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How to estimate the value of what Israeli tech means to Europe?

6 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Palestinians

Israel has its detractors in Europe. For decades, car manufacturers would not sell to the Holy Land. Today, the leader of Britain’s main opposition party, Jeremy Corbyn, cannot mention the word Israel, except in a manner that challenges the right of the country to exist.

The question remains. Can Europe do without Israel?

Israel…….. (has) around 1 startup for every 1,400 people. Some of these startups have gone on to be high-profile exits — Waze, which sold to Google for $1.3 billion, and recently Mobileye to Intel for $15.3 billion, among many, many others – (technologies used by hundreds of millions of Europeans daily). Just for comparison, France has .112 startups for every 1,400 people. Germany has .056 startups for every 1,400 people, and the UK has .21 startups for every 1,400 people.

I just read today that the “European Union has awarded 742 Million Euro to 1,062 Israeli Scientific Research Projects”. That must be a reason for that.

Now those same detractors of Israel may object to this use of taxpayers money. At least it is being handed out in a transparent and accountable manner, as opposed to the billions available for the Palestinians. At the same time, it is money that eventually benefits peoples of all kinds, across national divides.

I recommend that you read the press release in full.

The EU Delegation to Israel, together with the Israel-Europe Research and Innovation Directorate (ISERD) and the Israel Innovation Authority, celebrated scientific cooperation under the Horizon 2020 program with an awards ceremony on June 4th at the Peres Center for Research and Innovation in Jaffa. Awards were presented to 423 Israeli companies and researchers that won Horizon 2020 grants in 2018. Grants totaling over 742 Million Euro have been awarded to 1,062 Israeli projects since the beginning of the program through the end of 2018.

The Horizon 2020 program is the largest research and innovation program in the world, amounting to approximately 80 Billion Euro over seven years.

International cooperation in research and innovation is a strategic priority for the EU. It allows for tackling global societal challenges more effectively, creates business opportunities, and makes scientific diplomacy a driving force for the external policy of Europe.

Israel has been a partner in the EU’s research and innovation framework programs since 1996 and was the first non-European country to join it. Over the years, the EU-Israel partnership has strengthened Israeli academic and industrial excellence, led to investments in research infrastructure, and enabled long-term, innovative research

The program has enabled Israeli companies, researchers, and innovators to gain access to European partners, to integrate into an extensive infrastructure of European research, and participate in flagship projects in the fields of quantum technologies, graphene and brain research. The European Research Council (ERC), which is part of Horizon 2020, supports ground-breaking research at the frontiers of human endeavour. Israeli researchers have been extremely successful in the ERC programme and Israeli universities and research institutes can be found among the top 10 organisations, worldwide, hosting ERC grantees.

EU Ambassador to Israel Emanuele Giaufret said: “Every year, we celebrate EU-Israeli collaboration in research and innovation and honor the Israeli winners in the EU’s research and innovation program, Horizon 2020. We hosted a ‘plastic-free’ ceremony and event to show support for a critical area where the EU has taken on global leadership. Policies promoting sustainability of the planet for future generations need to be supported with technologies, research, and innovative solutions, where EU-Israel cooperation can play a key role.”

Dr. Ami Appelbaum, Chief Scientist at the Israel Ministry of Economy and Industry, Chairman of the Israel Innovation Authority, and Chairman of ISERD’s Steering Committee noted that: “The prestigious European Framework Program enables industry and academia in Israel to compete in the world of excellence and innovation. The average success rate for eligible applicants is only about 14%, so winning a grant in the program is a sign of quality and excellence for both researchers and companies. The European Framework Program allows for individual proposals and combined proposals with European partners, opening the door for research and business cooperation with European entities beyond the significant funding they already receive.”

Nili Shalev, Director General of ISERD, added: “The European Framework Program provides companies and researchers with numerous advantages besides the generous funding grants. It elevates the quality of research, enables recruitment of high-quality workers, provides investment in advanced equipment, and facilitates work at international standards. The grant enables companies to cut the time it takes to go to market and enables interaction with many potential customers. The program places participants at the forefront of global research on issues of environmental and social importance. The program offers a wide range of opportunities and benefits, and we are calling on all interested parties to contact the ISERD director, who serves as a gateway to the program.”

Projects and research that received funding in 2018 include:

Israeli company Vectorious received funding via the European SME Instrument Phase II program in early 2018 to conduct clinical trials and continue developing its V-LAP product – a miniature wireless heart implant that monitors heart function, accurately measures left atrial pressure (LAP), and sends all data directly to the HMO or the hospital where the patient is receiving treatment. For the first time, physicians can make informed decisions and provide their patients with better treatment based on real-time clinical data.

Optima Design Automation from Nazareth was granted approximately 2.5 Million Euro to continue development and scale-up of its innovative product: a software platform for chip manufacturers designed to ensure functional safety of chips used in autonomous cars.

A joint project of the Agricultural Research Organization (ARO) – Volcani Center and the company Fluence for a decision support-based approach for sustainable water reuse applications in agricultural production (DSWAP) that aims to find holistic solutions for wastewater irrigation that ensures environmental safety and health with minimal energy investment. This project included research groups from Israel, Germany, Cyprus, Spain, France, Italy, and Portugal.

Triox Nano from Jerusalem won a 2 Million Euro grant to continue development of its new drug delivery platform SMARTIOX, which combines material and DNA techniques to provide breast cancer treatment for women by injecting the active ingredient used in chemotherapy directly into the tumor area alone. This platform could be applied to other disease treatments as well in the future.

The PlaMOS project, led by Mellanox and IBM’s Haifa Lab, is developing a powerful integrative platform that allows an eight-fold increase in the speed of optical transmitters and receivers used in datacenters. PlaMOS relies on small-scale wafer integration of novel ferroelectric-based plasmonic-photonic modulators, silicon germanium photodetectors, and BiCMOS electronics combined in a super-fast, micrometer-scale optical engine capable of transmitting and receiving data at the world’s fastest speed of 200 Gbit/s per optical channel.

