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Gaza’s economic woes – what happens if the blockade is rescinded

4 July 2010
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Categories: Business, Israel, Palestinian Society

It is politically correct to accept that Gaza’s economic woes are cause by Israeli policies. However, if you use IMF and World Bank stats, 3 points are immediately evident of Gaza’s history:

  • Under Egyptian rule up to 1967, the area was an economic no-go area with life expectancy under 60
  • With Israel in charge, growth leapt to over 5% per annum until 1999.
  • Bring on the Intifada and then Hamas rule, and its back to disaster time.

Fertile Gaza, with an economy that could be really successful, suffers from unemployment, poor sanitation and an authoritarian  government.

For all the repeated criticism of Israel from UNRWA, NGOs, the Turkish Prime Minister and others, there is no starvation in Gaza. Consumer goods exist in quantity. There are even official tariffs to protect some local manufacturers and keep out imports. Hamas has refused to move even one Palestinian family from the refugee camps and into former Israeli towns. 

I found  a recent Newsweek article illuminating:-

While the three-year-old ban on many imports has posed a hardship for most Gazans, smugglers have been able to deliver these items through a network of tunnels connecting Gaza with Egypt. An Israeli television news segment—aired last week and widely discussed here—shows Palestinian shop owners on the phone with their Israeli suppliers, coordinating the delivery of goods by sea to Cyprus and onto Sinai, where they’re carted to Gaza through the tunnels.

So not much of a blockade. So what is likely to change now that Netanyahu has bowed again to international pressure and accepted most of Obama’s demands?

Will there be less firing on Israeli civilians, the main cause of Israeli hostility? Maybe – not out of love, but because Hamas has seen how the propaganda front can be more rewarding than firing thousands of missiles.

Ironically, if imports arrive directly into Gaza, prices may rise and Hamas may lose a source of its income. Hundreds will lose work in the tunnel industry and Hamas will cease to take its graft from the reduced contraband. Maybe, the activities will transferred to the overland ports of entry and “normality” will be restored.

Israel has agreed to up the numbers of trucks allowed to enter Gaza daily from around 100 to 150. Maybe exports can start up, which will produce a real bonus for the economy. The fact that NGOs have failed to call for this until now reveals how their focus was often directed against Israel than on behalf  of Palestinians.

What would truly make a difference is if Hamas were to recognise Israel’s right to exist. In the West Bank, where the economy has grown by around 8% in the past 12 months, there is now cooperation over sewage schemes and alternative wind energy. Rami Levy, one of Israel’s largest supermarket chains, has a new branch near Bethlehem open to all.

Why don’t world politicians force Hamas to do something that is obvious, necessary, simple and humane; to recognise Israel and to live in peace with the state? Think how much we would ALL be better off.

OECD confirms Israel “green and clean”

30 June 2010
1 Comment
Categories: Business, Israel

Cleantech 2010 in Tel Aviv is Israel’s premiere platform, allowing the Holy Land to show off its technologies in this latest industrial revolution. The country may offer barely 400 companies in the field, but its capabilities are being copied by many others.

Better Place is driven by an Israeli – American CEO, Mr Shai Agassy, who intends that Israel will host the world’s first all-electric car network within the next 12 months. IDE operates 2 huge desalination plants in Israel and has been commissioned to expand an existing operation in China. Siemens has already invested hundreds of millions in Israeli solar technology, with a new agreement announced this week. Personally, I am involved in an exciting biomass project, successfully converting poisoned waste into energy.

I can mentioned algae farms. We can discuss wind technology, which redirects the direction of the air around the turbines. And there is much more out there on google.

But it goes further than that, much of it is unseen. Israel’s electricity company is completing a pilot project, involving 150 internet users. They have access to a 100 mega line, way faster and cheaper than anything currently available. Within approximately 30 months, it is expected that the whole country will have access to the same service.

And the OECD in its first report on Israeli agriculture has confirmed the important skills that the country possesses. The press release is none too encouraging, probably the sign of some childish internal politics. However, the content is extremely positive.

According to the report, ………, a string of reforms in (Israel’s agriculture) sector between 1990 and 2007 caused a 60% rise in output leading to an annual average growth rate of 2.2%, higher than any other industry and higher than in most OECD countries.

The report states that Israel enjoys advantages in season and expertise, which allow it to successfully export many of its crops to the European market, but that its primary source of agricultural export is in technology. According to the document, in 2007 agricultural technology exports amounted to $2.2 billion, eclipsing agro-food exports.

