Covid-19 has destroyed large parts of most economies in the OECD, much temporarily and some permanently. Most businesses more deeply cursed are SMEs – small and medium enterprises that typically represent 95% of all economic activity.

In the 1930s, Roosevelt introduced the New Deal into the dust bowls of America. A decade later, on a similar basis, the Marshall Plan ignited the economies of Europe after the Second World War.

And in Israel in 2020? This is an economy that has spent much of the past two decades outperforming itself, even after the global credit crisis. And look at the positives of October 2020:

  • Israeli tech companies, which raised a record $8.3 billion in 2019, have already raised over $7.6 billion in the first nine months of 2020….
  • The commercial agreements with the UAE and Bahrain will see vast additional monies enter the domestic markets, which gods and services are sent in the opposite direction.
  • Chevron has chosen to come to Israel, feeding off the new emerging energy industries.

The problem is that this is all top line stuff. It does little to help in the short and medium term the many shops that have fled respective city centres. There are now close to one million people without work, and just 3,000 of the clever ones may be retrained. The evening news reported this work a 30% jump in calls too help the homeless.

To be it bluntly, it will take years to make up this lost ground, nver mind the social aspects.

And what has the central government offered to date? Well, I am no supporter of Prime Minister Netanyahu and his Finance Minister, Katz. However, we are talking about measures that are grounded in a different commercial era.

Billions have been allocated for loans. Never mind the paperwork still involved. This is simply storing up even greater consumer and commercial debt for a latter date. Bad!

Grants are available, if you can prove that your business has suffered a 25% drop in sales. Sounds like a good starting bar, no? But what happens to those operations, where income is always delayed and so cannot register any downturn for a while? Or those who have suffered a 10% fall off, but that is enough to force them to lay off workers? And so I could go on.

This is a one-size-fits-all approach. It has probably been created / cobbled together by civil servants and politicians who have yet to visit the desolate city centres and boarded up shop fronts. Few have ever run a business to know what is needed!

What is needed is clarity of vision, combined with sharp, new and refreshing angles – as per Roosevelt and Marshall. (As I write these words, I was struck by the sad irony that the death was announced of the marvellous reggae singer, Jonny Nash. His biggest hit was …… “I can see clearly now”.)

So rather than just complaining, what can be done? What can I suggest? Here are 5 separate tracks that together offer a very powerful impact.

Reduce the immediate pain:

  • Cut out / slash local rates, including for home businesses.
  • Ditto re national insurance contributions, which are stopping employers from hiring.
  • Reduce the income tax for self employed by 50%.

Give out money:

The Israeli government has belatedly realised that it is paying people to be laid off and then to stay at home.

  • Pay companies to bring back workers for 3 months.
  • Offer a grant to SMEs to pay for a marketing campaign on social media or revamp their website.
  • Pay for free / heavily subsidized business mentoring hours, and pay the mentors properly.
  • Convert part of loans into grants – against deliverables.
  • Training – pay for companies to do it in house. They know what they want better then anyone else.

Reduce the paperwork:

  • The kind of help described above requires public money to be spent. There so many checks and controls involved these days that entrepreneurs give up seeking help. (Maybe I should blog my own case studies).
  • RETHINK! Just say a few additional scams get through (sadly) becasue of weaker controls, what could be the much greater communal benefit?

Rezone empty retail properties

  • If a shop or similar lies empty for more than 6 months, maybe the local authority can force the landlord to accept a new tenant. (Yes – controversial).
  • Subsidise new businesses that have to pay high rents.
  • Where rows of shops lie empty, issue a compulsory purchase order, offer the owners a compensation rent, allow in on short-term minimal rents retail or service businesses. (Again , controversial).

Incubators

  • If you can have incubators or accelerators for high-tech, can a similar concept not be developed for the retail and service sectors?

A government can rarely tell people what to do. A government CAN create the infrastructure so that people can help themselves.

To date, the Israeli government has failed in this task. You may not like all of my ideas, but they offer a way out of the current mess.

Trust matters in a pandemic—not only trust in the scientific and medical advice the government provides but trust among citizens. Perhaps the single greatest responsibility of leaders in times of a crisis is to inspire such trust.

Dr. Michael Sandel, as cited by Dr. Robert Brooks

In a previous post, I referred to a series of articles on the 1973 Yom Kippur War. For me, the stand out item shared the reflections of two 25-or-so years old students. Miki and Gideon were not heroes in a tank or paratroopers. Their job every night was to supply food and petrol to Israeli troops, along a 15km stretch in the Golan Heights.

They were dodging the fire of both sides. No maps. No GPS. And in the morning, they would rest. Occasionally, they would wonder over to the communications tent to hear the voices, belonging to those who could not be ‘got out’ from the battle field – literally uttering their final words to a helpless wire operator.

As in many of the stories, the soldiers ignored the fear of the moment, but returned home with unforgettable pictures and sounds. Essentially, they had been happy. They remained proud of their country. You did what you had to do, because you could trust your leaders to be honest, even when their judgement was askew. (The various intelligence services shouldered the blame for the mistakes of the war).

Over the past 24 months, Israel has seen:

  • 3 general elections – all inconclusive.
  • 3 indictments issued against the Prime Minister.
  • 2 budgets that have not been prepared. There is hope that the numbers for 2020 will be approved in December – I kid you not!
  • 1,682 Covid-19 related deaths, so far.
  • 2 lockdowns, the second of which is currently in place!

With the hindsight of 72 years, Israel has coped very well with the existential threats. But, last night, Saturday night, as the first part of the Festival of Succot (Tabernacles) came to an end, the country opened up to a new reality.

