On Saturday night in Netanya, a city located on the coast plain of Israel between Tel Aviv and Haifa, Tali Gotliv – a minister of Bibi Netanyahu’s government – accused their opponents of being traitors.

Hmmm! It is less than 30 years ago, when Netanyahu was the leader of the Parliamentary opposition. He blamed the Prime Minister of the time, Yitzhak Rabin, for treachery. Weeks later, Rabin was assasinated.

Gotliv’s remarks drew the anger of many.

Who are you calling a traitor? Is it my father, who volunteered to fight in ’48?My grandparents, who financially helped build this country? My father-in-law, who did everything to make Aliyah, including being a stowaway, lying about his age, and enlisting in the army, and fought in wars for over 30 years? My mother-in-law who folded parachutes, her sisters, and her brother who all served? The uncle who proudly wears paratrooper’s wings with a red backing? My husband, who served and fought in both Lebanon wars and every “war” after, and volunteered for miluim until he was 50? My nephew with special needs, who all he wanted to do is join Zahal and is now proudly wearing a uniform? Or my daughter, who serves on the Lebanese border as the “eyes of the country”? We are traitors?

MK Tali Gotlieb, you are an embarrassment to the Knesset and to this country.

Shari Wright Pilo posted on Facebook:

The following day, Sunday, was the first full day back after the Passover holiday break

  • The Minister of Finance accused Moody’s of not understanding how economies work, after the agency warned that Israel’s credit status may well be downgraded.
  • It has emerged that Yair Netanyahu, the PM’s son, is on a luxurious holiday in the USA, openly financed by the taxpayer and accompanied by a security entourage.
  • And yet another opinion poll revealed that the decline in the government’s support continues to gather pace. I assume that means from the perspective of Gotliv that the number of traitors in Israel is growing alarmingly!

There is a central organising committee for these protests. One of its main proponents is a former chief of staff and one-time ally of Netanyahu, Moshe Ayalon. His team clearly has access to money. In parallel, there are many local neighbourhood groups emerging spontaneously. I even heard of one of them being called “Grandmothers for Democracy”.

Not by chance, this group was also active in Netanya . Gotliv was accompanied by other top officials, including the Minister of State Security, Itamar Ben Gvir. They addressed around about 500 people. However, their opponents numbered closer to 35,000.

The opponents of the Israeli governments plans can be found in most sections of society. Evidently, the numbers have yet to peak. Few of them hide their views. Gotliv’s shouting does not seem to create for her significant levels of support. Meanwhile, her boss, the PM himself, does not seem to exude the control of previous years. One news station reported him bringing back a behind-the-scenes advisor, previously disgraced by the submarine corruption scandal.

This is a government, driven by a mission convulsed by controversy, and which sees its opponents as enemies of the state. The problem for those at the top is that those underneath them are for now flocking to the devil of the enemy.

It is Tuesday 11th April.

In the Holy Land, the Christians have finished celebrating Easter. For Muslims, the month of fasting over Ramadan is approaching its end. And Jews are in the middle of the festival of Passover, usually a time of happiness.

However, the incessant terror attacks that have led 18 people dead since early January is taking its toll. The latest incident saw the slaughter of three members of a British-Israeli family. They were identified as Jews, driving in the wrong area at the wrong time.

Last night, the Israeli Prime Minister, Bibi Netanyahu, addressed the nation. He had an opportunity to unite. He had a platform to motivate a nation, wounded by discord over his policies and the bullets of terrorists. In a televised address, which I did not watch, the PM attributed these murderous acts to the protest movement against his attempts to reform the judiciary. And he went on to mock the opposition for their achievements when in power last year.

In other words, Netanyahu blamed the deaths on his political opponents.

These opponents include:

  • Most previous chiefs-of-staff, leaders of the Mossad, and the police force.
  • Most former judges of the High Court.
  • Most leading economists
  • Political leaders in Germany, the UK, France and the USA – to name a few.
  • And………….. well the list is long. But let us just say that of the hundreds of thousands that have protested on the streets of the country over the past three months, the numbers include members of my family. As far as I know, our only criminal act to date has been a driving fine or two.

So what is Bibi saying to me? Is he really accusing me of plotting and financing the murder of innocents? Obviously not. I assuming he is trying to capture some form of domestic political initiative.

After all, according to all political opinion polls, if an election were held today, the ruling coalition would be left in the gutter. In fact, the numbers are so bad that the Netanyahu’s Likud party would no lose its premier status in the Kenesset, a position that it has held for over a decade.

Netanyahu can blame whoever he wants. I don’t care.

However, by attempting to deflect the blame on to others, Netanyahu is admitting that he cannot and will not take responsibility. Responsibility for what?

