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Leadership communication woes: Vatican or Israel

10 November 2009
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Categories: Business, Israel

Speak to your customers. Engage your constituency. Sales manager or politician, everybody is trying to reach as many people as quickly as possible. And seemingly, we all know how to do it better than the other; just by quoting the magic phrase “social networking”.

Yup – get yourself a blog and a twitter account and the world will love you.

Even the Vatican is at it. Six weeks ago, Pope Benedictus XVI began to urge priests to exploit 2010 World Communication Day in order to promote awareness of the pastoral ministry. And if you click the link here, you will find a series of announcements encouraging the Catholic Church to use, use, use digital media for the greater good.

So if this is “powerful media”, even significant enough for the Financial Times to pick up on the comment, what about other countries? In Israel, Bibi Netanyahu has a deserved reputation has a good communicator. I have seen him speak several times, and he knows how to control an audience from the opening sentence.

And yet, look how poorly his government has delivered on two key issues. Internally, a new tax was announced on water consumption. The aim was to raise money for new investment in the sector and discourage over usage. The bills have started to come, showing more than a doubling in costs.

Uproar! The public reaction has produced a massive rethink on the grounds of…well, apparently the first rains have been so good that maybe Israel does not need such a tax after all! How’s that for a convincing message to the man in the street?

Or take the debate on the Goldstone report at the UN. Israel had months to prepare for this international PR disaster. The bottom line is that Israel had to enter Gaza, because it was under daily attack – over 10,000 rockets and missiles had been launched from Gaza in under a decade.

No comparable situation in the world? Did Israel dare point out that Saudi Arabia regularly attacks Yemen, killing innocents – this happened again in the past few days. What about the suspected atrocities in Sri Lanka? Or….. and the list goes on. Silence from Jerusalem, meaning the world has nothing to respond to.

The point is that when it comes to effective communications and leadership, the Holy Land may have a lot to learn from the Holy See. Fingers crossed that somebody gets the message?

 

Encouraging Palestinian suffering – a boycott

9 November 2009
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Categories: Business, Israel, Palestinians

In September 2000, Yasser Arafat launched the Intifada. An  immediate result of the security concerns was that Israel ceased to employ 125,000 Palestinians from the territories. 125,000 employees  – well paid compared to similar positions in Gaza and in Hebron – lost their wage packet almost instantly.

9 years later, supporters of human rights are asking British customers not to buy Israeli agricultural products. They intend that such a boycott will bolster the livelihood of Palestinians.

Just as the Intifada saw a sharp drop in Palestinian GDP, which is only just showing signs of a full recovery, so too will a boycott of Israel have an equally devastating effect. How so?

Simple – every day, tens of thousands of Palestinians work on Israeli farms. As increasingly supported by Israeli civil law, their conditions are improving annually. Just as with a decade ago, these are comparatively high salaries. Unemployment in the Palestinian territories is still over 20%. They are unlikely to find alternative jobs.

To take the argument one step further, most of Israel’s agricultural exports herald from peripheral areas, where wages are already comparatively low. So a boycott is going to effect Palestinians, along with Bedouin, Jew, Arab and Christian, all re-entering together the poverty trap.

For some, no work is often leads to the path of extremism, a horrible and useless experience for all sides.

With some irony, it is the British themselves who will also suffer from any such boycott. Aside from being deprived of excellent produce, they will create unemployment for their own folk.

Israel is Britain’s largest trading partner in the Middle East – excluding Saudi Arabia with its sales of oil and purchases of armaments. Imagine how many homeland-based British livelihoods a boycott would threaten! Billions of pounds of trade dumped into the sea, only to be trawled away by hungry competitors.

The hypocrisy of the boycott argument is further exposed by its own advocates. They do not call for an imports on Saudi oil not a ban on the use of cheap toys from China, despite the oppressive regimes. And they disseminate their information by e-mail, when their computers are run on Intel tech created in Israel.

Even the spin lacks credibility. For example, such people claim that Israel syphons off water from Palestinian towns, when the opposite is true.

When a political call for action is based in disinformation and will only wound those it is supposedly trying to help, then others must consider the true motivation of hate behind such a movement.

Fitch confirms Israel had “fared better” than most

8 November 2009
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Categories: Business, Israel

Israel’s financial community received a major compliment last Friday. The Fitch ratings agency confirmed that Israel had survived the global economic crisis significantly stronger than many of its economic competitors.