On the one hand, demonstrations, which had theoretically been severely curtailed by the lockdown, took on a vast new dimension. Instead of thousands located in a couple of positions. Hundreds turned up at hundreds of separate locations. Arguably, the effect of the protest was even more telling in this new incarnation. (I have little compassion for those few idiots who broke the law and fought with the police – MH).

The common theme of the shouting: ‘Bibi go home’. Why? Your party controls the Finance Ministry, when the economy has partially collapsed. You hold the Health Ministry, whose directives lack clarity and political support. And you Mr. Prime Minister have no moral ground to remain in office, when serious charges of corruption hang over your head.

To put that last sentence in another format: Most political analysts directly ascribe the political uncertainty in the country to Bibi’s desire to cling to power. This is not just an issue of ego. By doing so, he is seen by many as trying to ensure that his trial will never commence in January 2021, as he tries to weaken the powers of the judiciary.

Also last night, in some ultra-orthodox neighbourhoods, the police were attacked. Here, the socio-religious-political dynamic is more complex. However, it boils down to a simple component. There are sections of the community that have for decades not been encouraged nor forced to adopt the core cultural fabric of the State of Israel. So why should they start now, even when 40% (and growing) of new corona sufferers are from these very areas?

Uncannily, the wilder protesters from both groupings share a major dynamic. It is the same thought echoed over the dinner table or whatsapp groups or phone calls or any opportunity, when I can communicate with others. To be blunt:

There is a total lack of trust in the Prime Minister – neither as an individual nor in his abilities nor in his immediate circle – to get things done. His political longevity had been derived from slick slogans. Today, Israel needs the actions of a credible leader. Mr. Benjamin Netanyahu is not that person.

Dr. Sandel is correct! No inspiration. No trust.

Back in the early 1970s, Netanyahu was a young soldier in a crack unit. His brother was to give his life at the famous Entebbe Raid in 1976. Impressive and sad. But these historical interludes do not allow his entourage to characterise the demonstrators as anarchists. In effect, they (we) are looking for those values that got the country through the 1973 war.

The Netanyahu family does not provide those values today.

That same war led to the resignation of much of the top echelons of the political establishment. They had got it wrong. They found the guts and wisdom to accept responsibility. By 1977, their party was thrown out of power, rarely to return.

So let me leave you with the story of Geula, seen in the picture below protesting yesterday. I assume that at the age of 91, she would be flattered to be considered as a trouble-maker. Back in 1948, she was a fighter in the Yiftach Unit of the Palmach, as Arab armies attacked the newly declared State of Israel.

Geula – Protesting on 3.10.2020,

During training, she met her husband to be. He came from a family with roots in Austria and who was responsible for the initial building of much of old Tel Aviv. One of Geula’s sons, who I know, has an army record that can probably match that of Netanyahu. And he too is an active protester.

Yesterday was the 3rd October. The picture was shot around 6.00pm. The Yom Kippur war was launched at 2.00pm on 6th October 1973. How has leadership changed in Israel over 47 years?

Bibi: When the Geula’s of this world are prepared to risk their health during a pandemic and take to the streets, it is “cry out” to you! Either you prove to us what is so divine about yourself or you leave the political stage, immediately.

Yesterday was Yom Kippur, the Day of Atonement, a fast day for traditional Jews around the world. Leading up to the event, the leaders of the two main parties in Israel’s government offered apologies of sorts for the way that they have handled the Covid-19 crisis in recent months.

We are taught to accept apologies. Or as one friend quipped, maybe the best test of sincerity is to have these people act as trials for the new vaccines. If they survive, all well and good. If not,…..

I do not hide my displeasure of the performance of the Prime Minister, Netanyahu. He has ensured that the two ministries most concerned with the crisis – Health and Finance – have been retained by his Likud Party. Both have underperformed. to be unnecessarily polite.

It occurred too me during the fast, as one’s mind wonders on an empty stomach, there is a big difference between the Likud ministers and their partners (enemies?) in government from the Kahol Lavan party. Generally, the former are lawyers or politicos who have grown up with being in power for most of the past two decades. The latter are ‘doers’, who have proven credentials of getting things done in society – via the army, social causes, local government, etc.

And when you mention the phrase Yom Kippur in Israel, many automatically recall the war that broke out on that day in 1973. Eventually, Israel was to win on the battlefields but to lose the game of diplomacy. Internally, the country’s political system was turned inside out, forever.

When the war commenced, Dr. Ephraim Hamiel left his prayers in Jerusalem, rushed to his unit and spent the next month attending to the requiremnts of the dead. He still remembers accompanying dozens of bodies back from the war, as they bounced in the command cars, dusty boots bobbing about.

He described in a recent interview how he felt 12 months later, back in Synagogue, praying again during the fast. One of the emotional liturgies asks ‘who will live and who will not; who will have water and who will be met with fire’. It made him think. It forced me to wake up, as I searched for extra purpose in my prayers.

I discussed this later with my wife. These are troubled times, to say the least. Covid-19, a PM in Israel that stays in power despite three indictments, wobbling global stock markets, a trade war between China and America (whose outcome may be dependent on a bitter Presidential election). Did I forget something?

Where and how we can still have a meaningful impact is in our own lives. For many of us, we can still keep ourselves busy (and healthy). In my work, as a business coach and mentor, I have encouraged all my clients to think differently and to move quickly. Crazy politicians can’t touch you for that. They probably can’t even understand this approach.

Which is why you have to wonder. Will Covid-19 will play the same role for the Likud and its status of ‘no change’ as the Yom Kippur war did for its predecessors?

The only question is, why didn’t we do this earlier?

