I have long opposed aid for the Palestinians, when it inexclicably seems to disappear down a black hole. Donors and intended recipients become the victims to the owners of greed and violence.

So it is refreshing to come across some positive news.

Tonight, the Israel Palestinian Chamber of Commerce will hold a gala dinner. 

Guests of honour at the event will be President Shimon Peres, Tony Blair, official Envoy of the Quartet on the Middle East and his wife Cherie Blair, the Vice Prime Minister and Minister for Regional Development Silvan Shalom and Deputy Foreign Minister Danny Ayalon.

If this role of honour is impressive, of more importance for me is the sign of Palestinian commercial interests beginnings to take a lead. This is the beginnings of the creation of an independent economy, which looks to build wealth through normality and not via political dominance.

For example, The Portland Foundation is working in the Ramallah region, building new affordable homes. In a secondary field, they are developing long-term savings schemes. 

(Place this against the number of senior Palestinian officials, who have been accused of controlling the cement industry or similar rackets.)

Maybe Obama and Netanyahu should start by fostering similar positive schemes, create a stable framework, and then go for a comprehensive peace arrangement.

It seems that the international community has finally found a way to channel money to the Palestinians in a manner that clearly gets around the “Hamas factor”.

The aim seems to be to use UN institutions. Clearly even the Saudis have been worried, as there hundreds of millions is still in Riyahd as opposed to Palestinian bank accounts.

Certainly this is a positive step. But it begs one horrible question. What has happened to the money until now?

The Funding for Peace Coalition long campaigned for greater transparency and accountability of Western tax payers money going into Gaza and into Ramallah. EU, UNWRA, USAID and others have all invested billions.

We know that Arafat died as one of the wealthiest men in the Middle East. Crawl the web and you will find that he son of President Abbas has been censured for his new-found wealth. Hamas has finessed the art of smuggling, profiting on the building of the tunnel, their use, and the goods eventually sold.

A recent convert to this need for monitoring has been the Taxpayers Alliance. In a report released last month, the group detailed how the EU in particular funds a Palestinian educational curriculum filled with direct and indirect hatred.

To quote the key findings: –

  • Over €729 million of EU taxpayers’ money spent on aid to the Palestinian territories each year.
  • Donations to the Palestinian territories create a responsibility to ensure that the Palestinian Authority does not misuse its budget. That responsibility exists whether EU taxpayers are directly supporting the promotion of hatred and violence, providing the Palestinian Authority with funds that it can use to do the same or providing services that Palestinian authorities would otherwise be expected to provide, freeing up their budget to use as they like.
  • 42% of the Palestinian population are under 15 years old.
  • The Palestinian media is dominated by official newspapers, radio stations and television channels, paid for by the Palestinian Authority’s budget which is in turn supported by British donations. That media frequently broadcasts statements that advocate the continuation of violent struggle instead of pursuing peace.
  • Breakdown of the €729 million: €420m from the EU; €67m – France; €67m -Sweden; €55m -Germany; €27m -Italy; €93m – the UK.

The point? Well, tax collection by the Palestinian Authority and by Hamas is negligent. So if they are going to use other people’s money, especially in tight times as today, they should have the decency to use it on morally justifiable measures, which will feed into a genuine peace process.

The Pope and the Israeli Prime Minister seem to be running a competition. Who can make the most silly mistakes each day in Jerusalem, and then get caught out in the press.

Meanwhile, quietly, professionally, away from the cameras, Israeli commerce is getting on with the job of creating wealth for the country.

Item 1: Forbes has named 13 Israeli companies in its annual rankings of the top 2000 global public companies. Not bad bad for a country of 7.4 million people and stuck in a war zone, especially as America took over 25% of the placements.

Item 2: Seeking to emulate those 13 firms, 14 Israeli start ups have been named by the prestigious magazine, Red Herring, in a top 100 of most promising companies in Europe and Asia.  Again, a stunning achievement considering the meagre resources of the country and against such strong competition.

Item 3: Nilit has just concluded its fourth overseas acquisition in as many years, paying out US$20 million for an American company. I can personally vouch for a number of other Israeli manufacturers who are cash rich and are scouring potential M&As very seriously.

A lot of money and very little talk. A message for the busy politicos?

Yesterday, Pope Benedictus XVI commenced his vist of Israel, arousing a certain degree of disappointment.

