Israel Archives - Page 41 of 67 - Michael Horesh Business Coach and Mentor

7 September 2012

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Categories: Business, Israel

Last week, leaders of Israel’s banking club met up with the Minister of Finance. One financier was reported as saying: “In 2008, we were well prepared for the global crisis. Today the situation is far more complex”

How so? The list of issues is multiple and all require major resources to resolve them.

There is a gaping and growing budget deficit prompted by weak tax revenues and by heavy demands from the defense sector – currently all of Israel’s borders face new threats, not to mention the Iranian question.
Growth was marked at 5.1% for the first six months of 2011. A year later, that figure is 1.3%. This may be better than many in the OECD but still not enough.
Israel has several business tycoons. At least three of them, and especially Nochi Dankner, are in severe trouble. Dankner himself owns a major domestic bank. Together, they are threatening to strain those financial groups that have leant large amounts of investors’ savings. And if one of them could not survive the strain……..
Despite a series of measures from the Bank of Israel, the property market is still on the verge of over heating. First time buyers are being priced out. In parallel, there is a concern that too many new mortgages are being offered without sufficiently checking the financial capabilities of the clients. The fear of America 2008 looms large.
There is genuine concern that Israel’s famed start up industry is running out of stream. Attracting foreign investment to the Holy Land is proving to be an erratic proposition compared to 2011.

And then add to all of this the political issue. Within the next twelve months, Parliament (The Kenesset) will be dissolved and an election will be called. This is potentially disastrous for the country’s economy. First, even once the election is called, the process can take months up to and including when a new coalition has been formed, that is a long period of uncertainty and lack of leadership, which financial markets dislike. Second, the experience over decades is that Israeli governments will exploit all the handouts (a.k.a electoral bribes) they can find in order to hold on to power. Not good.

In fact, really bad. However, there is one exception to thsi process. In late 2008, an election was declared. There had been no time to draw up a budget for 2009. In such a situation, the law dictates that until Parliament decrees otherwise, the country’s budget remains that of the previous year, simply divided up equally over twelve months. The upshot was that while governments around the world tried to spend themselves out of the global debt crisis, Israel’s coffers remained relatively full.

Back to September 2012, when in-depth preparations for the 2013 budget are effectively quite shallow, if not on total hold. That means, it will be difficult for the current government to pass a budget before December. And if an election was called before that, the government could not spend its way to victory. In that case, who would win at the polls remains an open question, but the economy could emerge as a major beneficiary. A miracle?

6 September 2012

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Categories: Business, Israel

How to become a winner – that’s what we all want to know. From the point of view of a business mentor, it is a daily challenge for me to enable people to reach this goal.

I recently came across the works of Yehuda Shinar, an Israeli, who has developed a winning formula to teach people how ….”to win”. Yup, pun intended. And what does that mean? Well have a look a partial list of Shinar’s clients. In no order of importance: –

He has been involved with Maccabi Tel Aviv, when they won the local football league
He was behind the scenes when England won the World Cup in rugby
50% of new Israeli fighters pilots, acknowledged as some of the world’s best, have come through his course.
Team GB at the 2008 Olympics in Beijing owed a lot to Shinar’s methodology.

And so the list goes on. However, what makes Shinar’s formula so special?

He starts with a very simple premise: that a winner has to learn what they are doing when they are winning. A winner needs to be able to recognise the bits that work – so they can then work on the bits that don’t work………The crux of Yehuda Shinar’s model of winning behaviour is his famous T-CUP analysis: Thinking Correctly Under Pressure.

Enter Sir Clive Woodward, who in 2003 steered England’s rugby team to victory at the World Cup, a most unexpected triumph at the time. Woodward, from the backbone of Middle England, had already been a friend of Shinar’s for nearly a decade at that point. Shinar’s influence can be assessed from in the complete chapter that Woodward wrote about him in his book.

However, the fairy story does not end there. Woodward progressed. At the Beijing Olympic games, he acted as Deputy Chef de Mission for Britain. He was then commissioned to complete a review of practices at the games in preparation for London 2012. Last month, Team GB won a record 65 medals, and found themselves placed third in the winners table, an all-time best. Somewhere, deep amongst that collection of gold, silver and bronze, is a brilliant Israeli philosophy showing people how to succeed under pressure.

And here’s the beauty, it is not a matter of IQ or what you achieved at school. This is a skill that can be learnt by most of us, even slow starters.

5 September 2012

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Categories: Business, Israel, Jerusalem

“How do I generate a word-of-mouth” campaign” is the question that I am often asked. As a business mentor, you are expected to be able to conjure up some magic formula; straight out of your pocket, mixed with a couple of flash phrases re twitter or facebook, and wrapped with an encouraging smile that implies how easy it all is.

It can be, certainly. If you are a large company, you have extensive resources to create really clever campaigns. This video clip for Carlton beer in Australia went viral before it was even shown on TV. However, over 90% of businesses in the world barely have 1oo somethings of local currency to spend on advertising in any one year. And it was this very issue that the Jerusalem Business Networking Forum addressed last night.