It is nearly a year ago since McKinsey confirmed Israel’s strong positioning in the cleantech sector. This month’s exhibition and news serves to consolidate and publicise these significant global advances.

Reduced “weight of government”

29 June 2010
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Categories: Israel

The phrase, the “weight of government” often conjures up negative connotations – something along the lines of “what stupid thing are they going to force on me now”.

I assume the idiom comes from a time when there were so many people in government, sitting round doing nothing and getting fat. In Israel, there are currently 30 ministers of government, 25% of the whole Parliament. Clearly, the public budget has mushroomed in order to accommodate all of these people, their assistants, offices and other heavy baggage.

Israelis are used to seeing TV pictures of the opening of cabinet debates, where the table is full of sweet-tasting goodies. But suddenly, several months back, Prime Minister Netanyahu instituted a policy that has won the support of all factions and all religions. Fattening, unhealthy delicacies will no longer be provided. Ministers have been asked to join keep fit programmes. Cut up veggies are now the main part of the noshing menu.

If I was to paraphrase from a popular American TV reality programme, if the Israeli executive wants to change people’s lives, it has started to set an example with their own behaviour,

Netanyahu is reported to have lost 5 kg; the minister for tourism – 6kg; Yisrael Katz at the Transport Ministry – 30 kg; Barak and Lieberman, defence and foreign affairs – 6kg and 15kg. The finance minister plays basketball once a week.

Just adding up these figures alone comes to the average weight of an adult female. In other words, in terms of fat, the Israeli government is literally shrinking away. Now there’s a thought for the country’s enemies.

Orange, Israel, fails 101 “service for dummies” course

28 June 2010
2 Comments
Categories: Business, Israel

With the click of a button, an unhappy client could send your company or its sales into a tailspin. “Don’t underestimate the power of a disgruntled customer,” says Rebecca Morgan, who authored Calming Upset Customers.

Isn’t that obvious? Well, apparently not. We all know the stories of Dell and other multinationals who lost mega sales and many branding points by treating customers with arrogance. It would seem that bigger you are, there is a greater danger that you are less responsive to your income source.

Take the Israeli mobile operator, Orange, or Partner as it is sometimes known. It has a large and enticing website, with even larger profits to match. I called them to verify my latest monthly bill.

Do you think that I could get the customer service team to admit that there was a mistake? You must be joking. I asked for an explanation of how I was being charged. She responded. I said that her words did not match the line-by-line items. She said that her words also appeared on the bill. So what? What did that help me?

Her solution: Would I like to hear about a better deal? Nothing about how to resolve the discrepancy. So much for being a help desk.

In fact all my questions and comments were treated with the same kind of answer. In other words, the lady was well-trained and found a textbook response to each issue. Her problem was that she sounded just like… a textbook. Has nobody taught Orange staff that formalities do not work? In fact, they are offensive!

Anyway, I accepted the chance to hear about a different pricing system. So sexy voice number two comes on the phone to stroke my wounded ego. Yes, I deliberately use mixed metaphors, because I assume that this is part of “their” game. In effect, this was an insult to my intelligence, but they did not seem to understand that.

The new offer was clear. No penalty clause for changing programmes. But when pushed, she did admit that I had to commit to being on the scheme for 18 months. Why? Because “we are trying to help you”.

Sounds caring, yes? No, a thousand times, NO. If they wanted to help, they would just move me over to the new scheme immediately, no strings attached. Genuine assistance is something you learn about in the first lesson of  the service for dummies course, which it would appear that Orange employees are not allowed to study.

As for the 18 months commitment, which other retail brand demands such loyalty from you? Does Safeway say that you can only shop with them, if you make all you purchases at their outlets for the whole month? Does your bank demand that you keep all your accounts with them? Do have you have to service your car at the same garage every time?

The 18 month rule is an abuse of the consumers right to freedom of choice, and it encourages Orange and their competitors to offer out lousy customer service.

And who is to blame? Well, let’s start with the regulators, but that is another blog altogether.

Eureka – EU blesses the world of start ups

27 June 2010
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Categories: Business, Israel

EUREKA is a pan-European agency, investing €1.5 billion annually in start ups and emerging industries. Israel is considered one of the 5 most active partners of the project. For example, in 2008, it was associated with 40 of the 300 approved projects.

