Israel’s overall economic activity is measured monthly by an index, which amalgamates several statistics. For June, the index rose 0.2%.  Not much, but the first positive rating for nearly a year.

The index links together data on industrial production, revenues from commercial activity, exports and imports.

These figures are also reflected in recent trading on the Tel Aviv Stock Exchange. Over the past month, the main 25 Index has risen around 4.5%. This has been matched by a similar change in the daily volume of trading.

Three pieces of news have been released recently on the Palestinian economy.

The most encouraging comes from the International Monetary Fund (IMF). Real economic growth (GDP) is expected to rise by 9% in 2009. When you compare that to Israel (around -1.0% or less) and to the UK (at -2.5%), that is remarkable.

This change is promoted by:

  • The removal of many Israel security restrictions, resulting from  a decline in Palestinian violence.
  • Increased trade between Israel and the Palestinian sector – not just in goods, but also in high tech.

Still lacking is a more open, transparent regulatory financial system. This has yet to be implemented by the Palestinian Authority (PA), despite repeated annual demands of the IMF.

The report had been preceded by the announcement of the World Bank, which intends to contribute an additional US$33.5m to Palestinians in Gaza. The money will be directed primarily towards infrastructure projects. An agreement was signed with the PA’s Prime Minister, an internationally respected economist.

There is no issue over whether the money is needed. What hangs over the investment like a bad smell is the question of transparency.

The PA has no representation in Gaza, which is under the authoritarian control of Hamas. Who can guarantee that the money, effectively given by Western taxpayers, will be used properly and not diverted as has happened in the past? This remain a cause for great concern, yet to be broached by scared politicians.

 As if to emphasise the point, a third piece of news was revealed. The President and Foreign Minister of Greece have unwittingly been part of scam to raise money for a hospital in Gaza. The contributions totalled over US$1.5m.

Problem no’ 1: No such hospital existed. Problem no 2: Nobody can trace the money.

I have written that despite the global recession, the flight path between Israel and the UK has become even more crowded in the past 12 months. And since my posting, Easy Jet have announced that they will also mix it with the old timers.

I have just returned from a trip to the UK. I broke a lifelong association with EL AL and chose BMI. Some initial price research did not reveal a great deal of difference between the two.

I began to compare the service on offer, and took a chance with BMI.

And good service is what I found. Helpful attendants, a calm and quiet manner, a more serious approach to the safety procedures which we all ignore, etc. Even those silly announcements about wishing you a safe flight seem to come with a more personal or an individual approach.

Oh, and as for the BMI lounge at Heathrow Airport, now that is a class act, clearly designed with the frequent flyer in mind.

There is nothing bad about EL AL. What makes the difference is that BMI aim to go the extra few steps and smiles to ensure that you are relaxed and satisfied.

The BMI concept is not new. Dov Gordon is an experienced marketing strategist in Israel. He cites the history of the hotel chain The Four Seasons. Gordon quotes Issy Sharp, the founder of the chain.

 Sharp cares about The Golden Rule: Do unto others as you would like others to do unto you.  Around 1980 he decided that this would be the guiding value of his growing chain of hotels.  They would treat all others – customers, employees, partners, suppliers – as they themselves would want to be treated.

 “There was nothing new about this, of course,” said Sharp.  “What was new was that we enforced it.”

I am due to go back to the UK in October.

I have just received a summary of current financial activity in Israel, as distributed by the Economics Division of Israel’s London embassy. Bottom line: This is an economy that has suffered, but has survived. As one UK based journalist commented this week; Alistair Darling would kill for only a 1% or so reduction in GDP, which is what is predicted in Israel for 2009.

Only yesterday, it was reported that “The Israeli Procurement Managers Index rose by 9.5 points in June 2009 to 52.1%, the first time in 14 months that it has risen above the 50%.”

Yes, inflation peaked in June. Unemployemnt has breached 8%. For all that, the following data shows that there are very encouraging undercurrents supporting the Israeli economy.