The (hidden and obscene) costs of a general election in Israel

4 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

To cut a long story very short, Israel’s Prime Minister called for a general election in the winter of last year. It was held in April 2019, and his coalition partners won a majority. However, Mr Netanyahu has been unable to secure agreement amongst his buddies, and so is going back to the electorate…… on 17th September 2019.

As one person asked: If it takes the UK with tens of millions of voters and 650 constituencies only three weeks to prepare for an election, why on earth does it require the ‘start-up nation’ with four million voters five months? No answer. But just think how much extra money can be wasted in PR campaigns over that period, …..mostly funded by the taxpayer!

It is estimated that the direct cost of the election is around US$130 million. That makes for disappointing reading at a time when the country does not have a Minister of Finance and when the budget deficit has been lurching out of control for the past six months. The problem is that no real fix is in site before the winter, which means that the remedy will eventually be even more painful…..not that the present government will admit that to an electorate.

But there are other hidden costs.

After the elections in April, the 120 members of the Israeli Parliament, the Kenesset, were sworn in.

By the time the next election rolls around on September 17, Knesset Member Osnat Mark of the ruling Likud Party will have served in the Knesset for 10 months without performing any of the duties of a lawmaker. Nevertheless, she will receive a monthly salary of 43,000 shekels ($11,850), as well as a budget for aides and advisers.

Nice work if you can get it.

Moving on, let us recall why that first election was called earlier than required by law. The consensus in the press was that Mr. Netanyahu was seeking to delay the process of the four legal investigations against him. And by all accounts the main subject of discussions when trying to form a new government just now – a process which failed and resulted in those additional elections – was how to create a law that would weaken the prosecution’s cases against Netanyahu.

Add up the value of the charges against Netanyahu, and we are talking about billions of shekels.

Finally, let me turn my attention to the ultra-orthodox community, whose political parties see themselves as natural coalition partners of Netanyahu. They currently constitute about 16.5% of the populace, a figure expected to rise to 20% over the next decade.

However, 98% of 18 year olds from the community graduate without a proper education. Thus, when they do eventually enter the workforce, they are underqualified.

Actually, I should state “if” they work, because nearly 50% of ultra-religious men between the ages of 25 and 64 are estimated not to be a part of the working population. In order words, when Netanyahu agrees to the demands of his rabbinical partners, he is encouraging a form of enforced poverty.

Statistics indicate that 53% of the ultra orthodox live under the poverty line, as opposed to 9% for the rest of the population.

What the heck? Unemployment is at an all time low. The economy continues to grow in real terms. Loads of top musicians are turning up to play open air concerts this summer. So why should we care about a few squandered billions of dollars, if the Israeli government does not want us to think about them?

 

 

So what happened next in Jerusalem, June 1967?

2 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Jerusalem

Today is Jerusalem Day. 52 years ago, Jerusalem was liberated. For the first time in decades, Jews could freely pray at the Western Wall. Inhabitants could roam around the city without being shot at by Jordanian soldiers.

There are many heart-rendering photos from that day. Three soldiers looking up at the Wailing Wall. The sound of the shofar, the ram’s horn, being blown. Moshe Dayan, he with the eye patch, strutting with senior officers through the gates of the Old City of Jerusalem.

Today, nearly a million people live around Jerusalem. Its biotech industry is servicing millions globally. Intel sunk over US$15 billion to buy a local start up called MobilEye. And in terms of religion, everyone gets to do what they want.

However, going back 5 decades, what happened next? After the fighting ceased, we know that the soldiers were moved out towards the Hebron district, but then what?

The story of one rabbi, Shlomo Goren, encapsulates it all. It was recalled by Rabbi Ari Kahn, and I copy his words in full below. However, as I read it, I had to wonder, what has changed between now and then? Why has the hatred replaced the sweets that were offered in that moving episode of history?

You will chase away your enemies, and they will fall before your sword. Five of you will be able to chase away a hundred, and a hundred of you will defeat ten thousand, as your enemies fall before your sword. (Leviticus 26:7,8)

While the words of the biblical verse might once have sounded like hyperbole, in the coming days we will once again mark the anniversary of the Six-Day War. In 1967 – in the range of memory of many who are reading these words – the experiment called the State of Israel faced an existential threat, as a multi-front war threatened to annihilate the nation that dwelled in Zion.

The God of Israel was not silent, in a miracle of biblical proportions, the foreign armies were suddenly and decisively defeated. The Egyptian air force was neutralized within the first minutes of the war, and the great personal sacrifice Eli Cohen, Israel’s “man in Damascus,”helped defeat the enemy forces in the North.

Jerusalem was reunited, and the Temple Mount was returned to Jewish hands. This, too, came at a heavy price, paid with the lives of our young, valiant soldiers who gave their lives to defend West Jerusalem and to blaze the path to liberate East Jerusalem.

The iconic image of the young paratroopers standing at the Western wall is seared in our collective consciousness. Many of us have also seen pictures of the Chief Rabbi of the Army, Rav Shlomo Goren, who blew the shofar,recited a blessing of thanks and joy, and remembered the fallen in an awe-inspiring prayer at Western Wall.

What many do not remember is that on the following day, Rav Goren did something even more remarkable: He liberated the city of Hebron. Two people – Rav Goren and his driver – vanquished the 40,000 hostile Arabs living in the City of the Patriarchs. Only two people – with the help of God.

 

Adam Eliyahu Berkowitz also tells the story of Rabbi Goren’s account of that day.

“Many know the story of Rabbi Shlomo Goren arriving at the Western Wall flanked by IDF troops in the 1967 Six Day War on the 28th of Iyyar in the Hebrew calendar.
The moment, captured in an iconic photo, shows the rabbi holding a Torah scroll and blowing a shofar at the Western Wall surrounded by young soldiers. But few people know the even more astounding story of what happened the day after that photo was taken and how Rabbi Goren single-handedly conquered the holy city of Hebron and the Cave of the Patriarchs, known as the Machpelah Cave.