So, it comes as no surprise that this weekend, Israel was officially awarded the Presidency of EUREKA , succeeding Germany. In fact, of the 150 new initiatives, Israel will be concerned with 23  of them. Not bad, considering that Israel has only been a member since the year 2000.

Robert-Jan Smits, the deputy director-general of EUREKA, was quoted as seeing the Israeli leadership as a positive move for all. As reported in the Hebrew newspaper, Yediot,: –

Israel is a very good example of taking r&d seriously. Many European countries can learn from the way Israel’s government is involved in investing in industry. Israel has an educated workforce, excellent innovation and incubators…..

It will be interesting to see in what direction Israel will lead EUREKA. There has already been much talk of allowing in other countries, notably from Latin America. Israel’s minister for trade and industry, Fuad Ben Eliezer has also made it clear that he wants to bring Egypt into this exclusive club.

Israel wounds a $9 billion market

25 June 2010
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Categories: Business, Israel

Many analysts have commented how Israel’s successful high tech economy is a fact driven by necessity. Never was this more true than in the fields of medical devices and applications.

Specifically, look at the example of wound healing, a subject that reaches out to the civilian and heavy military markets alike in Israel. Estimates calculate the value of the global market at around US$9 billion.

And here’s the catch. Many of the global players with something significant to offer are Israeli:

Israel will have the world’s largest company for burn and chronic wound treatments, if all goes according to plan in a complex merger deal between Clal Biotechnology Industries Ltd. (TASE: CBI) portfolio companies MediWound Ltd. and Polyheal Ltd., which will come under the control of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). Under the proposed deal, MediWound will acquire full control of Polyheal, and Teva will gradually increase its stake in MediWound to 51%.

There are several other, but lesser known, Israeli companies, which operate in the field. One is called Cupron. It offers a copper-based platform technology, which is known to support skin regeneration. Could it make stitches in the skin an irrelevant subject?

These discoveries, shoved into the media limelight, come at a time, when there are growing shouts for economies to boycott Israeli products. The hypocrisy of such a world campaign is drawn out by these very products.

Can you imagine an organiser for these unilateral moves, which are often basted on hate turning round, saying: “I refuse Israeli treatment on my skin”? What nonsense!

When “branding” meets “networking”…

23 June 2010
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Categories: Business, Israel, Jerusalem

I am one of the moderators at JBNF, a monthly meet up forum for business folk in the Jerusalem region. This week, we conducted a frantic session of speed dating; 40+ people getting to know each other’s commercial strengths inside 90 minutes.

I was drained by the end of it. And yet, the results were clear as people left the hall. It was more than the swapping of business cards. Meetings were being fixed up. Interviews and site visits were arranged. Seminar material was being snatched up. And much more.

Interspersed amongst the one-on-ones, we arranged for 3 guests speakers to give tips about how to network; the importance and structure of an elevator speech, how to listen to others with empathy, moving out of our comfort zones – these were just a few of the themes mentioned.

What did it boil down to? When you network, you are showing off your own brand. And remember:

Before seeking the spotlight, the first question you should answer is, “What do I have to offer that no one else can?”

I told the story of how so many of us, when faced with a reception where we know nobody, end up spending most of our time creating an in-depth relationship with a glass of orange juice. In fact, a quick look around will probably reveal 30 other people in a similar situation. The trick is to start talking to them and to create new hubs of contacts. Draw them in to your circle – after all, as they are probably just as bored as you, they will be only to happy to talk to you.

And that’s the point. Moving out of your comfort zone may not be easy at first. However, as most of us find once we have moved on, the new level is just as satisfying as your previous set up. Surprise!

How tech brings you a better world cup

22 June 2010
3 Comments
Categories: Business, Israel

There must be dozens of countries around the world, that every 4 years have hopes of getting to the World Cup Finals but continuously miss out.

Israel is a strong member of that not-so-unique contingent. In fact, similar comments can be made of it efforts at the Olympics. Far more is spoken and written than actually done…done, that is on the playing fields and track.

You see, Israel often has a major part at these sporting triumphs, although the role is confined to behind the scenes. For example, for the past decade, numerous companies from the Holy Land have secured contracts for security at the Olympics, and this includes software and hardware providers. 

South Africa 2010 is no exception to the rule. LiveU is based north of Tel Aviv and connects real time video links to any camera within seconds. Barely in operation 4 years, by January 2010, their tech was used to capture behind the scenes action at the Grammy awards.

