes a valid point. When you agree to a fee concession, you

introduce the shadow of a doubt in your client’s mind about your trustworthiness. If you’re willing to cave in on your fee, what else will you compromise to get what you want? Plus, you should expect your future proposals to be subject to tough price wrangling.

In effect, you have “sweetened” the deal too much and the child rapidly becomes used to receiving extra chocolate for nothing. Is there a solution?

Instead of offering price cuts or scope increases, stand firm on the value you’re offering. If your client can’t or won’t pay your fee, find a new level of mutual benefit. When your ideas are good enough and your proposal is compelling, you’ll often find that clients come around and agree to the original fee.

….. In an ideal world, you would have discussed scope and the fee with your client long before your proposal is on the table. But some clients will still try to negotiate price no matter what.

There is no definitive answer. Some people see granting a discount or supplying additional hours as going the “extra mile”. Possibly. And occasionally maybe necessary. I will not divulge here my own tactic to bring the negotiations to a positive finish.

However, there is a growing awareness in management literature that those who hand out discounts tend to lose out – in fact lose twice over in the long run.

Interesting news from Israel’s stock market

4 August 2010
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Categories: Business, Israel

Like many of its fellow travellers, the stock market in Tel Aviv has spent the past few months marking time. Whilst the fundamentals are looking good, European economic uncertainty is acting as a restraint.

Yesterday, there was a serious incident on Israel’s border with Lebanon. Combine that with an unusual  rocket attack on Eilat the previous day, and you would expect investors to get jittery. The fact is that after an initial dip of 1%, the index closed the day’s trading marginally down.

To paraphrase a previous CNBC comment about Israel, it is a country that has discovered a path to economic growth, not because of stability, but despite geopolitical uncertainty.

Israel’s stock market has just released a report for the period covering January – July 2010. There are over 600 listed companies. The value of bonds and equities together is close to US$400 billion.

What sparked my interest was the level of daily trading. It has now reached US$567 million, 3% above the previous high of 2008 and many miles away from the troughs of 2009.

That is a true sign of long term confidence in the Israeli economy.

Why invest in Israel

3 August 2010
2 Comments
Categories: Business, Israel

Despite current hick-ups, the Israeli economy remains a strong bet for the long term. As I have mentioned before, there will be significant financial and structural benefits from the discovery of commercial gas reserves, the new membership of the OECD, and joining the highest level of the MSCI share index.

Today, I came across 3 separate articles, which put all this into focus. First, there was a report showing how Israel’s exports for the period January – June 2010 have been on the move up. Significantly, Israel has capitalised on the growth of emerging economies.

For example, trade with India has more than doubled. When you also factor in the China element, Asia now comprises 20% of Israel’s export market, not bad considering that most of the Middle East refuses to trade with the Holy Land (officially).

Then I noticed a comment on Fox News, which suggested that Obama’s economic policy is floundering. Well, maybe no surprise there as this network is not known as a supporter of the Democrats. The twist came, when the analyst observed that: –

  • Since 2007, Israel has experienced a mild recession, while America’s has been deep. 
  • Enterprise and its result — innovation — drive Israel’s economy, but are in reverse under Obama.
  • Under Netanyahu, Israel embraces success and exceptionalism. But Obama fails “The Israel Test.”

Put this together with an analysis from Investopedia, part of the Forbes group. 

With 65 public companies listed on the Nasdaq, Israel has exploded to be a major international entrepreneurial and technological center. Unlike other nations which heavily depend on foreign direct investment as a means of job creation and growth, Israeli entrepreneurship has driven the small start-up nation to house some of the most respected technical institutes and major public companies in the world.

Empty words? Lockheed Martin and Morgan Stanley have both announced that they are considering major investment schemes in Israel.

Israeli economy & government intervention

31 July 2010
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Categories: Business, Israel

However you twist the figures, the speed of the Israeli economic recovery is slowing down. The latest report from the Central Bureau of Statistics argues that: –

Economic indicators for the April- June period point to a continued slowdown in the pace of growth in imports of raw materials, trade and services revenue, industrial production and credit-card purchases….

Over the past 6 months, annualised GDP growth has dipped off by about 1.0 % to around 3.5% . On the other hand, the predictions for 2011 remain strong.

Citigroup expects the economy to grow 3.2% in 2010 and 4.2% in 2011. The Bank of Israel forecast is for the economy to grow 3.7% in 2010 and 4.0% in 2011.

Stanley Fischer, governor of the Bank of Israel, has pointed out several times that Israel was fortunate during the initial stages of the credit crisis. As the country was going through a general election, central government was weak. Nobody in authority was around to push through a large fiscal package. Debt did not go through the roof, as in the UK and elsewhere.