Off stage, Israel’s Prime Minister, Bibi Netanyahu, was opening himself up for criticism. Ostensibly, Bibi was in Egypt, talking with Mubarak. However, the much of the local media was concentrating on his capitulation of his economic plan.

Step back for a moment and recall. First, Bibi’s election promises included lower taxes. Second, he has appointed a finance minister who will play second fiddle to Bibi’s role of economic supremo. Third, as usual in formulating a new budget, the Finance Ministry leaked details of cuts and frightening new measures.

And what are we left with? Well, according to the papers, cuts in child allowances, hospital payments, less tax breaks for working women, etc have all flown out the window. Meanwhile, VAT could go up by 1%, a direct burden on the poorer members of the community.

It is not clear if Bibi buckled to the pressure of interest groups like rich trades unions or industrialists. However, even during his own successful term as Finance Minister some years ago, he was also known to cave in.

Which brings me back to Bibi’s meeting with Mubarak. And in a few days time with Obama, and then with the Palestinians. Bibi’s skillful oratory is not in doubt. It is his ability to deliver a safe economy and …….well long-term overall safety that concerns me more. It is time for leadership.

Pope Benedictus XVI arrives in Israel today, Monday. What’s the fuss?

Last night, Tel Aviv traffic came to a halt for several hours, as 50,000 people turned up to watch Depeche Mode in concert. And as I write, crowds as surging towards Mt Meron near Safed to commemorate “Lag Ba’omer” the cessation of a plague that killed thousands of rabbinical student nearly 2,000 years ago. The expected attendance is estimated at 500,000.

As for the Pope, how many can he count on? Officially, there are around 150,000 Christians in Israel, the one country in the Middle East with a growing Christian population. Most of these are from the Eastern Orthodox groups. Catholics are few in number.

The Pope’s visit is important for a number of reasons. It is not just that he is expected to make some definitive statements denouncing anti-semitism. His delegation will push to seek control of Vatican owned property in sensitive areas, like the Old City of Jerusalem. How all this will help to further the continually awkward Vatican- Jerusalem diplomatic loop is difficult to assess at this early stage.

One thing is clear. At best, the Pope will draw with him around 15,000 pilgrims – and no doubt others will follow later where he has lead. But these numbers are still insignificant compared to other mass events in Israel. (Pun not noticed, until after it was written – MH).

The Pope will learn that Christans are free to pray in Israel, something he will struggle to find elsewhere in the region. However, he has much more work to complete if he wants to secure a greater role in the Middle East for the Vatican.

FACT: Israel is one of the world’s leading countries in developing new agricultural techniques.

FACT: Israel has developed a string of technologies for purifying water without chemical treatment.

FACT: Israel suffers from a drought, cutting deep into its own farming output.

Last week, I visited “Agritech”, Israel’s annual show, displaying its latest techniques in the agricultural field – pun intended. Clearly visible were the strong delegations from India, Honduras, Chile, Australia, Brazil and elsewhere. The event is a quality circus on the exhibition calender.

It would take too long to survey all that was on view. I stopped off at Aquatal, delivering sweet drinking water from the liquids in the atmosphere. A research team, led by the Volcani Centre,  presented a thermal imaging solution for mapping the water status of crops.

And it is in water technology where the world has chosen to follow Israel. It leads in drip irrigation, water recycling, and desalination techniques. There are signed agreements with the Beijing, Melbourne and Madrid Water Authorities.

I am curently associated with a company that has perfected an efficient green solution for purifying liquids – both for local authorities and industry (food, chemical and other sectors).

So the question is: Why does Israel have a drought? Why does it lack enough water to “feed” the River Jordan and the general populace? For all these wonderful capabilities, why has the country not overcome the low rainfall levels?

And the answer: Well, I find that Israeli politicians love to talk. They jabber on about the economy, the Palestinians, and football, even when they have no real idea what they are talking about.  Turn to the environment, they are also invariably ignorant, but here they need to make real decisions which make effect interest groups. So why bother?

 It is only the future that will suffer, and thus no need to trouble the voters of the present. Politicians and civil servants drowning in their own selfishness, as the land cracks open around them.

Like many, I glean my info from many sources.

I am reluctant to name names, but every so often it is worth reconsidering a cardinal rule. And today, I am going to direct you to the work of my good friend, Seth Vogelman.