And as the current footballing grand prix plods on, LiveU has taken tens of its units to the World Cup. Clients renting their “black box” include media giants such as NBC and AP. Another line of sales are buses showing games as they are played.

40 workers, a growing line of investment partners and a small office in America. Amazing how simple it can be if you want to make it big. And millions around the world are now benefitting.

Israel puts cleantech back on the map

21 June 2010
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Categories: Business, Israel

I have just received my invitation to an exciting meeting of the “Council for the Improvement of Jerusalem”. Maybe long-winded in name, but the event will be designed to save future resources.

What the presenters will be talking about is a housing project for the caiptal, where the 50-100 new apartments will recycle their waste. The bottom line is that energy demands of the homes will be met without external support. Significantly, one of the key speeches will be given by Tamar Goldman, whose father Arnold Goldman has been a pioneer in the solar energy industry.

The presentation is scheduled to take place just 2 weeks after Israel’s annual showcase event: Cleantech. As the organisers point out….

There are 320 companies in Israel that can be defined as specializing in the CleanTech field. In the last two years, over 300 million dollars have been invested in the CleanTech industry. In the last two years, over 13 investment bodies were established in the CleanTech industry.

For a country of only 7.5m people, that is a remarkable achievement.

And while Israel is often mentioned for its strengths in solar and biomass technology, necessity has forced the country to take a lead in water purification. As the summer heat intensifies, I read this week that from a base of zero in 2004, this year nearly 300 million cubic meters of water will be made fit for drinking by purification. That stat will more than double by the year 2020.

These are not empty words. Earlier this month Tigo Energy raised US$10 million in ew financing. Israeli cleantech is definitely on the map.

Innovation led growth

20 June 2010
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Categories: Business, Israel

What is the value of innovation to an economy?

When talking about Israel, the IMD Buiness School has noted how innovation has helped Israel out of the global recession quicker than most. Innovation has helped Israel to reach the levels of OECD membership. I have wondered if Israel has discovered the DNA of innovation.

A boutique Israeli software house, QMarkets, has taken the concept of innovation one stage further. It provides companies with a formal platform, allowing senior managers to engage with the ideas of their employees and then to act on them.

My colleagues and I have been involved with QMarkets for around two years now, particularly in the UK and European markets. For example, last month, EDG, a significant international consultancy group, started a series of trials with the company. This has been followed with orders from a large energy supplier in the UK and a European telecon giant, with several pilots also in the pipeline.

A true sign of Qmarkets emergence was its positioning on the prestigious executive internet TV channel, “Meet The Boss.” Here, Michael Stilger, the company’s director of Global Solutions, outlined the concept of “innovation led growth”. Bottom line: Instead of investing in a production line or a software, promoting or encouraging innovation will impact directly on a firm’s internal procedures – that is to say, more sales and /or less costs.

From there, it is only a short step to see why the economy will benefit at a macro level from innovation. Interested?

Having faith in the holy economy

15 June 2010
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Categories: Business, Israel

One anonymous financial expert and blogger sees Israel’s housing market heading for a crash, taking the rest of the economy with it.

There are near daily comments in the Israeli press, arguing in parallel whether the financial mandarins are getting the real estate market right or wrong. Is it a bubble or not?

To judge from one anecdotal piece of evidence, the answer is that the banks confident that they are in control. Only today I was informed that two leading finance houses were fighting each other to grant a large loan to be secured against a significant piece of land. Certainly, not everything is rotting in the garden.

Yuval Steinitz is the current Minister of Finance, whose Jerusalem office is a brief drive away from the Holy Sites in the city. He can boast of a doctorate in philosophy, but has a limited background in economics. And yet, he is sitting fairly pretty at the moment. After all, even the most conservative estimate put growth in 2010 at over 3%.

An interview in a weekend paper demonstrates that Steinitz is aware of potential pitfalls. But for him, real estate is just one of several structural issues that are being actively tackled. For example, the government is ensuring that more flats are available to first time buyers, while mortgages regulations are being tightened.

Elsewhere, more investment will be placed to encourage the ultra orthodox and Arab communities to enter the workforce, when historically this has not been the situation. In order to address the “brain drain abroad”, high tech will receive more benefits, especially regarding the employment of local talent. The ministry of defence will have to justify financially new large programmes.

Steinitz also mentione that protection of pension plans, tax benefits for industry and other sacred cows are all being revisited. The aim is to ensure that the base structure of the economy matches the needs of the country over the coming decade. 