The war was still raging after the Old City of Jerusalem was conquered by the IDF. Directly after the emotional scene at the Western Wall, Rabbi Goren, a general and the Chief Rabbi of the Israeli army, proceeded to join the forces gathered in the recently recaptured Gush Etzion. The troops were waiting for the morning when they would push on to battle the Jordanian Legion in Hebron.

Rabbi Goren addressed the troops, telling them of the enormous significance of Hebron to the Jews. He lay down to sleep surrounded by Israeli soldiers, telling them to wake him in time to leave for the battle the next day. However, when he awoke a few hours later, he was alone. The troops had moved on without him. He quickly woke up his driver and they set out to catch up with the Israeli forces.

Alone, they drove the short distance into Hebron and were greeted by flags of surrender, white sheets hanging from every window and rooftop. The rabbi didn’t see any Israeli soldiers and assumed they had already conquered the entire city. What the rabbi didn’t know was that he had arrived before the troops. The army had taken a longer route in order to surround the city before entering it. As he drove toward the Cave of the Patriarchs, he was the only Jew, certainly the only Jewish soldier, in a city of 40,000 Arabs.

When Rabbi Goren arrived at the large iron doors of the Cave of the Patriarchs, he found them locked. Rabbi Goren shot at them with his Uzi machine gun, trying unsuccessfully to open the doors which had been locked to Jews for 700 years. The bullet holes are still there and can be seen by anyone visiting the site today.

The doors did not open, so he backed his jeep up and attached chains to the doors, pulling them open. Rabbi Goren entered the Machpela, blew the shofar as he had done the day before at the Kotel, set up the Torah scroll, and began to pray.

The Mufti of Hebron sent a messenger to ask Rabbi Goren, as a general of the Israeli army, to accept his surrender. He refused, sending back the answer, ”This place, the Machpelah Cave, is a place of prayer and peace. Surrender elsewhere.”

The first Israeli troops in Hebron were shocked to find an Israeli flag flying from the roof of the Machpelah. The next day, the rabbi received an urgent message from his officer, the Israeli Chief of Staff, Moshe Dayan. He ordered Rabbi Goren to take down the flag, remove the Torah from the premises and to order anyone entering to remove their shoes because the site was a mosque.

Rabbi Goren sent a message back in response: “The Torah is holy – it stays. The flag means to me what it means to you. If you want to remove it, you may, but I will not.”

Who needs a business mentor?

30 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

About 18 months ago, I gave a talk at a large conference near Tel Aviv of owners of SMEs. The subject was why they should consider hiring a business mentor.

For many of these people, they consider a mentor as just another expense. After all, how can an outsider known their business better than themselves?

I drew an analogy to the world of sport. In athletics, football, swimming  and the rest, there are many, many, many naturally talented human beings. Yet just about all of them have a coach.

Why? Because that extra voice and set of eyes have an experience that is able to bring the best out of others. Coaches and mentors have a special, somewhat undefined, skill that adds so much more to the achievements of the client.

It is the same in business. Sometimes, in order to get over that finishing line, you need an additional head and pair of hands, and there is nothing to be embarrassed about by admitting it.

To understand further what I mean – and to examine my table tennis skills – have a look at this video.

 

Customer service: Can it be taught or does human nature win over?

27 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

The headline of the article says it all: “Tough Israeli airport security can be insulting”.

It is a fine balancing act. Israel has to be ultra vigilant when it comes to security. However, does it have to be so rude, when questioning suspicious types at its airports? Read the responses of those in charge. At least as reported, there is not a hint of empathy at the plight of those turned over, many unfairly. Take it or leave it!

The issue comes to mind following my visit to a distillery in Islay, off the west coast of Scotland. Yes, Bruichlladich is a long way from home. However, the tastings on offer were a major comfort.

The staff were friendly and welcoming. Their explanations were excellent. It was the end of an early summer’s day – well, summer for that part of the world – and if you pardon the pun, everyone was in fine spirits. I decided to purchase a bottle.

I was told that in order to receive a tax refund, I should take my receipt to the appropriate desk at the airport. They did not offer the service of the paperwork at the distillery itself, which I thought was unusual. Unfortunately, at Heathrow airport, I was told that I had been misinformed and that I was required to submit the papers I did not possess.

Annoyed, I wrote to Bruichlladich. They responded (twice) within 24 hours. The response was understanding. They informed me that there would be some staff retraining. I was told that I could expect to receive a small item in the post.

Bottom line. Full apology. It was not possible to wind the clock back, but the distillery had risen to the occasion. Let’s face it. Islay is an island of 3,500 very friendly people and a lot more sheep than that.

By way of contrast, yesterday, I phoned a hotel near Jerusalem. I am trying to arrange a group booking for a family event. I eventually tracked down the relevant person.

When she spoke to me, I was able to enjoy the subtle background noise of lorries hooting nearby. Without explaining what was included, she cut straight to the price, as if I was supposed to absorb all its meaning in a quick gulp of breath. And then, she could not get me off the phone quick enough.

And if you think she called me back to follow up, you are wasting your time.

I can only assume that in all three stories, people have received some form of training in customer service. Clearly, in two of the incidents, the matter is seen of lesser importance. So the questions remain:

Where do you think I would want to purchase (again) if I had the choice, and why? And why don’t those people, who need to learn that lesson, fail to learn that lesson?

What makes Jerusalem’s high-tech scene so vibrant?

23 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Occasionally, I have mentioned the amazing buzz over the past few years created JLM BioCity. There is a wealth of ideas and innovation coming out of that team, yet in the relatively tiny city of Jerusalem, is world class. But what of the other sectors?

Earlier this week, I received a briefing of what else is happening around the city. I was stunned by the range of activity. What follows is a summary of that same bulletin published by the umbrella organisation, called JNext.

The weekly report starts off with a comment on the role of designers and ‘design mindset’ in general, became much more significant and crucial for tech companies to grow and succeed. They believe Jerusalem can and should become the place ‘Where Tech Meets Design’ and we are happy to invite you to the flagship conference of the ‘Tech Meets Design’ initiative as part of the annual Jerusalem Design Week.

