Last week, Yuval Steinitz was appointed as Finance Minister in Israel’s new cabinet. If the tenure of many of his predecessors is an indication, he is liable to hold the post for less than 2 years.

What he can achieve in such a small period of time? Perhaps it is more relevant to ask what are his qualifications that will endear him to the financial markets, other than being a long-time Bibi Netanyahu groupie.

The political views of Steinitz have moved to the right of the diplomatic map. He is a renowned expert in philosophy. He is savvy in political manipulations and has chaired committees in the Kenesset. And his familiarity with economics may not take him past a 101 beginners course.

What does this amount to?

In my view, this background is a great platform for success. It shows that Steinitz comes in with few preconceived theorems. He has the ability to listen and then to act. He understands how to operate the coalition politics of the legislature.

It is to be hoped that Steinitz will surround himself with capable advisers, and who are trusted by the wider capital markets. This rules out “jobs for the boys”, because the markets know how to belt such characters.

A colleague of mine has met Steinitz and gave him the thumbs up. And I recall that three of the most successful finance ministers over the past 25 years were also economic dumbskulls. Yet all of them – Peres, Nissim and Bar-On came through with high marks, each using similar skills outlined above.

Netanyahu has made it clear that he will be keeping a close watch on the finance portfolio. He has deep experience in that position. Because of him, growth regularly topped 4% per annum.

But this is also my concern. Israel’s economic problems in 2009 are not the same as when Netanyahu began at the ministry nearly 8 years previously. The approach must be different. Specifically, Steinitz cannot afford to give in to pressure groups like the Histadrut as Netanyahu used to do or to the banking interests.

Steinitz has an opportunity to lead Israel’s finances to a strong future. He will need to use his own talents to ensure this is achieved.

A recent conversation with an investment banker from the UK was revealing.  

He compared Israeli and British reactions to the global recession. Yes, both economies have taken a hit and G20 announcements will not change much overnight. However, while the financiers in London walk around with their heads looking down, in Jerusalem and in Tel Aviv you find continued verve and dynamism.

So as Obama, Brown and co parade around London, announcing the rebirth of Keynsian economics, I want to share with you some info on just 3 of the many fascinating Israeli companies I have spoken with this winter.

Take Leviathan. Set up by serial entrepreneur Daniel Farb, the company has a patented method to control wind direction around their turbines. This allows their customers to generate about 30% more wind energy than known competitors. As the recession has blown in, Leviathan’s sales have picked up.

Cognisafe lead us into the world of on-line gambling. The company is the first to admit that this is not everybody’s preferred area of activity, it is growing rapidly in popularity and needs protection against cheats.

This is where Cognisafe applies its unique software. It can identify threats, profile them and deliver suggestions for the operation managers. Thus, although hundreds of thousands of players may be present at any one moment, the game remains safe for all. The first customers are in the door, and there are encouraging signs from the British market.

The Optimum Group have taken production manuals to a new level. They convert bulky and often incompressible manuals to focused on-line procedures. The directives of the line managers become readily understood by the training staff, raising output and reducing time flows. They have a Fortune 500 list of Israeli clients, with a heavy focus on the sensitive defense sector. 

For these firms and many others, the recession presents opportunities rather than disasters. You will be advised to watch their continued development over the next few years, as they enter the world stage.

Today, I was in the Old City of Jerusalem. I had the opportunity to celebrate the Bar Mitzvah of my youngest son in one of the many special, renovated Synagogues in he area . In fact, we had started the festivites a month previously, when we prayed as a family at the Wailing Wall (Kotel) nearby.

And as we all know, upto 1967, such actions would have been impossible. Jews were not allowed in these areas.

Tragically, as my wife, children, friends and others were dancing, 25 miles away, a 13 year old boy was hacked to death. The youth,  unknown to me, was barely a few months older than my son. His crime? According to Hamas, the attack was a “natural reaction to Israel’s occupation”.

There are angry protesters all over the world, yet none of them resort to repugnant acts of slaughter, a pick axe to slay a youth. If this is Hamas’s definition of normality and acceptability, I wonder what it takes for them to consider something inhuman!