  • The worsening internal security situation
  • The worsening defense situation on the northern and Gaza borders
  • Direct investment form overseas that is drying up.
  • His capitulation to his Minister of Internal Security that has demanded funding for a new police force under his personal control.
  • And much more.

Bibi – you want me to accept the blame? Who gives a damn, except your inner cabal, who probably does not even know how much a carton of milk costs.

But leadership requires responsibility, and you can’t take that. You don’t have it any more.

Go home to your luxurious villa. Go, now!

For a little over two months, the Likud-led Israeli government under Binyamin Netanyahu (Bibi) has been rapidly forcing through the Kenesset a series of bills designed to reset the powers of the judiciary.

If you are part of the government, you will claim that these are reforms, that are long overdue. Relatively little outside support has been heard for the bulk of the proposals.

The opposition can be seen in the growing weekly demonstrations (around 300,000 participants last week), warnings from international credit agencies, threats of refusing to serve from army and air force reservists, and…………….. well the list is pretty long. Even the Presidents of France and the USA have commented less favourably on the subject.

How worrying is the situation? The Bank of Israel is now demanding the banks report twice a week on shifts in currency to overseas! Anyone worried?

About 3 weeks ago, President Herzog launched a private initiative to find a compromise. By yesterday, it had become apparent that he was making some genuine progress.

Now Herzog has battled Bibi before. They come from opposite sides of the political map. Herzog was born into a family that knows all about politics and diplomacy. His brother is a serving general. And he is a lawyer by training. The day after he won the vote in the Kenesset to be President, he was seen buying veg and milk in his local grocery store. The man has pedigree.

What has convinced Bibi to change?

It is not just because Herzog knows how to ‘get around’ him. For the record, Bibi did not want him as President nor did he want him in his previous high-flying role.

Bibi’s repositioning may have something to do with the fact that support for the Likud and their allies has plummeted in recent opinion polls. It is the kind of shift – a potentially permanent change – that the country may not have seen since 1977. But more of that another time.

However, I think it has more to do with Bibi’s wife, Sara. Last Wednesday, during the most recent demonstrations in Tel Aviv, word got around that Sara was having her hair styled…..barely a kilometer away from the shouting rabble. Maybe around a thousand people rerouted in order to ‘pay her a visit’.

Sara was blocked in for about three hours, before being evacuated by the police. She claims that she felt threatened, and understandably so. Her son, in an interview the following day, said how he had briefly feared for her life. (Disclosure – neither have a good reputation in much of the local media.)

However, it must also be said that most of the protesters stood across the road. Their most dangerous actions involved shouting slogans. Nobody was arrested. In fact, during the turmoil, WOLT turned up with a delivery of fast food. Maybe young Netanyahu wondered if the food had been poisoned.

And the question remains:

On a day when it was known that Tel Aviv would be swamped by demonstrators, why did the wife of Israel’s Prime Minister deliberately exercise her right to have a haircut down the road from her foes, who are referred to as anarchists by her own supporters? Why? What was so important about the scissors and blow dryer of her stylist?

I have no idea.

I would like to think that maybe, finally at long last, the Netanyahu got to see via the reflections in the mirrors of the hairdressing salon what the average person on the street thinks of their policies.

To translate one of the slogans of last week: “As the country is burning, Sara is having a haircut.”

Last week was closed off with a horrific terrorist attack in Jerusalem – 7 people slaughtered outside a Synagogue after evening prayers by a terrorist. Less that 24 hours later, a 13 year old Palestinian kid shot at Jews in the Old City. Mayhem.

Within days, the country had moved on – apart from the grieving families and the security services.

The question of the future direction of the country proved more important than the hard emotions of the immediate past. What will happen to Israel’s democracy – assuming that Netanyahu goes ahead with his reforms of the country’s legal system?

The Israeli Prime Minister constantly repeats to his audiences that his changes will strengthen democracy. I have yet to hear him explain how. I have yet to hear experts in law – local or from abroad – backing up his ideas.

What we have seen in the past week are 50 former director generals of economic ministries, most of whom were appointed in previous Netanyahu governments, denounce the plans.

The appreciation and stability that the Israeli economy enjoys is due, among other things, to the independence of the judiciary and the civil service, and harming them and lowering their quality will lead to damage to the Israeli economy, a cut in the credit rating and difficulties in raising capital for the tech industry.

Even before these new laws are approved in the Kenesset, The Economist magazine has already notably downgraded Israel in its annual Democracy Index. And on a visit to Israel, the American Secretary of State, Blinken, hinted that Washington is not thrilled at what is coming.