For some years now, Seth has been compiling a fortnightly survey of economic activiy in the Middle East, with a special emphasis on Israel. The latest work is posted at https://www.atid-edi.com/index.php/Fortnightly.htm ,as well as on his facebook.

Seth is a rare breed, with access to contacts in many commercial places which the average Israeli has not even heard about. The analyses are sharp, if not always to the taste of everyone. The range of opportunities posted is possibly unique. He drags in many untouched markets.

Happy reading

I have previously written that part of the strength of Israeli management psyche is  out-of-the -box thinking. It is why Israelis are renowned for bringing through new technologies against the odds into the marketplace.

So what happens when the company is up and running? What happens when Mr Israeli CEO has to start selling? Where does this creative thinking lead him or her?

Here comes the down side of Israeli character. In Hebrew, it is called “magi’a lee”. A rough translation is: “I deserve it”.

What do I mean? For much of the pre state period and for 3 decades afterwards, Israel was run by socialists. The state looked after you. You could rely on the state, because..well, because you deserved it for all those taxes you paid.

On top of which, Israel faces a constant existential threat. Israeli is in danger, “so at least buy our great goods”, we shout to everyone.

In commercial terms, this has a naive and childish parallel. So many new start ups outsource their sales efforts. It is mostly paid for on the basis of “success fee”. The contractor sells the products and services, which deserve to sell well, and the client will pay a large commission. In other words, work for us for several months, fork out all the expenses for that period, and then we can make you rich…maybe.

As I learnt way back at university, if you pay peanuts, you get monkeys. The so-called success fee provides no commitment to the sales team, which invariably gives up after a while.

The result – everyone is a loser!

And this is one prime reason that for all of Israel’s wonderful tech, so much stays in the country.

As for Israeli management psyche, it becomes a double-edged sword. Great for getting you going, but potentially a mother of company-destroyers. And only when Israeli CEOs resolve this conundrum will the economy’s structure take a major leap forward.

Over the past decade or so, Israeli management has earned a deserved reputation for innovative management. With limited natural resources, the country is known as a world leader for new techs in bio and nanotech, as well as IT and telephony.

Why? Well, the country has had to think quickly in order to survive. It is part of the national pysche.

Consider the origin of the phrase “out of the box thinking”. The idea is to resolve a problem from an unexpected direction. Israelis excel at performing unusual tasks.

To illustrate the point, I recall an anecdote told to me by a former naval officer and now leading market analyst for a successful high tech company near Netanya.

Years ago, he was stationed at a UK naval port on a training mission. They received an evening off to watch TV. 2 sets were available, one to watch the Eurovision Song Contest and one permanently set on a different channel. All the graduates poured into the one room. All?

All, except a few Israelis. They let everyone settle in a crowded room, moved next door, closed the door, and promptly switched the TV station to…the Euro contest.

Some minutes later in walked one of the senior members of staff. Initially worried that they had blotted their books, they were soon reassured. He burst out laughing, and I quote: “No wonder you guys always win your wars.”

So why does Israel have a lot of successful start ups? Because in order to succeed, you need to bulldoze your way through or around the numerous and varied obstacles. Israelis possess that capability.

The Israeli Finance Ministry is preparing a rolling budget for a 20 month period. Great – should cut out the usual financial uncertainty that would be expected to accompany the 2010 budget, as it would hit the Kenesset debating tables later this year.

But hang on, so what are the brave new measures of this new government?

The press has received leaks re the upping of tax on mobile phones given to employees. Wow! Tourists may be required to pay VAT on hotel bills. Staggering! Increased taxes on petrol. Clearly a sop to the green vote on the backs of the poor.

As for structural changes, well, public housing may be sold off through enhanced use of the financial sector. Again, not exactly earth shattering stuff. And so on.

Bibi Netanyahu has been in office for 2 months. Consider his experience. He is a former Finance Minister and former Prime Minister. And this is all he can come up with?

No strategy. Just a set of measures cobbled together. Vague mutterings of tax cuts delayed to 2010. No help for abandoned rail projects. No kick-start measures for SMEs, still coping with the awful paperwork and credit demands of local banks.