Economic Summary

  • MSCI Index revised its definition of Israel from emerging market status to a developed market status.
  • On July 15th 2009 the budget for the years 2009 – 2010 was finally approved. It is the first time ever that the Knesset approves a budget for more than one year. The approved budget for 2009 is NIS 316.6 billion, and for 2010 NIS 321.5 billion.
  • According to BoI press release, the negative trend in economic activity has begun to moderate.  
  • The budget has continued to record a deficit in the first 5 months of 2009.
  • The Central Bureau of Statistics (CBS) adjusted real GDP for Q1 2009 downward, yet nominal GDP was adjusted sharply upwards.
  • Bank of Israel (BoI) leaves interest rate unchanged for the month of July.
  • CPI increased in the month of May by 0.4%
  • The rate of unemployment increased for the third consecutive quarter. Q1 2009 the rate was 7.6%.
  • Following a 46% decline in 2008, the TA-25 Index has risen 25% in 2009.

The government has initiated several stimulus packages to address the difficult economic environment. The latest plan will expand guarantees for the banking system, create new funds for mid-size business and exporters, further institute negative income tax, reduce the number of foreign workers, implement structural reforms and increase investments in infrastructure.
 
Macro Focus
In the first five months of 2009 the budget deficit (excluding credit) was NIS 10.5 billion compared with a surplus of NIS 6 billion in the same period of 2008. This is principally a product of decreased tax revenues. Moreover, in May the government continued to act without an approved budget form the Knesset. Total government expenditure in the first five months of the year was lower than that permitted in the absence of an approved budget, and was NIS 7.8 billion less than that consistent with the full implementation of the expenditure in the 2009 budget proposal.
 
The CBS has issued a downward revision of growth rates for the last three quarters of 2009.
The CBS has issued a downward revision of growth rates for the last three quarters of 2009. 

In Q1 2009 real GDP was 0.5% below the forecast, yet nominal GDP was 3.6% higher, indicating a rise in prices. Consequently, inflation in the last four quarters now amounts to 8.2% based on GDP prices, whereas it only amounts to 3.4% based on the CPI. This difference largely reflects changes in oil prices which have had a larger impact on the CPI than GDP prices. It should be further noted that whilst growth rates were negative, the decline was significantly less than experienced in the US and Europe.
 
Whilst data on real activity in Israel support the BoI’s forecasts that the reduction in GDP is beginning to moderate, real activity is still expected to contract further in the next few months taking into account increases in the unemployment rate. The BoI asserts that a continued expansionary monetary policy supports the return of the economy to positive growth.
 
The rate of unemployment increased for the third quarter in succession climaxing at 7.6% in Q1 2009. The CBS published a figure of 7.8% unemployment for April and BoI forecasters believe this is set to continue rising. Real wage and nominal wage both increased by roughly 3% YoY in Q1 2009, following 3 consecutive quarters of real wage declines. Health tax revenues were 0.5% lower in April and May of this year than in the same months in 2008, largely reflecting a decline in wages and employment levels.
 
Consumption fell sharply in Israel during 2009. Private consumption decreased by 3.4% YoY with a decrease in consumption of durable goods forming a considerable part of this decline. Public consumption declined as well by 7.1% YoY, largely reflecting the absence of an approved budget to date.
 
Exports fell sharply by 37% YoY, reflecting the slowdown in the global economy as well as a delayed reaction to the real appreciation to the Shekel in H1 2008. Imports fell as well by 41.3% YoY. As a result the surplus in the current account of the balance of payments greatly increased in Q1 2009 to USD 2.7 billion, compared to a an average of less than USD 1 billion  in each of the preceding quarters. In the last four months, the current account totaled 2.1% of GDP. 
 
Foreign direct investments (FDI) totaled USD 1.7 billion in Q1 2009, compared to an average of USD 2.9 billion in the first 3 quarters of 2008. 
 
The industrial production index decreased in April by 1% and was down 11% on the 12 months ending in April. Whilst the trade and services indexes fell by 3% in April and 10% in the 12 months ending in April. 

Monetary Policy Focus
The CPI rose by 0.4% in May, in line with BoI forecasts. Since the beginning of 2009 the CPI has risen 1.2% and for the first time since December 2007 the inflation rate was within the target range at 2.8%. Yet, following changes in the tax rate and government-supervised prices including water prices, inflation is expected to be closer to the upper limit of the inflation target range.
 
In the period between the previous two monetary policy discussions, the shekel’s standing against the dollar and euro changed little, appreciating 1% and depreciated 1.1% respectively. The nominal effective exchange rate of the shekel (which shows the shekels change compared to that of its trading partners) declined by 0.3%. Whilst the shekel gained against the dollar more moderately than other currencies, the shekel-dollar and shekel-euro exchange rates were still highly volatile.
 