Yet last week,  a report was issued in America, which details why the very opposite was true for Washington.

Alan Blinder, a professor at Princeton, and Mark Zandi of Moody’s Economics (and one of the chief economic advisors to the McCain Campaign)….. argue that without any of the responses, 2010 GDP would have been 11.5% lower than it is likely to turn out, payroll employment would have been 8.5 million lower and we would now be facing outright deflation rather than just being at risk of falling into it, as we are now.

True, the American and Israeli economies faced very different challenges 2 years ago. For a start, Israel’s banks were sound.

However, there may be a need to move the local debate along. Today, Israel’s high tech sector needs help to reposition itself. The ultra orthodox and minority communities are not engaged in the labour force as the rest of society is. Infrastructure in the north and south remains weaker compared to the centre of the country. Primary and secondary education standards are continuing to slide.

None of the these are impossible issues to resolve. All require financial direction (and leadership) from the centre. Is it time to relax the purse strings?

Setting up your business – learning from a bracelet

30 July 2010
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Categories: Business, Israel

My prospective client asked me, Mr Business Coach, how I could help him set up his new operation. After my reply, he told me that he already knew all that. So I asked him what he wanted.

Silence! In one breath, he realised that he did not know and he seemed reluctant to let others try on his behalf.

I have said it before and I will say it again. Planning with a defined, logical vision is essential, before you kick off.

Look at the story of Silly Bandz – US$5 packets of silicone bracelets, making a fortune for the owners.  Robert Croak, the founder, clearly understood from the beginning what needed to be done. He hit on an idea, realised how conventional marketing would take too long to work, and thus used a social media campaign. His rapid success has been recorded on Bloomberg, CNN et al.

And when the initial effect wears off and others begin to copy him?

We’ve been planning some new products that will make Silly Bandz a household name for the next 5 to 10 years.

Know your direction. Know your numbers. Ask yourself some hard questions to confirm that everything is reasonable. And go for it.

Has Hamas given Israel’s local economy a boost?

25 July 2010
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Categories: Business, Israel

The fall out from the Turkish flotilla, originally sent to bolster the Hamas regime in Gaza, continues to reverberate in the commercial world.

There is no doubting it. Until June 2010, bilateral Turkish-Israel trade was continuing to reach new heights – over US$1.5 billion annually. And the defense sector was one of the main beneficiaries.

Today, Israeli and UN led commissions of inquiry fill up the news print. On the ground, 10s of thousands of Israeli tourists have abandoned Antalya and other Turkish resorts in droves – replacing them with the hotspots of Crete, Cyprus and Eilat. Several Israeli supermarket chains have declared that they will order less products from Turkey.

Britex is a small Israeli importer and distributor of textiles. As their Turkish suppliers have raised prices, the company has responded by moving to other sources. According to their CEO, orders are up 30% ever since.

Negev Textile Ltd is located in southern Israel near Sderot, which has seen thousands of missiles land on the town from Gaza in the past decade. The company dyes textiles and has suffered from Turkish price competition in recent years. Suddenly, its all change and the clients have started to storm back.  

When Fatah launched the Intifada in 2000, little consideration was given for how the local population may suffer economically. Much the same can be said for the Turkish government, where its support for the flotilla has been followed by a down turn in parts of its own economy. 

And in the meantime, the tactics of Hamas has resulted in a micro boom for some Israeli manufacturers.

Starting a successful business: pain and gain

25 July 2010
1 Comment
Categories: Business, Israel

Bare Escentuals (BE) is an American manufacturer of mineral-based cosmetics. Starting out as a cottage industry in 1994, the firm is valued today at over US$1.7 billion, approximately. The story of everybody’s dreams, but is it a reality available to all?

If you read about BE, you begin to identify 3 common themes which can be seen in many successful businesses.

First, no pain means no gain. I have met several people recently, who are good, intelligent, decent folk. And they feel that this should be enough to ‘make it through”. The horrible truth is often very different. However you cut it, most people do not get on without some sacrifices and a lot of sweat.

Take it from another angle. How many of us go through tough patches on our home (or private) turf. Not everything comes easy. So we should not expect anything different in commercial life. My good friend Mike Faibisch recently gave true expression to this and serves as an inspiration for others.

Next up is planning. At a very early stage, entrepreneurs must think through their vision and ask if it makes sense. If so, how and why. It is almost invariably the role of the big chief and founder to steer the set up period around many obstacles, and this in turn requires a firm plan of action.