The current outlook remains stable, although a warning was sounded, regarding the high public sector debt ratio. By 2008, it had fallen to 78%, but had started to rise ominously in 2009.

Israel’s credit rating remained unchanged, impressive when you consider that 44 countries have been down graded in recent months.

Fitch’s announcement confirms similar finding from Moody’s and from S&P.

The importance of such announcements should not be diminished. They enable Israel to raise money effectively on international financial markets. In parallel, the decisions of overseas investors can turn on such ratings.

Israel’s growing position in the global economy

5 November 2009
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Categories: Business, Israel

This week has seen continuing further international notification of Israel’s improving economic climate. CNBC’s coverage of the country’s innovative skills has been supported by other news.

Let’s start with Israel’s application to join the OECD. It appears that the 4 year process is drawing to a close. In January 2010, the organisation’s Secretary-General, Angel Gurria, will pay an official visit to Jerusalem, with the final papers expected to be completed by April.

This week, showed how Israel is about to become an exporter of energy, an amazing turn around with positive political and economic repercussions. Talks have commenced to supply gas to Cyprus.

Eric Dutram, an observer of funds and portfolios, summed up what is happening by referrring to the “TICK”  drive. Israel is part of a new group of countries, including Taiwan, Chile and Korea, where “many investors might be better suited tilting their international exposure”.

These economies may be small, but they all pack an economic punch. All four are ranked between 25-50 on the Human Development Index,  and all have above world average GDP per capita (PPP).

Why Israel specifically?

Israel is seeking to become a solar power leader in the region, which could lessen dependence on the actions of occasionally hostile neighbors. Israel has one of the highest rates of solar water heater usage, with almost 90% of the population heating their water this way (PDF). Israel also has “Silicon Wadi” or their version of Silicon Valley, which has become a high tech hub in the Middle East attracting companies such as IBM, Google, and Intel. Silicon Wadi has been described as the second most important center of innovation in the world, and with good reason. It has produced impressive technological feats such as Intel’s Centrino chip and the programing code PHP. Israel also has a very well educated workforce that are trained in technical skills, with a high level of engineers at 135 per 10,000 employees (well above America’s 70 per 10,000).

4 comments on the Palestinian economy

3 November 2009
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Categories: Business, Israel, Jerusalem, Palestinians

As Palestinians head towards elections in January 2010, few external commentators will be looking at their financial leadership. So let me chip in with some opening thoughts.

1) Israeli military restrictions are often held up as the sole or main cause of poor Palestinian living standards. In parallel, reports from the World Bank for the past 5 years have consistently chastised the Palestinian Authority (PA) for its excessive levels of public spending.

 This is a euphemism for employing too many people, particularly in the security services. 60% of the PA budget is devoted to paying salaries, including Hamas officials in Gaza. When will the government have the courage to reduce this patronage?

2) Another issue often ignored is the non-delivery on promises of donations, made by members of the Arab League, or its non-accountability in the books. This was brought to light again by Ekmeleddin Ihsanoglu, the secretary-general of the Organisation of Islamic Conference (OIC). With 57 members, it is the second largest inter-governmental body after the UN.

In an interview with Al-Jazeera, Ihsanoglu berates Israel and observes how the Goldstone Commission was a pre-planned tactic. But he effectively admits that much of the money raised on behalf of Gaza cannot be accounted for.  He mentions $100m. He clarifies that the Palestinians received $37m, of which $21m came from Norway. Where is the missing US$56m?

3) Britain’s Daily Mail newspaper eloquently explained why increased supervision of Palestinian accounting is needed by the international community.

The Government is sending British police and intelligence officers to the West Bank to try to stop a wave of brutal torture by Palestinian security forces, funded by UK taxpayers.

Their mission is to set up and train a new ‘internal affairs’ department with sweeping powers to investigate abuse and bring torturers to justice.

The department is being paid for by Britain, with an initial planning budget of £100,000 – a sum set to soar as it becomes established.

Yesterday a senior official from the semi-autonomous Palestinian Authority (PA), which runs the West Bank and its security agencies, admitted for the first time that torture, beatings and extra-judicial killings have been rife for the past two years, with hundreds of torture allegations and at least four murders in custody, the most recent in August.

And as noted by the World Bank, about 25% of the PA expenditure is supported by external donations, particularly from Western countries. They are effectively paying for the salaries of these people.