Then on Thursday, the Attorney-General came out with a much anticipated statement on the Prime Minister himself and his policies. In effect, she described the plans as toxic (my wording). And as for Netanyahu, he should disbar himself from all policy making on the subject, as he is currently the subject of three pending court cases.

What was most damning about the statement from AG, Gali Baharav-Miara, was that she went through the proposed changes line by line. She dismantled their proposed benefits.

Yes: The Likud Party of Netanyahu responded with shouts of she herself was in violation of conflict of interest and a puppet of opposition politicians. However, yet again, no legal person or institution of note denounced her. None came out in favour of the government. Why is that?

Earlier this week, I was talking to a colleague, who represents clients in nearby countries around the Mediterranean. They noted that since the new government’s inauguration in Israel, there has been a significant upsurge in the inquiries from people asking about transferring wealth away from the Holy Land. Mainly just inquiries, at this stage.

Just saying.

November 1st 2022 is sort of approaching. Israel’s 100+ day election campaign is thinking of coming to the boil. Maybe the opposition is a fraction ahead, but it is too close to tell.

One thing is for sure, at a macro level, Israel economy show little sign of slowing down.

This is Israel’s 5th election in less than 3 years. In the same time, the world has faced a pandemic. Russia has invaded The Ukraine and threatened the world with nuclear hell. Israel and Gaza have faced off countless. And Iran feels that it can build a nuclear capability without fear of Western retaliation.

And what do the figures show?

With unemployment a fraction up at 4.1%, the level of total employment has never been higher!

Average wealth per adult is roaring ahead, although the details ignore hardcore pockets of poverty in several sectors.

Israel’s economy is growing, absolutely and relatively to many of its European competitors.

“Israel has over 60 unicorns, but valuation is no longer a future predictor of growth. Meet the Israeli Centaurs, the 32 startups that achieved over $100M in ARR”

I guess that when an Israeli coalition government faces a run up to an election, it has very limited powers to interfere with the economy. In other words, people are left to fend for themselves.

Thus, while the poor or disadvantaged suffer, many others rise to the fore. This is helped by the fact that Israel is less dependent than many on wheat from The Ukraine. As for gas, Italy et all are rushing to Jerusalem to get hold of the country’s extra capacity!

Yes, interest rates and inflation are on the up, but not as in the much of the OECD.

So Joe Biden dodged most of the difficult questions during 46 hours in Israel and 3 hours in the Palestinian territories. His main stopping point was Saudi Arabia.

In return for a public and private humiliation of the American President, the Saudis will pump oil. This should help to lower pump prices in the USA and elsewhere. Thus, Biden’s incumbency will be protected. Yeah.

Meanwhile, the German economy comes under threat, as it is dependent on energy from Russia. Italy is in political crisis. Even Britain – not in the EU – is suffering from high inflation and an economic options that lack potency. The Euro is crumbling and the greenback is seen as a saviour, of sorts.

So where does this leave the economic planners in Jerusalem?

You could argue that none of this matters. With still around 100 days of electioneering, there will be little new policy direction in that time, and probably for weeks afterwards as well. And yet:

According to Bank of Israel data for 2020 and 2021, half of all imports to Israel came from Europe while Israeli exports to the continent were relatively low. The reverse was true for the United States; exports from Israel to the United States were very high and imports were low.

Weak euro could strengthen Israeli economy, experts say (ynetnews.com)

To dummy this down: Israel’s annual inflation rate is around 4.4% and climbing sharply. If the country buys from places where it ‘costs less’ against the shekel, then it will import less inflation! Potentially good news for those in power who are looking to sway electorates.

Israel will not be waiting for the Saudis to commit to ties, officially, with Israel. The desert Kingdom has rarely rushed to do anything, However, neither will the country let itself be governed by Biden’s own pressing internal agenda. Fortunately, Israel’s economic remains healthy and balanced.

The past week has seen the Israeli public treated to a spectacle of the absurd and the even more absurd. Even though, the main groupings had agreed to when and how the Kenesset would be dissolved, every hour seemed to close with the emergence of another snag.

In the end, we have learnt that:

  • Israel’s election will take place on 1st November, over 120 days away.
  • The parties could not find a way to approve key legislation, which everyone agrees is necessary.
  • The new metro system is Tel Aviv will be further delayed – a big bonus for the pollution seekers and lovers of traffic jams.
  • A tagging system for violent husbands has been postponed. Well, few party leaders are women.
  • A visa procedure to enter the USA has been put on hold, even though the American ambassador almost begged the politicians to allow it. Politicians probably don’t need visas.

And to round it all off, the outgoing Prime Minister, Naphtali Bennett, will not be standing in November. In fact, due to a complex political arrangement negotiated last summer, Bennett has already been replaced by Yair Lapid of the Yesh Atid (There is a Future) Party.