A. THIS IS BIG. Jerusalem was ranked by Startup Genome as Israel’s leading life-science cluster in Israel and one of the top-10 life-science ecosystems worldwide. The city was also ranked as one of the top-20 global ecosystems for Artificial Intelligence companies. Check out the full report and the Jerusalem page on the Startup Genome website. 🏆

B. Ben Wiener of Jumpspeed Ventures, the fund the invests only in Jerusalem based or born startups, announces its new fund, injecting more capital into the capital city. Ben is awesome, everyone loves him, including us. 💸

C. Bitemojo, the most delicious startup in the world (and one of Ben’s portfolio companies), has won the Global Gastronomy Startup Competition of the World Tourism Organization out of 300 startups from across the globe. If you haven’t tried it yet, Bitemojo is a culinary experience of self-guided food tours with nothing but your smartphone. Check out recent interviews with their co-founder, Michael Weiss on the WTO website and on TheMarker. Yummy 😋

D. Genetika+ (another one of Ben’s portfolio companies..) was featured in JPost’s ‘Companies that Make the World a Better Place’ section. Genetika+ is developing a personalized medical testing tool to better treat depression by helping physicians find the best drug therapy for their patients.

E. The Hebrew University hosts a Canna-Tech conference to promote more collaborations between the academy and industry in one of the world’s hottest trends. The Hebrew University is one of the leading institutions globally with expertise in Cannabis-related research and patents. ☘️(**the closest to a cannabis emoji..)

F. From a heavy metal band to a gaming company. Capricia, a Jerusalem-based gaming studio is about to release its first game. Check out the interview with the creators on Geektime 🎸

G. Mellanox, one of Israel’s biggest success stories (recently acquired by Nvidia) are in the process of starting an R&D activity in Jerusalem. They are looking for an excellent SW Team Leader manager to join 5 Years experience in C and Linux and at least 2 years of experience in leading SW teams is a must.

H. Taboola, one of the world’s leading content discovery platforms are in the process of setting up an R&D site in Jerusalem. They are looking for Algorithms Engineering team leader and SW team leader (JAVA) to lead the site.

Jerusalem has around one million inhabitants. Over half is compiled of two large conservative sectors; the ultra-orthodox Jews and the Arabs. And despite that natural restriction, which can limit industrial growth, the city is as vibrant as ever in the high-tech world.

The hidden numbers of Israel’s high-tech success

22 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

A few years ago, I was acting as the business mentor for a biotech company that had entered the Mass Challenge incubator in Jerusalem. Alongside them were a couple of people developing an app for the culinary tourist market. And today?

The biotech entrepreneur is still pushing ahead. Bitemojo has just won an international gastronomy competition (UNWTO). Is this one tiny step to becoming another Israeli high-tech success?

Every now and again, there are journalistic gripes that Israel does not produce enough commercial Unicorns. Well, I was recently wading through the updated stats of Israel’s success as a start up nation. What is impressive how the numbers seem to keep growing, almost exponentially.

Just look at the base of Israel’s ecosystem. For example, Comverse, which hit troubles and was sold off in 2016, saw 299 of its employees set up 386 start ups. ICQ, the founder of ‘chat technology’ and sold for US$400 million to AQL had 42% of its staff create 66 enterprises. Anobit, Intel’s first Israeli purchase, fostered an additional 11 businesses.

Another aspect of the high-tech industry is its impact on the lesser developed elements of the working population. Roughly 160,000 people are employed in high-tech, and there are about another 10,000 unfilled positions. Back in 2010, maybe 3,500 came from the ultraorthodox sector. That number had close to trebled by the end of last year.

Not only does this ensure that two conflicting parts of society are able to meet each other in the workplace. Significantly, many of these observant workers are female. Their work hours are frequently adjusted to match their domestic demands, often allowing husbands to study all day in religious seminaries.

Overall, women compromise around a quarter of the Israeli high-tech sub economy. Since 1995, at least 24 ladies have led exits of US$ 30 million or more. At the top of the list is Dalia Prashkar, who sold to BMC for US$650.

The Non-Jewish population is also beginning to make its mark. 24% of the overall population, barely 8% work in high-tech. Intel, CISCO and others had taken major steps to change the balance. And there is now a government sponsored high-tech incubator in the Arab city of Nazareth.

What next? Fivver, Waze, Wix have all succeeded on the global stage. ReWalk is helping paraplegics move about. Mobileye, started out to prove to Toyota that a solitary camera could protect a car from accidents. The company was sold to Intel for US$15.3 billion last year. It has already seen a unicorn spun off from it.

So what will we be saying about Bitemojo in five years, or maybe  we will only have to wait twelve months?

The value of a picture

21 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

If you had to choose one picture to sum up or to encapsulate how you feel about your work, your profession, your business, what would it be?

Now, I am a lousy photographer. The question came to me, as I was going through some snap shots of my recent holiday. I unexpectedly came across this item.

 

Loch Lomond (2)

This beauty spot was captured on the northern tip of Loch Lomond, near Glasgow, far away from my home in Israel. In better resolution, readers would be able to pick out the reflections in the water. And from here, I could go on to sing the joys of a recent wonderful holiday.

However, my point is different. I have had the pleasure of visiting the lake in the past. And on each occasion, it brings out a reality test in me. Strange, but the backdrop and tranquility allow me to reassess what is and is not important in my business.

In other words, the atmosphere helps me to focus and to appreciate what I want to be doing and how to achieve those goals. Yes, even experienced business mentors need a wake up call from time to time.

Too often, that reality check for many of us comes after having to cope with an unpleasant crisis in our lives. The truth is  very different. We have opportunities to ‘stand back and to think’ all the time. Yet we refuse to avail ourselves of those moments, usually because we are too afraid.

A picture – and yes, it can express 1,000 of your words in one breath – can help you to re-establish that focus. So I ask once again: What is that visual moment does it for you and are you prepared to use it more often?