Now consider that in a few weeks time, Pope Benedict XVI will visit Jerusalem and the Holy Land. It is less than a decade since his predecessor was here. As then, this trip will be a tremendous opportunity to show just how pluralism really does work in this minute part of the Middle East.

If the Pope is allowed out of his bullet proof vehicle, he will be able to see what I witnessed on the way to Synagogue this morning. We walked passed the entrance to Dormition Abbey, where pilgrims were mingling happily. A few yards along, the Armenian Quarter was thriving with tourists. And beyond, the minarets were calling their followers to prayers.

Obama, the EU and others are signalling to Israel to make quick and significant concessions to Hamas and to Fatah. Yet for all their so-called protection of Israel’s future, the international community continues to seek a way to appease the violence of Palestinian warriors.

The Pope will not be visiting Gaza. The treatment of Christians there in the past decade, and particularly since the takeover by Hamas, has been a continuous story of religious harassment.

And if Israel were to agree to the demands of America et al on Jerusalem, then my children will not be celebrating their weddings at the Wailing Wall. So if you want to keep Jerusalem open to all, then as the Pope will discover, do not change what already works.

 A few days ago, the Israeli treasury in Jerusalem announced that it had issued a debt package in the USA worth US$1.5 billion at 5.2%. Ever since, it is a topic that keeps coming up in discussions, and with no small amount of pride.

How did Israel succeed? At a time when Gordon Brown and other world leaders doggy paddle from one piece of bad economic news to another, it is worth taking a few moments to see what it is happening with finances of the Holy Land.

Yesterday in Jerusalem, I heard Prime Minister designate, Netanyahu, state that he thinks “we can outperform the global economy”. Fighting words, and as Finance Minister some years ago he did launch the country on a path of sustained growth of 5% annually for 5-6 years.

But it needs more than bold character.

You ask senior economists like Barry Topf, head of the Market Operations dept at the Bank of Israel. He notes how Israel has a real opportunity to come out of the recession in good shape. Strong, positive fundamentals + a solid financial position + excellent micro factors like entrepreneurial skills – Israel possesses those skill-sets, and when combined together they point to a positive course.

As Topf noted in a presentation, Israel is the only country in the EMEA region which does not have a current account deficit. That is a significant and positive stat that excites analysts!

A few days ago, the Bank of Israel released its summary of Israel’s International Investment position for the end of 2008. For the first time in a decade, Israel assets abroad now exceed liabilities, and the surplus approaches the US$ 7 billion mark.

No wonder there is a confidence in the capital markets to lend Israel money. And it is no surprise that for all the rising unemployment and political uncertainty in the country, there is genuine ground for cautious optimism.

The STEP Conference in Jerusalem looked at the opportunities open to the Palestinian and Israeli economies.

So what’s so special? Bibi Netanyahu was very keen to give the opening address. So I made sure that I listened very carefully. the following are direct quotes.

“The economic track is a compliment – not a substitute – for peace negotiations.”

He is looking for “rapid development of the Palestinian economy”.

“There is an important future for the Palestinian-Israeli economic relationship”

“I urge you to invest in the Palestinian economy”

Like him or not, this sounds like a man looking for a better road to peace, just as Obama is seeking new solutions to his problems. Maybe it is time for the new American regime to reassess Israel’s incoming Prime Minister.

The Office of the High Commissioner of the United Nations for Human Rights will host “the Durban Review Conference”in Switzerland in April 2009. It is designed to create an international momentum against racism.

By chance, at the exact same time on Tuesday 21st April, 10,000 people will be holding a rally at Auschwitz under the banner of “Say No To Hatred Today”.

The Durban conference will not be attended by the USA, Italy, Israel and Canada. Australia and Holland have open doubts. Around 90,000 people voted on Der Spiegel’s website against German participation. At least 45 MPs at Westminster have signed a motion of protest. So why boycott a UN sponsored event?

The answer is simple. The conference will be an extension of a previous debate held in 2001 in Durban, when the thin veil of pretence between anti-Zionism and anti-Semitism was blon away. Speaker after speaker attacked Israel’s right to exist, calling for economic, cultural and diplomatic sanctions against the Jewish State, the sole democratic country in the Middle East.