I recently sat down with a CEO. He had three action items on the immediate agenda. But their timing was out of sync with each other. He was afraid that tasks would be completed and effort expended, but the overall effect would be minimal. Brilliant!

And the third factor is all about “seizing the moment”. Sometimes, entrepreneurs need to just go for it. I was once working with an inventor. His product was simple but effective. He was offered a route to market by a single importer.

However, my client could only see bigger dollar signs in front of his eyes. Eventually, all his contacts became tired of him and he was left with his hopes, a worthless patent and a dwindling bank account.

Sustaining the Gaza economy

21 July 2010
2 Comments
Categories: Business, Palestinians

Like many things in Gaza, the truth about its economy is covered up amongst the spin of interests groups and their supporters. Even the IMF and World Bank surveys, are often prepared by locals, who are suspected of having a ‘less-than-objective’ agenda.

As I observed a few days ago, the inherent contradictions were brought to light by the visit to the region of EU foreign policy chief, Ashton. In order to combat what she saw as a humanitarian crisis, she announced another aid package. Yet, on the same day, the people of Gaza were treated to a brand new shopping mall.

What’s really going on?

Back in May, before the flotilla fiasco, the Financial Times was already reporting that: –

Some argue that Gaza’s tunnel economy is becoming a victim of its own success. … the remaining tunnels, about 200 to 300 according to most estimates, have become so efficient that shops all over Gaza are bursting with goods.

Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup – long absent as a result of the Israeli blockade – are both cheap and widely available. However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese airconditioning units. Tunnel operators and traders alike complain of a saturated market – and falling prices. “Everything I demand, I can get,” says Abu Amar al-Kahlout, who sells household goods out of a warehouse big enough to accommodate a passenger jet.

A month later, The Economist confirmed that life in Gaza was far different than what Ashton et al is led to believe.

American investors of Palestinian origin are set to open Gaza’s first mall. Land prices in Gaza city have shot up. Saudi investors have asked management consultants to look for opportunities.

The Palestinian news agency, Maan, is an excellent source of news. If you click on its Gaza page, you will see a typical spread of anti-Israel features. Understandable. And in-between, you can also learn how new cars are about to be sold in Gaza. Evidently, there is a lot of spending power in Gaza.

Maybe the real question is who has access to this financial wealth? In early July 2010, the Palpress news agency released a report in Arabic about Hamas corruption in Gaza. As a (google-supplied) translation reveals:

 Hamas movement in the Gaza Strip a chronic crisis because of corruption, its ugliest forms, in all joints of political and military, from its Prime Minister Ismail Haniyeh, who continues with his family to buy apartments and land through the military wing ” Qassam Brigades, “all the way to junior government officials who receive bribes from citizens burdened because of the Israeli blockade.

So we have NGOs and the EU claiming water and health situation in Gaza is not up to standard. We have consuming spending going through the roof. And the top politicos are on a roll.

In order to sustain this economy, three things need to happen. First, Hamas must maintain its autocracy. Second, Western taxpayers must be prepared to contribute generously, and at the expense of other important causes. Finally, the international media must continue to ignore such contradictions, just as it has failed to report on the new mall.

Israeli economy: growth or slowing down

20 July 2010
1 Comment
Categories: Business, Israel

Israel’s business climate worsened moderately in the second quarter as uncertainty in global markets and Europe’s debt crisis affected the risk level of local companies, Business Data Israel reported Sunday.

Not very optimistic. In the second quarter of 2010, exports were lower by 2.5%. There are clear concerns that the economy is slowing down, especially has Europe struggles to emerge from the credit crisis. Even foreign investment is falling off.

At this point, it is worth taking a breath and pausing for thought. The Israeli economy is still perfoming well, with growth at around 3.5%. It is just that this is not as high as predicted or hoped for.

Trade delegations are still popping over in quantity. I was chatting to a member of a team from Colorado. Amongst several opportunities, he was looking at further gas exploration. For him, what has been discovered in the Tamar field is just the beginning of a long story. The net result will be a massive positive shift in Israel’s balance of payments, and probably with geopolitical fall out as well.

Now consider that Israel appears to have a central budget and inflation under control. Unemployment is at 6.5% and dropping. And when you factor in the expected investments resulting from OECD membership and the Tel Aviv Stock Exchange joining the leading MSCI index, the long term future looks very healthy.

Yes , there are still concerns. Despite a recent weakening, the shekel remains strong against leading currencies, which harms profitability. And, as many have written, the high tech environment demands systematic restructuring; too much emphasis on the wrong technologies.

So, what’s the wrap up? The short term is unlikely to produce any exciting stats. But this is not an indication of a recession. The year 2011 is still looking good.