 

The economics of Jerusalem: 4 points for the summer

22 April 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Easter, Passover, almost Ramadan….the main religions seem to be in shut down mode. And yet the economic meanderings of Jerusalem, Israel, suggest otherwise.

Netanyahu won the general election less than two weeks ago. How he builds his coalition will be interesting. It is clear that he wants to try to keep the Finance Portfolio in the hands of his own Likud party, but how that that will eventuate remains unclear.

What is a given is that despite the strength of the economy, there are many structural changes that remain firmly on the table and ignoring them is a regressive act. For example, it is now accepted that the value of real estate in Israel is on the rise, despite the previous government’s flagship programme on the issue. Much needs to be done, and soon.

Following up on that theme:

The high exposure to credit for construction and real estate, together with mortgages, constitutes almost half of the banking sector’s credit portfolio. It continues to be an important risk for the banking system. There is a risk in the event of a renewed upheaval in the housing market equilibrium…

The Bank of Israel has been warning about this for months, but the ruling politicians and their mandarins have preferred to ignore the warnings. In fact the Governor’s tenure was not renewed. Whoever inherits the Ministry of Finance will be required by the money markets to act, and do so in real time.

Looming in the background is President Trump’s deal of the century, which is slower being leaked. As one journalist observed:

If you break it down, the Trump plan amounts to calling on the Palestinians to accept quasi-economic autonomy, with a US administration giving them monetary support and raising money for them from countries in the region – the “Arab NATO”: Egypt, Saudi Arabia, Jordan, and the Arab Persian Gulf states.

And meanwhile, the Israeli Ministry of Foreign Affairs, still dominated by the PM himself, has found a clever way to encourage countries to move their embassies to Jerusalem. First step – open up a large bureau for joint financial cooperation.

For example, since the visit of the Brazilian President to Israel last month, there are discussions to open a trade mission in the capital. In a similar posture, Hungary and also Australia are looking to create diplomatic offices in Jerusalem, based initially around boosting trade with the Holy Land.

Despite it snowing on the Golan Heights this week, the commercial story around the city is heating up.  I hope that the Prime Minister’s personal issues do not effect his efforts to move forward on all fronts.

 

 

Jerusalem – a global high-tech influence

18 April 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

This week, I attended at networking meeting in Jerusalem. Leading local companies were asked to present to a packed forum what they contribute to the local and international economies. Nothing too original in that, but together they made a loud deafening noise.

(I took no formal notes. So my observations are drawn from memory).

Let’s start with Intel. Always known for being the first prime high-tech company to set up in the Holy Land. And Israel is known within Intel as its first overseas r&d center. Today, the company employs over 12,000 Israelis directly, impacts on about 46,000 other workers, and is one of the country’s leading exporters.

The big news. As in the past, the next generation of chips entering millions of computers globally is being developed in Jerusalem.

By the way, my office is  situated near the Intel facilities. Every day, you will see the company employing those from all walks of life, including all the religions.

Intel bought out Mobileye, which has partnerships with most leading car manufacturers. A spin off from Mobileye is OrCam, which is valued at over US$1 billion within a decade of being set up. OrCam helped blind people to vote in the recent general elections in Israel. It intends to help them to drive. And from there, it will help those with impaired and other disabilities.

The list goes on. Brix Software is powering Finntech services for CrossRiver Bank in New Jersey. Synamedia, which was spun out of Cisco, is providing the likes of SKY TV and many others encryption services. etc etc. It was a fascinating list of stories from the many speakers. All are desperately trying to recruit software engineers.

What does this all add up to?

Jerusalem has around one million citizens. As seemingly throughout its history, it is a hotbed of religious and diplomatic discourse. And yet, the city and its residents are making an exciting and positive impact on the lives of billions around the globe.

That is a story worth investing in. That is a story that the world can look to as an achievement. despite the odds.

 

The economics of Israel’s general election

7 April 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

It is an accepted fact that Israeli general elections are determined by who is seen as the best person to lead the country safely and courageously through a war, if so needed.

You can talk about the corruption charges launched at Prime Minister Netanyahu. You can argue that his main rival and former Chief of Staff, Benny Gantz, is a political novice. etc etc. These factors pale into insignificance. What counts – what matters – is the perception of future physical safety andwho can be seen to deliver on that.

The lead economics’ editor in the Ha’aretz newspaper – a journal that despises Netanyahu – believes that the man should be thrown out by the nation. He is corrupt, and that corruption is ruining the country, financially and socially and morally.

I was more interested in the economic presentation by Sever Plocker in the Yediot Ahronot paper. As he surmised, for much of the past two decades, when Netanyahu has been Finance Minister or Prime Minister for most of the period, the economy has soared along at around 3.5% annually, barring 2009 and a small matter of a global credit meltdown.

But…..

In her 2017, Dr Karnit Flug, then Governor of the Bank of Israel, observed in her annual report that there was too much reliance of revenue flows that may not come through, especially at a time when expenditure was set to rise. By November 2018, the lady was out of a job.

Was the warning warranted? As Plocker points out, the budget gap of 2018 is 3.8%, double that of 2016. It is one of the highest in the OECD. And 2019 is likely to see the difference widen.

In other words, whilst the economy may seem to be in good hands and unemployment is set at 4%, the grey clouds are building up. After the elections, “the government will have to trim the rise in spending and raise tax revenue”. Plocker wonders why Dr. Flug will not be offered an apology.

Plocker continues by pointing out that not only have housing prices not really fallen. It seems that they will rise again as the impact is felt of the lack of little new housing being built. Ouch again, and so on.

What has the economy of 2019 and 2020 got to offer Israelis, on the back of a decade of Netanyahu in government? As the Netanyahu approved new Governor assesses:

In order to maintain the economy’s robustness, the government will have to make fiscal adjustments, a mix of greater efficiency, trimming the rise in spending, and a rise in revenues from taxes.

That does not sound very nice, thank you very much! That can only be the fault of the present government.

The Globes financial newspaper surmised:

The challenges facing the next government are greater integration of Arab women and haredi men into the workforce…. Another challenge is the low efficiency of Israeli bureaucracy. The Bank of Israel recommends that the government should set qualitative and quantitative goals for government workers in the framework of new labor agreements.