I have written often how my daughter is a volunteer in an ambulance brigade in Jerusalem, where staff and patients are from different religions. The Kenesset is host to Jewish and non-Jewish Communists, who regularly joust with Lieberman’s right wing approach. The churches in Ein Kerem, Jerusalem, where my wife works, toll freely every day. And this week, the members of Hapoel Tel Aviv football team offered their respects to a Circassian colleague, who lost his father in heart-breaking circumstances.

When visiting NGOs come to Israel and look for coexistence projects to invest in, there is no shortage of opportunities to consider. And that is the point. Such diversity and pluralism is hard to find in the other vast expanses of this violent region.

This openness is not just laid down in common law in Israel. It is a way of life for the overwhelming majority.

Significantly, the same principles are rarely applied when investigating other countries. Israel is thus judged by a set of standards, which converts spin into deligitimization. The result is often hypocrisy, mistrust, and even hatred. Ironic for a country looking to the outside world to help secure a peace with its neighbours.

The UN’s attempt at anti-racism has become an open route to vent venom at Israel, and thus at Jews.

I offer the remaining UN delegates an alternative. Leave the comfort of Geneva. Join those on the “March of the Living” in Auschwitz. No clearer message could be sent to totalitarian regimes around the world…….such as Libya and Cuba, the prime movers of iniquitous resolutions in Switzerland.

Then let us look toegther towards building coexistence through the multiple projects in the Holyland.

There’s an old joke in Israel. It takes 3 months to decide on a date to hold an election, 3 months to campaign, and 2 months to form a coalition. And when that is over, it is nearly time to start the circus all over again.

So while Bibi Netanyahu has been dallying around, trying to create a government based on a solid majority of 1 – or is it 5 – votes, the country has calmly gone through a series of crises. Hamas continues to send rockets into population centres. Stanley Fisher, the Governor of the Bank of Israel, is predicting the worst economic scenario in the country’s 60 year history. The Obama administration is looking increasingly hostile. etc etc.

Is Bibi the man to save the country? So far in coalition negotiations, he has surrendered several top portfolios to Avigdor Lieberman’s party, even though they received barely half the number of votes as him. Not a good omen for when the PM has to handle Palestinian or American pressure.

If only it would end there.

It is my wife who pointed out with pointed despair and disgust that neither Lieberman nor any of Bibi’s potential partners have sought the economics or education portfolios. She correctly observed how most people go into politics ostensibly to change things. And where better to make a mark on society than through these two ministries?

But in Israel, after over half a year of jockeying and puported idealism and electoral holier-than-thou comments, nobody at the top has the combined courage and ability to make a stand. These two jobs, which urgently need people of calibre, are being shunned by potential cabinet members.

What the hell did these people fight an election for?

Tourism in Israel had a brilliant year in 2008. Around 3 million visitors arrived, two thirds of whom were Christians. A significant increase on previous years. 

As the Tourism Ministry has reported: –

During the last decade, the ministry has invested tens of millions of shekels in developing sites including, among others, the Mount of Olives Promenade, Via Dolorosa and Christian trails in Jerusalem, Nazareth and around the Sea of Galilee.

Going forward, in less than two months from now, Pope Benedict XVI will visit the Holy Land. Although accepted that he will not be accompanied by tens of thousands of “well wishers” as his predecessor was in 2000, his entourage will still be very heavy indeed. Jerusalem hotels are already reporting full capacity for the period.

It goes further. This week, a large delegation of Israelis, representing the full spectrum of the tourism industry, visited Bethlehem.

With the cooperation of the Civil Administration, the city has been part of the boom since late 2007. In parallel, the Tourism Minister of the Palestinian Authority, Khouloud D’eibes, has given his open support to the initiatives and enhanced cooperation.

The net uplift: Welcome income for two economies, showing what can be done together. A model for economists. A slap in the face for detractors.

This weekend’s tennis match between Israel and Sweden appears to have more to do with politics than sport. Pictures of the violent protests against Israeli representation recall the worst days of the Intifada.

It is easy to compare the lawlessness of the protesters with those who attacked British police recently in London. Of more interest is to analyse their basic complaint that Israeli society is racist.