4) Despite the abuse of budgetary control, the World Bank notes that since 2008, as violence has reduced, so economic activity has risen. Just visit new shopping centres in key Palestinian cities like Ramallah and Jenin for proof.

However, a note of warning. This is the Middle East, where logic is often a poor way to analyse the geopolitical dynamics. Just before the outbreak of the Intifada in the year 2000, Palestinians were enjoying their best economic boom ever. Back then, the realities of the peace process ensured how that prosperity would not continue.

Nine years later on, will the Palestinian leadership, through their rioting on the Temple Mount and actions from Gaza, allow the same thing to happen?

Innovation and recession exit – Israel’s model

2 November 2009
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Categories: Business, Israel

At the back-end of the recession, innovation has become one of those buzz words.

A classic example is General Electric, which in May 2009 announced that over the next six years it would spend $3 billion to create at least 100 health-care innovations that would substantially lower costs, increase access, and improve quality.

In Israel, I am associated with the annual Techshoret Conference (March 2010), where innovation will be the key theme for communicators.

In the world of social media, there are plenty of tweeters on innovation. Similarly, LinkedIn groups have seen a plethora of discussions on the subject.

A new book expounded on the importance of innovation in the current economic situation. Entitled “Start Up Nation – The story of Israel’s economic miracle” (Senor and Singer), the authors relate how Israel is one of the first countries to break from the global recession.

I have previously written about Israel’s increasing economic performance. This book gives that ability a philosophical background. As Dan Senor stated in an interview with CNBC, survivability  has fed into innovation. Israeli physche looked at the economic downturn and said “we will get through this, quickly. Let’s move on.”

Senor and Singer ask how can Israel, surrounded by a geopolitical mess, continue to generate relatively high growth. They detail 8 factors.

Of the 8, I will single out two of them, which are often ignored, missed or considered political hotcakes for many in the OECD; First, immigration, which Israel openly encourages. There is hardly a sucessful hightech company today without a section of Russian scientists, who arrived in the 1990s. How would Le Pen in France or the BNP in the UK take to that concept?

And secondly, the military. All Israelis know that serving in the army need not just be 3 years away from home, but your first rung in an academic / technical career. In contrast, British newspapers often report how troops returning from Iraq and elsewhere struggle to return to society.

As the world moves out of recession, it will be interesting to analyse which companies have invested in innovation and which have not, and then asking who is doing better.

Why Israel’s economy is doing well

1 November 2009
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Categories: Business, Israel

Look for articles on the web about Israel’s economy, and you will find little to choose from. As Britain wallows in recession and the rest of Europe is gleeful at a few meagre micro points of growth, Israel is plodding along nicely.

For five consecutive years, Israel recorded excellent export led growth – about 5% annually – and this achieved despite wars in Gaza and in Lebanon. Israel has been one of the first countries to emerge from the global recession.  I am involved in preparing two courses for manages of new businesses.

There are several reasons for this continuous success. Israel has had some very able macro managers. Bibi Netanyahu was considered a successful Finance Minister, even by his local political opponents. And the current governor of the Bank of Israel, Stanley Fisher, has a brilliant track record in international banking.

On another level, Israel’s industrial growth has been in the right place at the right time.  Amdocs, Teva, Nice and others are world leaders in the various branches of high tech.  Several Jerusalem-based companies are driving the revolution in solar technology. And significant gas reserves have been discovered off the coast, which will lead to a major improvement in the country’s balance of payments.

On a third level, demographic factors are providing the economy with a potent consumption boom.  Elah Alkalay describes this as a “feel good factor”.  Comparing Israel’s position to OECD averages, she writes: –

The fact that Israel has more children, fewer single-parent families, more women with university degrees, and more woman apparently in joining the workforce (assuming that it is possible infer this from these data), it presumably contributes to Israel economic soundness and the domestic growth engine.

Problems? As with the previous 61 years, the geopolitical outlook remains uncertain. The shekel is too strong for the country’s exporters. A sickening “politically correct” economic boycott is finding a home in parts of Northern Europe.

For all that, what remains clear, Israel’s current economic position is stable and solid growth can be predicted for the medium term.

Water technology: Israeli and Palestinian experiences

28 October 2009
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Categories: Business, Israel, Palestinians

Israel can be proud of her contributions to modern water technology.

The WATEC 09 exhibition, which takes place in 2 weeks time in tel Aviv, is one of the most important show-events on the global circuit. Local companies like IDE lead in desalinisation tech. I am working with company that extracts commercial quantities of water from the atmosphere.