Netanyahu has made arguably racist comments about Arabs. He is so tied to the haredi parties that he will help them keep their constituency off the streets. And his claims about reducing bureaucracy – a pet theme of his – remains just a pet theme.

So who to vote for, if it is the economic issues that determine how people will decide? Well, we now have a better understanding as to who not to back.

Two of the saddest pictures of the Israeli general election

5 April 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Palestinian Society, Palestinians

The unnamed Lieutenant-Colonel from the Israeli intelligence forces said that they cried, when his team realised that they had identified the body of Zechariah Baumol. Somehow, after 37 years, the Israeli army had tracked down his place of burial. With the help of Russian President Putin and a third country, the reserve soldier, killed in Lebanon, had been brought out of Syria and was laid to rest in Jerusalem.

April 2019 is a horrendously divisive time in Israel’s history. The general election campaign has taken few hostages. Somehow, the story of this first sergeant, wrapped in the humility of his mother, sister and other family members, has humbled the nation. Prime Minister Netanyahu called his ‘return home’ as one of the most emotional episodes in his reign at the top.

In a sense, for a few hours, campaigning ‘seemed’ to be thrown to the gutter, along with all the useless flyers and interfering WhatsApp messages. The failing health of the President’s wife, Ruhama Rivlin, has also struck a cord of unity, even if the President himself had been insulted earlier in the week by the Prime Minister.

However, to my amazement, the other picture that has caught my attention was in today’s edition of the Ha’aretz newspaper, known for its vocal support of Palestinian rights. On page 24, we see a full picture. The caption describes Palestinians running away from gas canisters launched by the Israeli army, presumably at a demonstration near the border with Gaza. In the foreground, are seven children and one adult. Sad, no?

Now remember, for the first time in years, the Palestinian issue is very much off the front pages in this election. What is really sad for me is that the picture has a misleading attribution. Over 20 other people in the background are just loitering about – no tear gas is bothering them. No child is wiping their eyes.

And then you have to ask. Who takes under age children to a demonstration, especially when violence is a probability,…..and why?

Take a step back. In 2010, the Arab League set up a special fund for donations to be funneled to the Hamas-run Gaza Strip. Currently, the World Bank estimates the GDP of Gaza at 1% of that of Israel. What has gone wrong?

Egypt’s border closure back in 2012 has had a major impact. Hamas determination to invest in military aggression against Israel – 1,000 rockets fired in 2018 alone – has diverted resources. In the past year, President Abbas has cut off funding from his Hamas enemies.

More pertinent is the question what happened to that money from the Arab League? At the end of 2014 and the latest major fighting with Israel, US$4 billion was promised. In the following two years, about US$1.8 billion turned up. New suburbs were created. Water systems were installed.

But, then the donors assessed the level of graft by Hamas officialdom. According to the World Bank, the money flows faltered to US30 million monthly in 2017 and a paltry US$4 million last year. Combine that with Abbas cutting 30% and then 50% of the annual US$1.5 billion allocation, which he was supposed deliver, and then you can begin to wonder.

The stats continue. The standard of living in Gaza dropped by 10% in 2018. It is 140% higher in the West Bank, as ruled by the Palestinian Authority of Hamas.

The fundamentalist and intransigent, terrorist government of Hamas was propped up by Arab friends for years. It is currently funded by suitcases (literally) of dollars from Qatar. Weapon systems, originating from Iran, are still smuggled in.

Whatever the outcome of the Israeli election, the internecine Arab hatred will continue. It is sad. It is tragic, but it is not Israel’s fault. Whether Netanyahu wins or not, the upshot of the economics of Gaza will see the adult population continuing to send their kids to the front line. Sickening.

Israel’s economy – pre 2019 General Election

29 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Last week, I questioned if the Israeli economy truly needed another four years of a Netanyahu-style government. This comes on top of a warning from the Bank of Israel that growth is beginning to show signs of slowing down.

But not all is gloom and doom. Yesterday, I spent an exhilarating morning moderating  a networking session between the Jerusalem Business Networking Forum and a delegation from Global New York. We were hosted by Biohouse, a brand new state-of-the-art hub for bio start ups in Jerusalem. The concept is so good that it is to be exported, first to Tel Aviv and shortly to New York.

This impressive centre is not all that is new in Jerusalem. For example, HIL Applied Medical Ltd. has signed an agreement to lease a 700 square-meter space from The Hebrew University of Jerusalem to set up a manufacturing centre. The total cost of the project will amount to approximately $5 million. And this is potentially dwarfed by the plans of Mapi Pharma, which intends to set up a facility to manufacture a drug to combat MS.

Elsewhere in Israel, the big chiefs of Citibank and Walmart have been visiting, and not just to look at the late winter storms. Skoda, owned by Volkswagen, is expanding its operations in the Holy Land. The Radicle Challenge is seeking to promote Israel’s resurgent agritech sector.

The thirst of American and European fund mangers to be a part of the start up nation does not seem to be ending anytime soon. The financial numbers are staggering.

I just these stunning macro figures would convert out more into the pockets of those millions not involved in the world of high-tech and innovation.

 

Keeping Israel’s election economy together

19 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

April 9th 2019. Election day in Israel. It is not so much of who will be the biggest party, but which block on the political map will win. For now, Netanyahu’s right wing grouping has a slender lead, just.

For most of Israel’s 71 years and in direct contrast to most democracies, the issues of defense and foreign policy are seen as more important than the economy and social affairs. That is probably still true today, but how people feel about the shekel in their pocket is obviously a pertinent factor in how they will cast their vote at the polling station.

Let me be clear. Israel’s economy has been one way track upwards since the beginning of the century, barely effected by the 2008 global crisis. And Netanyahu, as Prime Minister or in other positions, has played a key role in that success. Just over 8% of the working population is involved in high-tech and they are generally doing very well.

Yet there is a feeling that the clouds are gathering. And even if they are, can Netanyahu keep the picture bright enough to control his support for another three weeks?