Who will win?

The country is divided in two. Are you prepared to allow Benjamin Netanyahu back in or do you want to support someone (anyone?) who will never form a coalition with him? The ex-PM is still facing 3 sets of charges in a long drawn out court battle.

Are you a betting person? The polls still reveal another hung Parliament, with Netanyahu in the lead by a neck., so to speak

I am conducting an official poll of my own, speaking to as many people as I dare. Everyone says the same thing – that they are disgusted by what is going on. After all in the week, when petrol prices have gone up again and the cost of electricity will around 10%, the funding of parties by the taxpayer will go up by about 12%.

But for all the despair, everyone is also saying that they will not be changing their vote from last time!

This leads me to wonder. Clearly, the messaging of the each of the parties will have to be very precise to get to the person who may change their mind or who may now actually decide to vote rather than to abstain.

I also wonder if there is a ‘post-corona’ effect. Who returned to Israel during the pandemic, but did not vote last time? Conversely, is there an opposite trend, as international travel is back on the agenda?

I suspect that this year more than ever, the successful party will be the one that finds a slogan that overcomes apathy, and that disgust.

The OECD expects Israel to pull in growth rates of 4.8% and 3.4% for 2022 and 2023. That is about 10% above the average for the rest of the group, and thus surely a sign of competence. Even better, this forecast is in line with Fitch’s belief that the underlying factors of the local economy are stable, despite Ukraine et al.

So where’s the proverbial “but”?

Since its foundation in 1948, only briefly has Israel been governed by a party with a majority in the Kenesset (Parliament). And just when you think that the coalition political back-stabbing could not reach an even lower point, along comes a new crisis.

Certainly, June 2022 resembles such a watershed. The current government has lost its majority in the Kenesset. Yet the opposition, led by Netanyahu, cannot replace it. New elections are not a certainty. Where to next? I don’t know.

But what is certain is that financial markets do not like uncertainty! And Israel is heading right slap into a mess.

Analysts have already started to predict a slowdown – higher interest rates, established overseas markets closing their doors, higher energy prices, and more. Just as worrying is that in the past, the slack has been taken up by the hightech sector. However, for the first time in over two decades, the Israeli tech sectors are showing signs of tiredness.

Add in a lack of political direction from the centre, and the concern levels are beginning to mount. Israel, an economic powerhouse, is in danger of losing is status of ‘being all right despite everything’.

No – it is not all doom and gloom.

  • Israel is signing significant new trade agreements, particularly with Arab States.
  • Unemployment remains low at 3.4%, and the state budget has not been so balanced since the global credit crunch of 2008.
  • Wierdest of all: The EU is looking to Israel for helping in resolving its gas shortage due to the Ukraine war. Compare that line to the news of the 1970s and the oil embargos! The upshot will be a very healthy bonus for the Ministry of Finance in Jerusalem.

The political instability will not be resolved immediately. If there are to be elections, they may not be held for months. If a new coalition is formed, it is very likely to face similar challenges to the current incumbents.

And that leads Israelis fighting for themselves, rather than be guided by politicians, who are currently acting like selfish children.

After two years of corona lockdowns, and when hightech has taken on an even greater importance in the domestic economy, is there still a role for business mentoring in Jerusalem?

This week, I have been writing a series of posts for LinkedIn on business coaching and mentoring. I have explored core issues such as the role of the mentor, how to find a suitable candidate and what are the potential benefits.

Today, it can seem that everything is so instant. If you have a problem, ‘google’ the solution and someone will deliver it within an hour. Just launch a marketing campaign on social media and your sales will leap forward in a jiffy. Simple, eh!

The reality is frequently otherwise. CEOs and decision makers are inundated with so much info that it is hard for them to reach a conclusion and then also act on them with authority.

And this is where the business coach / business mentor suddenly becomes so necessary, allowing the client to see the wood for the trees.

I woke up this morning to find an unsolicited compliment on my WhatsApp feed. It was from a geek in her branch of tech, yet slightly clumsy when it comes to interpersonal relations. I am enhancing her reach to create a social media strategy, plugging her achievements in Jerusalem and in Europe. The initial bait was a conference in the USA. Her blogs have called on interested parties to DM her. And guess what? They have done so!

Then this afternoon, an upcoming food distributor just blurted out in the the middle of our zoom conversation how I “have really helped” him to grow his business.

Pardon the messages of self-congratulation.

What I am saying is that business mentors, by asking and the right questions and by challenging the seemingly obvious – can boast sales just as much as a 60 second glance on Google. Contact me to learn how.