Speak to Ishamel Khalidi, Israel’s deputy consul general in San Francisco. A Muslim, a proud Bedouin, the owner of a master’s degree from Tel Aviv university, he clearly disagrees with such an appraisal. Writing recently in the San Franciso Chronicle, he observed: –

If Israel were an apartheid state, I would not have been appointed here, nor would I have chosen to take upon myself this duty.

On a different spectrum, the Leo Beck School in Haifa has a diverse student background. You can find Jew, Muslim, Druze, Christian, etc. Almost every year, another multi-ethnic school opens in Israel.

The Israeli Parliament has numerous non-Jewish representatives. The judiciary is replete with members of the minorities. And my wife works in the Ein Kerem area of Jerusalem, where today the church bells will toll out loudly as per every Sunday.

On March 4th, the Independent Commission for Human Rights released its monthly report re violations of civil liberties in Palestinian territories. At least 4 citizens, including Basheer ‘Ilayyan al Zaytouneh, died from torture. One died under interrogation from Palestinian police. Numerous journalists, like Wa’el Issam Abdul Qader, were detained or arrested or deported. etc etc.

So, are teh protesters in Sweden really interested in human rights or dumping their “politically hatred” on others?

This week, I attended an economic briefing at UBS. The Swiss banking giant is predicting global growth in 2009 at a miserly 0.2%.

This is what many see happening in Israel – although that is a giant positive mark when compared to several other Western economies.

Don’t get me wrong. The Israeli economic press is full of depressing reading. This week, the Tel Aviv Stock Market matched the loses in Europe and on Wall Street. High tech lay offs continue in quantity. The local bank news is still edgy.

And yet. And yet. There is still gold in dem Judean hills.

I am associated with a start up that has embedded a software on a smart card with a UBS application – enhanced content data management. It recently raised approx US$1m, with sales commencing in Spring 09. Another client’s software has made significant sales in the UK this quarter, despite the dire economy in Britain.

These are not isolated stories. the latest bulleting from Israel’s Investment Promotion Centre is extremely positive.

  • FDI in 2008 hit US$10 billion
  • Since December 2008, 3 Israeli medical device companies have been bought out for a combined value of over US1 billion.
  • GAP, Banana Republic and H&M will begin to open outlets in Israel over the next 12 months.
  • Solel, BrightSource Energy and other cleantech companies are striking large deals in Spain, California and elsewhere.

The UBS representative noted that the clever people are those who plan carefully at the end of a recession. 2009 will not be pretty. But for Israel there will still be several bright spots worth tagging. early on.

A stream of bad economic data has been released in Jerusalem in the past few days. GDP shrank by 0.5% in 4Q08. 18% fewer tourist nights were recorded in January 09 compared to 12 months previously. Intel announced a sharp drop in exports.

The Economist Intelligence Unit recently updated its predictions for 2009. The current forecast highlights a 1.9% real drop in global GDP. Taking the USA as an example, it explained that:

The US economy is in freefall. The 3.8% contraction in fourth-quarter GDP was the worst showing since the opening months of 1982, when the economy contracted by more than 6%. Business spending dropped by a stunning 19.1% at an annual rate in the three months to December.

So Israel is better placed? Well, I have long argued that Israel entered the recession with numerous structural positives, which are still true today. Naturally, that does not make the country immune, especially when the political system is neutered due to post-election coalition gamesmanship.

There is one stunning major bonus, clearly identifiable on the horizon. About a month ago, commercial quantities of gas were discovered in the Tamar field just off Israel’s coastline. This week, two hugely important pieces of information were released to the press.

First, it is very likely that the find is larger than initially thought. Second, spurred on by the American partner, Noble, the gas will brought to the market within 3 years, and not 5 as originally thought.

The knock on effect here – increased revenue for the treasury, employment, export possibilities, etc – will have a substantial and positive effect on the Israeli economy.

The Economist concluded its report with a “subdued outlook for the global economy in 2011- 2013”. Israel has a chance to be a special exception to that forecast.