Around 170 people registered to learn how to expand your network and to take part in “speed dating sessions”. For now, I want to concentrate on the three speakers; Itay Paz, Naomi Elbinger and Nurit Agamy, all experts in how enabling people to ‘get their message across’. Taking the key point from each one, I formulated a very powerful package for those wishing to be noticed and to be talked about.

Stage One:

The title of Itay’s talk said it all: Stand up or stand out. He asked for a volunteer, who was instructed to pick randomly sonebody the volunteer himself would like to meet. Subconciously, the person chose an individual sitting not too far away. Itay then asked for the audience to stand up. The same request was made. A different individual was picked out, who again was situated near the volunteer.

At this point Itay asked his listeners a very simple question. Why had nobody bothered to stand on a chair in order to be seen better? After all, the people at the back had no chance. To rephrase: what is that bit extra that you are prepared to do in order to separate you from your competitors?

Stage Two:

Naomi commented on people’s elevator pitch, that 15 second introductory blurb about yourself that you can whip out just as you are about to start a short ride in the lift with the person you most want to meet. Only, Naomi described this as an “elevator peach”. Make it juicy enough for the listener to like and also to crave for more. And how phrase your fruity words?

Well Naomi provides a template: If you Mr or Mrs Listener have a business that suffers from XXXXX, then I provide YYYY of a service that will guide your sales or production or workflow to an improvement of 1000% in 5 years. The point is to ensure that the listener asks you to continue speaking for longer than a quarter of one minute.

Stage Three:

Nurit said something that was simple and made complete sense. “Brand yourself before others brand you”. Take control of your environment so that everyone knows who you are, even before you arrive at your destination. After all, in these days of social media, many of us should not to be relying on a business card. (For the record, she has none printed up.)

Bottom line: If you want people to talk about yourself and your product, you have to work hard to earn that right. You have to ensure that you are one step ahead of the crowd. You cannot hide behind technology or catchy buzz words, hoping for the best.

And by way of a giveaway, here’s a great blog, which gives three further examples of how some of the larger companies have been adjusting their approach to branding in 2012.

31 August 2012

5 Comments

Categories: Business, Israel, Palestinian Society, Palestinians

The headline from the New York Times made for a simple summary of a UN report: “U.N. Sees Bleak Outlook for Gaza Unless Services Are Improved”

The UN describes how this narrow fertile strip of land, which has been run by Hamas since 2007, may not be fit for habitation by 2020. Education, health and other basic services are on the point of collapse. Unemployment is high. It is sandwiched between geopolitical tensions of Egypt and Israel. Life is very difficult.

To emphasise the point, Maan News service, based in Ramallah, reports that yet again Palestinian Authority (PA) employees in Gaza may not be paid their salaries. The background appears to be a combination of reasons; lack of funds within the PA and also a dispute between the Palestinian Government and its supposed Hamas allies in Gaza.

So how does one reconcile this gloomy picture with new investigative journalism from Arab sources that of the 1.6 million people in Gaza, there are at least 600 millionaires. In fact, on the ground witnesses reveal a very different kind of Gaza than the one depicted in the UN report.

Informed Palestinian sources revealed that every day, in addition to weapons, thousands of tons of fuel, medicine, various types of merchandise, vehicles, electrical appliances, drugs, medicine and cigarettes are smuggled into the Gaza Strip through more than 400 tunnels. A former Sudanese government official who visited the Gaza Strip lately was quoted as saying that he found basic goods that were not available in Sudan. Almost all the tunnels are controlled by the Hamas government, which has established a special commission to oversee the smuggling business, which makes the Hamas government the biggest benefactor of the smuggling industry.

So what’s the truth? The bottom line of the UN report is that 99% of Gaza’s troubles are the fault of Israel. Well, nobody can argue that Israel finds Gaza a welcome neighbour. Daily rocket fire from the Hamas territory did not cease even as schools started up again this week. The problem was that this context was omitted by the authors of the UN document.

The UN also is correct to underemphasise the large role that Egypt plays in the Gaza economy, such as providing much of its electricity. More recently, because of the increasing terrorism in Sinai, of which Hamas affiliated groups have a significant part, Egypt has been clamping down on its border with Gaza. Only 24 hours ago, CNN detailed how many smuggling tunnels, a core of Hamas’ revenue stream, have been shut down by Cairo.

For the record, I was talking to a journalist last week, who had recently been through some of these tunnels. He described what seemed to be large and growing centres of commerce, which would do proud any transportation highway around the world.

At the end of the day, the economies of Gaza and Ramallah may share a common trend. Life may not be comfortable for all, while there are still many who are doing well – in fact, really well. However,for the UN to argue that life is unbearable in the Palestinian territories and that is all the fault of Israel’s reminds one of those who print such racist tractates as the “Protocols of Zion”. Both contain the same level of hatred and distortion.

21 August 2012

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Categories: Business, Israel

“Easy money, cheap imports and strong confidence are no longer available”.

Thus wrote former top official of the Bank of England, Andrew Sentance, in the Daily Telegraph earlier this week, as he described the outlook for the UK economy. And he added that although the UK had enjoyed 25 years of near unprecedented growth until 2007, there were already clear signs back then that this golden moment was about to end.

And the connection to the Israeli economy? Let’s compare Sentance’s opening comment to what is happening to commerce and finance in the Holy Land.

