When economists around the world started to accept the fact about a year ago that global inflation was staging a ‘recovery’, the Bank of Israel tried to convince us that it ‘would not hit the Holy Land’.

Choose your excuse. We had a relatively strong economy. A strong shekel would protect us. A high-tech economy will not suffer too much. Aha! (See my blogs at the time.)

Today, the Bank of Israel has raised its lending rate by a relatively massive 0.5% to 1.25%. This is the third hike in four months, and should not be considered the last. “One-year inflation expectations are above the upper bound of the target range.”

There are some silver linings.

  • Compared to other major economies, inflation at 4.1% is still relatively low.
  • Inflationary expectations, as represented by movements in the capital markets, remain stable rather than aggressive.
  • Unemployment is still under 4%.
  • And the Treasury has much much extra money to dish out. (Useful before an election?)

Where to next? It is difficult to say. Wage inflation due to a tight labour market and a weakening shekel may only further stoke inflation. Strikes playing on the election factor (scheduled for 1st November) may also exacerbate uncertainty. And the price rises in Israel’s housing sector shows no sign of slacking off – over 15% in the past 12 months.

Economic growth in 2022 has been predicted at 5.0%, slightly down on original forecasts. The current estimate for 2023 is 3.5%.

Will any of this impact on how most Israelis will vote? Unlikely. Economics is rarely in the key factor on such decision making in the Holy Land.

The past week has seen the Israeli public treated to a spectacle of the absurd and the even more absurd. Even though, the main groupings had agreed to when and how the Kenesset would be dissolved, every hour seemed to close with the emergence of another snag.

In the end, we have learnt that:

  • Israel’s election will take place on 1st November, over 120 days away.
  • The parties could not find a way to approve key legislation, which everyone agrees is necessary.
  • The new metro system is Tel Aviv will be further delayed – a big bonus for the pollution seekers and lovers of traffic jams.
  • A tagging system for violent husbands has been postponed. Well, few party leaders are women.
  • A visa procedure to enter the USA has been put on hold, even though the American ambassador almost begged the politicians to allow it. Politicians probably don’t need visas.

And to round it all off, the outgoing Prime Minister, Naphtali Bennett, will not be standing in November. In fact, due to a complex political arrangement negotiated last summer, Bennett has already been replaced by Yair Lapid of the Yesh Atid (There is a Future) Party.

Who will win?

The country is divided in two. Are you prepared to allow Benjamin Netanyahu back in or do you want to support someone (anyone?) who will never form a coalition with him? The ex-PM is still facing 3 sets of charges in a long drawn out court battle.

Are you a betting person? The polls still reveal another hung Parliament, with Netanyahu in the lead by a neck., so to speak

I am conducting an official poll of my own, speaking to as many people as I dare. Everyone says the same thing – that they are disgusted by what is going on. After all in the week, when petrol prices have gone up again and the cost of electricity will around 10%, the funding of parties by the taxpayer will go up by about 12%.

But for all the despair, everyone is also saying that they will not be changing their vote from last time!

This leads me to wonder. Clearly, the messaging of the each of the parties will have to be very precise to get to the person who may change their mind or who may now actually decide to vote rather than to abstain.

I also wonder if there is a ‘post-corona’ effect. Who returned to Israel during the pandemic, but did not vote last time? Conversely, is there an opposite trend, as international travel is back on the agenda?

I suspect that this year more than ever, the successful party will be the one that finds a slogan that overcomes apathy, and that disgust.

Sometime towards the end of October 2022, Israelis will go to the polls for the 5th time in 3 and a bit years.

It is a pretty stupid way to prove that you are the only democracy in the Middle East.

In the 4 previous elections, Netanyahu was unable to form a stable government. He ended up making enough enemies of previous friends on the right of his party. While never a homogenous group, the various factions in addition to some left wing parties managed to hand out enough sticky plaster and stay together for a fraction over a year.

Last week, that coalition collapsed. Unless, there is no last minute surprise – and this is the land of miracles – the voters will have their say again. The pundits are – would you believe it – currently predicting the same result!

For those new to Israeli politics, let me explain two core fundamentals to understanding this game.

  1. Since the founding of the state in 1948, all governments have been coalitions. How complex is that? This outgoing team has about 36 ministers, while the Kenesset has 120 members.
  2. Most elections in democracies are determined by how people feel. That is often a reflection of the perceived position of the how much money you have in your pocket. The economy is rarely an important electoral issue in Israel.

You would have thought that political instability is bad for the economy. Not in Israel, at least not for now. The outstanding success of the tech sector, combined with the riches from gas revenues and the taxes from the property sector have all combined to keep the finances stable. Despite corona, Israel’s debt ratio continues to fall rapidly.