The BoI maintained the interest rate at 0.5% as expected. In its statement the bank noted that inflation expectations continued to be well contained, with taxes and an increase in regulation prices keeping inflation artificially high. Inflation has decreased by 2.8% in the past 12 months, following seventeen consecutive months of above 3% increases.
 
In an accompanying statement, the Bank reiterated its commitment to easing measures, namely the purchase of long dated government paper and foreign exchange with the goal of supporting financial conditions. It added that the negative trend in economic activity was moderating, as was the negative situation in the financial markets.
 
Micro Focus
IVC Research Centre reported that 122 Israeli Start-ups raised USD 279 million from local and foreign venture capital funds in Q2 2009. This figure is down 40% from the corresponding quarter of 2008 when 115 start-ups raised USD 465 million, yet 5% higher than the preceding quarter of 2009.
 
The Manufacturers Association of Israel has published findings from the Survey of Expectations forecasting further declines in industrial activity in Q3 2009, but the rate of decline has begun to slow. The survey rose to 96.6 points for Q3 expectations, up from 89.2 for Q2 and 74.3 for Q1. 100 points is the survey’s dividing line between a quarter of economic expansion and contraction.
 
Property Focus
London’s commercial property market has begun to show signs of recovery in Q2 2009. According to a report by Jones Lang LaSalle’s head of West End Markets Damian Corbett, this is partly a result of increased investment by Israeli property investors.
 
The report asserts that the volume of commercial property deals in Central London increased by 58% in Q2 with GBP 1.3 billion invested. Corbett added “during the second quarter of 2009 there was a large range of international purchases with 43% of investments coming from the Middle East and notable purchases from Israel. Corbett was referring to Israeli deals such as the purchase in May by Harel Insurance Investments and Financial Services Ltd and Clal Insurance Enterprises Holdings Ltd for GBP 40 million of a building in central London. Other examples cited included Nochi Danker’s IDB Holding Group and Israeli entrepreneur Gil Levy exploring further investment opportunities in the City.

The British Trades Union movement is a fussy character. It demands that other countries open up their markets to British goods. In return, more and more of its member organisations are campaigning against Israeli products.

Naturally, those who will suffer first are the Israeli working classes, as they could lose their jobs. But that is irrelevant for the big chiefs of the Labour.

Also ignored is the fact that there is no mutual condemnation of Palestinian violence. Neither is there a word of protest against the lack of human rights in Palestinian society. 2010 elections will be delayed. Or see the latest report from the  Independent Commission for Human Rights.

So, it came as a pleasant surprise to me, when I encountered a local London street market, where at least two of the stalls are openly selling Israeli consumer products. Such markets are very popular in London and are gradually emerging in more and more places.

I checked the labels – the place of origin was clearly marked. As I approached during the lunchtime period, there were several active buyers in the vicinity. Yup, and many of the vendors looked as if they would welcome trades union support for better conditions etc.

Maybe the unionleaders should evaluate the true level of their hypocrisy. Their campaigns are planned on computers and mobiles, loaded with Israeli tech. Many of their largest unions, such as hospital workers, operate machines built in Israel. And their anti-Israel rhetoric can be traced to that which was shouted at them by facists in the 1930s.

Spin is a soothing drug, which helps us to forget and to ignore the lessons of history.

London is where I was born and grew up. When I return, I expect to be greeted with constant rain, buses that are always late, and obesity

Nothing could be further from the truth. I have discarded my coat (temporarily). The buses are preferable to the lack of airconditioning on the underground. And there was a constant stream of joggers and cyclists on the Thames footpath.

Thursday lunchtime, and I was in the centre of royal Kensington. I am jabbering away in Hebrew with an Israeli diplomat, when suddenly our conversation is interrupted by a passerby.

It was an elderly man. At first, I thought he was speaking in Hebrew. But no, it was English. He repeated his question:

“Could we direct him to the Iranian embassy?” (which was down the road).

As my friend said afterwards, the surprise took away our laughter. You never know!

The man is the wrong side of 70, but you would never know it. Finally, Sir Bobby, the icon of British football for half a century, will be arriving in Israel this week.