Easy money: “Researchers have found that only 29% of venture capital investments in Israel during the first half of 2012 involved young start-ups.” For a country that has propelled itself into the OECD on the back of innovation, that stat is a major red-lettered warning. If seed capital is drying up, where will the next level of growth spurt come from?

Cheap imports: It is generally accepted (except by populist politicians) that commodity prices are on the rise and that this will very quickly feed into consumer price indexes, globally. In Israel, there is a second issue. the shekel has been weakening in 2012 against many of its trading partners. For example, it has lost 7-8% of its value against the American dollar and Sterling. Even against the Euro, the shekel has failed to gain ground. All this means a lot more imported inflation.

Strong confidence: Over the past few weeks, I have stressed how the politicos and civil servants in charge appear incapable of making longterm decisions, which are devoid of self interest. These judgements are being challenged further, as defense officials are demanding more resources to meet the threats from Iran, Hizbollah et al. Where is the strategy of old?

Sentance observes that UK decision makers need to recognise that the paradigm has shifted. Former excellent solutions are no longer so relevant. Would Messrs Netanyahu, Steinitz and Fischer in Jerusalem please wake up before it is too late?

20 August 2012

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Categories: Business, Israel

Israel’s economy may be doing better than many of its OECD competitors, but the effects of Europe’s downturn are seeping in on the finances of the Holy Land.

Nevertheless, to the surprise of just about all, the economy for 2q12 grew by over 3%, must better than had been feared. Even more staggering was how this spurt was led by exports as opposed to local consumption.

Well, let’s take that cheer and run with it. The gloom clouds are approaching thick and fast.

Budget planning for 2013 is very dodgy, complicated by election politics, weak coalitions within the government, and a defense budget that may need to grow by billions overnight.
Sharp changes in commodity prices are about to bump up food basics by 5-10%, a big “no-no” in an election. However, government dilly-dallying over bread and milk prices has seen manufactures suffer unnecessary losses, while consumers moan.
A weakening of the shekel against other currencies will result in stronger signs of import-led inflation.
And the unions are showing no interest in joining the governments efforts for a revised agreement with employers’ groups.

The road ahead is not simple. The Prime Minister’s time appears to be taken up with the Iran-situation and understandably so. The Finance Minister looks increasingly isolated from his colleagues. The performance of the governor of the Bank of Israel at cabinet meeting showed that he did not appreciate all the nuances of the “defence budget debate”.

In the past decade, Israel’s economy has shown an ability to rise above the troubles of wars, Intifadas and global downturns. Growth has been resplendent. At each juncture, there was a “strong man” in charge. We are looking for such a person today.

13 August 2012

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Categories: Business, Israel

It is not a rocket science. You do not need a degree in finance or business admin. During an economic downturn, factories close. People are laid off.

Not only is unfair to the workers – and their families. Quite often local communities suffer the knock on effects. In turn, social services are inadequate to meet the challenges. Meanwhile, the government is…………………well, let’s come back to that.

For the moment, let us examine what is happening to Israel, as European markets dry up and domestic industries are cutting stocks. A vegetable canning factory near Safed has yet again had to appeal for help from the authorities. Phoenicia Glass, employing hundreds across ethnic lines, is short of nearly US$100 million. Extra Plastic, Sederot, with over 120 workers and located in town that had the dubious pleasure of suffering consistent shelling from Gaza for years, is about to go under – even though the owners recently paid out a hefty dividend recently.

Blame poor management, unexpected changes in the markets, owners cleverly manipulating some accounting rules, etc – factories are shutting their doors. Meanwhile, the government is…………..

Would it be too cynical to state that the government is too worried about votes? After all, a general election is scheduled within the next 12 months. What bothers me is the lack of planning, when handling these situations. These crises can be predicted to a certain degree. So for example, surely if a factory cries for help, statutory payments can automatically be delayed for 60 days – maybe paid off later or just cancelled?

And where are the benefits to the workers? Offer them a small sum each and some space to start up a small business. Provide them some mentoring hours for free. Those are just three obvious suggestions that would cost the central treasury relatively nothing compared to unemployment pay, lower tax revenues from the community and the cost of other social problems.

Unfortunately, what the Israeli public is left with is sensational headlines and a dawdling cumbersome government mechanism that may or may not cobble together solutions and wrapped in wafer-thin spin. Meanwhile, the economy continues to suffer, along with hundreds of families.

9 August 2012

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Categories: Business, Israel

There is an old joke in Israel, often attributed to the air force: If you make a mistake, just shout louder and nobody will notice the problem.

In the past 24 hours, I have read 3 direct criticisms of the economic performance of the Israeli Prime Minister and his Finance Minister.

On last night’s news, a leading commentator urged the politicians to stop blaming European meltdown for the country’s worrying financial figures. The bottom line is that for two years, the politicians have spent too much and are continuing to do so.
This morning, in “Yediot” newspaper, a similar theme was echoed. The call was to wake up and to act decisively, before the money markets start to make their own painful demands for changes.
And, in some ways the act of Brutus, the Governor of the Bank of Israel, has warned that “the decision to increase the deficit target to 3% of GDP and the uncertainty of meeting the target raise the concern that the credibility of fiscal policy – which was a central component of the economy’s success in dealing with the previous crisis will erode,”. Stanley Fischer, close friend of the head of the Fed and other central banks, has had enough.