In the next few days, Israel will officially become a member of the OECD. It is a club that Israel deserves to be part of, now and in the future.

Gaza after the flotilla – what’s changed?

13 June 2010
3 Comments
Categories: Israel, Palestinians

It is over 2 weeks since Israel launched its raid on the Gaza bound flotilla. It would seem that the diplomatic fall out, especially in Europe, has not gone the way of Jerusalem. Spain for one is asking that the EU secure a change in the so-called blockade procedures by Israel.

Israelis argue that Gaza is full of food and common resources. Over 7,000 truck loads of goods were delivered in 2009 alone plus countless smuggling efforts. To that, you can add the fuel paid for by the EU, electricity and telephone services supplied by Israel, the falling price of cement, and so on.

One Israeli blogger, David Frankfurter, has described this scenario as “Liar, liar, pants on fire.” Elsewhere, he gives expression to what many Israelis feel. If the world wants a new attitude to Gaza, then writes Frankfurter: –

…..rules need to be formulated, which are simple, straightforward and easy to understand. Whatever Gilad Shalit (kidnapped by Hamas and not seen for nearly 1,500 days) has free access to, this will be allowed into Gaza….  Whatever he is denied will also be denied.  That includes visiting Red Cross staff. And access to medical care in Israel.  And guns.  And bullets…. Let Hamas draw up the list.

But there is another side to this argument. Check out what the Palestinians are saying about Gaza. For example, leading journalist Abu Khaled Toameh has commented how Hamas will ban the intended forthcoming municipal elections.

This is no isolated policy move. The May 2010 report from the Palestinian Independent  Commission for Human Rights documented 20 Gazan deaths in one month alone related to suspicious circumstances or the result of undue force. Similarly, there were 12 reports of torture, harassment of journalists, attacks of private property including UN facilities, and so on.

I was personally informed about the ransacking of the Sharek Youth Offices, where daily raids from government supported entities have resulted in destroyed and confiscated equipment. As a Sharek press statement observed in commenting on the flotilla incident: –

We do not accuse any particular party but stress that armed groups have taken these actions in the name of national security.  Nevertheless, the government in the Gaza Strip has not taken any significant action and has continued to disregard the violations experienced by Sharek and indeed all civil society institutions.  Given that those who carry out the violations do so in the name of the government in the Gaza Strip, we would like to highlight the following:

  • The government of the Gaza Strip is responsible for providing for the security and safety of its citizens and institutions, in particular against direct violations against them.
  • The fact that a group uses a name other than that of the government does not absolve the government from liability in these matters even if the groups are not related to the security or armed forces of the government in Gaza.
  • The efforts by international activists in the Freedom Flotilla to break the siege of Gaza and the attention of the world’s media on the siege has been used as a distraction and a cover to settle scores with any individual or organization arguing for unity, reform, development, freedom and justice in the Strip.  Such an action is a flagrant violation of the rights of the citizens of Gaza who remain steadfast in the face of the siege and Israeli aggression.

With all the efforts being made by our supporters abroad to break the Israeli siege, we believe we must also draw their attention to the ‘internal’ siege, imposed upon us from within through confiscations and the daily withdrawal of freedoms.  

We do not accuse any particular party but stress that armed groups have taken these actions in the name of national security.  Nevertheless, the government in the Gaza Strip has not taken any significant action and has continued to disregard the violations experienced by Sharek and indeed all civil society institutions……… 

You have the feeling that much of this abuse was around before the flotilla incident and will sadly continue in the months to come. So why is Israel to blame? Plus ca change, n’est ce pas?

 

Innovation; Israel & Denmark

9 June 2010
1 Comment
Categories: Business, Israel

Innovation is one of those much-hyped buzz words. It can be used in the context of motivation. And yes, I have written about them both, often in the context of Israeli society and commerce.

Yes, Israel is good at innovation. “Why?” the question was posed yesterday by a 4-strong delegation from Denmark’s Enterprise and Construction Authority. I met them with leaders from “Israel Business Connection“, which is dedicated to helping new immigrants to integrating into society.

The discussion was fascinating. One key theme to emerge was that you cannot legislate innovation. It has to be part of a culture. A central authority help to provide some of the conditions of that environment. Here, Israel has several fundamentals working in its favour.

Let’s start by returning to the theme of immigration. It is an accepted fact that much of the brains behind Israeli hightech and cleantech are Russian Jews, who abandoned the Kremlin as soon as they could in the 1990s. With or without Hebrew, many have found their way into industry. I come across this almost every week in my company visits.