Compare that to the efforts of the Bank of Israel, which is demanding that Israeli banks conduct their affairs with far greater transparency and less recklessness. For example, whatever the outcome over the board of Bank Hapoalim, the country’s largest bank, the industry knows that the rules have been changed for the future. 

And the stock market has responded positively following the BOI’s efforts.

So, why do I write about Bibi and not his Finance Minister? Because the minister is a novice. In this week’s round of discussions with cabinet members over budget cuts, the individuals are being invited to the PM’s office. The Finance Minister is not even expected to be present!

It is too early to give a first term report or hand out marks. But on his performance to date, Bibi is merely dabbling with the economy. His spin has not covered that up. The economy demands more. The people deserve better.

Rainfall in the Middle East has always been an issue. This year, the winter rains in the region have been around 20-25% below average, and that average itself has been in constant retreat for some years.

So when the World Bank issues a report stating that  “Israel extracts 50% more water from the aquifers it shares with the Palestinian authority than it is authorised to do so”, ears prick up.

Double back to a detailed report from the office of the Israeli Water Commissioner. It carefully details the obligations of all sides under the 1993 Oslo Accords, and who has fulfilled what. In brief, Israel has gone way beyond the letter and spirit of the agreements in helping the Palestinians.

It is the Palestinians, who have yet to drill or to operate half the required wells in the Eastern Aquifer. And in the Northern District, they have sunk over 250 illegal wells.

But here’s the killer fact. Over 60% of Palestinian sewage is deliberately not treated. Its run off contaminates into the already precious reserves of water, rivers or lakes.

An internet search will show how loads of NGOs and other pressure groups have sunk tons of resources, research, man-hours, money into deligitimising Israel’s use of water. I personally have had correspondence with such activists over the years. If all that investment had been turned away from hate and ploughed into coexistence, much of the Palestinian water shortage could have been resolved.

How so?

Take Cequesta, a small Israeli company, based just outside Jerusalem. Using environmentally friendly tech, it recycles water from industrial or other use. The systems are not expensive, support the environment and provide a clear solution to populations with water shortages.

Whether it be Cequesta or other solutions, the Palestininas have much to gain from cooperating with the Israelis. They only people to lose out will be those determined to see Israel suffer, whatever the cost to truth.

As I was blogging yesterday about Israel’s economic status, Professor Stanley Fisher, Governor of the Bank of Israel, was presenting his annual report to the country.

With no small irony, the TV  cameras captured the new Finance Minister thanking Fisher for his efforts and then promptly forgetting the book on the table. Freudian slip, if ever there was one!

Much of the press has slammed Fisher. In another irony, nobody is interested in what happened in 2008. Everybody is focusing on the corrected and increasingly pessimistic predictions for 2009 and 2010. For the BOI, growth will recede by 1.5% and then rise by only 1% respectively. Allowing for population changes, this is a double whammy.

A headline in Yediot Ahronot, Israel’s largest daily newspaper explains why people are confused. Fisher talks with quiet optimism, but his stats are not looking good. He is now playing down Netanyahu’s call for lower taxes. Seasonal sales remain cool. Fisher is warning that there is more bad news to come before the upswing.

But I disagree with the critics.

The global recession is unprecedented in scope and form for at least 2 generations. Thus, any response cannot rely on standard formulas, usual policies, or spin. And that is what Fisher is saying today.

In fact, if I recall a briefing of his back in July 08 to a UK trade delegation, and before the credit squeeze really set in, Fisher was saying the same thing thing.

Any measures must be considered, now more than ever. Tax cuts to please politicians will not help the populace as a whole. calculated policies are the order of the day. Stay cool, endure some more nasty pain, and the economy could well already be seeing the first early stages of recovery.

The fact is that neither journalists nor politicians have a better solution to the crucial issues. Fisher’s opponents have chosen the easy path of being critical without providing an alternative.

They would be better off demanding that the Finance Ministry finally implements a package of measures to encourage small and medium sized businesses. That will clearly boost long-term and sustained growth.

Confused? For the moment it is Fisher who has the explanations. Stay tuned to him.

I have long argued that Israel will survive this terrible recession better than others, and possibly come through even stronger.

The jury will remain out for some months to come. However, when the local stock market rises around 24% since the beginning of March, it is time to take stock.

First, in comparison to global equity prices, the Tel Aviv Exchange is on par. Good start. And we know that current prices often reflect future expectations and known prospects.