The stats speak for themselves. Growth predictions are falling all the time – now down at around 2.5% for 2012. Exports are dropping off. Unemployment, expected to rise, is shooting up. etc. Cuts have been made to day-care centres and infrastructure projects. Investors are making a fortune out of government bonds these days, a sure indication of a problem.

And meanwhile, in order to shore up his coalition, the Prime Minister continues to approve heavy financial payouts to the parties that stay with him. In other words, in order to prove to others that they are correct and to stay in power, the prime decision makers for Israel’s economy are continuing to carry on with the very mistakes that took them into the mess in the first place.

I have just read a fascinating blog on why it is difficult for all of us to accept our own mistakes:

…..the setbacks and failures that derail your future plans or call into question your self-image. These are the ones that occur because of your deepest weaknesses and flaws. For this reason, we prefer to avoid thinking about these mistakes, or to attribute them to circumstances out of our control.

Anybody know how I can send that posting to Israel’ government before it is too late?

8 August 2012

3 Comments

Categories: Business, Israel

It takes about 5 seconds these days to find a site that says “4 great tips to build a business plan”. Simple. So why do so many people just ignore this basic piece of planning for their business?

To tackle the issue from another angle: Consider the question “who needs a biz plan?”. Again, the answer is straightforward – just about everyone; a start up in hightech, the kiosk on the corner of your road, an established multinational, and even your home finances. You can’t ignore them.

So what does a biz plan give you? Have a look at three case studies from Israel that I have come across in the past week alone.

First, I am currently helping out a small, growing telecom company, and the founders wish to raise money from investors. So, they need to present a document – a.k.a. business plan – which shows their technological, financial, and managerial abilities. Fine.

However, that is not the sole purpose of the report. The act of writing and editing the document is forcing the head team to ask what it is they really do. I participated in a fascinating discussion, which resulted in an emphasis switching from the tech aspect of the company to the human element. Clearly they are more than just a bunch of enterpreneurs with yet another platform technology. The creation of the biz plan has challenged them to realise who they really are and how they can maximise their full potential.

Second, I have come across a family business in the Jerusalem area, which sells household products. The concept is one of the oldest in international commercial history – buy from a supplier, add a mark up, sell quickly and at a profit. So, I was stunned to be greeted by the news that the owner has accumulated debts worth hundreds of thousands of dollars. Blaming poor stock control is not enough of a solution. Time to look at the lack of financial planning and what that can show for the future.

And my final example lies in the heart of Israel’s Ministry of Finance. This week’s newspapers have highlighted a fact that many people had been predicting for months: The budget deficit in Decemeber 2012 will be close to twice the original forecast of January.

This is not just a case of somebody getting it wrong, and badly so. Taxes have already risen and more changes are planned. Infrastructure projects have been shelved. The building of new classrooms has been postponed. Improvements for day care facilities have been cancelled. So much for financial planning from the top, from the very people who trying to help us run our own lives.

Get out your excel spreadsheets and start some realistic planning for a viable financial future.

6 August 2012

2 Comments

Categories: Business, Israel

Whether you believe Israel is on the right or wrong side of the so-called ‘Middle East conflict’, you cannot doubt that Israel’s army gets to see some action too frequently. Just last night, terrorists broke into an Egyptian army base in the Sinai desert, stole two APC’s and tried to ram the border crossing with Israel. A battle ensued.

So how would you pay your teenagers for defending your country?

Let’s start from the beginning. From the age of 18 in Israel, boys are conscripted for 3 years and girls for 24 months. Depending on the level of training, where they serve and the ‘danger element’, the monthly wage varies from around 350 nis to 800 nis. So at the lower end, we are talking about US$90 or STG60 per month.

To give that figure some kind of comparison, stats in today’s newspaper reveal that an American recruit will receive about US$1,600. For the UK, the figure is close to US$1,200. Even the Chinese army pays better than the Israeli army at US$150.

However, the average Israeli private on parade does not have to go abroad to learn how his own Finance Ministry officials, safe in the cosy chairs, are insulting him (or her). The minimum wage in Israel is about 4,100 nis, and that is for a 185 hour work month. The soldiers are frequently stuck for over a week on the base, receiving maybe a tenth of that!

And then of course there is the touchy subject of those who are exempt from the army for religious reasons, and end up being categorised as “early-level teachers”. Their classroom wages, also often below the minimum figure, is way above that of their brothers in arms.

In effect, Israeli soldiers, who risk their lives for the country, earn a living which will just about buy themselves a daily portion of felafel in pitta. Disgusting as that is, my point is more generic. There are many grades of workers in the Israeli public sector – nurses, social workers, soldiers, etc – who are paid far far less than they are worth. It is time for the Finance Ministry to deal with these anomalies, before society has to pay a heavy price.

30 July 2012

4 Comments

Categories: Business, Israel

The OECD has warned Israel for months that Jerusalem’s budget did not add up. The newspapers of been full of similar articles. Finally last week, the Israeli treasury moved to plug a 14 billion shekel – say US$3.5 billion – gap in the finances. Loads of new or higher taxes. And as is common in such situations, the lower and middle classes will take the brunt.

