Figures released yesterday indicate that Israel’s economy will grow by 4.5% in 2008 (5.4% in 2007). And despite the “r” word – recession – increasingly mentioned by international figures, Israel is not showing signs of dipping into negative growth for 2009.

Israel has its forecasters of doom. And Israel’s 30% growth over 6 or so years has been linked in many ways to inward foreign investment and exports, which will both slow in 2009.

For the moment, there is much anecdotal evidence that the crunch has yet to come. A venture capital fund, Genesis, has raised US$100m for a new round of investment. I am aware of at least 2 Israeli start ups that intend to secure external investment in the next few weeks, and I hope to report on those stories in due course.

4 major employers, including Coca Cola (Israel) and Osem, have announced publicly that they have no plans for lay offs.

I am personally involved in an exciting new conference, aimed to introduce key Israeli figures in export sales, marcom and biz dev to new elements in marketing techniques. Delegates from some of Israel’s key high tech giants, including Sandisk, Comverse and ECTel, will be present at this central business event in Jerusalem.

Slow down or recession, the best way to tackle them is to generate new activity. That is what citizens are acting on. It is time for the government to follow.

Israel has welcomed in the Jewish New Year. The Ramadan season is well behind us. Thousands of Christian pilgrims are returning home after celebrating the Feast of Tabernacles in Jerusalem. The country is returning to its usual rushed normality, but what does it find itself?

I present here 3 comments on current society; 2 not so positive and one very encouraging.

1) A recent OECD report notes that for the years 2004 – 2006, Israel has one of the highest poverty rates in the West. 24.5%. For those who denounce Israel because of the poverty of the Palestinians, these stats must come as a complete surprise.

Over a quarter are pensioners. However, 34% of children are in these figures, and this is the core issue. the country has two blocks of very large families; the Arabs and ultra-orthodox. In both cases, it is rare for the mother to work. Both benefit from large state payouts. And the result is the disasterous stats as shown here.

2) In startling contrast, a report from the UN reveals that Israel has one of the largest gaps in wages in the world. In other words, the difference in earnings between the top and bottom percentiles are highly exaggerated.

3) If the above figures point to a national divide, it is encouraging to read about a positive trend in the army. It appears that nearly half of all graduates of the officer’s course now come from the religious community. Up to a decade ago, such a high number would have been unthinkable.

It is even more encouraging when you consider how disappointed, if not disgusted, this part of the population has been with the Israeli government’s policy towards disengagement from Gaza and other similar issues. A small section of leading rabbis have even called for soldiers to boycott specific orders. 

It is the new generation, which is responding to the challenges by ensuring that they are a part of the people and not separate from the rest. It is this type of nationbuilding which so many of Israel’s political and economic leaders have been lacking in recent decades.

As an example of one such family, I refer you to https://www.israelisoldiersmother.blogspot.com

Take a world credit crunch. Add in the local holiday season. Mix in a relatively high rate of interest. And what would you expect the Tel Aviv stock market to move?

Well, you are unlikely to expect it to jump 5%, which is exactly what it did today, Sunday.

The reasons are not clear. it has emerged that the pension funds are actively buying. And again, I stress that the fundamentals of the economy are sound – eg, unemployment has yet to rise. There is a tourist boom, which is likely to continue into 2009.

I have spent the past few days in shopping malls with my kids. Parking was a problem, as people flocked to empty their wallets in the shops. Yesterday, we went touring in the lower Galilee region, visiting a herbs and spices centre. We left at nightfall and the crowds were still flocking in.

Yes, the government has revised downwards its growth forecast for 2009. And “Israel is likely to face a credit crunch in 2009,” a senior regulator predicts, as reported in Globes newspaper.

The truth is that so far Israel is coping well. The authorities have reacted calmly and solidly. The internal economy is operating solidly. The country is prepared to face any winter storms, even if they are not just full of pretty white snows.

This week I wrote about my eldest son, David, acting as steward for Christians and others, parading through Jerusalem.