It is true that the Israeli economy contracted further than had been initially forecast in early 2022, at close to 2% annually. However, inflation remains relatively modest despite higher energy prices. Unemployment remains at under 4%. And, what counts is how Israelis will be feeling towards the Autumn as opposed to today. That is a relatively long time off.

The politicians know this. For example, the opposition parties, led by Netanyahu’s Likud party, have spent the past 4 months blocking a move to give financial compensation the self-employed. This is one key sector of the economy still suffering from the impact of corona. The logic is that the delays will help to disrupt the functioning of the government and thus help in its downfall.

They were right. And the self employed and their families continue to suffer.

What happens next?

First the Kenesset needs to confirm finally that it is dissolving itself. As you can tell from the above, few gambits are certain just now.

The OECD expects Israel to pull in growth rates of 4.8% and 3.4% for 2022 and 2023. That is about 10% above the average for the rest of the group, and thus surely a sign of competence. Even better, this forecast is in line with Fitch’s belief that the underlying factors of the local economy are stable, despite Ukraine et al.

So where’s the proverbial “but”?

Since its foundation in 1948, only briefly has Israel been governed by a party with a majority in the Kenesset (Parliament). And just when you think that the coalition political back-stabbing could not reach an even lower point, along comes a new crisis.

Certainly, June 2022 resembles such a watershed. The current government has lost its majority in the Kenesset. Yet the opposition, led by Netanyahu, cannot replace it. New elections are not a certainty. Where to next? I don’t know.

But what is certain is that financial markets do not like uncertainty! And Israel is heading right slap into a mess.

Analysts have already started to predict a slowdown – higher interest rates, established overseas markets closing their doors, higher energy prices, and more. Just as worrying is that in the past, the slack has been taken up by the hightech sector. However, for the first time in over two decades, the Israeli tech sectors are showing signs of tiredness.

Add in a lack of political direction from the centre, and the concern levels are beginning to mount. Israel, an economic powerhouse, is in danger of losing is status of ‘being all right despite everything’.

No – it is not all doom and gloom.

  • Israel is signing significant new trade agreements, particularly with Arab States.
  • Unemployment remains low at 3.4%, and the state budget has not been so balanced since the global credit crunch of 2008.
  • Wierdest of all: The EU is looking to Israel for helping in resolving its gas shortage due to the Ukraine war. Compare that line to the news of the 1970s and the oil embargos! The upshot will be a very healthy bonus for the Ministry of Finance in Jerusalem.

The political instability will not be resolved immediately. If there are to be elections, they may not be held for months. If a new coalition is formed, it is very likely to face similar challenges to the current incumbents.

And that leads Israelis fighting for themselves, rather than be guided by politicians, who are currently acting like selfish children.

If you judge by the headlines alone, Israel’s economy seems under pressure for the first time in almost two decades.

  • Inflation on the move – a monthly climb of 0.8% in April
  • Strikes looming in key parts of the public sector.
  • House prices rising by 16% annually, as of the end of April.
  • The GDP shrunk in the first quarter of 2022.
  • Super-Unicorn “Wix” continues to post loses.

All gloom?

Not really. Yes – politically, any opposition party would seize on this pile of ammunition and pound their foes. However, as with the government, Israel’s opposition is as united as the United Nations itself (sic).

The truth is that for now, the fundamentals are strong. For example:

  1. Due to some unusual one-off statistical reporting, the GDP was not expected to reveal strong findings this time round.
  2. Israel is discovering additional large gas supplies, just at a time when Europe needs to replace its Russian resources.
  3. Israeli high-tech continues to find new markets, now accounting for over 54% of all of its exports.
  4. Dare I say it, but Israel’s defense manufacturers are also no doubt quietly benefitting from the fall out from Russia’s expansionist dreams.

If you want some anecdotal evidence, just consider my own work. I have seen a handful of clients this month alone who have approached me as a business mentor, looking to open up in the Jerusalem area.

When the “dot.com” bubble burst at the turn of the century, the Israeli economy took a hit. Since then, neither the credit crunch of 2008 nor wars with Hamas and the Hizbollah nor the pandemic have succeeded in halting the juggernaut of the start-up nations’ economy.

For now at least, Israel’s gloomy economic news may require some careful analysis but it has yet to demand a full rethink of policy.

An item on an edition of the Financial Times podcast this week indicated that currencies of smaller economies are weakening daily, particularly against the dollar.

There are many reasons for this. They include the relatively sharp rise in interest rates in the USA, who will be hit hardest by the fallout from the Ukrainian mess, and the continuing impact of 2 years of covid. Each country will have its own idiosyncrasies. Meanwhile, let’s have a look at the position of the Israeli shekel.