There has been a worrying trickle of less positive economic information over the past month:

And so the list goes on. Crisis time it is not, but something is not right.

The most indicative sign of this is the price of fruit and vegetables. Now Israel was set up as an agricultural economy. There are hundreds of farms – private, kibbutzim and so on.

The previous government promised that the cost of living would be a key part of their next programme. Would this mean a freer approach and the reduction of duties on the import of fresh produce? Prices stabilizing?

You must be joking! Over the same period since the early 2000s, prices have nearly doubled. Out of season fruit are just not available. The local farmers are still protected, even though they will argue that they are given a raw deal by the big chains of supermarkets. Competition is stifled. So much for the free economics, preached by Netanyahu.

Last weekend, I read the most bizarre analysis. In order to override the power of the chains, more and more farmers are setting up their own local shops. Great. However, the newspaper “The Marker” compared 14 types of products, sold in three private shops and also in four chains.

You would have expected that the farmers could offer the best deals as they do not have to bare the cost of middle men. Again, you must be joking! Of the nearly 100 prices in the table, almost without exception, the farmers were the most expensive.

And this is the economy that Netanyahu is trying to sell to the electorate as a picture of achievement.

 

 

 

 

 

 

Palestinian economy – Israeli economy

15 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Palestinian Society, Palestinians

Israel is where Western countries send delegations to learn how to copy the success of the start up nation. Just this week, it was announced that Mellanox exited for a mere US$6.9 billion. Who’s next?

And yet there are those who are questioning if the proverbial bubble has burst for the Israeli economy. The fiscal deficit is climbing. The general election on April 9th and is likely to result in further political instability. Can the economic triumphs of the past decade be repeated?

Palestinians benefit from a resilient Israeli economy. Legally or otherwise, over 100,000 labourers find employment daily via their neighbours. If they gainfully registered they receive full social benefits, which barely exist in the territories. That said, since the Oslo Accords, both in the West Bank and particularly in Gaza, the Palestinian economy has shrunk.

Yes, there was a positive blip at the end of the 1990s – 15% improvement for two consecutive years. However, Chairman Arafat’s decision to launch the Intifada killed that off, as well as others.

The West Bank has historically been the stronger of the two districts. According to an analysis by Doron Peskin, unemployment has risen slightly over the past two years to almost 18%. Arguably of more concern is that economic growth has shrunk by almost 50% to about 2.7% annually. The data for Gaza is far more depressing.

What is important to note about these numbers is that natural population growth is higher than 3%. President Abbas is ill and is seen increasingly as less able to command respect. And we have observed that the Israeli economy may be weakening, and thus less able to take up some of the slack.

Next stop? I am not sure. However, just before Hamas launched two rockets at Tel Aviv last night, there had been a massive demonstration in Gaza. The populace were revolting at the high cost of living. At the same time, the shops in the better off suburbs still appear to be remarkably busy.

I suggest that there is a lesson here. The Palestinian leadership should learn from their Western colleagues, listening to Israelis about how create wealth rather than seeking to destroy hope.

International Women’s Day; an Israeli perspective

8 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

The role of women in Israeli society is not a simple issue to discuss.

First, there are two conservative blocks – the ultraorthodox and Arab sectors – which are traditionally very conservative in outlook. And the important role of the army in day-to-day life, albeit that many more combat positions are now available to women, is another limiting factor.

Just recently, much has been made about the lack of women in senior roles in the political system. This is especially pertinent since elections are coming up. In fact, the World Bank ranks Israel as only 76th in gender equality.

However, all is not doom and gloom. Most of the senior positions in the banking system are held by women. The JLM-BioCity Event this week hosted ten female leaders in the field of pharma and biotech. Forbes is blazing another trail with its first Under 30 Summit for Women, to be held March 31-April 4 in Tel Aviv and Jerusalem. Meanwhile, one enterprising blogger attests to six Israeli women with a mission to change the world for the better. And it does look as if Druze women will finally have a rep the Israeli Parliament.

Clearly much is still to be done. However, I will leave the last word with the Israeli Central Bureau of Statistics, which released a mountain of info to commemorate the day. (And I quote in full).

International Women’s Day 2019
Central Bureau of Statistics annual report
The statistics in this report are mostly from the year 2017.

• Female population in Israel at end of 2017 – 4,433,560 (out of about 8.9 million total population), of whom 27.3% were age 14 and younger, and 12.8% were over age 65.
• The average age of giving birth to a first child rose in the last decade, from 26.8 in 2006 to 27.6 in 2017
• Fertility rate of women in Israel: 3.11 children, compared to OECD average of 1.7.
• Babies born to single mothers accounted for 5.3% of all Jewish babies born in 2017.
• Life expectancy for women in Israel is 84.6 (compared to 80.7 for men), a rise of 2.2 years in the decade 2007-2017, compared to 2 years among men.
• Overweight: Age 20 and older, 40.9% of women and 55.4% of men were overweight.
Education
• Among 12th-graders, more girls than boys were eligible for a matriculation certificate – 70.9 % compared to 59.2% respectively.
• Among Arabs, the disparity between male and female 12th-graders is greater. Of those fulfilling the qualifications to enter university, 56.6% were women and 37.8% men.
• In the 2017/18 academic year, 59% of university students were women. Compare with 1969/70, when less than half of the students were women.
• Among Arab students, 68.9% were women.
• Percentage of women among academic students: 58.4% of BA students, 62.2% of MA students, 52.8% of doctoral students, and 74.3% of diploma students.
• Women constituted over 80% of the students in paramedical professions and education, and only 30-35% of the students in physical sciences, engineering, mathematics and computer sciences.