And the flattering list of accolades is not something that emerged overnight. Israel was a pioneer of drip irrigation through Netafim and others.

The results for the local economy have been enormous. Israel’s Water Commission released a 37 page pdf report in April 2009.  Per capite cubic meter consumption has continued to drop this decade – approx 150 for 2008. 40 years ago, the figure was over 500.

And despite 5 years of constant below-average rainfalls, the country has been able to honour its agreements with its neighbours. Jordan still receives water under the peace treaty. The Palestinians, who negotiated their needs via Article 40 of Annex III to the Oslo Accords, are now receiving far beyond what was agreed 15 years ago.

To give a specific example, the Water Commission noted that “it was agreed to transfer to the Gaza Strip an additional 5 MCM/yr from Israel’s national system (at a price equal to the cost of desalinated water plus transport). The supply pipeline for this purpose was laid by Israel up to the border with the Gaza Strip.”

In fact, the Palestinian attitude towards increasing poor water resources in the region can be described as disappointing.

Yes, the Palestinian economy weaknesses do not allow the government to invest in infrastructure as it would wish. There again, there does not allow it to relinquish its responsibilities. As anecdotal evidence, I live near southern Ramallah. And last summer, the region suffered unduly from mosquitos due to untreated sewage and wasted water.

Given this background, a recent report by Amnesty International (AI) is not just disappointing. AI has declared that Israel is deliberately misusing water resources to the extent that the Palestinians are left with minimal reserves. Yet for many, this is a misleading accusation, pouring oil on a region already burning with violent distrust. 

It is not clear why an organisation, gleaming with its success in supporting the rights of political prisoners, has entered into the arena of ecology. Nor is it obvious how AI can substantiate its claims, when it deliberately did not ask the Israelis authorities for supporting documentation.

From Israel’s point of view, the Palestinians have violated their commitments under the water agreement from Oslo:  Eg over 250 wells drilled without the authorization of the Joint Water Commission (JWC). Further, despite their obligations to establish sewage plants and having obtained foreign funding for the purpose, only one plant (El Bireh) has been built in 15 years.

The JWC has approved 82 new wells. Lt.-Col. Amnon Cohen, head of Israel’s civil administration’s infrastructures department, observed that: –

43 are in Areas A and B, which are under PA control and they do not need us involved. Out of the remaining 39, in Area C and under Israeli security control, 21 have been approved and 11 have not even been submitted for approval.” (In addition, over 55 other wells have been approved for upgrading).

The Oslo Accords clearly state that Israel has an obligation to bring water up to the entrance to the main cities and surrounding areas. The amounts have been increased over the years.  The Accords also ensure that responsibility for final distribution is in the hands of the local Palestinian authorities.

So, if the average citizen does not receive the water, than why is Amnesty blaming Israel and its technology? The accusation is similar to the financial aid that Palestinian people are supposed to receive but can never be traced. Everything has disappeared down the same dark, dark plug hole.

Find the hole and those guarding it, and you will start to understand who is perverting the casue of peace in the Middle East. Now there’s a project for Amnesty International.

The hidden peace in the Middle East

26 October 2009
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Categories: Israel, Jerusalem, Palestinians

On the surface, signs for peace in the Middle East are looking faded.

George Mitchell’s shuffle diplomacy has revealed the naivety of the Obama regime. Camera evidence from Jerusalem’s Temple Mount show that the recent disturbances are the result of deliberate extremist provocation. And with President Abbas calling elections for January 2010, he will not want to portray himself to his electorate as a man of compromise.

So what are we left with? Answer is that if you take out the politicians and let ordinary people get on with it,there are a few yet significant moves to peace taking place.

Take the campus of Beershaba university, where 15 Jordanian students are studying for bachelors in emergency medical care. No, this is not a one-off story. The Save A Child Heart unit at the Wolfson Hospital has spent years treating Palestinian babies and training doctors from Bethlehem or nearby.

Away from the medical arena, a group of Israeli physicists have invested in a new technology to bring electricity to poor Palestinian villages. The Everest Hotel near Bethlehem and the American Colony Hotel in Jerusalem are deliberate meeting points for Israelis and Palestinians to get together.

In Jericho, a synagogue, dating back to the sixth century, had been ransacked in the early part of the Intifada. Nearly a decade later, the Palestinian Authority has helped to ensure that the renovations have been completed. With a joint Israeli-Palestinian patrol, a group of ultra-orthodox Jews have begun to hold prayers at the site.