Further, like counterparts around the world, Israel’s leading bankers have been muttering that “maybe” there are “signs” that “possibly” we are somewhere around the bottom of the trough. OK, so they would not place their fat salaries on an open table if there was not some basis for that.

Evidently, there are still hard times ahead. Sales of cars and household appliances have yet to pick up. Traditional industries have still threatening lay offs due to lack of credit.

I have identified 3 indicators, which together can form a solid base for hope.

Since the beginning of the year, the shekel has lost almost 10% of its value against leading currencies. Israel is an export driven economy. So this stat convert towards higher corporate revenues, and thus investment and employment.

There are some indications that high tech is beginning to recruit again. Just as significant, when you consider what happened to AIG, Udi Klein, the head of the insurance agent’s assoc in Israel, believes that the industry will be short of 1,000 workers over the coming year.

And of course, there have been at least 2 significant discoveries of commercial gas in the past few weeks. The revenues are liable to have a major benefit on the economy and its long-term health.

Were to now? The Finance Ministry. Due to electoral consideration, Israel has lacked macro economic leadership for too long. It is time for the civil servants and politicians to come up and implement strategic and structural policies that will make a difference.

I am increasingly asked why people want to boycott Israel.

Ignoring outright anti-semites, what makes somebody deliberately want to isolate the sole proclaimed democracy in the Middle East? So I invite you to take a few minutes and join me in analysing the background and to come up with a solid intellectual argument.

Background:

Briefly, Arab countries have been demanding a boycott of Israel, even prior to its creation in 1948, at least 19 years before the issue of the West Bank cropped up. And this demand includes a wish to force non-Arab countries to comply with sanctions against Israel.

Skipping forward to the current decade, left-wing activists have taken the lead in calling for a boycott, primarily in Britain.

1)      Trades Unions have repeatedly called for universities not to employ Israeli academics, specifically if they do not comply with a set political point of view.

2)      NGOs have encouraged the British government to demand from retailers that all goods manufactured in Palestinian territories are clearly labeled, way beyond what the EU has agreed with Israel. (The government has reverted to the spin of saying it is responding to consumer pressure, although that abstract has never been proven).

3)      The influential Cooperative Movement in the UK, which sponsors several MPs, is under increasing pressure to boycott Israeli goods.

4)      Where the UK leads, Canada follows. There is a growing movement to launch an academic boycott and stop the import of Israeli wines.

5)      A few Australian professors have also felt a need to climb on to the bandwagon.

6)      In America, Motorola (Israel) sales have been plagued by Palestinian campaigners.

7)      You can search utube for films of how campaigners violently tear Israeli goods of the shelves of French supermarkets or terrorise vendors of Israeli products in UK shopping malls.

8)      The Dutch Labour Party is demanding that Israel talks to Hamas or face sanctions.

So Why Boycott:

Let’s look at 4 possible reasons.

1)      To promote human rights.

Well in that case, there would be calls to boycott 50% of the countries in the world, yes? Type the word “boycott” into google. Around 95 out of the first 100 entries refer to Israel – note “Israel” and not just a call to boycott goods made in the Palestinian territories alone.

It can be assumed that most of these activists are content to accept the repression in Zimbabwe, the slaughter of Christians in Sudan, the racism of Venezuela, or even the totalitarianism of several Islamic regimes including Hamas. For example, the Dutch Labour Party has made no equivalent demand on any Arab party in the conflict.

2)      To help Palestinians.

Israel’s trade union organization, the Histadrut, has a long and strong tradition of working with minority sectors, including Palestinians. They have estimated that a boycott of Israeli products manufactured in Palestinian territories will immediately affect approx 25,000 Palestinian workers.

·         This figure does not include dependants and family member, ensuring that the figure rises towards 150,000.

·         Behind the stat is the fact that these wages are relatively high for the Palestinian sector.

·         Threatened economic instability will threaten new investment.

·         And a boycott of Israel is likely to hit at those sectors that employ tens of thousands of Palestinians working within the pre-1967 armistice agreements.

 

3)      To stop Israel’s violence towards the Palestinians.

This is certainly a noble objective. However, the narrative ignores that fact that most of Israel’s policy in Gaza or elsewhere is based on response. For example, the military action in Gaza in January 09 followed a refusal by Hamas to renew a ceasefire and after 8,000 rockets had landed in Israel over 8 years.