UAE Minister of Economy Abdulla bin Touq al Marri

A few days on from the dramatic pace accords in Washington, and parts of the Israeli government are still trying to reap the benefits of the agreements with UAE and Bahrain, with maybe others to follow. After all, there is precious little else to celebrate.

The list of woes is long, but they start from the fact that the domestic Covid-19 stats look awful and get worse daily. The infection rate is on the rise. 24 hours after the new lockdown (which is not a lockdown) measures were announced, nearly 42,000 unfortunates joined the ranks of the unemployed. Rows of shops in town centres lie disused. Government financial support is full of words, but few understand how to implement the announcements.

There is a theory that the hightech sector will act as a knight in shining armour and save the economy. Yes, money is still being raised. As I walk past the Intel fab in Jerusalem, I can see every day a major piece of building. And also in the Holy City, the JVP Media Quarter was relaunched as ‘Margalit Startup City’, intended that it will grow into a worldwide innovation quarter for startups, multinationals, and investors.

However, I place my hopes on the Gulf States wanting to send their petrodollars to the Holy Land.

My point is as follows. Although it will not be immediate, this is new trade and money. The effects will soon slip into the Israeli economy and assumedly down to the ‘ man on the street’. Something for the central planners to hope for as their own ideas run out of steam in the most pathetic of manners.

I am writing just after Jews around the world have celebrated their New Year, always a time for reflection. To paraphrase a recent demand of me from a client:

You are my business coach and mentor. How will you ensure that I succeed next year? Challenging!

When I probed for a definition of success, the response was fairly grey. And this probably highlights the reason why that particular organisation is struggling for now. Little internal direction. No specific view of what the future should hold.

I am a firm believer of 3 yardsticks. This is usually a combination of:

  • a financial target
  • a focus on the number of new clients sought
  • and possibly the most important – a definition of the type of clientele you want to bring in.

It is this last element that has seen two of my clients change direction and find the courage to reach for some very heavy duty new customers.

So how do business mentors describe success? They cannot brag that their business has grown. That is of small use to a potential client who is understandably only interested in themselves and their own issues. After all, a mentor is often perceived as somebody who sits back, listens wisely, and then moves on without much fuss.

In my case, it is not the words that I use. Nor is it the methodology that I apply. Looking back on 12 months, I can relate to a vast array of different case studies, where the client has reached the ‘finishing line’. For example:

  • I have created international packages, involving separately Hong Kong, Greece, USA and India.
  • Despite Covid-19, I have seen shops open premises in Jerusalem and nearby.
  • I have created strategies for innovative entrepreneurs, ensuring that they introduce their tech to investors with sound business models.
  • I have lent support and drive to numerous new immigrants and members of the ultra-orthodox communities, as thy have opened new companies.

If I had to pick my favourite, I will refer to a young lady, not yet 20 years old, from a minority community. She came to me with an idea and quickly absorbed the principles about pricing, importing, selling techniques, contracts and more. When turned down for a loan due to age and inexperience, we created alternatives.

The company was established two weeks ago. The first clients are lined up. They are expected to generate a high enough profit margin to pay of much of the founder’s investment.

As a closing thought, it is definitely important to measure your success. However, make sure that you can own and feel that difference. And thus when it comes to moving ahead, you will be better able to describe those very achievements to your target audience ……. in order to kick off the next round of sales.

Five minutes ago, I read a post from Rajesh Sharma on LinkedIn.

The blurred picture shows Angela Merkel, looking very haggard. She is returning from a trip to the shops with her husband. Sharma comments:

To lead by example:
Mrs. Angela Merkel, coming back from the market with her husband. She is Chancellor of Germany, one of very strong economy. Yet, Merkel receives no free state service, no housing, no electricity, no gas, no water, no free phone from Germany’s this woman has the same rights and duties as any German citizen. She does her shopping, pays for her groceries, and if she gets a ticket, she pays out of her own pocket. A press reporter once told her: “Remember, I took a picture of you in the same dress ten years ago?” She said to him: “I have a mission to serve the German people, not to be a model!”

Sharma goes on to compare this approach to politicians in India. Sadly, I can make the same comparison to much of the current senior Israeli leadership. Their approach is shameful, an embarrassment to the country, possibly the result of having been in near continuous power for two decades.

Leadership – in politics, in business, in the army – is based on the ability to convince people to go the extra mile.

Earlier this week, Israel’s Prime Minister, Bibi Netanyahu, announced new lockdown measures. These included severe travel restrictions. The following day, general chat, news items, and social media were full of reports how people intended to ignore the clampdown. “What for? Why? What does it help”….were the form of responses.

Bibi also claimed that the economic problems of Israel are far less that other countries. Thus we can be relatively pleased and thus this should by implication motivate the country.

I am a business coach and mentor. Again, the next day, I faced questions from clients wondering why the government does not seem to care nor know how to help. One was in near tears.

  • Religious politicians don’t care so long as the towns with their supporters are not forced into lockdown.
  • The PM is too busy trying to show off the significance of his truly important peace deal with the UAE, and (assumedly) prepare for his trial on three counts of corruption.
  • The treasury budget head doesn’t care any more (or cares too much?) as he has just quit.

Who is around to help the average Israeli citizen cope with the economic mess? Mess? Yup. As of yesterday, Thursday, Israel had the worst corona stat per head in the world. There are still nearly 900,000 unemployed, in a country of 9 million citizens. And the Minister of Finances’ core move so far seems to be his demand for a public sector wage cut.

In a formal statement last night, the PM said:

……, we know that there are still major difficulties. We are constantly discussing additional steps – negative income tax and other things that we are discussing, in order to provide more and more solutions to the citizens of Israel and businesses in Israel. We are not letting up even for a moment.   We do not have one mission, we have two: To see to both health and the economy.