You want more? Check out Jordan and Israel’s work together over protecting the Dead Sea. Investigate the joint sewage and tourist projects in the Jenin/ Gilboah regions. Talk to the tens of thousands of Palestinians who work in Israel during an average week.

Ghadaffi’s calls to give Palestinians nuclear arms – the new calls in the UK to boycott Israeli products, culture or academics – violence against holy sites in Jerusalem; all of these actions are updated versions of the hatred of the past, which resulted in violence and hopelessness and death.

The actions of coexistence described here are the genuine steps towards creating a peace dynamic. They need to be told about, encouraged and copied. It is time for analysts to discover a new genre within the Middle East.

Israel to revise economic forecasts upwards

25 October 2009
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Categories: Business, Israel

Haim Shani, the new Director General of Israel’s Ministry of Finance, is a very lucky man. He comes in to the job, as the worst of the global recession is safely in the past. The country faces no immediate elections which tend to destabilise the economy. A budget for 18 months has been secured.

Best of all, Shani replaces Yoram Ariav, who leaves behind a well-run ship.  So, what is there to look forward to?

Shani is a successful CEO of one of Israel’ leading hightech giants, NICE. He is set to release new growth predictions for the year 2010, which will be revised upwards towards the 3% mark. The previous forecast was about half of that. This means a significant shrinking in the expected public deficit, and so to an easier monetary regime.

As a side note, amny ministers will try to claw back the cuts in the budgets as tax collection has started to rise again.

It will be interesting to see how the Bank of Israel reacts to the positive trends. Its main concern is future inflation. The annual target is 2.0%, although the current rate is close to 3.5%.

Stanley Fisher, the  bank’s governor, is known to be encouraging other international financiers to follow his lead, as he has already raised interest rates.  More of the same is expected. It is a question of how much and when.

Israel should listen to UK’s bank supremo

22 October 2009
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Categories: Business, Israel

Before the global downturn, it was a popular gripe in Israel to bitch about the profits of Israel’s banks. Generous bonuses were not a problem, as the private banking sector in particular “willingly” agreed to pay high charges for services rendered.

As the figures for 2Q09 showed, after a downturn for 9 months, normal progress is being resumed. The bankers of Tel Aviv are having fun again.

Outrageous? Far be it for me to recall that Israel has one of the greatest discrepancies in the OECD between the highest and lowest income earners. That is until I read what Mervyn King, Governor of the Bank of England, who stated in Scotland on Tuesday. “Never in the field of financial endeavour has so much money been owed by so few to so many”.

King noted that the worldwide damage caused by the international bankers has resulted in 2.5 million lost jobs in the UK alone. And as in Israel, the bonuses are creeping back in.

True, Israel’s banking system has not been a party to many of the fiascos exposed by the credit crunch. The rules have been tightened since the 1990s. Yet, the recommendations of King still demand serious reflection in an economy where a small handful of financial institutions are dominant.  

King has called for serious reform. And while it is possible to argue that safety nets in Israel are higher, King’s comments about the lack of competition are very comparable. As noted above, Israeli banks play around with high commission fees, despite theoretical supervision from the Bank of Israel.

On Wednesday, the Dail Mail newspaper issued an update on their campaign for fairer bank charges. It appears that UK banks could be forced to repay up to US$35 million to customers, following unfair overdraft charges since 2001. Now there is campaign for some enterprising Israelis to take up.

Small businesses in Israel (2)

19 October 2009
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Categories: Business, Israel

Previously, I wrote about how the small business sector in any country is surprisingly large, yet receives precious little support from central government.

The sad truth is that most new businesses fail within the first 12 months of operation. Reasons can vary; poor management, lack of resources, fuzzy vision and more.

In the opposite corner, much can be done to ensure that a new enterprise will succeed. Yes, checklists can be readily provided, but many of the points can be wrapped up in a key phrase. President Obama popularised the saying “Yes we can”, but he was only stealing other more well-known ideas.

Here’s what I mean. Shrinks, life trainers and others all tell us to seize an opportunity. How often do we hear that when a door slams shut, we have to find the other one that has just opened. Management guru, Luke Johnson, recently observed that “optimism is the elixir that makes everything possible.”

It is often this dynamism and motivation which drives new enterprises forward. When that is mixed in with good business culture – as well as a bit of luck and prayer – that results can be explosively positive.