An item on an edition of the Financial Times podcast this week indicated that currencies of smaller economies are weakening daily, particularly against the dollar.

There are many reasons for this. They include the relatively sharp rise in interest rates in the USA, who will be hit hardest by the fallout from the Ukrainian mess, and the continuing impact of 2 years of covid. Each country will have its own idiosyncrasies. Meanwhile, let’s have a look at the position of the Israeli shekel.

Overall, despite new domestic political shenanigan’s and the threat of Palestinian violence, the Israeli economy is doing well. The Treasury is having a windfall with a whopping budget surplus, unemployment will struggle to go any lower and the world of high-tech bubbles along. And just at the right time for Europe, new gas reserves have been discovered in Israeli territorial waters.

Earlier this week, the financial newspaper “Globes” reported that the Israeli shekel is valued at its lowest for 20 months against the dollar. Again, there are many causes for this – international stock market uncertainties, et al. But let’s not forget that following on from the turmoil at the end of the Trump administration, the shekel was only recently considered the darling of world currencies.

Where next?

In the past, the Bank of Israel has always ensured that its rate of interest remained competitive when looking over its shoulder to what the Fed does. That difference looks as if it might be partially eroded in the near future. That implies that the shekel has further to decline.

A client of mine has to create a new pricing strategy for exports around the globe, looking at setting prices for up to a year ahead. As his business mentor, what did I think?

Given the various geopolitical uncertainties that look as if they will linger and impact for months to come (at least) and given the political uncertainty in Israel, I said that he had two options. Either add in a large safety factor and totally overcharge from the getgo. Alternatively, he should refuse to commit to prices beyond the next three months.

Those running the economy in Jerusalem may have some reserves compared to their counterparts in the OECD, but that extra rope is still limited. Tricky times ahead.

Look at the core stats! Avigdor Lieberman, Israel’s Minister of Finance, could not ask for a rosier picture:

All good, no? So why my hint of pessimism?

The Israeli Parliament is about to reconvene after the Spring break. And the government looks as if it is tottering. It had a majority of 1 – in a 120 forum. That has been lost. The season of last minute, behind the scenes, dirty dealing is upon us.

And if all financial markets hate one thing, it is instability.

This current coalition government has lasted about a year. Its predecessors under Netanyahu’s direction dragged on for two years without a budget and no clear direction. Yet whether you approve of them or not, the current team has:

  • Passed one budget and the planning of the next one is almost complete.
  • Started to tackle the bureaucracy, which costs small businesses so much time and money.
  • Reformed the mobile phone market for the ultra-orthodox sector.

If political instability erupts tomorrow, the Israeli economy will not crumble. The hightech sector reveals no signs of a slowdown, although there are fewer vacancies than a year ago. As Jon Medved, CEO of Our Crowd writes:

In Israel, where VC investment jumped by 150% from a then-record $10 billion in 2020 to $25 billion in 2021, startups attracted $5.6 billion in Q1 2022 – indicating an annual rate of approximately $22 billion, slightly below the previous year.

(13) Good news: Our world is flat | LinkedIn

However, what is different about May 2022 compared to the Netanyahu period is that the world is today faced by complex financial uncertainty. After two years of covid, economies are struggling to pick up. And yet primarily because of the Ukraine war, inflation is on the move. By how much can central banks rush to raise rates of interest without choking economies even further?

Such decisions require coordination between the senior bankers and those politicians and civil servants running the treasury in Jerusalem. If the latter are caught up with intrigues and negotiations to save their jobs, that smooth policy direction will not take place. Ouch!

The most important thing is certainty, for all players, in both the private and public sectors. It is clear that the economy wants certainty and a planning horizon. When there’s uncertainty, it’s damaging. Another round of elections, if it means a delay in passing the next budget, certainly does not help day to day management and will be harmful to economic reforms and continued investments that we think the economy needs. It is harmful both in the short term and to the ability to close gaps in the long term.

Bank of Israel’s governor, Amir Yaron: “If we let inflation climb, mortgage borrowers will be hurt” – Globes

Our inflation (in Israel) is 2.8% and still within our target range. Even if we see indices that bring inflation above the range, our expectation is that inflation in the second half of 2022 will fall in the direction of the target range.

Andrew Abir, Deputy Governor of the Bank of Israel

And the experienced economist makes a fair point. Israel’s inflation rate is still relatively low. Look at America, which has just announced the highest set of price hikes in decades. It is now assumed that planned interest hikes will be brought forward. The Europeans are still trying to work out how temporary (or otherwise) this period of inflation is likely to be.