Overall, despite new domestic political shenanigan’s and the threat of Palestinian violence, the Israeli economy is doing well. The Treasury is having a windfall with a whopping budget surplus, unemployment will struggle to go any lower and the world of high-tech bubbles along. And just at the right time for Europe, new gas reserves have been discovered in Israeli territorial waters.

Earlier this week, the financial newspaper “Globes” reported that the Israeli shekel is valued at its lowest for 20 months against the dollar. Again, there are many causes for this – international stock market uncertainties, et al. But let’s not forget that following on from the turmoil at the end of the Trump administration, the shekel was only recently considered the darling of world currencies.

Where next?

In the past, the Bank of Israel has always ensured that its rate of interest remained competitive when looking over its shoulder to what the Fed does. That difference looks as if it might be partially eroded in the near future. That implies that the shekel has further to decline.

A client of mine has to create a new pricing strategy for exports around the globe, looking at setting prices for up to a year ahead. As his business mentor, what did I think?

Given the various geopolitical uncertainties that look as if they will linger and impact for months to come (at least) and given the political uncertainty in Israel, I said that he had two options. Either add in a large safety factor and totally overcharge from the getgo. Alternatively, he should refuse to commit to prices beyond the next three months.

Those running the economy in Jerusalem may have some reserves compared to their counterparts in the OECD, but that extra rope is still limited. Tricky times ahead.

Look at the core stats! Avigdor Lieberman, Israel’s Minister of Finance, could not ask for a rosier picture:

All good, no? So why my hint of pessimism?

The Israeli Parliament is about to reconvene after the Spring break. And the government looks as if it is tottering. It had a majority of 1 – in a 120 forum. That has been lost. The season of last minute, behind the scenes, dirty dealing is upon us.

And if all financial markets hate one thing, it is instability.

This current coalition government has lasted about a year. Its predecessors under Netanyahu’s direction dragged on for two years without a budget and no clear direction. Yet whether you approve of them or not, the current team has:

  • Passed one budget and the planning of the next one is almost complete.
  • Started to tackle the bureaucracy, which costs small businesses so much time and money.
  • Reformed the mobile phone market for the ultra-orthodox sector.

If political instability erupts tomorrow, the Israeli economy will not crumble. The hightech sector reveals no signs of a slowdown, although there are fewer vacancies than a year ago. As Jon Medved, CEO of Our Crowd writes:

In Israel, where VC investment jumped by 150% from a then-record $10 billion in 2020 to $25 billion in 2021, startups attracted $5.6 billion in Q1 2022 – indicating an annual rate of approximately $22 billion, slightly below the previous year.

(13) Good news: Our world is flat | LinkedIn

However, what is different about May 2022 compared to the Netanyahu period is that the world is today faced by complex financial uncertainty. After two years of covid, economies are struggling to pick up. And yet primarily because of the Ukraine war, inflation is on the move. By how much can central banks rush to raise rates of interest without choking economies even further?

Such decisions require coordination between the senior bankers and those politicians and civil servants running the treasury in Jerusalem. If the latter are caught up with intrigues and negotiations to save their jobs, that smooth policy direction will not take place. Ouch!

The most important thing is certainty, for all players, in both the private and public sectors. It is clear that the economy wants certainty and a planning horizon. When there’s uncertainty, it’s damaging. Another round of elections, if it means a delay in passing the next budget, certainly does not help day to day management and will be harmful to economic reforms and continued investments that we think the economy needs. It is harmful both in the short term and to the ability to close gaps in the long term.

Bank of Israel’s governor, Amir Yaron: “If we let inflation climb, mortgage borrowers will be hurt” – Globes

The world is in chaos. Inflation – Ukraine – wheat and chip shortages. And for all that, it seems that everyone still wants a piece of Israel’s surging economy.

Despite covid et al, Israel’s core economy has remained stable over the past two years. The fiscal deficit is now dropping fast. Unemployment is around 4%. And the hightech sector continues to find overseas investors.

All these factors are just what countries and investors looking for in these turbulent times, as they seek out new markets.

China, India and the UAE are in the process of drawing up free trade agreements with the Holy Land.

Britain announced in Parliament this week that it is drafting a wider trader structure with Israel.

Singapore is finally opening an full embassy in Israel.

Lego, that amazing toy company from Scandinavia, will open one of its trade-mark shops in Tel Aviv.

And my favourite news item? Lulu, an Indian supermarket giant, whose HQ is in Abu Dahbi, “is in talks with Israeli government officials at the Ministry of Economy and Industry about the possibility of operating stores in Israel.”