His Finance Minister added:

……………. We are now sitting here in order to analyze and see the economic situation and decide on the necessary steps.   In general, as the Prime Minister said, the August data were good even in relation to the pre-corona situation in most sectors. This is no wonder. We have now provided the Israeli economy, to 4.5 million Israelis who used to fly overseas, with open skies. Today they are with the open ground in Israel; they are here and accelerating activity.

Hmmmm! Reassuring? Sitting around and discussing!

Yesterday, I was on the phone to a lady, whose business has collapsed. She has also been ill. She qualifies for none of the small special financial handouts. She was nearly crying to me, asking why the government is not doing anything.

And sure, we discussed pivoting etc, but it sounded so pathetic.

I do believe the government cares. I also believe that the government is completely out of touch. It has been in power for too long and thus is incapable of changing.

Israel needs – no, demands – a “New Deal”. And a team, based around the ideals of cigar smokers in large villas who create policies based on slogans but not facts, ain’t got what it takes.

(My best wishes to the lady who inspired this blog).

Around 6.00pm on Thursday evening in Israel, the news broke that Trump had convinced Abu Dhabi to sign a peace treaty with Jerusalem. With a slight of hand, Israel’s PM, Benjamin Netanyahu (Bibi) had outflanked both his right-wing opposition and the Palestinians. Ironical, eh!. And his sagging popularity flipped back upwards.

However, for Bibi that was not the main talking point of the week. I am not talking about how he quietly postponed his annexation plans. Nor am I referring to the threat of yet more elections, which he was also forced to take off the table, for now.

The key issue for Bibi was and remains his upcoming trial in January 2021. This is the trial that Bibi said would never need to come about, because there was no evidence. However, the police force and the country’s legal system, both led by his own appointees, have argued that there are no less than three (for now) cases to answer.

So in the same week of this wonderful news about peace, we learnt of three moves by the Netanyahu camp to block his trial. In no order of importance:

  1. His wife, Sara Netanyahu, claimed that she had been the target of verbal violence. Personally, I found her remarks unusual in light of the demeaning comments her husband had thrown at a female celeb in a recent election campaign. And she had little to say about her son’s vitriol over various female journalists.
  2. It came to light that Deputy State Attorney Liat Ben-Ari, who ‘by chance’ happens to be Bibi’s chief prosecutor, will be investigated for possibly illegally renovating an investment property. Funny how this came to light in a media source that is closely identified to the Netanyahu group.
  3. We must not forget the PM’s own bitter speech directed at the Attorney-General. Unprecedented.

I cannot believe that these incidents are not linked. But now add in two pieces of background information. First, the Netanyahu team is complaining that it does not have enough lawyers to manage the case workload, maybe because they are too busy creating alternative spin in the minds of the electorate? Second, they claim not to have the financial resources to mount a full response, even thought the key defendant himself is estimated to have amassed a personal wealth of tens of millions of dollars.

What does this all add up to?

Hopefully, the second wave of corona is almost under control, although another 8 people sadly died over the Sabbath. The economy is contracting by the second, well below the worst depths predicted by the central planners. Terrorists in Gaza are continue to send over incendiary devices in balloons.

I would not accuse the PM of being complacent about any of these issues. But they are not central.

What is pertinent – in fact, what is the only things that matters – is ensuring that his trial does not start in January, by almost any means. The rest of us citizens are worth less than pawns in this personal gam of power-keeping.

Whatever Bibi’s next move, the core motive will feature the January 2021. The Holy Land indeed!

Is there a magic formula to guarantee that when you start a business enterprise, it will be a success?

No! Absolutely not! There a billion factors involved, most of which are not in your control; an unexpected government initiative, a surprising competitor with the same concept, an international credit squeeze, and even a virus emerging from bats in an unknown province in China with an unpronounceable name.

And so the list rumbles on. Moreover, rules that apply to a specific industry may be less relevant to another.

However, none of these issues negate the responsibility that you, the intrepid entrepreneur and executive, should have for seeking to do your level best.

I have helped countless numbers open their business. Time and again, three over-used phrases come up. People use them all the time, but frequently misunderstand their true significance. It is time for me to share this trade secret with a wider audience.

FIRST, before you lay out a single penny, cent or shekel, you need to know where you are going. That means you need a “vision statement”.

Imagine you are the captain of a large ship. You are told to set sail. The vessel leaves port, but then what? Without a target, the captain will not know how much petrol to take on, provisions, crew, etc. And his mighty boat will go around in circles, because it has not been assigned a clear destination.

That will be the same disastrous outcome for your business. To translate a Hebrew colloquium, you will be hitting the accelerator on the full yet going nowhere slowly.

SECOND is the function of a “business model”. Look up this phrase on the internet, you will discover a billion versions to describe this phrase. Allow me to cut through the red tape and deliver a practical explanation.

Whether you have created a product or service, before launching to the market, you need to know who is going to buy it, where, how, when, at what price and why. When you think you know the answers to those questions, validate them.

Proof to yourself that you are not talking goobledeegook! Otherwise, as you formalise your findings in a business plan, the document will be incoherent.

THIRD, and by no means least, there is the little matter of “fixed costs”. Let me immediately clarify that these are expenses that exist almost every day and remain very static in level throughout the year. In other words, these costs hang around, even if you do not sell even one item.

A typical example could be office rental or back office staff. Another example, when it comes to smaller operations, could be the monthly budget of your household. If you cannot cover these items through sales, you are on the wrong track! No room for discussion.

I have spent nearly 15 years as business coach and mentor. It concerns me how often I have seen SMEs trying to ignore this rule, usually ending up dipping heavily and ineffectively into their savings.