Innovation: Canada takes a lead from Israel

19 July 2010
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Categories: Business, Israel

Israeli high tech may be wondering about its next steps. However, the charge towards innovation is still on. Only yesterday, I met a start up medical device company that has incorporated the letter “D” in its name, which stands for “destructive tech”.

I have written how Denmark is looking at the Israel model to becoming a successful innovative society. Yesterday, I went to a fascinating evening, where a new Canadian commercial approach was presented.

The discussion was led by Mr Sheldon Potter from Fogler, Rubinoff LLP and by former Israeli ambassador to Canada and now President of the Israel Canada Chamber of Commerce, Mr Alan Baker. Now Canada is an economic powerhouse. Toronto hosts the world’s 8th largest stock market. The country boosts a comfy life style.

As Potter observed, Canada has become “innovation hungry”, and there is little infrastructure to support the desire for change. And why look to Israel? In Canada, university research papers used to stay on the shelves. In Israel, they are commercialised.

In the past few days, the Canadian media has picked up on the theme of how poor innovation results in low productivity. For a country trying to emerge from the shadow of its American neighbour, that is bad news. Ontario Premier, Dalton, McGuinty, has been amongst the most open in calling for a change in economic direction.

And here’s the connection to Israel. McGuinty recently led a strong delegation to the Holy Land to consider joint ventures in the health sector. The states of Manitoba and Quebec have fielded similar task forces. There are discussions to set up Canadianincubators, as well as an office of the chief scientist, just as Israel did many years back.

And as for cooperation between the two countries, there are many stories to tell. An Israeli solar panel company has reached a technology agreement with a large manufacturer of spare parts for cars. And in a few months, a major delegation from the retail sector will be seeking partnerships with innovative Israeli manufacturers.

If Denmark and Canada can learn from Israel, who wants to be the next economy to benefit?

What Israeli spin cannot hide about the Palestinian economy

18 July 2010
4 Comments
Categories: Business, Israel, Palestinians

  On 14th July, the EU announced increased financial support for the Palestinians.

The European Commission has agreed an additional financial package worth € 71 million for the Occupied Palestinian Territory, topping up the € 224 million already allocated by the EU in the 2010 European Neighbourhood and Partnership Instrument, as well as a reinforcement of humanitarian aid for Palestinian refugees.

For Catherine Ashton, the EU top foreign policy official, Israel has not done enough to help the poverty of the Palestinians. And many claim that the situation in the West Bank is not much better. Citing charities like Save The Children Fund, bloggers say that West Bank prosperity is  a myth.

Boring stats reveal that in absolute terms Gazans received only 12 tons per month of food aid – far less than Zimbabwe, Ethiopia or any of the other hot spots. Put that into “loaves of bread per head”, and suddenly Palestinians have received 10 times more than their “competitors”.

Sounds wrong? Well have a look at these photos. On the same day that Ashton was moaning about poverty in Gaza, a brand new shopping mall was opened in the area. Some kind of computer imagery ploy? Not if you check out the website of the mall.

And no, these are not isolated situations, taken out of context. Here is how one Syrian blogger compared many Arab countries to what he has witnessed in Gaza.

And as for the West Bank, it is not just the luxury car business that is booming. The end of Plaetinian led violence has seen a return to the choices of normal consumer spending.

The biggest demand is for their four-wheel-drive models, but prestigious European cars are also selling well. The Al-Bustami company, for example, deals exclusively in German cars such as BMW, Mercedes and Golf.

What is it that Ashton refuses to acknowledge? Why are Western taxpayers bank rolling this hypocrisy?

Back in February 2010, acclaimed Palestinian journalist, Khaled Abu Toameh, asked the same question.

Donor countries have yet to respond to revelations by former Palestinian intelligence official Fahmi Shabaneh that top Palestinian Authority officials are continuing to pocket millions of dollars, earmarked for financial aid to the Palestinians in the West Bank and Gaza Strip.

“Don’t the Americans, Europeans and Arabs care about their money that is being stolen? If they continue to turn a blind eye to the corruption of the Palestinian Authority, Hamas will eventually take over the West Bank the same way they took the Gaza Strip.”

Nearly a month after Shabaneh, who headed the anti-corruption unit in the General Intelligence Service, revealed in an exclusive interview with The Jerusalem Post that some of Palestinian Authority President Mahmoud Abbas’s close aides and loyalists had siphoned off hundreds of millions of dollars to private bank accounts, decision-makers in the US and EU continue to bury their heads in the sand.

Hamas or PA; Gaza or West Bank;  Ashton and her caring political friends are determined to plough on with their spin, but for the benefit of who?

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