And yes, Israel is surrounded by less than friendly countries, which forces (or motivates) it to be creative. Military tech is often converted to civilian use, once former soldiers take on regular jobs. An early example were night sights and their application in medical equipment.

The Israeli government sets up incubators, several of whom have since been bought by private companies. These afford young firms the opportunity to concentrate on development, while minimising the burden of admin.

In parallel, there is a system to allow start ups to engage with professional business mentors, subsidised by 75%. In the past year, I have fulfilled this role several times. It is demanding and rewarding. It requires experience to see above and beyond the immediate issues. I challenge the client to focus on what is the core subject and not to be bogged down with trivialities.

The Danish team reported that in terms of start ups, there is no shortage of numbers in their country. The problems revolve around converting this energy in to large companies. And while we were chatting, the Israeli treasury announced measures to tackle that very subject.

Clear outs, some cows, Israeli humous and Pepsi

7 June 2010
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Categories: Business, Israel

What should my budding entrepreneur do? Sitting opposite me yesterday was a very talented young gentleman. He had found a way to import cheap goods into Israel, sell the stock quickly, while gathering loads of satisfied customers and locking up a wad of liquid profits.

Should he take the business up a phase? Can he develop his idea and start to realise his extended vision?

I pointed him to a story in the weekend Hebrew press. Strauss Ltd is an economic food giant in Israel. Legend has it that the company started operations nearly 80 years back. Grandmother Strauss fled Germany, acquired 2 cows and started selling the milk in a small town in northern Israel.

Around 15 years ago, Strauss bought out Elite, Israel’s largest sweet manufacturer. It now dominates the Israeli humous, tehina and “dips” market. Ofra Strauss, chairperson of the Strauss Group, is considered the 12th most influential woman in the world, according to Forbes Magazine.

Two years ago, Strauss began to explore a joint venture with PepsiCo, a US$43 billion food conglomerate. The aim was to buy the company Sabra, and latch on to the growing humous market in the USA. The relationship has proved an amazing success. Ofra Strauss is even pally with Indra Nooyi, the CEO of PepsiCo and 3rd in the Forbes list.

Last week, the two companies upped the level of engagement. They announced an agreement to co-own a new 300 hundred employee plant in the state of Virginia, not bad for an area suffering over 7% unemployment. The American humous market is about to become very spicy overnight.

My prospective client might be better off by moving to the USA and opening up a pita business, which will compliment the Strauss-PepsiCo cooperation. Whatever his choice, grandmother Strauss should remain a simple yet pertinent inspiration during his decision making over the next few days.

How Gaza missed a US$1 billion deal

6 June 2010
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Categories: Business, Israel, Palestinians

The second Palestinian Investment Conference in Bethlehem closed at the end of last week. Reports differ, but anywhere between US$500 million and US$1 billion were raised to support Palestinian infrastructure projects. The American government was represented through Obama’s special envoy, George Mitchell.

The fact is that most of the money will end up in the West Bank for two reasons. First, there is no love lost between the Palestinian Authority under President Abbas and the Hamas rulers in Gaza. Fatah and the PLO just do not operate in Gaza.

In parallel, there are logistical and structural issues why Gaza loses out. Over the past few years, violence in the West Bank has reduced substantially. The World Bank reported an 8% spurt in economic growth during 2009. The Ramallah stock market is showing initial signs of trading regularly.

Drive 2 hours south to the Gaza Strip and beneath the rhetoric of Hamas leadership, you find fundamentalism. Even during the fracas with Israeli commandos, Palestinian human rights groups condemned the local leadership for harassment. The Arab Bank has already closed 2 of its 3 branches in Gaza, amid reports of money going missing. And of the 20% of the population listed as refugees, not one family has been relocated to the former Israeli wealthy towns since 2005.

One blogger has described how the Israeli raid of the Turkish flotilla was reported with the full force of Orwellian newsspeak. 6 ships sailed to prevent a human disaster, which does not exist. The Daily Telegraph (UK) quoted Khalil Hamada, a senior official at Hamas’s Ministry of Justice:

There is no starvation in Gaza….No-one has died of hunger.

Yes, the British newspaper also confirms that the Gaza economy is in a very poor condition. Matthew Kalman in Time Magazine reports a similar picture. Hamas is thrilled at the “economy of tunnel goods”,a s it takes its percentages from the profits.