Sanction supporters might have created some credence if they issued a similar demand to boycott Fatah, Hamas and Hizbollah for their violence against Israeli and local civilians. But that balance is consistently lacking in all the arguments.

4)      To help peace

Again highly praiseworthy: But we know that trade between nations and peoples helps to foster understanding and progress. A boycott seals off those very opportunities for all sides.

Boycott’s Raison d’Etre:

So, once you tear away the spin of all these excuses, what are you left with? I looked at the website of Palestine Solidarity Campaign (PSC). The senior team reads like a “who’s who” of participants of trendy causes since the early 1960s. With a couple of exceptions, I would not associate any of them with being anti-semitic. There are even some non-practicising Jews.

BUT, if you compare the language of the website, it reads strikingly similar to that of the Arab League of the 1940s. Then, these people called for: –

 “Jewish products and manufactured goods shall be considered undesirable..” thus declared the Arab League Council on December 2, 1945. All Arab “institutions, organizations, merchants, commission agents and individuals” were called upon “to refuse to deal in, distribute, or consume Zionist products or manufactured goods.”

 

And the difference with today’s cries against Israel? Very little, as PSC site describes. It is the same venomous hatred as 60+ years ago, except that the spin today is more subtle and comes from politically acceptable Western celebs.

History will judge any future boycott as a triumph of evil; a deliberately racist tool, based on a combination of misinformation, phobias and enmity.

Today, Monday, the Israeli government posted two seemingly contradictory pieces of monetary news.

On the positive side, foreign currency reserves have passed the US$44 billion mark, a target long picked out by the Bank of Israel. Part of the latest jump resulted from an oversubscribed bond issue in Luxembourg, again another vote of confidence from overseas institutions in the Israeli financial markets.

Now switch over to government spending. Ouch! 

As in many countries, tax revenues are down and lower than initially predicted. The shortfall for 2009 could run close to 5% of GDP. As for expenditure, March was particularly bad. Large debt repayments became due and new unemployment expenditures have begun to kick in. 

What next? Today’s newspapers are full of leaks about forthcoming budgetary cuts, although many – eg reducing holidays – look like accounting fixes. The ship is not sinking, but the captain will need a firm and experienced set of hands to guide it through.

Last week, Yuval Steinitz was appointed as Finance Minister in Israel’s new cabinet. If the tenure of many of his predecessors is an indication, he is liable to hold the post for less than 2 years.

What he can achieve in such a small period of time? Perhaps it is more relevant to ask what are his qualifications that will endear him to the financial markets, other than being a long-time Bibi Netanyahu groupie.

The political views of Steinitz have moved to the right of the diplomatic map. He is a renowned expert in philosophy. He is savvy in political manipulations and has chaired committees in the Kenesset. And his familiarity with economics may not take him past a 101 beginners course.

What does this amount to?

In my view, this background is a great platform for success. It shows that Steinitz comes in with few preconceived theorems. He has the ability to listen and then to act. He understands how to operate the coalition politics of the legislature.

It is to be hoped that Steinitz will surround himself with capable advisers, and who are trusted by the wider capital markets. This rules out “jobs for the boys”, because the markets know how to belt such characters.

A colleague of mine has met Steinitz and gave him the thumbs up. And I recall that three of the most successful finance ministers over the past 25 years were also economic dumbskulls. Yet all of them – Peres, Nissim and Bar-On came through with high marks, each using similar skills outlined above.

Netanyahu has made it clear that he will be keeping a close watch on the finance portfolio. He has deep experience in that position. Because of him, growth regularly topped 4% per annum.

But this is also my concern. Israel’s economic problems in 2009 are not the same as when Netanyahu began at the ministry nearly 8 years previously. The approach must be different. Specifically, Steinitz cannot afford to give in to pressure groups like the Histadrut as Netanyahu used to do or to the banking interests.

Steinitz has an opportunity to lead Israel’s finances to a strong future. He will need to use his own talents to ensure this is achieved.

A recent conversation with an investment banker from the UK was revealing.  

He compared Israeli and British reactions to the global recession. Yes, both economies have taken a hit and G20 announcements will not change much overnight. However, while the financiers in London walk around with their heads looking down, in Jerusalem and in Tel Aviv you find continued verve and dynamism.