Haters of diversity aside, good news for all parties.

Tonight, a cold wet Saturday night, thousands of Israelis have taken to the streets in support of Ukraine. Earlier today, the Ukrainian President, Zelensky, suggested that Israel could act as a mediator with Russia, because Jerusalem is one of the few democratic capitals with good relations with both sides.

As the Ukraine – Russia conflict has brewed, simmered and then boiled over, Israel has found itself in the most delicate of delicate positions. Here are the six reasons why. (By the way, the order of importance is for you to decide afterwards.)

First: Let’s face it. There are still 200,000 Jews living in the Ukraine with its rich legacy of traditions. This includes Zionist history in Odessa and the important burial grounds in Uman.

Second: It is an open secret that Israel’s air force has spent much of the past few years bombing Iranian positions in Syria. As many of these are located near Russian bases, this effort has been maintained (and continues for now) with the tacit agreement of Moscow.

Third: Ukraine is the largest supplier of wheat to the whole of the Middle East, including Israel. This is the core ingredient in staple foods. Prices of the commodity have already leapt upwards on the world markets.

Fourth: Over the past few months, after 15 years of increasing enmity, Turkey has been strengthening its ties with Jerusalem. Wondered why? The are probably many reasons, but just remember why the ports in Crimea and on the southern coast of the Ukraine have historically been so important for Russian monarchs and rulers. Look where the Black Sea emerges in the south. Ooops!

Fifth: Putin has made much of labelling the Ukrainian government as Nazi. Interesting rhetoric. The mother tongue of President Zelensky is Russian. As for his religion, he was born Jewish!

And finally, it is estimated that 25,000 Ukrainians are employed as subcontractors in Israel’s hightech sector. As the CEO of Lemon.io posted on LinkedIn earlier:

We have 40 employees and 100s of Ukrainian developers in our network.

1/Cash.
• we’re paying 2 months worth of salary in advance to our employees
• developers will get payouts 2х more often
• we’ll try to generate enough cash in case banks fail to provide services

2/ Support.
• if anyone has to or volunteers to protect us against the enemy, we will keep their jobs and pay them full salary while they are at war
• those who stay in regions under attack will keep their jobs and get fully paid
• we will relocate those who feel unsafe

3/ Shelter.
In case of a full-scale war and absence of internet/phone connection, we set up an address in a western city, Lviv, where they can get assistance with accommodations.

So far, a vast range of international sporting events featuring Russia have been cancelled. From my perspective, it is not difficult to understand why.

It’s official. International credit rating agencies love Israel. As the Times of Israel discussed. “Fitch Ratings reaffirmed Israel’s A+ rating with a stable outlook on Wednesday night, noting the country’s strong economic performance and a reduction of the fiscal deficit in 2021.”

What’s going on? The proverbial mob on the streets is complaining of inflation. The self-employed are crying out for help. The price of housing, a main cause of inflation, went through the roof in 2021. So why the smile on the face of the Avigdor Lieberman, the Minister of Finance?

First, in terms of basics, the fiscal deficit is clearly under control, for now. After two years of pumping money into the covid economy, that is very important. And unemployment has fallen back to pre-corona levels.

What has sparked the explosion in optimism this week is the news that the Israeli economy had surged forward by over 8% in 2021, beating all market expectations. This immediately prompted positive swings of over 1% in both the exchange rate and the local stock market.

It is too early to say for sure what prompted the upswing. We can speculate about the ever-buoyant tech sector or the fact that the commercial sector found a way to continue operating despite Omicron. There must also be a concern that this stoking of the economy could only add more drive to the upward trend in prices.

However, I take comfort from two factors. First, after three years, the country has a budget in place and that has created an atmosphere of stability in monetary agencies. Second, the exports of goods and services jumped by over 26% in the last quarter of 2021! That is massive, especially considering the strength of the shekel, and bodes well for the future.

As for the rest of 2022, who knows. This is the Middle East. There is new massive trade in the offering, as ties are expanded with Morocco and Bahrain. For now, things are looking up and even further upwards for the Israeli economy.

Our inflation (in Israel) is 2.8% and still within our target range. Even if we see indices that bring inflation above the range, our expectation is that inflation in the second half of 2022 will fall in the direction of the target range.

Andrew Abir, Deputy Governor of the Bank of Israel

And the experienced economist makes a fair point. Israel’s inflation rate is still relatively low. Look at America, which has just announced the highest set of price hikes in decades. It is now assumed that planned interest hikes will be brought forward. The Europeans are still trying to work out how temporary (or otherwise) this period of inflation is likely to be.