The are plenty of examples of what I am describing. I am one of the moderators of the Jerusalem Business Networking Forum, where many members tell of the struggles to find the determination to move past the first dodgy months.   

In the next posting, I will examine what is required to mix in with that high motivation level.

Learning to innovate through motivation

15 October 2009
1 Comment
Categories: Business, Israel

How can you get your company to change – to innovate? What will motivate employees?

Sam Palmisano, chairman and chief executive of IBM, recently posed a similar set of questions.

If employees want more control over decision-making, then they have to accept greater levels of responsibility, accountability and ownership of the consequences of their decisions. Management has to provide the tools, the mechanisms, the funding … and the individual has to make use of them.

Stefan Stern’s analysis of IBM, GE and others turning themselves upside down in order to innovate is clearly becoming a new fad in many sectors and countries. Yesterday, I spoke to one leading UK based consultant ,who described his discussion with two large government ministries that are embarking on similar programmes. The politicians are demanding that they find a new way to provide better services for the public.

Here in Israel, I have previously referred to QMarkets, whose software is designed for allow corporates to engage their employees. In turn, they are offered channels to promote their own ideas on behalf of the company culture. Net result – increased revenues, motivation flows, smiles on the faces of all concerned.

The same subject came up in my conversation with Paula Stern, CEO of WritePoint, a leading supplier of technical writing services to the Israeli hightech industry. More and more, the writer is expected to find efficient and simpler ways to communicate the same messages. Their industry is being forced to change.

The exit from the global recession is reiterating a very old lesson to many companies from all over the world. If you stay still, you will soon be overtaken. Quite often, the way forward lies in the strength of existing human resources. Learn to find a way to harness that strength.

Networking – a simple Israeli railroad approach

14 October 2009
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Categories: Business, Israel

I probably receive at least one e-mail a day, encouraging me and explaining to me how to network. Tweet this and smile at that! If I don’t do it, I should consider myself a fool, my business model sucks, and I should go back to cleaning the floors….or at least that’s how you are meant to feel.

The way out is to join whatever is being offered and see the light. At least I will have the benefit of losing the weight of another few dollars from my bank account.

Well, there is another method to network. In technical jargon, it is called the “bleeding obvious” method. It is available to all of us of us, all the time. And I recently discovered the trick, on my doorstep in Israel.

Here’s what I mean.

First, in former days, I belonged to a youth club. Not the most active member, still I was around for years. Well, it seems that many of us are now living in Israel. In fact, we had a get-together about a month ago; 400 people of all ages and backgrounds.

The event was 100% a social occasion. But if you listened carefully and dropped in on conversations, you could hear people talking about work, employment and other such issues. We were networking, without even realising it, and it was fun.

Last week, I organised a supper for former pupils of my school, who are now living in Israel. I had collated a list of 25 names, and many turned up – even with a few spouses. Again, a fun evening, but with plenty of accidental networking.

All of us are part of social groups, and not just from current activities. And whilst we should not be explotive, they can be put to extensive commercial use. This is not being cheeky or rude. There is no need to use twitter. Just talk and communicate with people.  After all, that is why humans developed language skills in the first place!

On Israeli railways, this form of networking has reached new heights. For example, if you take the morning train from Bet Shemesh to Tel Aviv, it is known that the last 2 carriages are only for those who wish to pray. They have their own “club”.

And yesterday, the train from Haifa to Beersheba hosted “speed meeting”. The train was full of small business execs, who had deliberately boarded to introduce themselves to like-minded people. Everyone was delivering one-minute speeches on themselves. A dynamic, high speed event.

Simple. Networking means talking – conveying a message. The rest is commentary. Just go and find the right forum for you to do it.

Small businesses in Israel (1)

13 October 2009
1 Comment
Categories: Business, Israel

Go to China, USA or Nigeria. One of the few microeconomic facts that can be found everywhere is that small businesses comprise around 95% of economic activity.

Here’s another common detail. Many governments want to help these enterprises. Politicians love to be seen cuddling up to local successes. But the truth is often a very different picture. Bureaucracy and officialdom often culminate in a bank of goodwill that cannot be converted in to practical help.

Hardly surprising. Public authorities work well when they can wrap the challenge into a neat box to fit large communities. Apart from their name, small businesses are not a compact group. They work from home or not. They distribute, manufacture, compute, or not. They are internally dynamic, or not.