If you ask the average person on the street in Israel – if there is such a creature – they will tell you that the distinguished economist obviously does not do the shopping in his household. The government has just been forced to apply enormous pressure on major food manufacturers and food importers to postpone or delay previously announced price hikes. In addition, Israel’s Minister of Finance has proposed a series of measures to put extra spending money into the pockets of the less financially secure.

The irony of many of these measures is that much of the extra cash will serve to boost the profits of the large retail grocery outlets. That is where it is assumed that much of the money will be spent.

However, few of these measures will dent what is called inflationary expectations. There are two reasons for this. First, however strong the shekel is against many of the major currencies, the prices of imported raw materials are soaring. Similarly, even if the cost of international freight comes down from its peak, it will remain way above pre-corona rates. All the shops are stuffed full of overseas products.

What can the policy makers in Jerusalem do?

There are two fundamentals that determine what happens in the economy. And throughout the country’s history since 1948, few politicians have dared to tackle these vested interests.

First, the price of land and the hidden costs of planning a new building remain high. Why? Because between them, they bring in to the treasury vast amounts of tax revenue. Eventually and inevitably , shop owners pass on these expenses to their customers.

Second, the country is full of protected interests. High import duties on fruit and vegetables protect the farmers, even when products may not be in season. Antiquated union practices ensure that the ports of entry are expensive to run. Importing procedures are complex (bureaucratic) and thus also expensive, prohibiting new entrants into the markets. (It would take me a separate blog for me to explain the procedures to import tinned food into Israel – labels, samples, approvals from at least 3 ministries, and more).

The common denominator of the two factors is the lack of competition. And thus the cost of living in Israel remains high – absolutely and comparatively. And now you know why Israel has some of the greatest differences in wealth between those who have and have not.

But just who can and wants to see that?

According to the Bank of Israel (BOI), inflation in the Holy Land will remain under 2% during 2022. On the back of rising energy costs, supply chain disruptions and geopolitical considerations, much of the rest of the OECD is looking at the 5% mark if not more.

What makes the respected economists in Jerusalem so certain that this challenge will pass by?

The BOI points to wage restraint, stable gas prices domestically and other factors. And yet each factor is not without its critics. For example, just by talking to friends, nobody is going to kid me that wages will keep to a 2% hike. After all, the growing hightech sector is chronically under-staffed.

Another issue that must be called out is the influence and the long arms of the hightech sector.

If we are to remain positive, in the words of “The Economist”:

Today’s tech giants (Apple, Amazon, Alphabet, Meta, Microsoft) are placing bets on the technologies of the future…..The frontiers on which big tech is most focused seem to be the metaverse, self-driving cars and health care. About a tenth of the five companies’ acquisitions in the past three years have been of firms that specialise in augmented or virtual reality. That spending spree has been led (predictably) by Meta, which made eight of the 13 purchases. 

Guy Scriven: USA Technology Editor

These are the very sectors where Israel has demonstrated areas of excellence. This should ensure that the FDI will remain steady for the foreseeable future, creating work and strengthening the eco systems. Will this demand also stoke up consumer expectations

Alternatively, as Wall Street finally begins to dip, it is the tech sector that is taking the biggest knock (for now). “The Nasdaq Index is down 9.7% from its peak but ………. over the past year half of the 100 Israeli companies traded on Wall Street (not only the new ones) have fallen more than 50% from their peak and only 20% have had single-digit falls.”

Will there be layoffs and thus a relaxation of the anticipated wage inflation? Or will money become tighter, thus causing the price of money to rise – a piece of tech jargon for saying inflation is on the way.

From my perspective, Israel is completely tied to the fortunes of the global economy. Thus despite the talk of officials, the deceleration of the economy because of omikron, the country cannot escape the owes of its major economic partners.

It is going to take more than wishful talking to keep the Israeli economy on track in 2022.

According to Dun & Bradstreet, the Israeli economy grew by 7% during 2021. Only the likes of China and India bettered that.

Does this teach us anything about January onwards?

Well, we know that the government is finally providing some direction, as the planners can finally work according to a targets set in an official budget. And we know that Israeli exports will continue to be boosted by the hightech sector. In fact, for the first time in the country’s history, the service sector (a.k.a. hightech) is more prominent than the value of goods sold overseas.

If we look at the stats, there are 3 positive trends that are likely to continue into next year.

  1. Unemployment is down sharply, and there remain key bottlenecks in many parts of the labour market. For example, it is suggested that there are around 15,000 positions open in the hightech sector.
  2. 2021 was another record year for M&As in Israel. “The number of deals that closed this year rose to 238, the highest total in the past decade and almost double the number of deals in 2020.” Israel remain s a hot place to invest in.
  3. And in a year of yet more lockdowns etc, 2021 saw record new vehicle sales in Israel. Purchase tax earned by the government on new cars in the first 11 months of the year rose 20% from 2020. And there is more to be bought.