Employment 2018
• Participation in the labour force of women age 15 and over was 59.8%, compared to 68.2% of the men. More men than women were employed full-time. Among both men and women, the unemployment rate was about 4%.
• Women constituted 56.3% of employees in academic fields, and 33.8% of managerial positions were filled by women. 34% of hi-tech workers were women.
• 90% of working women are satisfied with their jobs, but only 56% are satisfied with their salaries.
• Since 2007, the gender-based disparity in income decreased for salaried workers, but increased or was unpredictable among the self-employed.
• Among married couples, in 67.2% of one-income households, the wage-earner is male. Among Arabs, the percentage is even higher. Among the ultra-orthodox, the reverse is true – in 76.8% of one-income households, the wage earner is the woman.

• Of 34,200 people tried for criminal offenses, 7.5% of them were women.
• Licensed drivers in 2018: among the Jewish population, 45% of licensed drivers were women; among the Arab population, 38% (a rise from 31% in 2008).

 

International investors conference in Jerusalem

3 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

It is about to arrive. OurCrowd’s annual Jerusalem investor summit will take place this week.

The show is sold out. Participants are expected from over 150 countries, and I intend to meet a few of them at a client later on today. All for an operation that has been going less for a decade and will place investments from US$10,000 upwards. So what is the big deal?

The Globes newspaper answered the question very succinctly recently, and the article includes a full interview with the CEO, Jon Medved.

30,000 investors are registered in OurCrowd’s crowdfunding platform. Figures provided by the company to “Globes” show that in 2018 alone, the fund raised $400 million and invested in 80 companies: 24 new investments, 56 follow-on investments, and four investment funds. The fund was involved in 29 exits, the most prominent of which were BriefCam, sold for $90 million to Canon, and Jump, sold for $200 million to Uber. In 2019, OurCrowd has already been involved in the sale of Corephotonics to Samsung for $155 million.

I was stunned by a further set of stats I read in another paper over the weekend.

  • OurCrowd relies on over 170 experts
  • An investor will typically receive at least 5% of the shares of a company
  • About 10% of the investors are Israeli.
  • The average amount invested each time is around US$350,000. And a total of over US$1 billion has been raised to date.
  • 3 companies have reached a valuation of over a US$1 billion. A further 37 are worth over US$100 million.
  • And yes, 13 companies closed up.

I am somewhat stunned that others have not copied this model. There again, these numbers do explain why thousands of international investors, assumedly many from countries not normally associated with Israel, will be converging on Jerusalem this week.

 

 

 

 

 

2 quick observations on Bibi Netanyahu

1 March 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Jerusalem

Israel’s Prime Minister, Benjamin Netanyahu, has been charged with three counts of breach of trust and one count of bribery.

For years, I have considered Netanyahu a great Finance Minister – just right for what was need in his time on the job. At the top, he has been excellent in extending Israel’s connections with many countries, which had previously ignored the state. However, I am not too sympathetic regarding his current legal problems, although he has many articulate followers.

The web is full of comment and satire. I would just like to draw my readers attention to a couple of readings.

The Fall and the Fall of the Smollett Empire by David Wiseman is a seemingly innocuous blog. He makes the well known point that if you lie and are caught out, it is rarely best to lie again in order to cover up. Wiseman surmises:

The worst thing about scandals is that people in positions of power manipulate the trust that comes with that position- in order to facilitate the cover-up. “Do you think we would actually do bad stuff? We’re the ones you come to when you have problems.” ….This is what incompetent educators, crooked politicians, bent police and morally bankrupt clergy stand behind which makes the original crime even more horrific.

Sometimes, society is complicit in the cover-up, burying its head in the sand as the truth is too upsetting to hear.

Hmm. I think it is obvious how I draw a connection to the Netanyahu issue.

In parallel, Matthew Kalman was active on Facebook last night. He drew the attention of his audience to a book he had co-authored back in 2013: Pyschobibi.

Great title, but what does it mean? The writers are journalists, not psychologists, but they argued that Netanyahu is driven by two background conditions. First, his father was a political outsider and learned to cope with that rejection. Second, his father preferred the elder son Yoni, something which the brother found difficult to accept.

The upshot is not just a will to succeed, almost at all costs. I am not sure that I agree with all of the premise. However, you have to wonder. Why in the name of the devil has Netanyahu ensured that the ultra right wing, Otzma Yehudit party, will be represented in the next Kenesset?

The point is that this group is the direct descendent of Rabbi Meir Kahana, who was murdered two decades ago. Accused of nationalist socialist policies, I clearly remember as a university student going to hear him rabble rouse in 1981 in Jerusalem to decide for myself. I had just finished a course on the rise of Hitler. The man spoke just like – themes and mannerisms – the former German Chancellor. I was disgusted.

And it is those policies that Netanyahu wants to see in the next Kenesset, at least in order to keep himself in power. I do not want to say any more.

The global reach of Israel’s Kibbutz movement

28 February 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

Israel’s kibbutz movement, once considered a living success of socialism which then collapsed into an economic and ideological disaster, has more than revitalised itself.

I began to poke around on the subject when I read an article on the numbers of people living on kibbutzim. (“im” at the end of a word in Hebrew is a way to determine that the word is spelt in its plural version). In 1995, around 124,000 people had homes on a kibbutz. Within a decade, the number had dropped by nearly 10,000. By 2016, the figure had soared to 171,000.

There are currently 273 registered kibbutzim. Around half of them have housing problems. The thought is to build multistory buildings in these rural delights to resolve the issue.

There are many reasons for the renewed interest in a kibbutz way of life. I will concentrate here on the commercial aspect. The fact is that “Israeli Kibbutzim …. have invested NIS 110 million (approximately $29.9 million) in Israeli startups in 2018, a 45% rise compared with the year before.”

In other words, kibbutzim, which led an agricultural global revolution during the previous century, have finally embraced the concept of innovation and the start-up nation. (For the record, drip irrigation, small tomatoes, and many other inventions started off life in the Holy Land.)

And it is not just kibbutz funds that invest. A typical story is Zebra Medical, located on prime real estate on a kibbutz north of Tel Aviv. Its software reads CT scans and other medical reads with extreme accuracy. Over the next two years, the company will ensure that Israel will become the first country to be covered by medical imaging AI.

It is such technologies that are sought around the globe….along with the oranges, avocados and strawberries.

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