So as Obama, Brown and co parade around London, announcing the rebirth of Keynsian economics, I want to share with you some info on just 3 of the many fascinating Israeli companies I have spoken with this winter.

Take Leviathan. Set up by serial entrepreneur Daniel Farb, the company has a patented method to control wind direction around their turbines. This allows their customers to generate about 30% more wind energy than known competitors. As the recession has blown in, Leviathan’s sales have picked up.

Cognisafe lead us into the world of on-line gambling. The company is the first to admit that this is not everybody’s preferred area of activity, it is growing rapidly in popularity and needs protection against cheats.

This is where Cognisafe applies its unique software. It can identify threats, profile them and deliver suggestions for the operation managers. Thus, although hundreds of thousands of players may be present at any one moment, the game remains safe for all. The first customers are in the door, and there are encouraging signs from the British market.

The Optimum Group have taken production manuals to a new level. They convert bulky and often incompressible manuals to focused on-line procedures. The directives of the line managers become readily understood by the training staff, raising output and reducing time flows. They have a Fortune 500 list of Israeli clients, with a heavy focus on the sensitive defense sector. 

For these firms and many others, the recession presents opportunities rather than disasters. You will be advised to watch their continued development over the next few years, as they enter the world stage.

British Midland is one of the largest airlines in the world. This  time last year, it finally got round to operating a daily flight to Tel Aviv airport.

The past few months have not been kind to the travel industry. A commercial recession has seen less business people hoping on flights. Tourism to Israel is down around 50% by some calculations.

However, 2 days ago, British Midland made a positive statement and bucked the trend. They now have 2 daily flights in both directions, Heathrow – Tel Aviv. Their chief executive, Mr Nigel Turner, personally turned up to launch the event at a gala cocktail hosted by the British ambassador in Israel.

For the record, I can testify that the event was a tremendous success, plenty of networking going on, people looking for opportunities to promote trade between the two countries.

Let us hope that the new Israeli minister for transport continues to open up Israel’s skies, as promised at the ceremony. this can only be better for the customers and help to further bilateral ties around the world.

 A few days ago, the Israeli treasury in Jerusalem announced that it had issued a debt package in the USA worth US$1.5 billion at 5.2%. Ever since, it is a topic that keeps coming up in discussions, and with no small amount of pride.

How did Israel succeed? At a time when Gordon Brown and other world leaders doggy paddle from one piece of bad economic news to another, it is worth taking a few moments to see what it is happening with finances of the Holy Land.

Yesterday in Jerusalem, I heard Prime Minister designate, Netanyahu, state that he thinks “we can outperform the global economy”. Fighting words, and as Finance Minister some years ago he did launch the country on a path of sustained growth of 5% annually for 5-6 years.

But it needs more than bold character.

You ask senior economists like Barry Topf, head of the Market Operations dept at the Bank of Israel. He notes how Israel has a real opportunity to come out of the recession in good shape. Strong, positive fundamentals + a solid financial position + excellent micro factors like entrepreneurial skills – Israel possesses those skill-sets, and when combined together they point to a positive course.

As Topf noted in a presentation, Israel is the only country in the EMEA region which does not have a current account deficit. That is a significant and positive stat that excites analysts!

A few days ago, the Bank of Israel released its summary of Israel’s International Investment position for the end of 2008. For the first time in a decade, Israel assets abroad now exceed liabilities, and the surplus approaches the US$ 7 billion mark.

No wonder there is a confidence in the capital markets to lend Israel money. And it is no surprise that for all the rising unemployment and political uncertainty in the country, there is genuine ground for cautious optimism.

The STEP Conference in Jerusalem looked at the opportunities open to the Palestinian and Israeli economies.

So what’s so special? Bibi Netanyahu was very keen to give the opening address. So I made sure that I listened very carefully. the following are direct quotes.

“The economic track is a compliment – not a substitute – for peace negotiations.”

He is looking for “rapid development of the Palestinian economy”.

“There is an important future for the Palestinian-Israeli economic relationship”

“I urge you to invest in the Palestinian economy”

Like him or not, this sounds like a man looking for a better road to peace, just as Obama is seeking new solutions to his problems. Maybe it is time for the new American regime to reassess Israel’s incoming Prime Minister.

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