Officially Bobby Charlton will be a special guest of Team GB at the Maccabiah Games, the third largest gathering of athletes in the world. He will be accompanied by other senior members of the Manchester club.

Away from the stadiums, Charlton has a full itinerary. To quote the press release:

On Friday 10thJuly, Sir Bobby and his party will attend a coaching session with the British Council’s ‘Football 4 Peace’ at the Wingate Sports Institution in Netanya. This will involve Sir Bobby joining Arab and Jewish children from the Football 4 Peace project at the Wingate Sports Institute for a special coaching session.

This initiative is now in its 9th year and has the full cooperation of Israeli statutory authorities. Specifically, over the first half of July, hundreds of youngsters of all ethnic backgrounds will be trained by dozens of experts from the UK.

Thinking about it, Charlton is ideal figure for this role. I am a confirmed Chelsea supporter, and always looked forward to the Blues pulling one over their Manchester rivals. However, Charlton was a cut above the struggle, a man of dignity on a muddy football pitch.

Charlton is quoted as saying: –

Using football to bring different people together is an approach that we endorse as part of our community outreach at Manchester United. I am delighted to be extending this philosophy to Israel.  It is a privilege to be working with Arab and Jewish youngsters and to be a part of Football 4 Peace project.”

Israel’s neighbours will do well to copy this project.

This week saw the announcement by the airline U.S. Airways that it is launching a new service between Philadelphia and Tel Aviv. This will add to the increasing competition on a lucrative route.

Significantly, U.S. Airlines is not the only company upping the stakes over flights to Israel. And this is in a year, when many companies are hurting as a result of the global recession.

BMI recently doubled its service to the UK, now operating 14 flights a week. Cleverly, they have targeted the commercial community, a deliberate move on El Al’s and British Airways’ profitable clientelle.

Guess what? Prices are dropping and the flights are full, even with the additional seats.

That is a lot of extra business travellers turning up in the Holy Land from Britain.

Jerusalem does not have a great reputation as a centre for the classic arts. “Shakespeare Jerusalem” is making a strong challenge on that notion.

Last night, at the Jerusalem Botanical Gardens, the troupe performed a series of …well, I would call them loosely love themes, in public. Let me hurriedly explain.

The stage was set outside. The first act began with the onset of sunset, the end of another sweltering day. For those who do not know the holy city, this is usually the call for a strong cooling breeze to descend on the residents.

The actors performed sketches from 7 separate plays. The show casings were presented under the title “battle between the sexes”. How was it? Well, I listened to the reaction of the people around me. To be honest, I was almost bored as one after the other repeated the word “fantastic”. Over a thousand people just loved it.

After the intermission, we were exposed to a theatrical concert; a mix of Shakespeare’s flowing poetry and modern Hebrew sonnets. The production was excellent. The choice of songs, a potential disaster area, was superb. Lisa Woo’s vocal ability set the audience alight.

Yes, the atmosphere helped. The stage was partially surrounded by a large lake. On the other side, the high branches of the trees rustled, as in harmony. It was almost romantic, even for a sceptic like me.

A big round of applause to the sponsors, such as Mercantile Bank, who could see an unusual and badly needed opportunity. And I believe that the Jerusalem City Hall was also involved – about time!!!

Bassma Eid is a rare individual. He is passionate about the rights of Palestinians.

And for Bassam that means that ordinary Palestinians have been mistreated by both Israelis and by their own brothers. His Palestinian Human Rights Monitoring Group has never been welcomed by the authorities in Ramallah. 

I first caught up with Bassam around 5 years ago. He had recently been released from a hellish period in a Palestinian prison, incarcerated for openly criticising Chairman Arafat. Clearly the torture did not dull his appetite for campaigning, as he demands that a true peace in the Middle East will only be made between democracies. Here the Palestinians are in deficit.

Bassam’s latest campaign centres around the continued corruption in the Palestinian Authority (PA). He openly questions why so much money is needed for salaries on behalf of people, who do not seem to exist.

This is not an isolated cry for help. Back in April 2009, AMAN, (the Palestinian Coalition for Accountability and Integrity) found that “corruption is still rampant in Palestinian society. Despite some positive reforms in the area of public fund management, there is still a general weakness in the system of combating corruption”.

Aman commissioner Azmi Shueibi said the Palestinian public in general believes that corruption increased in 2008.