So blame Israel? No blockade and everything will be wonderful? Obvious, but just more Orwellian drivel.

Before the flotilla affair developed into an international crisis, I wrote that:

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

The predection came true. Now remember that Egypt also enforces the blockade, because it realises the evil of Hamas. And Monsieur Abbas is certainly not opening the financial taps to Gaza.

If Gaza was not ruled by Hamas, how much freer would its people be? How many churches would then be open? And much money would begin to flow into its economy?

Turks and Israelis declare economic war

3 June 2010
4 Comments
Categories: Business, Israel

Does it matter that bilateral trade between Israel and Turkey is about disappear in to outer space?

For Israelis, Antalya is a mega tourist destination. All charter flights have been cancelled. Zvika Levinson, CEO of Daphna, an important clothing chain, has cancelled plans to open up a production line in Turkey. Almogim, an Israeli building company, has cancelled import orders.

For over a year, Israel and Turkey have been playing love-hate over trade relations. In parallel, senior Turkish politicians have been cosying up to Israel’s enemies; Syria and Iran. And now, after the fall out of the so-called peace-keeping mission,  little room remins for hope and expectation. What’s at stake? Around US$2.5 billion worth of trade annually.

One Israeli investment house, Halman-Aldubi, has pulled out of Turkey all together. There are some key Israeli defence contractors, who may see contracts ripped up over night. As for tourism, Israeli TV reported that Israeli visitors barely add up to 1% of the Turkish market.

Who will suffer in the end? Just the average citizen, on either side, as politicos continue to trade insults, replacing cooperation with distrust.

If bankers are pessimists, why is Stanley Fischer smiling?

31 May 2010
1 Comment
Categories: Business, Israel

Stanley Fischer is governor of the Bank of Israel. He is just beginning a second term in the position. In a recent newspaper interview, he noted that his job requires him to be “concerned” all the time. Yet, if you read the article in full, you will find that this one happy man.

The reasons are not hard to find. Let’s start with the recent past. As a previous Number 2 at the IMF, Fischer knows all about handling financial crises. In late 2008, Israeli politicians left him alone to find a suitable monetary policy to deal with the credit crunch. As they were too busy fighting a general election, there was no opportunity to throw public money at the problem, like in Greece or the UK.

Surprise! Israel was one of the first countries to emerge from the global economic meltdown.

And Israel’s public sector debt today remains serviceable. In fact, there are plans to continue to lower direct and indirect taxation, although a debate remains over what is the correct timing.

Fischer is also thrilled at the opportunities presented by Israel joining the OECD. This will open up the economy to new lines of investment and credit. In the long term, this will help the government to secure balanced budgets.

Domestically, the economy knows that thre is a wise and caring official in charge. In the past year, Foreign currency speculators have been fought off. The head of the country’s largest bank has been forced to resign. And May 2010 has seen the cenral bank prick a potential real estate bubble.

So, whilst the soars of Athens can still be felt across Europe, Israel still remains an economic pleasure spot in the Mediterranean basin. Thanks Stan! Your keep on with your fretting, whilst us poor civilians reap the benefits.

Boycotting Israel’s economy the slow way

30 May 2010
1 Comment
Categories: Business, Israel, Palestinians

I have just read a bizarre banner, beaming out political correctness: “Gaza seize isn’t sweet. Boycott Israeli chocs“.

This was all to do with a small protest in New York. It follows similar efforts led by activists, primarily in Europe. They claim that Israel is not interested in peace with the Palestinians, and therefore should be isolated. Sounds cool, until you examine the childish if not racist hypocrisy of the newspeak.

First, consider how these groups spread the word. Obviously, they use computer and mobile tech. Open up these machines of wonder, anywhere in the world, and you will find loads of Israeli tech inside. Yes, Intel’s current and next round of microchip was developed in Israel.

Try googling www.soluto.com. This Tel Aviv start up has just won Tech Crunch’s prestigious 2010 Disrupt competition. Soluto has designed a software to make computer’s work faster. How long will it take for a hate-Israel activists to latch on to that?

Israel’s tech pervades many aspects of life overseas without people being aware of it. Better Place is a prime exponent of battery cars, maing their way into Europe. The country has the top brains in solar and wind tech. The irony is that green politicians, often noted for their criticism of Israel, have consistently failed to reconcile their rhetoric with facts on the ground.