If you have read up to here, you may be saying “well, I know all that, but I still don’t seem to get it right. Help!”

What is stopping you both reaching out and then accepting guidance? The answer is not procrastination. That is the symptom. Compare your position to my clients in the year of corona. They have opened businesses, taken operations overseas, secured loans, increased sales.

My work is to act as your guide, coach and mentor. I use my experience as a strategic economist, with an ability to see all sides of an enterprise. I offer you the clarity you desire to make vital decisions on your path to success.

To find out more – to learn how to create a solid vision statement and business model, and then to ensure you get things done – do not hesitate to call me.

Those who know me will tell you that I rarely start my day without a decent cup of tea. My children have labelled it as my daily brain massage.

It’s the ‘cuppa’ that gets me going. And ever since I left England for Israel decades ago, I have always managed to maintain a decent supply of English tea bags. They are rarely sold in the Holy Land and only at the most disturbing of prices.

Corona has interrupted the regular deliveries. There are few international travelers these days to top me up, armed with gifts from Waitrose et al. My favourite brand is Yorkshire Tea, strong without being too bitter, although PG Tips is an excellent second choice. However, we all have our own individual taste buds.

So, a few weeks back, as I could see that I was running down towards the last of my precious stock, I resorted to eBay. The picture above is the result of my efforts.

Immediately, sanity and calm was restored to the household.

To add to my joy, I read this week that an “English Tea” will soon be served again in Jerusalem. That wonderfully exotic and historical hotel, The King David, will offer a “three-tiered tray” of goodies between the hours of 4.00pm and 6.00pm, six days a week. Champagne is an optional extra.

We live in a year, when corona has shaken up all of us. Most politicians have failed in their primary task of providing leadership. It is at times like this when we need to rely on our core resilience, sternly and most nobly sustained by a pot of tea, in Jerusalem. Enjoy!

Ostensibly, the news from Israel this week has been depressing.

  • About 20 more citizens died from corona.
  • The government’s economic policy for saving the economy looks amateurish, if I have to be complimentary.
  • The Prime Minister is seeking new elections, when the country needs leadership not political pranks.
  • Demonstrations and violent counter -demos in response to the actions of the Prime Minister.

The list goes on. It is no wonder that I cancelled the weekend newspapers months ago. It is poignant to note that yesterday was the day that Jews around the world recalled the destruction of the first two Temples. One of the background causes is considered senseless hatred, when communities turn in one each other. Ironic?

This morning, my face brightened up. Just after completing the 6.00am news on the Israeli Army Radio station – it is a 70 year old anomaly that this semi-commercial media outlet is still ostensibly run by the military – the announcer wished the Arab and Druze community “Eid al Hada Mubarak”.

Today is Eid-Al-Hada, the Feast of Sacrifice, for Moslems.

So there is hope! But is this a one-off incident? I invite to open this link https://www.facebook.com/19459912688/videos/750021899147879/

It is amazing how many wonderful things take place in this wonderful Holy Land between different religions, but is so rarely reported! When I look around at these and other similar stories, I note that none involve the government. People are doing it by themselves, for themselves.

It’s now about 4.00pm. One of the main TV stations has a special on how citizens can donate to charities, swamped with extra appeals in this time of need. During the chit-chat, there is a ticker at the bottom of the screen, publicising positions available.

Some cheer at last. Have a good weekend!

The wife of a top Israeli politician posted yesterday that the Prime Minister, Bibi Netanyahu, “could go through an economic holocaust as long as nobody is loved more than he is,”.

A poor use of words in my view, to say the least. However, it came just 24 hours after a leading newspaper, Ha’aretz – a perennial critic of the PM – surmised that Israel’s democracy is faltering as a result of an increasingly direct-rule-of-law approach from the top.

Israel’s corona numbers this week are now worse than those during the initial winter crisis. Bibi has always been seen as the on in charge of all corona issues, if only because the previous Minister of Health was out of his depth. (And it must be remembered that in the coalition negotiations during the Spring months, Bibi insisted on keeping the Health Portfolio for his party.)

So what is really driving Netanyahu, during this time when Israel’s top public health official resigns and its citizens are being asked to consider non-emergency hospitalisations?

I argued during the first phase of Covid-19 that the country’s economic response was pathetic. It featured populist measured, proposed by people who did not how to run businesses. Was I right? The Bank of Israel has just downgraded its growth forecast for 2020 from 4.5% in May to 6%. Of the 10 billion shekels (US$2.85 billion) promised 3 months ago in a country thirsty for liquidity, only 47% has been spent. 20% of loan applications for businesses have been rejected.

Has anything been learnt since?

This week, the Bank of Israel announced monetary measures that propped up the banks, which are already making a fortune out of other people’s debts. For example, tens of thousands of people have been allowed to delay mortgage payments for 3 months. You think that the banks lost money on that one? Think again.

Unemployment had peaked at just over 27%. It slid back down. It is now on the rise again, with meagre measures in place to incentivize employers retain staff. For example, I heard an interview with a CEO of a cosmetics factory south of Tel Aviv. They have burnt through their emergency fund of 4 million shekels, which allowed him to retain all of the 150 employees. He now has to release 40. Not a hint of support from the elected officials.

In contrast, the Hong Kong model for dealing with their economic problems is worth studying. The bottom line is that money has been handed out in grants to commerce and to residents. It may still be a tough economic climate there, but not like in Israel.

Over the past 72 hours, Bibi has led the Israeli government in taking new measures to fight the spread of the virus. This includes not using air conditioners on buses – in the Mediterranean summer. For the record, due to security measures, buses in the West Bank must drive with the windows closed. Again, do the law makers really know what thy are talking about?