Well, the recognition of defeat will be welcomed by the financial markets. However, there is general acceptance that there is more to come.

What concerns me, and I have stated this before, is that these measures were clearly issued in haste. For all the pessimistic forecasts, those in (so-called?) control did not listen. For example, it is less than a month ago that the Finance Ministry announced that certain import tariffs will be reduced over the next three years. That same decision was revoked last week.

Israel is not as badly off as other countries. It is no Greece nor Spain. Its growth is far superior to that of France and the UK. That said, eight million citizens deserve a better performance from their fiscal planners than served up to date in 2012.

It is with some irony that the one bright spot has come from the roads. Israel’s transportation system still leaves a lot to be desired. Nevertheless, the installation of new road safty cameras have created of new profit centre, as the fines have poured in. This is one step to be welcomed…..until I get caught(?).

27 July 2012

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Categories: Business, Israel

I have not hidden my dismay. The Prime Minister of Israel, Bibi Netanyahu, has come close to blowing much of Israel’s economic progress of the past decade or so. By Wednesday night this week, he seems to have woken up and concocted some emergency measures to plug a large government fiscal deficit.

The move has earned the praise of international economist, Stanley Fischer, who is also Governor of the Bank of Israel. That said, it is generally accepted that the proverbial plug is not big enough.

In fact, it was Bibi’s own spin that gives away the plot. In attempting to justify higher taxes and budget cuts, he mentioned how he was intending to introduce free education from the age of three. Add in a few new missile systems needed because of the Iranian and Syrian crises, and you have a series of large monetary promises that cannot be met by a token rise in tax on cigarettes.

Bibi’s meandering policy making has already seen the currency devalued against the dollar and sterling by 4% and 3% respectively during July 2012. Overseas investors are known to be withdrawing positions from the Tel Aviv Stock Exchange. Unemployment is back at 7% and rising.

The Prime Minister may not be able to control the dynamics of the Syrian and Iranian regimes, nor even the bizarre financial planning modes of Greece or Spain. However, he has been elected to lead, responsibly, in Israel, and it is time for him to do when it comes to the economy.

24 July 2012

2 Comments

Categories: Business, Israel

Whatever you say about the man, when Israel’s current Prime Minister, Benjamin (Bibi) Netanyahu was Finance Minister, he did a great job. The stats show that from 2003, he initiated and then presided over a period of supreme growth in Israel’s economy, a pattern that continues today nearly a decade later.

However, that triumph is increasingly looking like a thing of the past. GDP, export and tax revenue forecasts for 2012 are being consistantly revised in the wrong direction. And Bibi, as Prime Minister, is spending his time these days shoring up his coalition, investing in incentives for new partners rather than in industry. Some basic facts from this week’s news alone:

The stock market is dropping, just like much of the OECD economies.
Tax revenues are over half a billion dollars below expectations
Unemployment, expected to rise after its record low last year, is still higher than predicted
As European economies freeze up, exports have not found enough new markets, leaving a widening gap in the balance of trade.

In contrast, one of the deals Bibi offered to a group of politicans was estimated to cost around 12 million shekels (US$3 million). So when it was announced this week that the Ministry of Finance has delayed the decision making process for the 2013 budget, you have to ask yourself: “What’s going on? Is anyone in charge?”

As I indicated, Prime Minister Bibi has spent much of the last 2-3 months manipulating small partners and potential partners for his coalition. Commentators and opinion polls inidicate that he has lost political capital in the process. By way of a suggestion, if he cannot lead the squabbling pack, maybe he should stick to what he knows best, economics…….before his legacy is lost and the country has to face a needless time retrenching.

20 July 2012

1 Comment

Categories: Business, Israel

Israel’s economy has been thrilled and excited on a decade of growth, which neither an Intifada, nor war with Lebanon nor global meltdown succeeded in halting. Last year, GDP shot forward 4.8%. And in 2012…….

Well, the prediction for 2012 has just been revised downwards, again, to 2.7%. While the hope for 2013 is to see a return to 3.5%, all these figures are looking very optimistic. What’s going wrong?

The simple answer is bad trade figures. Exports have fallen off by 2.5% in the first quarter of this year, while imports have surged ahead. Specifically, exports to European mainland, notably in the pharmaceutical sector are way down. It is not the PIGS (Portugal et al) issue that has impacted on Israel so much – and yes, the pun was intended – but the slowdown of the other large economic powerhouses in the continent.

Decision makers at the Finance Ministry and the Bank of Israel are facing several problems at once.

ITEM 1: It is recognised that there is a major budget shortfall. Tax revenues are lower than expected. However, the defence establishment is demanding heavy and immediate new resources to cope with Iran, Syria and Gaza. The navy alone has asked for nearly a US$1 billion to protect Israel’s new offshore gas supplies. And other claims for expenditure are floating around as the government is being challenged to meet commitments over road building, new classrooms, pension schemes and more. If that is not complicated enough, the central bank is using the rate of interest to dampen the housing sector, which overheated.

There are some bright spots. By 2015, Israel should start to reap the benefit of new income from its offshore gas and oil fields. And internationally, as recorded by Deloitte, the country still inspires confidence in overseas investors.