That same night, Adina, 2 years his junior, came home at the end of a course with Magen David Adom (MDA), the Israeli ambulance service. She has just been approved as a volunteer and she is thrilled.

Adina loves helping people. She relates that almost the first item they learnt on the course was that they must, by law, give aid to anyone, regardless of race, religion or colour. If you were to go into any Israeli hospital ward, you will find openly, peoples of all religions on both sides of the treatment areas. It is not just law, but a natural way of life for the country.

Our family knows several adults who volunteer for ambulance duty with the MDA. They tell us with some regret how their roles are now limited when they are called to go to Arab villages. The violence in recent years has forced them to wait for an army escort, before they can cary out their job. In fact last month, for the first time in years, an ambulance was able to enter Ramallah, the Palestinian Authority’s centre, in order to save a 6 month old baby. 

Gaza too benefits from this dedication. Since January 2006, there have been at least 20 occasions, where Palestinians have used medical stories as a cover to launch terror attacks. In 2006, 4,932 Palestinian patients received special treatment in Israel. That figure will double by the end of this year.

I guess true peace will be obtained not just when Gaza has better medical facacilities, but that these are available to those of a different background and religious history.

One of the fascinating aspects of living in Israel is where modernity walks with the Bible, almost literally. Yesterday, I wrote about Christians, Jews and others using the annual Jerusalem march to recall pilgrimages to the Temple.

Last night, I attending an amazing sound and light show at the “Tower of David” museum. The citadel is located just inside the Jerusalem fabulous Old City and was built sometime in 2nd BCE. The walls and much of the complex remain intact, offering a phenomenal backdrop to a review of the history of the holy city. 

The show itself is new, exploiting much of the latest techniques in media screening; 4 advanced computer sytems, 20 projectors, 14 speakers, 10km of cables, 2 projection rooms. Over 30 minutes, the audience is treated to a 3D spectacular of the creation, King David, Roman conquest, Christianity and Mohammed, and much more.

The citadel’s walls seemed to vanish as they were replaced by human activity from the past. The age span of my party covered 70 years, and we all were speechless by the end.

It was another reminder how modern Jerusalem has successfully learned to merge with and to learn from its past. And as we watched, towering over the top of one of the ancient turrets were ……the red lights of a mobile telephone receiver! You had to laugh.

It is the second day of the Feast of Tabernacles – Succot as it is known in Israel. My 17 year old son has spent the day on steward duty, supervising the annual Jerusalem March. Despite the first rains, around 35,000 people converged on Jerusalem from 3 starting points and then paraded through the centre of the capital.

In many ways the event is a fusion of the new order meeting the old. People in the 21st century of the modern era are reaclling the foot fetivals of the past.

As ever, one of the largest groups was organised by the International Christian Embassy. This special team of people are responsible for bringing thousands of visitors to Israel each year, travelling the length and breadth of the country.

And it would wrong of me not to mention that one of my most favourite professional projects was built through one of the strongest local supporters of the embassy.

Israel is known as the one country in the region, whose Christian population has grown in the past few decades. It is sadly ironic that as thousands of overseas guests walked safely through the streets of Jerusalem, parallel news from neighbouring countries has been far less encouraging.

As nightfall descends on the Holy Land, its citizens from all religions have a lot to be proud about thankful for.

Yesterday, I wrote that the Israeli economy is essentially sound, relatively well placed to face the international credit crunch.

Sure enough, the Tel Aviv stock market did plung 8% on opening. By the end of trading, it had lost “only” 3.8%. During the day, a statement from the Ministry of Finance gave official government backing to private deposits in the local banks.

Few have considered how this international mayhem will effect the Palestinian – Israel peace process. One immediate thought is that if governments are having to spend more on domestic needs, there will be fewer spare resources for overseas aid – ie, less for the Palestinians.

Bad thing? Possibly. This may provoke a turn to more senseless violence. Alternatively, the Palestinians and Fatah may finally understand that the pot is not bottomless. The billions of annual support from UNRWA, the EU and elsewhere require fuller accountability, both towards their own and for the overseas community.