Will Omicron halt this progress? Who can assume what will or will not happen on the geopolitical front? Meanwhile, as things stand, the Israeli economy is well set for 2022. Happy new Year to all!

Israel is a small country. 50% of the territory is arid. On at least two of its borders, it suffers from constant violent infiltrations. And its existence is threatened by the nuclear aspirations of Iran.

So why of why is the economy booming? Look at the stats.

This week, it was announced that “Israel’s high-tech sector raised a record $25.4 billion so far in 2021, up 136% over 2020″. That is nothing short of outstanding.

Start-up whizz and commentator, Hillel Fuld, put this number into perspective with a comment on his LinkedIn page:

This year was the first time that the number of Israeli IPOs surpassed the number of exits. Meaning, more companies went public than were acquired. That is a very important metric. It means that we are no longer “Startup Nation”. The aggregate value of Israeli companies traded on Wall Street is $300 billion. Three hundred billion!!

Clearly much of the good news is a result of the bounce back from the depth of the corona period. I suspect that an element can be traced (somehow) to the end for now of political instability that saw four general elections in 24 months, as well as an unwanted rhetoric voiced by some politicians. On all this was achieved at a time when the previously vital tourism industry imploded!

It would be interesting to speculate what would have happened if government had been more involved, passing more laws, interfering in the cause of helping. We will never know of course, but there is a message here for the fiscal and monetary planners sitting at their desks in Jerusalem.

Avigdor Lieberman is not an obvious candidate to be the Finance Minister of Israel. But in an era of small parties and coalition politics, that has been his job for the past six months or so.

He is a former confidant of Netanyahu, who was one of the first of several to abandon the now former PM. Lieberman has been suspected of corruption. Senior parties members have been convicted. He is seen a pragmatic politician of the right, whose accent never hides his Russian origins.

Last month, for the first time in over 3 years, Israel’s Kenesset passed a budget. It had promised huge change. There are some reforms. But the most important issue is that the financial markets can identify with Israel’s attempt at proper governance. Yes, Jerusalem is trying to provide the platform for business leaders to surge ahead. One up to Lieberman.

The opposition leaders are furious. They have nicknamed the minister “liebermaS”. The word ‘mas’ in Hebrew means “taxation’. Cute, I suppose.

But let’s look at the state of the economy in Israel, late 2021, after nearly 2 years of Corona-economics.

  1. The inflationary threat sweeping across most developed countries has yet to impact Israel. This is due to the strength of the shekel. The currency is in favour because despite political instability, Israel’s economy to-date has ridden out corona very well.
  2. The level of unemployment in Israel fell significantly in November. At 5.7%, it is beginning to approach the record lows seen before corona days.
  3. The fiscal debt continues to drop, down by over 50% since the peak of the corona crisis. Somebody seems to be managing the books very well, and thus there is less need to borrow money in the markets.

If there is a black line in the sky, it is something that I have mentioned several times in the past. In a country founded in 1948 on socialist principles, the gap in Israel between haves and have nots keeps widening. This is unacceptable, and possibly unsustainable for the long term. Hopefully, hopefully, Lieberman’s financial planners in Jerusalem will start to address this in 2022.

It is about 18 months since a 27 year old religious studies student gained control of El Al, the primary airline for Israelis and many Jews around the globe.

Blame corona or poor financial planning or government interference, but in November 2021 the company is still dependent on tens of millions of dollars in additional taxpayers money to keep afloat. The scenario is not promising. Could it have been better?

Choosing a niche market is never easy for any company. El Al is expected to serve all, whilst facing security challenges (expenses) that do not apply to 90% of its competitors. However, others have succeeded in this difficult market.

flydubai first flew to Tel Aviv in November 2020, becoming the initial airline to operate commercial flights on the route to the Gulf. With 123 rotations planned for December, Tel Aviv will be the joint most served airport on the airline’s route network in the lead up to the Christmas rush. Profits are assumedly being counted up.

On a separate level and whatever future plans El Al is considering, it is generally accepted that Israel needs another international airport and that the country is way behind in the planning stage. One possible option – in Jerusalem – is about to be withheld for good.

Until the year 2000, northern Jerusalem was the site of an international airport. It was originally developed in the 1920s during the British Mandate. The Atarot site boasted flights to many leading destinations around Europe and the Middle East. It was used by Prime Minsters and celebs. The violent Palestinian Intifada put paid to all of that. Today, the runway is a parking lot for buses.