But what brought me back to the fear addressed in the comment on the ‘economic holocaust’ was the policy regarding Yeshivot (religious seminaries for men). These are known to be one of the main epicentres for the spread of the virus. Bibi wanted to close them.

Before I continue, take a moment to recall the leader of Jewish communities in China, who in March reported no illness in his following, because people adhered to the strict health warnings. A similar story can be told of a young rabbi in London, who threw people out of a Yeshiva and locked the doors.

In Israel, in July 2020, a key member of Bibi’s coalition, Moshe Gafni threatened to abandon his partner if the Yeshivot were closed. Against his better judgement and the clear advice of the officials at the Ministry of Health, Bibi gave way.

If politics is the art of compromise, let us understand what Mr. Netanyahu’s sterling creativity achieved. If the government had fallen and thus if he had lost his job, he would find it more difficult to delay his trial of corruption on several counts.

How many Yeshiva students and their families will now be infected unnecessarily? How many people will have to delay hospital treatment? How much extra cost will be placed on the health and social services? How how many could……..? Holocaust it is not, but it is utterly repugnant.

June 2020 was another stunning month for Israeli startups, raising US$700m despite covid-19. So what could be wrong with Israel’s economy?

Last week, one of the main TV news stations showed an item, detailing how the middle class in the Holy Land is finally cracking. Many of the frills like extra curricula activities are being eliminated. Housing and flats are being put up for sale.

The response from senior Likud minister, Tzachi Hangbi, a confidant of the Prime Minister?

This nonsense that people have nothing to eat is bullshit. Bullshit. There are a million people who, most of them, until now, have received unemployment payments… There are businesses that were hurt and they’re in serious distress. [But] saying ‘there’s nothing to eat’ is populism.

While the PM has acknowledged that this comment is unfortunate, it does force us to recall his own remarks in mid June that nearly 90% of the Israeli economy is up and running again!

In the words of a senior editor of “Globes“, an independent financial daily:

The intentions of Israel Aerospace Industries, Amdocs, and The Phoenix Holdings to lay off hundreds of employees each has torn away the mask: the economic crisis is not temporary, leave without pay is not a bridging measure. The State of Israel is not rumbling towards the most severe economic crisis in its history; it is already at the height of it. And no-one is taking responsibility. All that surrounds us is chaos and emptiness……The only significant economic decision since the crisis started – to put the country on furlough – was made by the director general of the National Insurance Institute, and not by the policy makers, and even that turned out to be a disaster.

To go to the punchline of that article, it is time for the decision makers to wake up, right now!

Around 20% of the workforce remains unemployed. For example, El Al has furloughed about 7,000 of its workers. This has impacted on thousands of others in ancillary industries. I wonder how these people would calculate “90%”!

The Prime Minister, Mr Binyamin Netanyahu, has promised his country a “6 month program of economic renewal”. This is a man, who for much of the past 25 years has thrived and succeeded on slogans. After all, his original fortune was made as a marketing executive where catchy slogans are a core part of your ammunition. But as for the details….?

As Israel seemingly emerged ‘quite well’ from the first corona wave, Netanyahu concentrated his efforts on his beloved ‘annexation plan’. Whatever may eventually emerge from that, it will not be what he initially declared with pomp and ceremony. Further, it has detracted his attention to something even more core – ensuring his voters can put bread and butter on the table every day.

Israel does not need slogans nor action items hastily thrown together over a couple of weeks.

Israel demands carefully thought out long term radical policies that meet the cruel demands of a totally new financial and economic scenario. As I wrote frequently at the beginning of the corona crisis, most of the current crop of decision makers – politicians and senior civil servants – are totally out of their depth.

This is not a task suited for sales reps.

90 percent of our economy is working again and we continue to move forward.

Thus spoke Prime Minister Netanyahu on 15th June. This amazing statement demands some justification. After all, unemployment which had peaked at 27% is assumed still be north of 20%. Walk around any city centre, and you cannot fail to see the many properties simply abandoned.

International flights are few. In fact, El Al today even grounded its cargo trips. That automatically impacts on tens of thousands of jobs. New mortgages, a reflection of the property market, are described as ‘sluggish‘. Even the accounting giant EY is laying off people.

The newspaper “Ha’aretz“, no friend of the Prime Minister, has called for a rethink. Netanyahu personally is well-positioned. His wealth is valued way above US$50 million. In addition to his healthy monthly salary, last week he was voted a tax break by his allies to the tune of around 1 million shekels.

So what is on the increase?

  • The Tel Aviv Stock Exchange, which had fallen by about a third since the beginning of the Covid-19 crisis, has made up half of those losses.
  • The price of housing is on the move upwards, as there are fewer building starts.
  • Large chains and supermarkets are enjoying a spike in sales, as fewer people are prepared to eat outdoors.

None of this is particularly inspiring. At least, Israeli tech companies have raised over $4.7 billion in the first six months of 2020, close to half the figure for the whole of Covid-19 free 2019.

In previous blogs, I complained how the mandarins of master planners seem to be out of touch with what is happening in the economy. I know of so many good businesses crying out for support, but do not meet the criteria of the ‘professionals’. Is that surprising?

Well some senior decision makers are on record of declaring that 90% of the country is back on its economic feet. Hmmmm!

Three months of various stages of lockdown and Jerusalem’s tech scene has not stopped buzzing.

To quote an item from Forbes magazine last month:

There are currently 405 active tech companies in the Jerusalem ecosystem, a 102% increase over 2012. In 2019 alone, $233.5 million were invested in Jerusalem-based companies and startups, a 21% increase from the prior year. Over the years, Jerusalem-based companies have seen 22 exits and total investments of $1.6 billion, according to Start-Up Nation Central’s Finder.