If you ask the average person on the street in Israel – if there is such a creature – they will tell you that the distinguished economist obviously does not do the shopping in his household. The government has just been forced to apply enormous pressure on major food manufacturers and food importers to postpone or delay previously announced price hikes. In addition, Israel’s Minister of Finance has proposed a series of measures to put extra spending money into the pockets of the less financially secure.

The irony of many of these measures is that much of the extra cash will serve to boost the profits of the large retail grocery outlets. That is where it is assumed that much of the money will be spent.

However, few of these measures will dent what is called inflationary expectations. There are two reasons for this. First, however strong the shekel is against many of the major currencies, the prices of imported raw materials are soaring. Similarly, even if the cost of international freight comes down from its peak, it will remain way above pre-corona rates. All the shops are stuffed full of overseas products.

What can the policy makers in Jerusalem do?

There are two fundamentals that determine what happens in the economy. And throughout the country’s history since 1948, few politicians have dared to tackle these vested interests.

First, the price of land and the hidden costs of planning a new building remain high. Why? Because between them, they bring in to the treasury vast amounts of tax revenue. Eventually and inevitably , shop owners pass on these expenses to their customers.

Second, the country is full of protected interests. High import duties on fruit and vegetables protect the farmers, even when products may not be in season. Antiquated union practices ensure that the ports of entry are expensive to run. Importing procedures are complex (bureaucratic) and thus also expensive, prohibiting new entrants into the markets. (It would take me a separate blog for me to explain the procedures to import tinned food into Israel – labels, samples, approvals from at least 3 ministries, and more).

The common denominator of the two factors is the lack of competition. And thus the cost of living in Israel remains high – absolutely and comparatively. And now you know why Israel has some of the greatest differences in wealth between those who have and have not.

But just who can and wants to see that?

According to the Bank of Israel (BOI), inflation in the Holy Land will remain under 2% during 2022. On the back of rising energy costs, supply chain disruptions and geopolitical considerations, much of the rest of the OECD is looking at the 5% mark if not more.

What makes the respected economists in Jerusalem so certain that this challenge will pass by?

The BOI points to wage restraint, stable gas prices domestically and other factors. And yet each factor is not without its critics. For example, just by talking to friends, nobody is going to kid me that wages will keep to a 2% hike. After all, the growing hightech sector is chronically under-staffed.

Another issue that must be called out is the influence and the long arms of the hightech sector.

If we are to remain positive, in the words of “The Economist”:

Today’s tech giants (Apple, Amazon, Alphabet, Meta, Microsoft) are placing bets on the technologies of the future…..The frontiers on which big tech is most focused seem to be the metaverse, self-driving cars and health care. About a tenth of the five companies’ acquisitions in the past three years have been of firms that specialise in augmented or virtual reality. That spending spree has been led (predictably) by Meta, which made eight of the 13 purchases. 

Guy Scriven: USA Technology Editor

These are the very sectors where Israel has demonstrated areas of excellence. This should ensure that the FDI will remain steady for the foreseeable future, creating work and strengthening the eco systems. Will this demand also stoke up consumer expectations

Alternatively, as Wall Street finally begins to dip, it is the tech sector that is taking the biggest knock (for now). “The Nasdaq Index is down 9.7% from its peak but ………. over the past year half of the 100 Israeli companies traded on Wall Street (not only the new ones) have fallen more than 50% from their peak and only 20% have had single-digit falls.”

Will there be layoffs and thus a relaxation of the anticipated wage inflation? Or will money become tighter, thus causing the price of money to rise – a piece of tech jargon for saying inflation is on the way.

From my perspective, Israel is completely tied to the fortunes of the global economy. Thus despite the talk of officials, the deceleration of the economy because of omikron, the country cannot escape the owes of its major economic partners.

It is going to take more than wishful talking to keep the Israeli economy on track in 2022.

In the left corner, Omicron is spreading rapidly in Israel, trapping tens of thousands of new victims daily. Credit card transactions were dropping off last week, as people were beginning to stay at home again.

In the right corner stands the Bank of Israel. signaling a strong argument for cautious optimism. Contrary to the Fed or the Bank of England, it is refraining from indicating that interest rates will rise soon. In fact, while acknowledging cautiously that Omicron may change things, the Bank of Israel Research Department assessment is that GDP will grow by 5.5 percent in 2022 and by 5 percent in 2023.

Is it just the march of tech that saved the Israeli economy in 2021? Last year, despite the lockdowns et al, the country saw record sales of cars, pumping a records 44 billion shekels (almost US$14 billion) into the treasury. So far, despite everything – including political instability and the ‘regular’ border threats – the government pays its bills, and with a bit to spare.