Palestinian President, Abbas, has claimed this week that he “will deal with the USA but not with Israel”. Bravo, a true practioner of the boycott policy.

And here’s the catch! I thought that making peace was all about getting together, finding a way to talk to each other. Rather than boycotting products, surely it would be preferble to arrange joint exhibitions and displays. I is time for Abbas to sit down with his Israeli conterparts. 

If the Palestinians and their supporters are so afraid of letting Israel’s pluralistic society be exposed to others, what are they afraid of? What hatred is their spin covering up?

The day Israel’s stock exchange joined the big league

27 May 2010
No comments
Categories: Business, Israel

Thursday 27th May is the Tel Aviv stock market’s (TASE) first day of trading under the highest classification of the global MSCI. Although a tiny percentage of the pool, TASE is now in the same league as London, New York, Paris et al. Congrats.

As part of the “warm up” to the big day, Wednesday’s trading was TASE’s largest ever day for turnover. An average day sees vloume of around 2+b nis (US$0.55b). The highest previous record was in December 2007 with 5.4b nis. Yesterday’s level hit 16.4b nis, approx 8 times a normal day’s activity…until now.

Teva, Israel Chemicals, the telecom sector – many of the blue chips saw high volatility. And despite the specially extended trading hours, some of the orders will only be placed on Thursday due to the backlog.

TASE ended up on the day, although it cannot be taken for granted that the gains will be secured over the next few days. Europe’s financial instability threatens the Middle East as much as any other region. Despite reaching a new record high since the credit crunch, the index is 10% of its peak.

The question is why the rush into Israel? And the answer remains that Israel’s economy is performing well. New gas reserves will fundamentally change the country’s balance of payments over the next few years. Cleantech r&d plays an increasing part in the economy and for exports. Israel has just entered the OECD club, which will spark a new round of foreign investment.

Mazaltov to TASE!

Gaza’s floating economy

24 May 2010
3 Comments
Categories: Business, Israel, Palestinians

As I write, at least 9 ships are heading towards Gaza laden with humanitarian aid, activists, European politicians and soundbites. The aim is to help the population of Gaza, which continues to suffer from poverty and high unemployment. In addition, the voyagers and their supporters wish to protest against what they see as Israel’s irresponsible behaviour towards the territory.

If you google the phrase “Gaza economy”, you end up with very few serious analyses of what is the true situation in this tiny fertile strip of land. The Financial Times of London, a leading media beacon in international money matters and no friend of Israel, observes that

…the tunnels below Rafah have offered a unique lifeline to Gazans, who are otherwise deprived of all but the most basic humanitarian supplies. They have also allowed Hamas, the Islamist group that controls the Strip, to replenish its coffers and rebuild its military arsenal, making the tunnels a target for Israel……Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup – long absent as a result of the Israeli blockade – are both cheap and widely available. However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese air conditioning units. Tunnel operators and traders alike complain of a saturated market – and falling prices.

This is not an isolated piece of reporting. If you pop into the Roots Club in Gaza, according to Lonely Planet, you can dine on “dine on steak au poivre and chicken cordon bleu”. Tom Gross documented the “after effects” of a previous flotilla, when the arrivals were seen purchasing souvenirs in well stocked shops.

Earlier this month, I wrote that:

According to the World Bank, the Palestinian economy is booming. During 2009, growth in the West Bank reached 8%, although Hamas controlled Gaza saw a more modest development of 1%.

 In fact, the World Bank had previously noted that up to the beginning of the Intifada in September 2000, the Palestinian economy grew at over 5% pa in real terms since 1968, shortly after the beginning of Israel’s control of the region. So, while Israel’s current restrictions cannot help economic growth, you have to wonder if the cause of the poverty lies elsewhere.

Ironically, it was the singer Elvis Costello, who indirectly pointed out the true fallacy. This pop icon has just cancelled a two-date performance tour of Israel in protest at Jerusalem’s continued humiliation of Palestinians. On the day of the announcement, Hamas authorities executed three Palestinians…in front of their own families. Who’s humiliating who?

Similarly, who’s starving who? As one Israeli blogger observed, the Palestinians are the recipients of billions annually in aid. We know the shops are full. The UN confirms that Israel sends in tons of aid near daily.

And then there is the housing issue. According to UN stats, just over 20% of Gazans live in refugee camps. Israeli towns in the Gaza Strip were closed down in 2005. Since then, not one person has been allowed to move out of the camps and into these former settlements. Why?

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

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