However, it is ITEM 3, that is the real worry for me. Private sector consumption has remained positive, revealing a 2% growth in early 2012. That stat is often an indication that election economics is coming into play. This raises the ugly question as if the Finance Ministry will continue to manage its books for short term objectives or for the long term benefit of the country?

For the past decade, the latter has usually been the case, but just remember: Bibi Netanyahu, the Prime Minister has already delayed discussions on the 2013 budget due to internal political weaknesses. Markets will soon pick up on that uncertainty. Interest and exchange rates will feel the pressure and that in turn will force unwanted changes.

Israel has just gone through a two week heatwave. That is no excuse for a lack of leadership.

13 July 2012

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Categories: Business, Israel

BDS is an international movement that purports to act solely against Israeli activity based in what is called the West Bank. On the other side, there are many that claim and with a wide amount of justification that the campaign is really a euphemism for the deligitimisation of Israel as a whole.

BDS activity is particularly active in the UK and has gained the support of the Church of England. So it is with some irony that London was the host in June for a major conference featuring 40 Israeli start ups. Stats reveal that bilateral trade has shot up in 2012, despite the European recession. And despite being a country of under 8 million people, Israel features over 40 companies on London stock market listings.

What caught my eye about the conference was the list of high profile attendees. Aside from the politicos, “Jimmy Wales of Wikipedia, Brent Hoberman of lastminute.com, Errol Damelin of Wonga, Jimmy Maymann of the Huffington Post, Mark Read of WPP, Dov Moran, founder of M-Systems, which invented the USB flash drive” were all present.

So if BDS is all about boycotting, what could they try to stop in the next few months?

Well, how about banning the import of all Intel chip based products, which continue to feature prime Israeli r&d. Without being too flippant, one suspects that the BDS movement is using such computers themselves.

Next, the BDS supporters will have to avoid coming in to London during the Olympics and probably after that. Traffilog, a software house located outside Tel Aviv, has secured an order to help control vehicles in the British metropolis as well to identify suspicious objects.

And if the BDS team wants to inform each other of this potential logistical restriction, they can no longer use BT appliances. The “international communications giant British Telecom has chosen Israel‘s Cyber-Ark Software to monitor and secure its accounts.” And if that is not enough, they must also be aware of which mobile tech they use, as many phones these days contain Israeli based tech, such as the GPS systems.

I could mention Richard Branson’s latest joint venture to distribute Israeli water coolers. How about the desire of Dell Computers to take on more Israeli technology partners? As I wrote, trade is booming.

I am forced to ask a delicate but direct question: What is BDS all about? Boycotting trade? Maybe at the margins but as I have detailed, globalisation shows that this is a pretence. Human rights? Not really, because these people seem to care little for the daily murders in Syria or the fact that Saudi women have only just been allowed to represent their country at the Olympics. The question begs to be answered.

I looked at the home page of the BDS website. With all the politically correct prose it can muster, the BDS technical writers compare their campaign to the boycott of South Africa last century. However, they omit to say that the same campaigners of old wanted to see the country remain on the geopolitical map, only under a proper democracy. Maybe a truer equivalent is with an earlier European boycott that offically commenced in Nuremberg in 1935?

6 July 2012

4 Comments

Categories: Business, Israel

It has been over a week since Israel’s Prime Minister and Finance Minister jointly announced that the budget deficit would be allowed to rise from 1.5% to 3% of GDP. It is worth recalling that Prime Minister Netanyahu was the previous finance minister, who just over a decade ago launched a period of unprecedented economic revival, which continues today in Israel.

So if the PM and his financial mate are in agreement, why are Bank of Israel Governor, Stanley Fischer, and Treasury Budgets’ Director, Gal Hershkovitz, up in arms? Why are they demanding that the upper ceiling remain at 2.5%?

Back to Netanyahu: He looks out of his bathroom window and sees a lynch. Directly in front, steep monetary demands from his Defence Minister, which cannot be ignored. To the left, a downturn in tax revenues, beyond what was expected. To the right, social demands left over from 2011’s protests and rapidly linking up with the need to launch “election economics” early in 2013. Bottom line: the PM needs more coins – lots of them and fast.

However, the financial and international credentials of Fischer arguably far outweigh those of his boss. Fischer has made several public addresses in the past few days demanding budgetary and monetary responsibility. Specifically, he is looking for an immediate 1% rise in VAT and a smaller deficit. (To be fair, higher taxes have not been ruled out, but they are not expected to be harsh).

Fischer is also facing a squeeze. Quarterly economic growth has fallen off from a high of 7.5% in 4Q2010 to around 2.9% for 1Q2012. The central rate of interest is 2.25%, about as low as it can drop, without leaving the shekel exposed to external speculation. Unemployment is set to rise steeply from all-time low. And of course, Israel is highly vulnerable to any fall out from the possible collapse of the European economy.

So who is right? To state the obvious, time will tell. Unfortunately, the nature of the Prime Minister’s statements appear to indicate that today he is influenced more by political considerations than by the potential opportunities offered from a long-term economic strategy. There again, when Netanyahu made his name as a reliable Finance Minister, he was much younger and his ego could allow him to be patient.