Only yesterday, I was on a zoom call linking a serial investor group from the holy city with a team in Hong Kong.  The previous week featured a bunch of us talking with an Israeli scale up and a partnership from the heart of the Muslim block.

Yes, finally if belatedly, the Arab side of the sector will receive its share of the glory.

The Silicon Wadi project entails the construction of approximately 200,000 square meters (2.1 million square feet) of commercial area, with an emphasis on the high tech, trade, and hotel sectors. Among the goals of the initiative are to create 10,000 jobs in east Jerusalem, increasing the participation of east Jerusalem women in the job market, and to bolster support for the Israeli school curriculum in east Jerusalem schools.

And come Jun 22nd, OurCrowd, arguably Israel’s largest investor fund and located in Jerusalem, will host its “covid summit”.

It is interesting to note that part of the international impact of corona has seen more Jews seeking to move to Israel, particularly Jerusalem. Keep watching folks!

 

It is relatively straight forward to connect the dots in the trail of the demise of modern retailing.

  • Ever higher rents are forcing shops away from city and town centres.
  • Humongous food shops are driving local supermarkets to despair.
  • Amazon has sapped the strength of large retailers, who have often reacted with the speed of dinosaurs.
  • And now Covid-19 has taken people off the streets. The shops are left with rent to pay, but no sales.

Last week, my wife ventured into the centre of Jerusalem, as Israel emerges from lockdown. She reported back how several shops had just disappeared – shut and no stock inside. This included some leading local chains.

And yet………..

Covid-19 has taught us a lot of things. Sociologists will have a field day, when their research kicks in. For example, Israelis, known for their paranoia to watch news programmes, have began to steer away from the media featuring current events.

Similarly, much has been made of how ‘community spirit’ is coming back into play around the world. People are going out of their houses, together praising workers in the front line, praying or just creating social-distanced silly dances.

As retail expert Paul Brooks remarked in a classy podcast with Jonathan Gabay, Covid-19 is bringing about a “transformation” in how we approach our lives. In an effort to readdress the balance between ‘work, rest and play’, Brooks argues that we are focused on “authenticity”.

And nowhere is this more true than the return to prominence of the local neighbourhood corner shop – food, clothes, books or whatever. How come?

Covid-19 started out when somebody let a horrendous virus escape from a man-made lab. All the clever algorithms and the internet gadgets in the world could not stop it from spreading. In fact, man-made devices like travel had the opposite effect.

Time for a return to basics? Time to reject the offers from big companies, that often represent an attempt to dump dead products. Time to downsize.

And this, ironically, is where the small retail trade could look to a revival. They represent everything that has been turned away over the past few decades; available nearby, a human voice, no preset script, and a feel of ‘made for me’.

For example, earlier to today I was talking to the owner of a shop that sells ladies’ fashion. Now that she is out of location and readjusted her approach to selling, she told that Sunday had been one of her best days ever.  One anecdotal story? Yes, but surly it is no coincidence that many of the latest entrepreneurs that have come my way in the past two weeks have also chosen these principles?

What next? Too early to tell. However, I assess that there is a move towards small is beautiful. Retail, encouraged by local authorities, have a chance to lead the selling revival.

 

Today, President Rivlin received the 2020 Statistical Yearbook from the Jerusalem Institute for Policy Research.

A press release detailed some selected statistics for 2019:

*Jerusalem is the largest Jewish city in Israel with 569,900 Jewish and other residents, and the largest Arab city in Israel with 349,600 Arab residents.

*For a second consecutive year, there is negative migration of -6000, the lowest level for a decade. Of those leaving the city, 46% have left for communities in the Jerusalem metropolitan area.

*The number of those moving to Jerusalem is the highest ever: 12,800 people.

*There is a wage differential of 20% between men and women in Jerusalem, as opposed to 33% nationally, 32% in Tel Aviv-Yafo and 35% in Haifa.

President Rivlin noted that:

Jerusalem is the largest ultra-Orthodox city, and also the city with the largest Arab population. Jerusalem is also ‘young demographically: the percentage of young people in Jerusalem is large, in part as a result of Arab and Ultra-orthodox growth in numbers. These young people are our future.

Jerusalem is a microcosm of our existence here, its population a representation of the demographic diversity of the state of Israel. We must find a way to create a conversation, to connect, to build partnerships. I thank the Jerusalem Institute staff for their dedicated work to depict our reality. Their ongoing and determined efforts to understand our reality and to make it accessible to the public are extremely important. 

This is the week, when the Israeli economy is cautiously returning to work after ‘lockdown’.

The immediate damage can be measured in a dismaying 27% unemployment rate. We have yet to learn how many businesses have collapsed and to what level production has fallen. Nor do we know how many surgical procedures have been delayed and at what cost.

On a brighter side, if you look at today’s front page of the financial newspaper “Globes“, you will see headlines referring to around US$200m worth of investment into start up companies: Nexar – US$52m, Cheetah – US$36, Otonomo – US$46, etc etc.

In fact, “Israeli tech companies, which raised a record $8.3 billion in 2019, have raised $3.7 billion in the first four months of 2020.” And if it had not been for corona……. your guess is as good as mine.

And is the puff running out of the start-up nation drive? Just look at the news in the past 24 hours.

  • Intel Corp. (Nasadq: INTL) is set to acquire Israeli company Moovit for about $1 billion. The company has developed a public transport and mobility journey planner app. Intel Capital, the venture capital investment arm of Intel, is one of the shareholders in Moovit.
  • Mastercard and Enel X have won a tender to establish a new fintech-cybersecurity laboratory in Beersheva, with NIS 13 million (approximately $3.7 million) in funding over three years.