Say no more……..to Obama and the EU who are still donating a billion dollars of taxpayers’ money to the PA and affiliated public bodies.

You want to know why Microsoft has a large r&d arm in Israel? Ask Ray Ozzie, Microsoft’s Chief Software Architect.

Ozzie is in Israel to attend the “Think Next” annual conference. 23 start ups parading their talents and hopes in front of the industry’s finest. As Ozzie was quoted back in Hebrew: –

There are some wonderful technologies here, which makes you want to find out more about them.

Mere words? As Ozzie was quizzing the latest group of Israeli entrepreneurs, I was visiting a company a few miles down the road. Its technology has the capacity to compress data on a computer by 50%. The ROI per work station can be measured, reaching thousands of dollars in a few years.

Tel Aviv’s stock market continues to perform well. Yesterday, Sunday, saw another 2% jump. That confirms that the market has clawed back over 30% of its value since the beginning of 2009.

The latest catalyst was a positive report on the TASE from Barclays UK.

In fact, there are a series of sound fundamentals why the local market is so intriguing. For an in depth analysis, I offer this clip from the CNBC website.

Yesterday, I commented about the freedom to protest on the streets of Jerusalem.

I have just received a translation of an article, posted in the Israeli newspaper Ma’ariv from 22nd June. The authors pose a simple question: Six months ago, many commentators around the world were demanding that Israel be sanctioned over its actions in Gaza. Today, re Iran, those same voices are silent.

It is not the shame that stinks. Nor even the hypocrisy. These people originally spoke out in the name of human rights. Clearly, that was a lie, an abuse of the phrase for ulterior motives. Their true interest was the denigration of Israel, the one true democracy in the Middle East.

Below is a copy of the translation, as I received it:

Where is Everyone? 

Ma’ariv (Monday, June 22, 09) by Ben Caspit and Ben-Dror Yemini (opinion) –

 

Tell us, where is everyone?  Where did all the people who demonstrated against Israel’s brutality in Operation Cast Lead, in the Second Lebanon War, in Operation Defensive Shield, or even in The Hague, when we were dragged there unwillingly after daring to build a separation barrier between us and the suicide bombers, disappear to?  We see demonstrations here and there, but these are mainly Iranian exiles.  Europe, in principle, is peaceful and calm.  So is the United States. Here and there a few dozens, here and there a few hundreds.  Have they evaporated because it is Tehran and not here?

   

All the peace-loving and justice-loving Europeans, British professors in search of freedom and equality, the friends filling the newspapers, magazines and various academic journals with various demands for boycotting Israel, defaming Zionism and blaming us and it for all the ills and woes of the world—could it be that they have taken a long summer vacation?

 

Now of all times, when the Basij hooligans have begun to slaughter innocent civilians in the city squares of Tehran?  Aren’t they connected to the Internet?  Don’t they have YouTube?  Has a terrible virus struck down their computer?  Have their justice glands been removed in a complicated surgical procedure (to be re-implanted successfully for the next confrontation in Gaza)?  How can it be that when a Jew kills a Muslim, the entire world boils, and when extremist Islam slaughters its citizens, whose sole sin is the aspiration to freedom, the world is silent?

   

Imagine that this were not happening now in Tehran, but rather here. Let’s say in Nablus.  Spontaneous demonstrations of Palestinians turning into an ongoing bloodbath.  Border Policemen armed with knives, on motorcycles, butchering demonstrators.  A young woman downed by a sniper in midday, dying before the cameras.  Actually, why imagine?  We can just recall what happened with the child Mohammed a-Dura.  How the affair (which was very harsh, admittedly) swept the world from one end to another.  The fact that a later independent investigative report raised tough questions as to the identity of the weapon from which a-Dura was shot, did not make a difference to anyone.  The Zionists were to blame, and that was that.

   

And where are the world’s leaders?  Where is the wondrous rhetorical ability of Barack Obama?  Where has his sublime vocabulary gone?  Where is the desire, that is supposed to be built into all American presidents, to defend and act on behalf of freedom seekers around the globe?  What is this stammering?