Last week, I wrote that the Israeli economy was different from many of its neighbours in Europe and North America. And the Tel Aviv stock exchange has been fortunate to have missed many of the massive swings recently due to national holidays.

No doubt that today, Sunday, will be “catch up time”. The market will suffer heavily. However, Sever Plotsker, a leading financial commentator, has noted 8 points why the local commercial system bears reason for cautious optimism. Writing in Hebrew in the paper Yediot Ahronot, he observes that: –

  1. Israel has not seen inflationary real estate prices.
  2. The mortgage market has remained manageable.
  3. Bank debt remains reasonable.
  4. Relative to other countries, Israelis save their extra earnings.
  5. The Israel stock exchange is less sophisticated than many of its rivals, lacking manipulative techniques that exist elsewhere.
  6. Due to government restrictions, Israeli banks since 2003 have (reluctantly) allowed for relatively high rates of bad debts.
  7. The budget remains balanced.
  8. Israel has experience in nationalising banks, and getting out quickly.

Plotsker does recall that Israel’s stock exchange has seen fantastic growth over the past 6 years – 270% at its peak – and so a correction will not be a bad thing in the short run.

Overall, a sensible, planned central approach, led by Stanley Fisher, should see Israel through the world crisis. Another tense week ahead for all, but we can remain hopeful.

In Israel, Jews are in the middle of a 3 week period of religious festivals. Similarly, Muslims have just finished Ramadan. Time for the women of the home to be busy in the kitchen, surely? And yet, times are a changing.

On the political scene, it is looking incresing likely that Ms Tzipi Livni will form the next government. This is a lady with one sharp background. Her parental home was modest and dedicated to core values, associated with the founding of the country. In early adulthood, the lady evidently had a stint in the security services. She has just fought an internal battle in her own party, Kadima, defeating a former chief of staff in the process.

This is no one-off triumph for the female in Israeli society. The speaker of the Kenesset is Ms Dalia Itzik, who has fought her way up the system, staring off as a teacher in education politics in Jerusalem. The Head of the Supreme Court is Ms Dorit Beinisch. The Knesset boasts a female Arab member, very active on social issues. And so the list goes on.

It is not just on the national scene that women are active. In the town of Hara Adar, just west of Jerusalem, some local women became fed up with the back-stabbing of local macho leaders. A few years ago, they formed their own political party. The result is that they are now a significant voice on the local council.

A similar move has begun in Givat Zeev, sandwiched between Ramallah and Jerusalem. A town of 12,000 residents, it is facing elections in early Novemeber. The local female team are well placed to become a dominant force. 

Stats on rape, harrasment etc are not encouraging. On the other hand, these changes will surely help to show others the way forward.

Two months ago, I heard a lecture by Stanley Fisher, Governor of the Bank of Israel and who possesses a very impressive cv in nternational banking. He pointed out that over 5 years the Israeli economy had grown around 30%, despite wars and diplomatic concerns. unemployment was at a historical low. Debt was closing on European levels, and so the list went on.

Fisher was later asked how the coming world recession would impinge on Israel. For sure, the economy which has thrived due to direct foreign investment will suffer. Exports will take a knock. But from there on, providing government and individual keeps cool, it will not be too bad.

Right or wrong?

It’s Wednesday 8th October. As I write, Gordon Brown is about to announce a partial nationalisation of British banks. Yesterday, Wall Street dropped another 5%. Stock markets in Egypt and in Saudi Arabia fell 16% and 8% respectively.

As for the Israeli market, a 3.9% bounce upwards. Yup, the country that has learnt to thrive without a peaceful background bucked logic once again.

And yet the resons are clear. Sure, a 0.5% surprise reduction in interest rates helped. The fundamentals are good. The country does not possess a mortgage system as in America. The banks were revamped decades ago, with few serious exposures to the mayhem overseas. The stock market was upgraded this year on the FT index.

It will be a brave person to predict what will happen tomorrow, but the signs are positive for the long term.