Back on the Israeli high-street, the shopping malls have yet to reopen. Politically, the country maybe heading for a new government next week or a fourth general election. Yet none of this seems to bother the entrepreneurs, who are continuing to have a field day in the Holy Land.

As I write this Sunday, demonstrations are taking place in Tel Aviv and Jerusalem. The self employed are disgusted at the government’s response, or lack of, in helping small businesses survive the corona fall out. To give some perspective, on Friday, the Ministry of Finance had announced a third set of proposals, which like its predecessors seemed to be designed to help as few people as possible.

These measures were prompted by a heart breaking appeal from a falafel booth owner in Ashdod. His video had gone viral: He explained that he has paid taxes all his life, that corona has destroyed what he built up with his bare hands, but that the criteria for financial support means that he will receive zilch.

The Prime Minister called the man. The politician assured him that he would personally ensure that he would get through. Hmm. Anything to do with the fact that the stall owner comes from the boss’s core voting caucus? But lesson number one, albeit learned sub-consciously, go viral and embarrass the top!

My work as a business mentor has led to talk to tens of organisations in the past month, particularly in the Jerusalem region. Part of this effort has been sponsored by the Ministry of Immigration, seeking to help those newcomers who have been enterprising enough already to launch a business.

These people know long before I voice my suggestions that the government’s main support is through loans, which only encourages more debt! And even if you were to qualify for one of the schemes – for example, you can only claim up to 16% of the previous year’s sales(!?!?) – but you go broke, the bank will come looking for you. What’s wrong with that? The government guarantees at last 85% of each loan.

With hindsight, the operations that I have been dealing with have come to an understanding; 3 sentences that can be uttered in the same breath.

  • Yes, we all recognise the tragedy that the virus has forced on thousands around the globe.
  • No, we are not waiting around for public support, usually espoused by well-meaning bureaucrats, who would not know a VAT form if it was stuck to their face.
  • Yes, and here’s the difference. Corona is not a challenge. It is an opportunity! Just test your ideas faster and move on out quicker!!

Everyday, I am involved with more and more examples of this approach.

  • A studio for the performing arts has launched an online mentoring course to improve self-confidence and self-awareness, core elements of what it teaches anyway.
  • A book publisher, which relied on a third party distributor, is now rapidly creating an alternative solution via digital marketing.
  • Two separate financial advisory services have identified niche markets that probably have always existed, but they now realise how these can be approached.
  • A national NGO has overhauled its procedures, ensuring staff and beneficiaries are better protected against layoffs.

Last week, I caught the headline of a large cinema (in America?), which opened its car park for drive-in movies. They are sold out most nights.

Israel is known as the start up nation. The high-tech boom in the early 1990s emerged in spite of the government, before the mandarins realised what was happening (and could claim credit). Over the past decade, countries like the UK have tried to copy that format.

It would seem that the same thing is about to happen again, “thanks” to corona, a change led from below.

POSTSCRIPT: Yesterday morning, my wife and I went for an early morning walk to catch the sunrise overlooking Jerusalem. It was drizzling and there were few around at that hour. One exception was a short,75-year old religious lady, speed walking.

She told us she was just turning back to go home…..which would take her another hour or so. She then explained that she has to do something as corona has closed her beloved public swimming pool. And then with a broad smile described how she has also invested in a piece of apparatus …….. a trampoline!

In a week where we celebrate Israel’s 72nd Day of Independence, I am proud of the spirit of the “start up nation’, which lies in the people themselves!

 

 

 

 

A month or so from now – say early June 2020 – it is possible to envision the Israeli economy trotting back towards a semblance of normality.

But what does that mean in reality? Before corona, unemployment was around 4%, people had been ignoring the price index for years, and the GDP was set for a 3.25% or so growth for 2020. Very healthy, but in the past.

Let’s face it, a big chuck of society, especially in Jerusalem and peripheral areas, revolves around the tourism industry. Hotels, airlines, tour guides, tour sites are all ‘out of position’ and will almost certainly need to lower prices for a year or so. In Eilat, where 70% unemployment has been recorded, the good times will not be returning tomorrow morning. Nationally, 26% of the workforce currently does not have a job to go to on Sunday morning, and the number is growing.

It is not all doom and gloom. Some commercial sectors have held up well. For anecdotal evidence, juts look how all the building projects in Tel Aviv and Jerusalem have leapt ahead. On the high-tech front, overseas investment continues, although at a slower rate:

  • Smart LD lighting firm, Juganu, has raised US$18 million.
  • Hargol, foodtech, secured a further US$3 million.
  • Entrée Capital venture capital fund announced this week that it had closed a US$100 million seed fund.

However, none of that has stopped the IMF forecasting a 6.3% drop in Israel’s GDP for this year. The Governor of the Bank of Israel sees a 5.3% dip ‘only’. Sure, these are predictions, but in this case there is no prior model to make such estimates. To make the point, both teams foresee a relatively quick rebound, but how much and when is up for debate.

My main concern for the future lies in the economic policy, or lack of, for the next six months. First, much of the immediate central government help for businesses has been built around loans. Allow for the fact that old-fashioned bureaucracy is delaying their approval. Once eventually in play, companies will be depending on sales rising quickly in order just to pay off loans.

If that does not happen, the government will have printed money for no good reason. That is a trigger for inflation. In parallel, more companies will simply go under. More unemployment!

And second, the government is effectively paralysed. The country has held three general elections in 12 months, and a potential fourth is looming. The Minister of Finance is a political has-been. In other words, there is no fiscal direction from the centre, and neither is their likely to be soon. Commerce is being told to get by, on your own.

I am not kidding you when I say that a 6.3% tail off might actually turn out to be too optimistic, especially with this current government in charge.

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