Not all is plain sailing. Clearly, inflationary pressures are beginning to bite, as reflected by food manufacturers revealing higher prices for early 2022. The labour market is becoming tighter, particular in the hightech sector, driving up salaries. And geo-political factors – such as the slowing of the Chinese economy and Putin’s assertiveness over gas exports – may also come into play somehow.

The start of 2022 is similar to that of 2021 – the economic skies ahead are full of clouds (and for most countries) and their colour remains undetermined for now. 2021 eventuated in 7% economic growth in Israel and record exports. 2022 will see …………. anyone want to guess?

According to Dun & Bradstreet, the Israeli economy grew by 7% during 2021. Only the likes of China and India bettered that.

Does this teach us anything about January onwards?

Well, we know that the government is finally providing some direction, as the planners can finally work according to a targets set in an official budget. And we know that Israeli exports will continue to be boosted by the hightech sector. In fact, for the first time in the country’s history, the service sector (a.k.a. hightech) is more prominent than the value of goods sold overseas.

If we look at the stats, there are 3 positive trends that are likely to continue into next year.

  1. Unemployment is down sharply, and there remain key bottlenecks in many parts of the labour market. For example, it is suggested that there are around 15,000 positions open in the hightech sector.
  2. 2021 was another record year for M&As in Israel. “The number of deals that closed this year rose to 238, the highest total in the past decade and almost double the number of deals in 2020.” Israel remain s a hot place to invest in.
  3. And in a year of yet more lockdowns etc, 2021 saw record new vehicle sales in Israel. Purchase tax earned by the government on new cars in the first 11 months of the year rose 20% from 2020. And there is more to be bought.

Will Omicron halt this progress? Who can assume what will or will not happen on the geopolitical front? Meanwhile, as things stand, the Israeli economy is well set for 2022. Happy new Year to all!

Yesterday, Israel (just about) celebrated International Tea Day.

As this fact relates directly tot he name of the blog, I am breaking my rule and reproducing in full a post written for another site. The link to the original can be found here

“International Tea Day and in Israel”

(But before you continue, ensure you read this with your ‘cuppa’ by your side – assumedly black tea WITH milk!

Tea is an aromatic beverage of great demand in the world market. Tea is a $38.8 billion industry worldwide and in 2020, global consumption of tea amounted to about 6.3 billion kilograms.

Tea is the second most consumed drink in the world, after water. Coffee is third, orange juice and beer follow and soft drinks come in at 6th place (1.7 billion servings of Coca Cola are drunk each day).

Indians, Britons and Chinese drink around 4 times more tea than Israelis. Israelis drink relatively little tea – around 200 cups per person/year. Turks apparently drink the most – 3.16kg of tea per person/per year.

Turkey grows one-fifth of the world’s supply of tea. Tea may have been born in China, but India is the other giant of production.

Types of teas

With so many kinds of tea available, you might be surprised to find out that there are only really five types of tea. Even the most exotic, exciting, or weird infusions are derived from these five basic teas.

  1. Black
  2. Green
  3. White
  4. Oolong
  5. Pu’er

What is a tea and what is a tisane?

Anything else among the many common tea flavors we consume, is a herbal or plant infusion. Amongst connoisseurs and foodies, these are called “tisanes”.

Some of the most popular teas and tisanes

  1. Darjeeling: Derivative of Black Tea with a light, nutty taste and a floral smell
  2. English Breakfast: Has a rich and hearty flavor and is enjoyed with milk and sugar (In Israel you’ll hear this referred to as ‘Tay Angli’)
  3. Matcha: Derivative of Green Tea, which is high in antioxidants and nutrients
  4. Chai: A milky, sugary, and spicy beverage originating from India and now popular in Israel
  5. Earl Grey: Made mostly with Black tea, Earl Grey has smoky, fragrant, and citrus tones
  6. Jasmine: Has a delicate aroma and a refreshing flavor
  7. Chamomile: Is known for its soothing properties
  8. Oolong: Falls between Green and Black Tea and is one of the top five true teas
  9. Yerba Mate: Includes high levels of caffeine and is often used as an alternative to coffee
  10. Rooibos: Originating from the South African Red-Bush tree, is light in flavor, with many health benefits
  11. Pu’er: Has earthy, mellow, and balanced undertones and has become popular over the last few years
  12. Lapsang Souchong: A black tea with a smoky aftertaste
  13. Mint: A favorite in Israel, helps to soothe upset stomachs
  14. Sencha: Most famous in Japan for its bitter taste

Tea in Israel

Wissotzky Tea (Hebrew: תה ויסוצקי‎) is one of the oldest tea companies in the world and is the leading tea distributor in Israel. Founded in 1849 in Moscow it became the largest tea firm in the Russian Empire and by the early 20th century, it was the largest tea manufacturer in the world.