Meanwhile, back in England, it is almost a hundred years ago to the day when Mary Poppins landed and her scriptwriters threatened government ownership of the banks. A spoonful of sugar for all international investors?

Palestinian presidential elections are approaching. As usual, in order to cover up the national divisions, attention is often diverted to the poor economic conditions engulfing the Palestinian territories, and why Israel must be to blame for all that is wrong

1) The World Bank in September 2008 produced yet another report on the Palestinian economy. It has reduced 30% since the Intifada broke out. Unemployment is at 30%. And to paraphrase a 122 page document, the way to growth lies through increased aid and fewer Israeli roadblocks. Yes?

Well, it sounds politically correct. However, in the words of the bank’s own former regional expert, Nigel Roberts, the Palestinians have received more aid per capita than any other population. And this investment has neither done the job nor has it all been accountable.

As for roadblocks, the 2008 report confirms that the economy had grown at 6% per year for the 6 years up to 2000 and the beginning of the violent Intifada against Israel. The true logic demands that Hamas and Fatah stop its war against Jerusalem, which would then enable Olmert and co to get rid of the security measures and thus significantly increase the welfare of Gaza and Ramallah.

2) The World Bank produces a report on the Palestinians almost once in 9 months. How many does it hand out on Somalia? The pressure group, Human Rights Watch has just labelled that country as “the most ignored tragedy in the world today”. You have to wonder what motivates the world to concentrate on the Palestinians, investing heavily in resources which disappear, as millions others are forgotten and abandoned around the world.

3) 5 times a week, about 90 trucks of food, clothing, medical materials and other necessities reach Gaza from Israel. In parallel, it is now emerging that Gaza is responsible for vast sums of money entering Muslim charities inside Israel proper. Poverty may be a clever piece of spin in the war against Israel, but its hypocrisy is becoming dangerously exposed.

Menachem Meir is a Jerusalem academic. Successful and a careful observer of the Jewish faith, he is blessed with a wonderful wife, children and a smiling group of grandchildren. Around 1942, he was separated from his elder brother Fred in France. The younger sibling eventually made his way to the States, forgot his German, abondoned the family name and and has seen the next two generations happily embrace Christianity.

Few have the right to judge either; how they have survived and why they lost touch with each other. Even fewer have managed to explain the Holocaust – how and why it happened.

I was honoured to attend a private showing of an international film, depicting the childhood, separation, and the families of Fred and Menachem. The session took place yesterday, less than a week before the Day of Atonement, the holiest day of the Jewish calender. Yom Kippur, as it is known in Hebrew, features a 25 hour fast, where Jews come together asking for forgiveness and offering repentence.

In this light, viewing the film suddenly became amazingly pertinent.

1) The Meir family was originally transported in 1940 from Germany. In charge of the operation was a nazi officer called Hopp. He was a local commander. His son is associated with a many charities and successful businesses in Germany. Inteviewed on camera, he repudiated the actions of his father, publicly offering to fund part of the film and a ceremony, which remembered the horrific deportation.

2) Fred had spent decades running from his past. On camera, he was clearly the more openly moved of the two, when handling the horrors of yesteryear. His parents had asked him to look after Menachem, who had refused to join him in America. Were his tears partially a sign of relief that Menachem had lived and confirmed the family’s honour? Waas this guilt being removed?

3) Menachem found the old family home. He explained to the current inhabitants why they had come to visit, accompanied by a camera crew. Shocked and surprised, the occupants offered no apology and no regret. The brothers left the scene with evident disappointment if not disgust.

4) In contrast, Menachem was reaquainted with a former school friend. The gentleman explained how he had tried to help them with their clothes on the day of the deportation. He bore a look that signified relief – as if to say, the reunion signified a form of individual repent after 65 years. In return, the brothers showed hope and forgiveness

And there was one further point for the Israeli; religious or not, elderly or at school, a plumber or an academic. Menachem was at home in Israel. For all of the countries problems, the 3 generations were safe. His non-practicising relatives from America noted after a family meeting in Germany – by definition, it was not a reunion – that Israel provided true bonds for its citizens. It is place with roots and which can grow further.