23 June 2012

2 Comments

Categories: Business, Israel

Item One: As a business mentor, I try to encourage my clients to take responsibility for their decisions. My aim is that they should realise how any strategy has consequences, which need to be explored thoroughly in advance.

Item Two: The popular television programme of the 1980s, “Yes, Prime Minister”, wonderfully satirised the notions of citizens around the world. If a government minister makes a mistake, he will never own up to it.

Item Three: The ombudsman in Israel has released two reports in June. The first slams the Prime Minister for his conduct of a sensitive military operation. The second effectively censures the Finance Minister (Steinitz) and the Interior Minister (Yisha’i) for their management of the fire brigade service, following the deaths of 44 people in an inferno 18 months ago.

Let me concentrate on the latter incident, where the ombudsman feels that the two members of cabinet had a “special responsibility” for ensuring that the fire service had sufficient equipment and training.

In response, everyone accepts that this failing can be laid at the hands of several governments, going back possibly twenty or more years. Specifically, Steinitz argues that he was in favour of granting significantly higher allocations, but had demanded a programme of reform, which was never offered. Yisha’i contends that he had complained repeatedly about the lack or resources, but nobody listened.

I am sure that they are both correct. And I agree with Steinitz, when he also says that he cannot be held responsible for a second minister’s problems, everytime he has not been able to allocate better budgets. After all, next people will blame him for deaths in hospitals.

However, when I don my hat as a mentor, both men come up very short, although for different reasons.

Steinitz wanted to hear of detailed reforms before signing a large cheque. Good for him. Nothing is free in life. However, he has a duty to understand that if a situation is so dire, especially when dealing with a subject that can involve life-and-death, then greater flexibility is demanded.

This is a classic case of trying to turn a situation in to “black or white”, when we know that life is full of compromises. Could Steinitz not have released some initial funds? Steinitz and his team failed to take that wider and more responsible approach.

As for Yisha’i, that he failed to convince the money men to hand out the cash does not mean that he should be censured. However, he is known as one who understands how to secure finance for his political party’s favourite projects. And on the weekend on the fire itself, he is reported to have spent the Sabbath safe with his family in Jerusalem, while his teams were operating flat out in the north of the country. Where was his leadership, and with that comes responsibility?

Bottom line? The ombudsman is correct when he says that government ministers should take a more professional approach. May he and his successor continue to broadcast that message. However, it is a message that he has failed to apply to his own office, which criticised two experienced politicians for the wrong reasons.

As in “Yes Prime Minister”, Steinitz and Yisha’i will shift the blame and life will carry on as normal….except for the families of 44 people.

22 June 2012

No comments

Categories: Business, Israel, Jerusalem

Earlier this week, I wrote how I am bewildered how Israel, a nation of less than 8 million people, continues to hold such an important position in the global tech revolution of the past two decades.

I listed five stories that I had come across in the past few days. However, I did not realise that I was only just scratching the top of a very large iceberg. The comments of John Chambers, CEO of Cisco and visiting Jerusalem this week, put this into perspective.

There are a lot of opportunities here. It’s the second country, after the US, in terms of start-ups and entrepreneurship. There are companies here that do not grow enough, and what we do is to bring these companies into the Cisco family and grow their activity. I don’t think that there is a better time to invest here, in partnerships, venture capital and help our partners expand.

Chambers is specifically looking for partnerships between Jews and non-Jews. And where he leads, others are right behind him. CA from California has committed itself to setting up an innovation centre with Tel Aviv University. “The new center will focus on enterprise computer infrastructure management and cyber security. CA did not disclose details about the planned investment in the center, but it will reportedly total several million dollars.”

And for specific successes of the week, let’s start with Flash Networks from Herzylia, just north of Tel Aviv. The company was named co-winner of the prestigious Global Telecoms Business Innovation Award for Mobile Content and Services Innovation.

Second, LucidLogix is reported to be providing support to millions of global game users via its partnership with Intel on motherboards.

Third, Orad Hi-Tec offers video servers, which are cheap and effective solutions for all the video cassettes stored in TV station warehouses. It is exceeding helpful when TV stations need quick and ready access to old sporting tapes. Bottom line is that the company has become Israel’s main rep at the 2012 European Football Championships, as several large organisations like the BBC use their services.

A country of 8 million people? A country surrounded by geopolitical issues? A government that can barely run the fire brigade? Israel’s youthful private sector has found a method to get around these restrictions.

19 June 2012

2 Comments

Categories: Business, Israel

Combining the phrases “Israel” with “start-up nation” in the same sentence has almost become a cliché.

Back in the mid 1980s, Israel’s commercial fame centred around the theme of growing tomatoes in the desert. Although that agricultural tech is still very evident, hightech / cleantech / biotech / nanontech etc is what drives the numbers today at the Finance Ministry in Jerusalem.

That said, every week, I am stunned afresh at what Israeli companies achieve. So, I have compiled a brief list of items that I have spotted in the past few days, technologies which will quietly impact on millions around the world.

1) Israel and the Galaxy S3

Samsung’s new smartphone, Galaxy S3, is clicking up the sales around the world. How many of the new users are aware that part of the security package was developed by Discretix Technologies Ltd, located 25 miles north of Tel Aviv? The company ships over 4 million of its devices monthly.