In Israel, the government has recently announced a package of help for small commercial operations. Lots of goodies for companies, who have spent 12 months weathering the global recession on their own. Those who have survived are now near independent.

It was a similar story after the war with Lebanon 3 years ago. Although much help was promised to local firms in the north, it took far too long to come through. The true beneficiaries in the short term were the sellers of A4 sheets of paper to government offices.

If that was not bad enough, I recently attended a lecture by Nitzan Ehrlich, the CEO of Aviv. Specialising in helping small companies find financing, he noted that the country is full of public and private funds for struggling businesses, but few people know about them. Absurdly, he noted that some in the relevant ministries do not even know how to start the application procedures.

It is time to give some genuine attention to this sector, which tends to hide a rich wealth of entrepreneurial talent.

Israel’s economy in celebration mood

7 October 2009
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Categories: Business, Israel

This week, Israel is celebrating the Festival of Tabernacles. The annual Jerusalem March saw 70,000 Christians, Jews and others parade joyously through the centre of the holy city.

In parallel, the country’s business sector has been revelling in a successful week for commerce.

  • The Tel Aviv Stock Exchange has hit a 13-month high.
  • Despite having just emerged by a deep recession, the Bank of Israel now holds record reserves of foreign currency.
  • Israel’s generic drug giant, Teva, has made 20th place in the “BusinessWeek” World’s Best Companies/Global Top 40 list.
  • Following on, the Minister of Finance, Steinitz, committed Israel to supporting the G-20 initiative to increase resources available to the IMF and will loan it, upon demand, money from its foreign exchange reserves.

“Israel is willing to play its part in contributing to the IMF’s resources and will participate in the two main funding programs – the NAB (New Arrangement to Borrow) and the Voluntary SDR Allocation – that were recently announced. Upon demand, the IMF would be able to get a loan, up to 500 million SDR [$316m.], that would be paid from Israel’s foreign exchange reserves,” said Steinitz. “In addition, Israel will be committed to purchase its allocated SDR. This will be implemented as an investment from our foreign exchange reserves.”

As Steinitz added in his speech, there is still a lot of hard work ahead. However, just as Israel has had to swallow pride and learn from other counties in the past, today the Holy Land has much to offer the international business community.

Jordan confirms Israel’s centre stage at IMF

5 October 2009
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Categories: Business, Israel

A few days ago, the IMF confirmed Israel as one of the stronger countries emerging from the global recession.

Yesterday, Sunday, delegates at the annual IMF roadshow were treated to a presentation on Israel’s success. Significantly, Israel is now using two macroeconomic tools, which other countries are still backing away from; budgetary cuts and an increase in interest rates.

The Israeli newspaper, Yediot, has observed that Israel’s finance minister and also the governor of the Bank of Israel received praise from several sources. One notable quote came from Bassam Hilel al-Salam, Jordan’s minister of finance, who observed that Israel is managing the economy correctly.

Israel remains a small economy. It has only just joined the OECD. But it is evidently a growing economy, whose companies make strong contributions globally in hightech, biotech and cleantech. It is one of the largest defence contractors in the  world. Microsoft’s latest anti-virus tech was developed in Israel.

And so the story will continue, which is why the boffins of the IMF are interested in what is happening in the Holyland.

More dead Palestinians ignored by Goldstone

4 October 2009
2 Comments
Categories: Israel, Palestinian Society, Palestinians

The Goldstone commission, under UN direction, looked at human rights abuses against Palestinians.

The final report has come in for much criticism from Israel. And yet, with some irony, it is the Palestinian Authority, which has interrupted the progress of the document on the way to the UN’s General Assembly. The reasons for this change of direction vary – ranging from American pressure to a desire to return to the peace process.

The Palestinian Commission for Human Rights suggests an alternative cause for policy alteration. Its latest report, referring to August 2009, makes for damning reading, a mess of violations of human rights, where Israel has had no direct or indirect role.

ICHRdocumented 48 cases of death in the Palestinian-controlled Territory during August 2009. 41 of which took place in the Gaza Strip. In terms of cause of death, these cases are distributed as follows: 28 deaths were attributed to armed clashes in Rafah city, while 3 deaths were linked to violent family disputes and rivalry. In addition, 3 lives were lost due to security chaos and manslaughter while 7 death cases resulted of tunnels accidents.