   

A source who is connected to the Iranian and security situation, said yesterday that if Obama had shown on the Iranian matter a quarter of the determination with which he assaulted the settlements in the territories, everything would have looked different.  “The demonstrators in Iran are desperate for help,” said the man, who served in very senior positions for many years, “they need to know that they have backing, that there is an entire world that supports them, but instead they see indifference.  And this is happening at such a critical stage of this battle for the soul of Iran and the freedom of the Iranian people.  It’s sad.”

   

Or the European Union, for example. The organization that speaks of justice and peace all year round.  Why should its leaders not declare clearly that the world wants to see a democratic and free Iran, and support it unreservedly?  Could it be20that the tongue of too many Europeans is still connected to dark places?  The pathetic excuse that such support would give Khamenei and Ahmadinejad an excuse to call the demonstrators “Western agents,” does not hold water.  They call them “Western agents” in any case, so what difference does it make?

   

To think that just six months ago, when Europe was flooded with demonstrations against Israel, leftists and Islamists raised pictures of Nasrallah, the protégé of the ayatollah regime.  The fact that this was a benighted regime did not trouble them.  This is madness, but it is sinking in and influencing the weary West.  If there is a truly free world here, let it appear immediately!  And impose sanctions, for example, on those who slaughter the members of their own people.  Just as it imposed them on North Korea, or on the military regime in Burma.  It is only a question of will, not of ability.

   

Apparently, something happens to the global adherence to justice and equality, when it comes to Iran.  The oppression is overt and known.  The Internet era broadcasts everything live, and it is all for the better.  Hooligans acting on behalf of the regime shoot and stab masses of demonstrators, who cry out for freedom.

   

Is anything more needed?  Apparently it is.  Because it is to no avail.  The West remains indifferent.  Obama is polite.  Why shouldn’t he be, after all, he aspires to a dialogue with the ayatollahs.  And that is very fine and good, the problem is that at this stage there is no dialogue, but there is death and murder on the streets.  At this stage, one must forget the rules of etiquette for a moment.  The voices being heard from Obama elicit concern that we are actually dealing with a new version of Chamberlain.

   

Being conciliatory is a positive trait, particularly when it follows the clumsy bellicosity of George Bush, but when conciliation becomes blindness, we have a problem.

   

The courageous voice of Angela Merkel, who issued yesterday a firm statement of support for the Iranian people and its right to freedom, is in the meantime a lone voice in the Western wilderness.  It is only a shame that she has not announced an economic boycott, in light of the fact that this is the European country that is most invested in building infrastructure in Iran.  She was joined by British Foreign Secretary Miliband.  It is little, it is late, it is not enough.  Millions of freedom seekers have taken to the streets in Iran, and the West is straddling the fence, one leg here, the other leg there.

   

There is a different Islam.  This is already clear today.  Even in Iran.  There are millions of Muslims who support freedom, human rights, equality for women.  These millions loathe Khamenei, Chavez and Nasrallah too.  But part of the global left wing prefers the ayatollah regime over them.  The main thing is for them to raise flags against Israel and America.  The question is why the democrats, the liberals, and Obama, Blair and Sarkozy, are continuing to sit on the fence.  This is not a fence of separation, it is a fence of shame. 

Visit Jerusalem and you come to a city where you walk on history.

In the Old City, you can wander back thousands of years. In the newer parts of the city, geopolitics storms out at you from every corner. And in any one of the main streets, you can find people of several religions streaming towards you.

Sit in your internet cafe and complain about the Israeli political system, well you will be typing away with no fear that a policeman is looking over your shoulder with a baton, as in Iran.

This week, Jerusalem has proved that it is more than just a centre to the 3 main religions. Yesterday, Thursday, a gay parade took place. Yes, it did anger leaders of all religions. Yet I went into the night life area, later in the evening. The atmosphere was definitely one of fun and good will.

Today, the ultra orthodox will protest the opening of a car park on the Sabbath. I have many reservations about their aims and methods, however they will be protesting when most others in the Middle East can only dream of the opportunity.

Opposite these devout Jews will be standing a group of youths, dressed in jeans and tanktops, demanding greater pluralism.

Free speech – in Jerusalem or in Israel per se – is a precious gift. It must be protected, and not abused. When people complain about Israel and its so-called treatment of Palestinians, they rarely apply the same principles in reverse. Amnesty International feels that Israel should release political prisoners, but its silence over the abuse of Gilad Shalit is reprehensible.

Here, the choice of silence is as unacceptable as repression of free speech.