2) Israel and Google

Google’s r&d centre in Israel has long been considered a success for the company. Chairman, Eric Schmidt, reiterated the triumph in an appearance this week in Tel Aviv. That same evening, he appeared on a national news programme, where he stated categorically that one of the reasons for his latest visit to the Holy Land was to evaluate additional Israeli tech firms to purchase.

3) Israel and Euro 2012

While Europe’s 16 leading football nations thrill their fans in Poland and in the Ukraine during June, behind the scenes there are hundreds of companies supplying products and services to the players.

Delta Textiles, based in Carmiel in northern Israel and known as an excellent employer, was contracted some time ago by Nike to manufacture high quality socks. It is not just the topsplayers from France and Portugal, like Ribery and Ronaldo, whose smelly metatasarls are benefitting from Israeli machinists. By the end of the year, it is assumed that Barcelona, Manchester United, Inter Milan and several other great European sides will also be sporting this attire.

4) Israel and Boeing Aircraft

Elbit is one of Israel’s leading defence manufacturers. With the help of its sales, the country is consistently one of the world’s leading exporters of such systems.

The company has just secured a contract to supply “a low-profile head-up display (LPHUD) that will be part of the Advanced Cockpit System for Boeing fighter jets.” At the first level, the contract is valued at US$80 million with further opportunities available.

5) Israel and Facebook

Face.com was created in 2007 and has developed a capability for facial recognition of photos. Five years later, the company has been purchased by Facebook for a reported US$100 million. Last year, Zuckerberg’s team invested US$70 million in Snaptu, another Israeli start-up.

By way of an afterthought, I recalled how Israel has a lot of critics if not haters around the globe. They will boycott anything to do with the country. I wonder if they have asked the question how the world would function without access to these and similar capabilities.

12 June 2012

1 Comment

Categories: Business, Israel, Palestinian Society, Palestinians

It was recently pointed out to me by a blogger friend that American federal agencies are encouraging those willing to listen that they should place greater investment in the infrastructure of the Palestinian economy. The aim is to move away from the traditional support given to UNRWA or non commercial elements.

A World Bank report in September 2011 describes “the necessity of both sustainable economic growth and effective institutions for a future viable [Palestinian] state. (And)……investment opportunities have arisen in Palestine. For example, in 2011 the Rasmala Investment Bank established the Rasmala Palestine Equity Fund, which seeks to “achieve long-term capital appreciation by investing in a diversified portfolio of growth and value stocks listed on the Palestine Stock Exchange in securities anticipated to undergo initial public offerings as well as securities at their initial public offering.

One reason for this encouraging change of approach is that the senior Palestinian leadership has yet to shake off the whiff and evil of corruption that pervaded the Arafat dictatorship. To paraphrase a second blogger, Arnold Roth:

Muhammad Rashid, Arafat’s money-carrier (literally), has been arrested. He has been running the Palestine Investment Fund, which in turn controls the Arab Palestinian Investment Company. This organisation is dominated by Tareq and Yasser, the sons of President Abbas.

May not look good to outsiders. The Palestinian Authority (PA) has reserves. Reuters recently observed that:

The Western-backed PA ….says it has poured around $7 billion into the Gaza Strip since its rival Hamas seized control in 2007, but complains that the Islamist group is stymieing its efforts to balance its books……The PA says it spends $120 million a month, or more than 40 percent of its whole budget, on salaries and services in Gaza.

Remember, those salaries includes dosh for those people launching rockets daily into Israel. And they more than likely funded the “security” provided to a journalist friend as he toured Hamas smuggling tunnels last month. It is also useful to recall that much of this funding comes from the generosity of European taxpayers – over 1 billion dollars since 2008.

Maybe Western leaders are finally aware that this displacement of resources is adversely effecting the average “man on the street” in Ramallah or Jenin. For example, Palestinian sources note that hospitals are facing closure, as they are starved of income. And because the PA has consistently ignored its water obligations under the Oslo Agreement with Israel, villages in the Bethlehem district are now running dry.

Where next? Difficult to say. Palestinian banks are also in a precarious position as they have been struggling to feed the needs of central government. One thing for sure – if you want to invest in the Palestinian economy, make sure that central sources are nowhere near the distribution table.

Pages

Can election economics work? Israel as a case study

Winning: Englishman, Israeli and 65 medals

Branding – being noticed: The Jerusalem Formula

Will the real Gaza economy stand up and be counted?

What British and Israeli economic planners can learn together

Israel’s economy surprises again

Industry, recession and the failure of central planning

Why decision makers hate to admit to mistakes – Israeli case study

I don’t need a business plan, do I?

What’s the value of the life of an Israeli soldier? A comparison

Israel’s financial planners – differentiating spin from the truth

Israel’s economic plan, or not?

If only Netanyahu had stayed as Israel’s Finance Minister?

Israel’s economy – seeking direction in summer 2012

Can you boycott trade with Israel?

What’s happening to the Israeli economy?

Mentoring, ministers, muck-ups – Israeli conundrum

Israel tech takeaways – where Cisco leads….

5 unexpected takeaways about Israei tech

Investing in the Palestinian economy – who gets what?

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