 

 

 

 

 

As for the West Bank,

 

7 death cases occurred, the causes of which are distributed as follows: one death case occurred in a detention center in Nablus; 5 deaths were linked to family disputes and one death case occurred as a result of negligence and the non-adoption of general safety precautions. death case occurred in a detention center in Nablus;5 deaths were linked to family disputes and one precautions.

The report details names, places, dates, hard facts. It cites the customary harassment of the press, sexual harrassment and the lack of basic religious freedoms.

For all Israel’s criticisms of the Goldstone Report, it strikes me that the commission has failed those people it was trying to help. The report failed to point out and stress these repeated yet hidden deprivations in the life of ordinary Palestinians. If not the UN, who will halt this continuous saga of shame?

Israeli economy, recession and the opportunity

2 October 2009
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Categories: Business, Israel

The “Economist” magazine has led with a fascinating article, outlying how clever companies have seen the global recession as an opportunity, and not just a free fall to disaster.

The article notes how DuPont, P&G and many others thrived on the 1930s Great Depression. In the early 1990s, “Bain & Company discovered that twice as many firms made the leap from “laggards” to “leaders” (ie, from the bottom quartile of companies in their industry to the top quartile)”.

And in the past year:

There is also every reason to believe that the current recession will produce lots of upstarts. The Kauffman Foundation, which studies entrepreneurship, points out that about half of Fortune 500 and Inc. 500 companies (lists of the biggest and fastest-growing firms in America, respectively), including such household names as FedEx, CNN and Microsoft, were founded during recessions or bear markets. A disproportionate number of these upstarts produced industry-changing ideas that established companies failed to appreciate until it was too late. Indeed, business is more likely to take advantage of this “serious crisis” than the world’s politicians.

In the late winter 2009, I wrote about a conversation with a UK banker, who compared the Israeli and British attitudes to the recession. He noted that neither country could avoid it, but Israelis tackled it head on. They saw it as just another challenge to go out there and to perform in the market place.

Because of this psyche and because of Israel’s economic structure, I had always predicted that Israel would be one of the first to emerge from the recession. Enter the IMF to confirm what is happening to the local economy.

The IMF’s forecast of a 0.1% GDP contraction (for 2009) is better than its forecasts for all other developed economies, including the US ….. The IMF predicts an overall contraction of 3.4% for developed economies as a whole in 2009.The IMF’s growth forecast of 2.4% for Israel in 2010 is also among the fastest rates projected for next year among developed countries. Only five countries are predicted to do better.

No, not everything is rosy; worrying unemployment figures. And the shekel is too strong against the currencies of major trading partners, a disturbing parameter in an export dominated economy.

So, I will leave the last word to the Governor of the Bank of Israel, Stanley Fisher, and his usual cautious optimism.

“Today, I’m less worried. It’s possible to relax, but not to overdo it; there are still problems, and still more things that need to be done. I am however concerned that, because we are emerging quickly from the crisis, we might not derive from it all the lessons that we should, particularly in the financial system.

Driven mad in Israel

30 September 2009
No comments
Categories: Israel

There is a well-known phrase round this part of the world: “Only in Israel”. What happened this morning left me so speechless that I am compelled to share it with my readers.

This has nothing to do with finance or the economy or management, my usual themes. This is all about pure Israeli arrogance.

I was slowing down, approaching a traffic light at a busy intersection. I then became aware that on my outside was a car, which had stopped on the pavement separating the contra flows of traffic. When I write stopped, I actually mean that the driver was waiting for a lull in traffic in order to cross over and change directions.

The situation looked dangerous. So rather than stand on principals, I let the driver through. And as the car lurched forward in front of me and jumped awkwardly into the middle lane, what did I see written in large letters on the side? “TRAFFIC POLICE”.

What? This arrogant driver was actually driving a police car. Worse, as I realised why he was driving clumsily. Our moronic hero was using one hand to clutch his mobile phone to his ear!

Surely, there could be no more crimes? Wrong again. Mr Moron then forced his way back into my lane, nearly causing another accident.

Why had I not reached for my mobile camera to film this ten seconds of crazed stupidity? Did I mention that we are talking about a new white Fiat Punto, registration 10 975 65?

Two minutes later, after some further severe lane swapping, Mr Moron pulled over to the side of the road and joined some other members of the esteemed police community.

Continuing my journey in some shock, I was provided with the punchline for this piece. …….My car radio dutifully repeated for the umpteenth time this month yet another announcement, imploring Israelis to drive with greater care and caution. You don’t say!?!?!?!?!?

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