Over 25 years ago, I attended a play at the Royal Court Theatre in London. Titled “Not Quite Jerusalem”, it revolved around the lives of foreign students working on a kibbutz. It was humourous while poignant, but had little to do with Israel per se.

In those days, the Royal Court was a fun place to visit. You were guaranteed an evening of entertainment, which made you think. It was an important part of the world of expressive fringe theatre.

Jump forward to 2009 and the theatre is hosting a 10 minute short play by Caryl Churchill, called Seven Jewish Children. Churchill is an established author, who unashamedly tests accepted norms. Provoked by recent events in Gaza, she has taken 7 historical themes important to Jews and questioned them.

Anything wrong in that? Not, in theory. Anything wrong in criticising Israel? Not, in theory.

Michael Billington is a respected critic. He notes that by using conversation with children as a backdrop, Churchill accuses Israel of using security to justify massacres. Anything wrong in that? Yes, plenty, lots of plenty.

There were no massacres in Gaza. And as a parent of three children attending Israeli schools, I can testify that Israel does not officially or unofficially teach or preach massacres. To claim or imply otherwise is a libel.

And neither are children taught about the “otherness” of Palestinians, as Billington has observed.

My children study Arabic. They learn about Muslim culture. Their geography books contain references to the pre 1967 borders. And they are taught about Christianity, the Crusades and European history.

I cannot find similar curricula in Palestinian schools. In fact, many have argued that the new Palestinian textbooks published since 2000 would fail any critical analysis by UNESCO.

But I digress. Churchill has denied that her play is anti-semitic. Yet she writes about Jews. She uses Jewish themes. She inserts them in a deliberately provacative way. She causes wide spread revulsion amongst most  British Jews.

Is her play about Israel? Well, sort of, but Jews are the central theme., and thus makes people question if Jews possess acceptable values and ethics.

To my way of thinking, the play is a libel. It is anti-semitic.

Amazingly, in this woeful episode of British culture, there is still something yet more pathetic; the feeble actions of the Royal Court management. Its spokesman has urged people to see the play before they judge it. “It is possible to criticise the actions of Israel without being anti-Semitic,” he says.

In other words, they will show what the hell they want in the name of free speech. But apparently Ramin Gray, the theatre’s associate director, has admitted that the Royal Court would be hesitant to stage a play critical of Islam.

This is hypocrisy, out right hypocrisy. Double standards exposed mega time. It is this abuse of free speech, which allows the Churchills of this world a stage and platform for their hatred.

Remember the Protestant priest, Rev Martin Niemoller? In 1945, he recalled how nobody had protested that Jews, Communists and Catholics had been rounded up. So when they arrested him, there was nobody left to object.

Similarly, it is time for the UK to wake up. Most criticism of Israel has often bordered on the anti-semitic. In Churchill’s case, she has crossed the boundaries of the acceptable with a Bob Beamen leap. Her work is disgusting, aimed at sowing hatred and mistrust, that and nothing else.

Protectors of free speech should see her words for what they are, and then replace them vociferously…….before the thought-police put them next to Niemoller.

Last week, Israeli women gave a global lesson in equality.

Let’s start with the general election Like her or not, and whatever the final make up of the new government, most commentators accept that Foreign Minister, Ms Tzipi Livni, ran the best campaign. She came from behind in the polls to become the largest party. She looked comfortable slipping into jeans and boogying at a disco. She was the lady to fear.

And as for Avigdor Lieberman, he may be the enemy of the foreign press, but of his electoral list, 4 are counted as former models. And one of those is the daughter of a former deputy Prime Minister. Yup, women did well in the polling booths.

But the successes do not stop there. Bar Raphaeli, Israel’s best-looking export and long-time partner of Leonardo DiCaprio, made the front cover of Sports Illustrated Swimsuit Issue. This is a lady who is proud to acknowledge her own natural beauty in tandem with that of her homeland.

Possibly even more sensational was the triumph of Hila Plitman. Growing up near the centre of modern Jerusalem, this soprano picked up a Grammy award. She received the attribute as in the category of best classical vocal performance.

Israel may be locked in to much of the culture of the Middle East, but she continues to offer pluralism and democarcy,  In fact, a female duo has been chosen to represent Israel in the Eurovision Song Contest, a Jewess and a Muslim. 