Wissotzky’s sell around 55 different blends of teas and infusions and your can purchase some of their signature blends via their website or enjoy a cuppa at their Tea House in Tel Aviv.

World price of tea

As of November 2021, the world wholesale price of tea was $2.48/kg (or 7.70 NIS/kg). This is a far cry from the retail price. There is between 30g-40g of tea in a 20-tea-bag-box that retails for around 17NIS on Israel’s supermarket shelves which translates to 175NIS/kg.

How to make the perfect cup of tea?

So you think you make the best cup of tea on the planet? How do you do it? Do you use a tea-pot no matter what, or do you make your cuppa in the cup? Do you use loose tea leaves or only tea-bags? Do you care if the tea-bag has a string and a tag, or not? Do you drink your tea with milk or black; with lemon, with sugar or some other way? Does Israeli tea compare to your favourite brand from the old country; Lipton’s, Twining’s, Five Roses, Joko, Yorkshire, PG Tips, Ahmed, Barry’s Irish and others? Do you store your tea in a wooden tea-box, in a tea-tin in a bottle or just in the supermarket package?

As you can see, tea drinking is not as simple as it seems. It’s an art and steeped (no pun intended) in culture and tradition. However you enjoy it, now’s the time for a tea-break, but before you go, please tell us (in the comments section below) what your favourites are – blend and brand and where you’re buying them.

Israel is a small country. 50% of the territory is arid. On at least two of its borders, it suffers from constant violent infiltrations. And its existence is threatened by the nuclear aspirations of Iran.

So why of why is the economy booming? Look at the stats.

This week, it was announced that “Israel’s high-tech sector raised a record $25.4 billion so far in 2021, up 136% over 2020″. That is nothing short of outstanding.

Start-up whizz and commentator, Hillel Fuld, put this number into perspective with a comment on his LinkedIn page:

This year was the first time that the number of Israeli IPOs surpassed the number of exits. Meaning, more companies went public than were acquired. That is a very important metric. It means that we are no longer “Startup Nation”. The aggregate value of Israeli companies traded on Wall Street is $300 billion. Three hundred billion!!

Clearly much of the good news is a result of the bounce back from the depth of the corona period. I suspect that an element can be traced (somehow) to the end for now of political instability that saw four general elections in 24 months, as well as an unwanted rhetoric voiced by some politicians. On all this was achieved at a time when the previously vital tourism industry imploded!

It would be interesting to speculate what would have happened if government had been more involved, passing more laws, interfering in the cause of helping. We will never know of course, but there is a message here for the fiscal and monetary planners sitting at their desks in Jerusalem.

Avigdor Lieberman is not an obvious candidate to be the Finance Minister of Israel. But in an era of small parties and coalition politics, that has been his job for the past six months or so.

He is a former confidant of Netanyahu, who was one of the first of several to abandon the now former PM. Lieberman has been suspected of corruption. Senior parties members have been convicted. He is seen a pragmatic politician of the right, whose accent never hides his Russian origins.

Last month, for the first time in over 3 years, Israel’s Kenesset passed a budget. It had promised huge change. There are some reforms. But the most important issue is that the financial markets can identify with Israel’s attempt at proper governance. Yes, Jerusalem is trying to provide the platform for business leaders to surge ahead. One up to Lieberman.

The opposition leaders are furious. They have nicknamed the minister “liebermaS”. The word ‘mas’ in Hebrew means “taxation’. Cute, I suppose.

But let’s look at the state of the economy in Israel, late 2021, after nearly 2 years of Corona-economics.

  1. The inflationary threat sweeping across most developed countries has yet to impact Israel. This is due to the strength of the shekel. The currency is in favour because despite political instability, Israel’s economy to-date has ridden out corona very well.
  2. The level of unemployment in Israel fell significantly in November. At 5.7%, it is beginning to approach the record lows seen before corona days.
  3. The fiscal debt continues to drop, down by over 50% since the peak of the corona crisis. Somebody seems to be managing the books very well, and thus there is less need to borrow money in the markets.

If there is a black line in the sky, it is something that I have mentioned several times in the past. In a country founded in 1948 on socialist principles, the gap in Israel between haves and have nots keeps widening. This is unacceptable, and possibly unsustainable for the long term. Hopefully, hopefully, Lieberman’s financial planners in Jerusalem will start to address this in 2022.

Israeli tech has led the way in making deserts bloom, chat on our phones, cybersecurity, new foods and so much more.

This week, the Start-Up Nation achieved a new high point.