It’s a cauldron, but Jerusalem is a great place to live, because her freedom is available to all – for all to respect its precious status.

Three new opportunities have come my way this month.

After some social networking, I spoke to Jonathan Keren-Black, an engineer resident in Australia and co-alumni of Brunel University. He has developed, manufactures and sells a simple household device, which collects and purifies rainwater. Megamarket in Aussieland and elsewhere.

The initial inquiry was to see if I could seek alternative manufacturing resources. The current remit is to outsource the production and distribution rights. This will allow Jonathan to have an earlier and stronger revenue stream. He will also have more time to devote to his next entrepreneurial project.

Moving on, I met with the owners of a new company in southern Israel. Their single product has begun to hit the shops overseas. The discussion with my colleague and I quickly branched away from sales channels. We discussed production strategies, as well as management direction.

A third Israeli concern is already selling a string of products, partially manufactured overseas. Within four years, they have found themselves located in severa; unique but linked markets.

All these companies are relatively young. All possess a strong IP, the main asset to the company, along with a management of solid experience. All are caught up with a series of “growing pains”, which many young companies face, including how to manage logistics.

And now for the difference. It is Jonathan, who probably has been least involved in commercial matters over the yearscomparatively speaking. It is he, who has worked exactly what he wants to be doing next.

Jonathan has realised that the route to his pot of gold is not by controlling the whole of the supply chain. He will be happy, when he off loads the routine issues. His long term profit may be less, but he will be happy, and successful, able to engage next in whatever he loves best.

The others will succeed as well. They will learn to manage their limited resources, but the process will take that much longer.

It is not a case of right or wrong. These case studies show that a CEO must comprehend that the game plan of resources is comprehensive ; how to manage the finances, to apply human capital, to detect market opportunites etc against time. If “no can do” is even a partial response, then learn how to take your cut in another manner, like Jonathan.

I wrote earlier this week about a string of anecdotal evidence, which points to Israel starting to emerge from the recession. 

Today’s front page of the Globes financial newspaper confirms these findings. There is a series of positive headlines. For example: –

  • The investment house Barclays Capital has raised its rating of the Israeli banking sector.
  • The Israeli Treasury is enacting legislation to allow overseas mutual funds to trade locally, which will lead to greater competition in the financial markets.
  • Israel’s pharmaceutical industry, a major player in the local hightech sector, is continuing to show strong export sales and few layoffs.

Is everything rosy? The OECD warns that true national growth will only be seen in 2010. Encouragingly: –

The report says that the recession in Israel is at its height, due to high exposure to global trade. However, the damage is limited, by only small difficulties in the Israeli financial system and by the lack of a real estate prices bubble in Israel. ……….The OECD also emphasizes that Israel must be adamant on cutting the budget deficit, saying, “In the short term fiscal discipline seems reasonably assured, but less so in the medium term.”

BBC? CNN? Sky? They are all asking if the world is emerging from a recession. Every little new detail is analysed. Today, the UK announced a significant fall in the predicted number of house repossessions, and thus…..

The cruel fact is that officially nobody can say where the economy is at, until formal stats are released looking back over six months.

Israel being Israel, people do not hang around, waiting for announcements. In fact, despite the rise in unemployment way over 7%, there is a large amount of anecdotal evidence to suggest that our economy is commencing an upswing.

Here’s what I mean.

  • I am trying to book  a week’s holiday in August in the north of the country. Many popular hotels are full.
  • Today, I spoke with my insurance agent, who specialises in policies for the family and small practices. While this a sector liable to cut back in a recession, he is enjoying a boom period.
  • Similarly, a client, specialising in internet research, has recorded a string of new projects since the beginning of the summer.
  • And today’s newspapers are full of reports about how house prices have been rising as far back as January 2009.

It is early days yet. This week, the Bank of Israel kept the interest rate at 0.5%, but it will not be long before that moves upwards. That is the kind of change, which results from officialdom not wanting the economy to overheat. Boy, it will be great to worry about too much growth!

The current troubles in Iran have been a big boom for the twitters of this world. Despite trying to gag foreign journalists, the mullahs have learnt too late that internet and mobile tech are readily available. Their own violence and hypocrisy is being exposed by the minute to the listening world.