Curiously, Saudi Arabia has just appointed its first female deputy minister. Yet another case of Israel showing others in the region the benefits of her open society.

Several of my recent postings relate to the great tech available in the Jerusalem region re solar power, clean water and green heating capabilities.

You have to conclude that if there was a touch more investment available, Israel would suffer very little from water shortages, waste or even expensive fuel.

Cleantech is not the only area where Jerusalem excels. I have just received the latest issue of the Jerusalem Life Science Bulletin. The Holy City is full of modern miracles.

The briefing commences with details of the most recent breakthroughs in research . Israeli scientists reversing brain birth defects using stem cells. The identification of genes of a rare skin disease. And many more.

In terms of building strategies, the Kaiser Foundation Health Plan and BioOhio have signed agreements with local teams.

In academia, the “scientist” magazine ranks Israeli academic institutions in first, second places in its annual search ‘the best places to work in academia’ outside the US.

And all this news is wrapped by the International Nanotechnology Conference taking place at the end of March 2009 in Jerusalem.

Recession, maybe. But there are several Israeli enterprises pressing ahead for all that. Overseas investors take note of what is happening in Jerusalem.

Last Thursday, I was co-moderator of a fantastic networking event. It linked the Jerusalem Business Networking Forum with the CleanIsrael Network, the Association of Renewable Energy Industries, and the Movement for a Stronger Israel.

11 new cleantech companies presented themselves in front of a strong audience, led by Naomi Zur. She is deputy mayor of Jerusalem and has a direct mandate to push this sector in the new administration.

What makes this so impressive? Well, in the midst of a global recession, a war and a new drought in this part of the Middle East, these 11 companies are seeking to make a difference. And not just wishful thinking. Glen Schwaber, with 15 years of experience in VCs and General Partner at Israel Cleantech Ventures noted that 3 years ago, nobody put their money in cleantech. Last year, around US$200m was committed to 20 projects in Israel.

The details. Jerusalem is already known as the world leader in developing solar energy tech. Papers delivered by enertglobal, G3Solar and others rammed home that message. Wind energy, biofuel, watertech etc are all fully represented in the Holy City. Cequesta Ltd is already delivering wastewater devices to Europe.

Essentially, these companies have struggles to find their way through “the system”. The activity is finally being acknowledged by central government. Sigal Admoni of the Industry Ministry, who presented for the first time in public a US$100 million national Renewable Energy Programme. Unlike many of the other politicians, she sat through all the company discussions.

On a cold winter’s night, there were a 100 + people in the room. They represented the interested and curious, biz dev types, and investors. The truth is that the IP content on show was worthy of a global audience.

It showed the way forward to a new wealth of commercial potential. I have generated 3 very key and exciting meetings as a result of the event. 

So is Israel in a free fall recession?

I was walking around the centre of Beersheba yesterday. This is the capital of Israel’s Negev desert. Wind swept and cold, shoppers seemed to be elsewhere. Several premises were boarded up. Depressing.

The “Madoff effect” will hit the Jerusalem economy in particular, as so many NPOs are located there. Special ed, student research, medicare care for the poor and more – many of these groups will have their funding severely restricted overnight.

Go to the economic section of the newspapers and you will read about inflation levels dropping. The Bank of Israel has dropped interest rates, but cannot compete with the near zero levels in America, which is keeping Israeli exports relatively expensive at a time of lower demand.

Now look again, but look hard at what is going on, almost slipping by unnoticed. Yesterday, I was informed of a string of potential investment deals worth tens of millions of dollars in high tech. In today’s issue of the Yediot newspaper, the journal has highlighted thousands of positions in different sectors waiting to be filled. 

Personally, I took part this week in a new effort to launch a Cleantech forum in Jerusalem, specifically aimed at bring new technologies and biz dev facilitators together. The first meeting will be in about three weeks and we already have people queueing up to present. There are more companies than we believed.

The conclusion: It is not all doom and gloom. There is a very sorry side of this downturn, which will hit people badly. There is also a second economy, which is soldiering through and should emerge triumphant in 12 months time. That is the sector for the overseas analysts to act on, now.

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