As for tomorrow? Next week, Jerusalem planning committee is set to approve 9,000 new homes in the area. The international community is likely to scream foul play. Either way, El Al, flydubai and others are likely to have to find their route to profitability along an alternative flight path.

Let’s start with a contradiction:

  1. It seems that the Arab countries are no longer prepared to bail out their friends in Gaza and in Ramallah. Donor funding has dropped by over 80% since 2008 to under US$200 million a year.
  2. Albeit from a low base, economic growth in 2021 will hit 6% and that is despite the Gaza rocket shelling during May.

Now, let’s bring in a dichotomy. We talk of “the Palestinian economy” , but this is increasingly one term for two different arenas. The tired and corrupt regime of the elderly President Abbas still nominally controls much of the West Bank. Meanwhile, Hamas rules Gaza through terror and corruption.

Is there another route? Can the Palestinians obtain a higher standard of living, even if this does not meet all of their political aspirations?

The Abraham Accords have shown how trade doors are being wrenched open for Dubai , Bahrain and Abu Dhabi, now that they have actively recognised Israel’s right to exist. And just this week, Israel signed a new cooperation agreement so that Jordan can produce 600 megwatts in renewable energy for Israel. The government in Jerusalem will examine desalinating 200 million cubic meters of water for Jordan.

So the opportunity is clearly there.

Meanwhile? A significant number of Palestinians, particularly in Gaza are dependent on handouts. For example, the UK government announced this week.

In Financial Year 2021/22 the United Kingdom (UK) has provided £11m to United Nations Relief and Works Agency’s (UNRWA) core programme budget to help UNRWA provide basic education to more than 533,000 children a year (half of which are girls), access to health services for 3.5 million Palestinian refugees and social safety net assistance for around 255,000 of the most vulnerable across the region. The UK also provided £3.2m to the UNRWA’s emergency appeal in May 2021 to help provide basic services, such as healthcare and clean water following the Gaza conflict.

James Cleverly – Foreign, Commonwealth and Development Office

Doubts continue to persist if all of the sums reach the intended targets. And this poverty promotes the interests of Hamas and others not interested in a peaceful solution.

Not looking good.

With a budget (finally) in place for 2022 and covid (seemingly) in check, can Israel’s economy look forward to a successful 2022?

The forecasts indicate almost 5% growth for the new year. Inflation, now the worry of central bankers in the EU and the USA, has not (yet?) fully featured in the Holy Land.

What we do know for now is that the core numbers are mostly showing positive times. An article from Reuters listed them, and they start with a largely successful inoculation campaign against covid. Even tourism is opening up.

In the third quarter, exports grew 7.5% for its fifth straight quarterly gain, while investment in fixed assets rose 14.8%. Private spending — the main economic driver — increased just 0.7% after a 33.5% jump the prior three months. Led by high-tech, exports continued to rise in the face of a 25-year high for the shekel versus the dollar and 20-year peak against the euro.

The high-tech sector continues to race ahead. In this small country of 9.3 million people, packed into an area the size of Wales, another 20 companies announced investment rounds in the past three days alone. And one, StarkWare, joined the unicorn club.

You never know what is round the corner, but for now the central economic planners in Jerusalem can be pleased with their achievement.

Connect the dots of these headlines from the Israeli press over the past few months

  • In early April this year, “Ha’aretz predicted that “20 to 40 Israeli tech companies will go public in New York, with an average valuation of $3 billion.”
  • Two months on, “The Calacalist” noted that “the market cap of blue-and-white companies on Wall Street has surged by $100 billion since the start of the year.”
  • In the last week of June, four Israeli tech companies raised US$26 billion through IPOs in New York,

What’s hot in Israeli tech? Just about everything.

Wired Magazine” jumped in one the act and released its 10 Tel Aviv crazy start ups. And no, the list was not just another set of cybertech wanna-to-bees. It was led by edutech. agritech, community focus, and a payments’ system for small businesses.

If there is one downer in all of this it pertains to the “Big 5 of Global Tech“. Their reps in the Holy Land soak up much of the available as they have the resources to pay what the market demands. The situation is so desperate that last week, the Minister of Science, Mrs. Farkash-Hacohen, asked the Israeli Tax Authority to develop a plan that would allow non-Israeli tech workers to get quick and easy authorizations to work in the country.  

Meanwhile, the new giants of Israeli hightech are pushing ahead. Look at Monday.com, Still losing money, it is nevertheless valued at over US$15 billion.

Since monday.com’s IPO in June, the share price has more than doubled from $155 to $356 as the company has leapfrogged the value of other veteran Israeli companies like Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Amdocs Ltd. (Nasdaq: DOX).

And the Israeli stock market does not appear to be retrenching. obvious why?

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