Fred has recently retired to Florida. Clearly beautiful and idyllic, he was asked if this was his home. He could not give an affirmative answer.

It is an open fact that the Middle East is chronically short of water. If there are reserves of this “liquid gold”, they are hidden in remote areas of Turkey.

Nowhere is the problem more acute than in Israel and in the Palestinian territories. (Remember that under the 1993 Oslo Accords, Israel is obliged to supply detailed amounts of water upto the entrance to Palestinian towns and cities).

So what can be done? I spoke to one israeli team that can take water out of the atmosphere in commercial quantities for on-site agricultural use. Another approach is to conserve water use. Israel has much to do here, especially amongst few maintenance.

Another aspect demanding immediate attention is untreated sewage, seaping off into streams and rivers. The estimate for 2007 was that 178km of untreated muck had found its way into these open water flows, which form the basis for drinking water supplies in many Palestinian regions. Equally critical was the misuse of groundwaters for agriculture, as opposed to drinking. Again, it is the citizen who suffers as the Palestinian Authority is only capable of mismanegemnt.

With a degree of political irony, it appears that the two populations are tied together…by a series of underground aquifiers. No amount of rhetoric or violence can change that. If Hamas and Fatah do not start cooperating with the Israeli authorities – the ones with the technology, resources the will and  the finances – then both sets of populations are going to be suffering even further, and in their own kitchens.

Several people have asked me what I meant by the Paul McCartney “kosher certifcate”.

It is not just that Macca’s visit wll encourage other artists to come and be seen in Israel.

Reports of his concert were found on the front pages of leading newspapers in the UK, America, Australia and probably elsewhere. That is massive positive PR that Israel has not been able to generate during all the rest of the celebrations for its 60 years of independence.

If if that is not good enough, take my wife’s anecdotes. She convinced her multinational company to hold its UK conference one day early, so that she could return in time for the concert. And following the international press coverage of the performance, her colleagues have sent her e-mails of delight as they were able to “take part” in the festivites from around the globe.

In this context, who cares if Macca visited a school in Bethlehem (where he had to avoid local protests)? Who cares if he did not visit Jerusalem? A great concert for Israelis. A superb event for Israel.

Thursday, 25th 2008 will remain a special day in my life. After blah blah years and decades, I had an opportunity to fulfill a life-long dream. I saw Paul McCartney, live, on stage, singing.

Sure, I was so far back that he was only a dot on the eye. Sure, he was missing three other members of the Fab 4. And, he was past 64. It did not matter for one second of my 2 hour and 20 minute joy ride.

The press had made much that the Beatles had been banned from appearing in Israel way back in 1965. Was the cancellation due to a clash between two local impressarios? Did the government of the day really believe that the young crooners would corrupt the youth? Or was it that the country was so strapped for foreign currency reserves and could not afford the entertainment, that the cancellation was based on a made up excuse?

More relevant is what this concert means to Israel today? For me this is simple: For all Macca’s visit to Bethlehem and his wishing the audience “Ramadan Karim”, he gave Israel what it has longed for – a kosher certificate.

He is so big that no longer can any artist find an excuse not to visit. Finally and utterly – Israel is on the map in the world of music and live concerts. The country offers performers first class facilities. In return, they should be here to honour their fans.

One irony: Maca constantly used the theme of giving peace a chance. great, the region needs it. And yet, for me the best song of the night was “Live And Let Die” withe explosive guitar solos and effects. Smile; it’s the Middle East.

I was told of a group of Israelis, who underwent a psychometric test for junior management positions in the local civil service. They were examined on their Hebrew, given an assignemnt in time management, asked to identify the wrong picture in a sequence, and more.

At the end, one of the participants asked if the senior managers had undertaken such a test. Others laughed, but there was clearly more than a tinge of poignancy in the question.