CNN, BBC et al are showing off their twitter networks to their audiences, as if they discovered them. The truth is, as the Iranian leadership is learning, this is a revolution from below. And just as Bill Gates started in a garage, so Facebook was founded in university dorms.

So what?

It seems that the Iranian theocracy is not the only regime under threat in the region. A study of Arab bloggers was conducted by the Berkman Center at Harvard . To quote Saad Ibrahim, an Egyptian disssident resident at the university:

Blogger has become almost a revered term in Egypt. Groups that are otherwise completely disenfranchised, the only outlet for them is online.

And the more the authorities arrest the writers, the more who appear later on.

Now from an Israeli perspective, all this is very interesting. I wrote yesterday, how much of blogging and twittering is often virulently anti-Israel. And yet, Israel is one of the largest twittering communities in the world.

Do Israeli geeks compalin about the government? Yes, and from many different persepctives. Significantly though, Israel is an open, pluralistic society. Demicratic safety valves already exist through transparent elections and multi language media. Television from all over the world is broadcast daily into people’s homes.

By way of a suggestion to the rulers of most of the members of the Arab League. If you want to be around in 10 years time and still keep criticising Israel, maybe you need to adapt your constitutions in order to meet the challenges presented by modern technology.

Check out all the links to Israel on WordPress, bloggers paradise, and you will find tens of entries everyday.

Most of the authors impart bile. They hate Israel. You tell them that Israel is the one democratic country in the region, with a growing Christian population, and a medical system open to all, and and and …..you might as well be talking to a brick wall. For these people, Israelis are murderers.

It is easy to be cynical. If I was to count the number of times I am supposed to have carried out genocide, the Palestinians would be equivalent in numbers to those in India or even China.

So how can I prove my point that Israelis are really just like any other people, looking to live a life full of fun and in peace?

Enter Aussie rules football. Now for those of you not used to this sport, you may consider “peace” and Aussie rules (or Footy) a contradiction in terms. I was first introduced to the sport some years ago via a film called “The Game”, which made the battle of the Somme look like a Sunday afternoon picnic.

But no. The Shimon Peres Center for Peace brought the game to Israel. It recruited 20 Israelis and 20 Palestinians. They trained together near Jerusalem and sent a joint team to an international tournament in Melbourne.

What did this mean on the field? A great story is Nasser Gus, who had served a jail sentence for firing on Israeli soldiers. He partnered up with religious Jews living in the West Bank. The actual results seem less important than the political and social bonds formed.

This Sunday night, a documentary film will be screened in Jerusalem, showing how the idea moved from a wild though all the way to reality. As the director observed in a newspaper interview, this is a direct lesson in seizing an opportunity, despite considerable social obstacles constantly being shoved in your face.

As for the detractors on WordPress reading this, they should ask themselves why this film is not currently being shown on the West Bank or in Gaza. And they should consider why if Israelis keep coming up with programmes for coexistence, how come there are few equivalent Palestinian initiatives?

Much has been written about why the financial system collapsed on its heavy feet.

Opportunism replaced by vulgar greed is one popular theme. American, British and other financiers convinced most of us that their paper money was worth more than…paper.

Then of course there are the politicians. It is not just that they were prepared to believe the first category. They institutionalised the grab for money. Governors in America have lost poitions of power. Members of Parliament in the UK have used taxpayers money to build a moat, to buy manure, to pay off mortgages that did not exist, and..well, I gave up reading.

In Israel, Hirchson, the former head of the Kenesset finance committee was ripping off millions from blue collar workers, as he was preaching financial purity. (He later became Finance Minister!).

And there is one last part of the picture; the regulators. Until now, we have let them off the hook, even epathised. Many have commented that their freedom of action was curtailed by their bosses, the politicians.

Let’s be honest. That has not always been true. Last month, a shocking example came to light of mismanagement on the part of regulators in America. To quote a stockbroker friend of mine in the UK, this is  “absolutle financial market horror”!

Inspector-General Coleman of the Federal Reserve admits at a public hearing that she has not investigated what happened to a trillion dollars of American taxpayers’ money. She ain’t got a clue where it has gone.

No transparency. No accountability……except for the fact that she and many others receive a handsome salary to know nothing.

By the way, the las person to claim that “I know nothing” was Manuel, a Spanish waiter in a John Cleese comedy show. Maybe one of them should be appointed to run the world’s financial systems.

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