I am not referring to Defense Minister’s, Benny Gantz, and his trip to Morocco. No matter how it was spun this was all about lucrative sales and shoring up the anti-Iran rhetoric.

OurCrowd, one of the most successful VCs on the planet, based in little quaint Jerusalem, has opened an office in Abu Dhabi.

Permit me to quote the CEO of OurCrowd, Jon Medved:

This historic development, a fruit of the Abraham Accords, will not only allow OurCrowd to raise funds in the UAE, but also promote local Emirati and regional startups to our 160,000 global investors and drive international investments into the UAE’s dynamic startup ecosystem. This is a major step toward developing OurCrowd’s business in the UAE and demonstrates our long-term commitment to the Gulf region. 12 OurCrowd companies are already active in the UAE, with many more expected to follow, and we have just announced our first investment into a UAE-based fund.

Last night, I was eating supper with some close friends, who were describing their visit to the Gulf States. It is safer to walk around openly with a kippah (skullcap) in these deeply Muslim countries than in many parts of Europe or even the USA.

You can watch Medved’s interview on CNBC here. You can watch this space to see how Israel continues to make a positive impact on the lives of billions and keeps looking for new opportunities to do so.

It is about 18 months since a 27 year old religious studies student gained control of El Al, the primary airline for Israelis and many Jews around the globe.

Blame corona or poor financial planning or government interference, but in November 2021 the company is still dependent on tens of millions of dollars in additional taxpayers money to keep afloat. The scenario is not promising. Could it have been better?

Choosing a niche market is never easy for any company. El Al is expected to serve all, whilst facing security challenges (expenses) that do not apply to 90% of its competitors. However, others have succeeded in this difficult market.

flydubai first flew to Tel Aviv in November 2020, becoming the initial airline to operate commercial flights on the route to the Gulf. With 123 rotations planned for December, Tel Aviv will be the joint most served airport on the airline’s route network in the lead up to the Christmas rush. Profits are assumedly being counted up.

On a separate level and whatever future plans El Al is considering, it is generally accepted that Israel needs another international airport and that the country is way behind in the planning stage. One possible option – in Jerusalem – is about to be withheld for good.

Until the year 2000, northern Jerusalem was the site of an international airport. It was originally developed in the 1920s during the British Mandate. The Atarot site boasted flights to many leading destinations around Europe and the Middle East. It was used by Prime Minsters and celebs. The violent Palestinian Intifada put paid to all of that. Today, the runway is a parking lot for buses.

As for tomorrow? Next week, Jerusalem planning committee is set to approve 9,000 new homes in the area. The international community is likely to scream foul play. Either way, El Al, flydubai and others are likely to have to find their route to profitability along an alternative flight path.

Let’s start with a contradiction:

  1. It seems that the Arab countries are no longer prepared to bail out their friends in Gaza and in Ramallah. Donor funding has dropped by over 80% since 2008 to under US$200 million a year.
  2. Albeit from a low base, economic growth in 2021 will hit 6% and that is despite the Gaza rocket shelling during May.

Now, let’s bring in a dichotomy. We talk of “the Palestinian economy” , but this is increasingly one term for two different arenas. The tired and corrupt regime of the elderly President Abbas still nominally controls much of the West Bank. Meanwhile, Hamas rules Gaza through terror and corruption.

Is there another route? Can the Palestinians obtain a higher standard of living, even if this does not meet all of their political aspirations?

The Abraham Accords have shown how trade doors are being wrenched open for Dubai , Bahrain and Abu Dhabi, now that they have actively recognised Israel’s right to exist. And just this week, Israel signed a new cooperation agreement so that Jordan can produce 600 megwatts in renewable energy for Israel. The government in Jerusalem will examine desalinating 200 million cubic meters of water for Jordan.

So the opportunity is clearly there.

Meanwhile? A significant number of Palestinians, particularly in Gaza are dependent on handouts. For example, the UK government announced this week.

In Financial Year 2021/22 the United Kingdom (UK) has provided £11m to United Nations Relief and Works Agency’s (UNRWA) core programme budget to help UNRWA provide basic education to more than 533,000 children a year (half of which are girls), access to health services for 3.5 million Palestinian refugees and social safety net assistance for around 255,000 of the most vulnerable across the region. The UK also provided £3.2m to the UNRWA’s emergency appeal in May 2021 to help provide basic services, such as healthcare and clean water following the Gaza conflict.

James Cleverly – Foreign, Commonwealth and Development Office

Doubts continue to persist if all of the sums reach the intended targets. And this poverty promotes the interests of Hamas and others not interested in a peaceful solution.

Not looking good.

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