Personally, I don’t see why drawing a tree with roots or a family with people of correct proportionate sizes means that you are capable to carry out satisfactorily an administrative task. But the whole exercise got me thinking.

Let’s take all these high flying bank execs and sales people around the word. Many have been earning fat bonuses for years on what have proved to be financially unsecure policies. They frequently obtained their position by going to the right school, knowing the correct person, or just through the gift of the gab.

Perhaps a better way to assess human potential is to make them draw pictures and analyse simplified test scenarios. It might save the world from a world recession.

Lehman Brothers has disappeared. Halifax in the UK was sold overnight. And in Israel?

The shops are full, as people prepare for the Jewish New Year or the end of Ramadan. Banks are still rolling in the profits. Unemployment is at a record low.

And high tech? Well I can report form own perspective. I have one client, where contracts are being drawn up re a UK investor. Another has received 2 proposals from mainland Europe.

These are not freak incidences. A colleagues told me today that an investor, who last week informed him that a project looked interesting, is about to pop over to Israel to complete the deal. And so it goes on.

I find 2 lessons here:

a) The collapse on Wall Street and elsewhere was sparked by stupidities in the mortgage market in one country (and rising commodity prices). That does not mean all global economies are rotten.

b) The Israeli market has undergone some harsh restructuring since the previous high tech dive in  1999. It will not escape unscathed. However, it still has what to offer the outside world, especially in investment opportunities. Time for a visit.

I have just heard a fascinating approach to helping women enter the labour market in Israel.

What’s so special about that? Ultra-orthodox or Haredi women have often been held back from working. Their culture and society effectively “keep them in the kitchen and nurseries” even when they have solid qualifications. Other factors, such as not working directly with men or high maternity levels, have kept them unemployed.

Along comes Ms Libie Affen. A feminist? I am not so sure. Libie is a Haredi lady with a masters degree and the COO of Matrix, a leading Israeli high tech company. With a spin off from matrix, she has established a profitable company to employ Haredi es, to give them the conditions they require, and to produce quality output as demanded by Fortune 500 companies.

She currently employs 450 ladies, most of them software engineers or equivalent. One of the conditions is that they are provided rivate transport to and from the client. This allows them to deal with children int he evening and protect their modesty demands.

Now here’s the real “wow” factor. Libie has been asked to explain this model to a female cooperative in Detroit. And to take this one step further, the Palestinian Authority has also been in contact.

Why did I write this? Did you realise that Israel is about to swear in a female Prime Minister. She will sit along side the female head of the Supreme Court and Madam Speaker of the Kenesset.

A few weeks ago, I attended a panel discussion on the cleantech industry in Israel. Fascinating stuff. For example, it turns out that this tiny mass in the Middle East leads the world in solar tech. 

And that is not all. We grow algae in the dessert and send the production abroad. Shai Agassi’s non-fossel powered car is developed in Israel. Irrigaion techniques have moved far forward form computer linked sprinklers.

I was recently commissioned to investigate some greentech opportunities for a UK based investment group. I thought that I had seen eveything, but there was more to come.

I have met a company generating commercial power for communities out of manure and sewage. Another corporation is creating cooling systems out of crystals. And a third group has designed a housing complex where the power used is self-generated amongst the dwelling units.

These companies are earnestly seeking sales streams abroad, and they deserve all the success they can receive.

For the past year, I have been a member of the board the Israel-Britain Chamber of Commerce. The organisation was recently involved in coordinating the visit of the British Minister of Trade, Lord Digby Jones.

Now get hold of this:  “Over the past decade, bilateral trade has grown by 40 per cent and is now worth over £2.3 billion pounds. …..  more than 250 Israeli companies now located in the UK…. and 47 Israeli companies listed on London stock exchanges, with 41 having joined in the last three years.”
  
Lord Jones said his government organisation UK Trade & Investment, which is responsible for promoting the UK international business, is committed to securing another 25 more inward investment projects from Israel by 2010.
 

What an opportunity for Israeli companies. The Brits are actually giving a direct entry int the vast network of European trading relationships. Just hop on board.


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