Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

Israel held its second general election almost a month ago, and there is no sign of a government in formation.

Incumbent Prime Minister Netanyahu has a reputation of being a winner, usually. It seemed he had won back in April, only for one of his expected coalition partners (Yisrael Beiteinu) effectively to ditch him. Back to the electorate in September and he has actually ended up with a slightly worse set of cards to play with.

Today, he is a wounded race horse. The biggest evidence for this are those individuals, such as Gidon Sa’ar and Nir Barkat, in his own Likud party, who are beginning to announce that they are prepared to replace Netanyahu – of course, only if and when he resigns.

The same is true overseas. Assumedly one of his biggest fans, President Trump, has failed to do anything about recent Iranian aggression towards Saudi Arabia. Then last week, the Americans withdrew military protection from their Kurdish allies in northern Syria. Both items have sent shudders throughout the Israeli security services. (I remind you that one of Netanyahu’s key election posters included a photo of himself and his chum Trump, smiling together).

For good measure, Netanyahu’s supposedly close relations with President Putin are also being tested this weak. So far, Netanyahu’s words are having little impact.

Everyone knows that Netanyahu is facing legal accusations on at least three separate issues, involving bribery and the perverting of the course of justice. Many argue that the proverbial elephant in the room for both elections was Netanyahu’s desire to remain as Prime Minister for as long as possible. The law for removing a PM, if and when he has been formally charged, is unclear. It seems that technically he can stay where he is.

And what does this impasse mean for the average Israeli?

  1. The Bank of Israel has already issued a strong warning regarding the budget deficit, which has been out of control for nearly a year. Painful cuts are urged.
  2. The Bank of Israel has also reduced its estimates for economic growth in 2020 by a full half of one per cent to 3.0%.
  3. Reforms and incentives are held up. I have a client that wishes to apply for a government grant, which will help their company invest in new machinery. This will create employment and thus fulfill new export orders. The grant programme ran out a few months ago, and can only be extended when the Kenesset (Parliament) begins to work again. Meanwhile……
  4. Everyone accepts that the budget for the Ministry of Defense is large, relatively and absolutely. Including American support, it stands at 72.9 billion shekels (almost US$21 billion). Of this, 7.9 billion shekels (11%) is handed out in pensions. By way of comparison, the Ministry of Education is appropriated 6 billion shekels and the Ministry of Welfare 9.5 billion shekels annually. Disproportionate?
  5. As for the Ministry of Health, if you do not live in the key population centres, hospital services are simply poor. Pardon the pun, but I am sick and tired of seeing pictures of patients waiting in beds in hospital corridors. Unacceptable!

Aside from Netanyahu, there are at least three other politicians from the outgoing government awaiting for the Ministry of Justice to decide if they should be prosecuted. One of them includes the Minister of Health, Ya’akov Litzman, The Israeli political system is unwell, and most patients are demanding a new doctor be placed in charge.

Two Israeli Unicorns and both leading viral content distribution companies, Ltd. and Outbrain Inc., have agreed to combine forces.

Taboola was founded in 2007, has 1,400 employees and has raised over US$160 in a decade. Outbrain: founded 2006, 800 workers, and has raised US$150. Having spent years snipping at each other, they are now seeking to combine forces to take on Google. All change.

But most companies are not that global. Whatever the financial headlines, business is dominated by SMEs – individuals or small groups of people struggling daily to hit their targets in their own local neighbourhoods.

I recently was called in to three such operations in the Jerusalem area.

The first one was a relatively simple affair. The owner wanted to sell. I was asked if he was making the correct decision. Given the state of his business, his private situation and the offers received, the answer was a clear yes.

The good news was that here was a person that was prepared to put aside all his established thought processes, look beyond the jungle of clashing thoughts, and realise what needed to be done. Mega kudos points.

In the second scenario, I appreciated that the founder needed help, but that they could not be told out right what to do. So, I created a time line as to what would or would not happen, depending on their actions, carefully choosing a specific date months in advance.

I cannot say that the process was smooth. The initial meetings were accompanied by much resistance and the old-fashioned weapon of choice, ‘procrastination’. However, three months into the battle and we have a clear path forward and a completely new face to the marketing strategy. Quite literally, it is as if the CEO has discsovered a new language, judging by the way they are talking.

In case study number three, the story is more complex. Shortage of space forces me to narrow down the bare facts. This is a person, who is so caring that they will do anything for anyone. And this is the constant excuse why they cannot help themselves, because others need their attention.

The business model, such as it is, is truly weak, Nothing will change that pattern until they are able to comprehend that the damage they incur on themselves will eventually impact on those that they love.

We are taught that change is often seen as a threat. As a business coach and mentor, almost every week I try to show CEOs how in fact change can be such a fun, if not invigorating, challenge. Otherwise, we end up like approximately 80% of the Fortune 500 companies from  about 50 years ago – they are no longer around.




It is that time in the calendar, when Jews celebrate the New Year. In Israel, the population now totals just over 9 million people. At a macro level, the economy is plodding along very nicely at over 3 per cent annually, and that despite buffoons for politicians in Parliament and enemies in Iran and in Gaza that seek a violent destruction to the capital of Jerusalem.

Israel has developed a reputation for innovation and entrepreneurship in the past two or so decades. Chat technology, cherry tomatoes, electric and driverless cars, understanding the sonar language of whales and much more. Hightech, fintech, cleantech, AI , foodtech, and the list drags on.

But what if……..

Somewhere around 2012, imagine a few nearly-thirty year old types gathered around a bar, sipping a wee dram of whisky. And then suppose one says how it is a shame that Israel does not have its own distillery. And then another poses the question: ‘well, what if we set one up?”

And thus was born the concept of The Milk and Honey Distillery, now located in a most uninspiring area of south Tel Aviv. No luscious green mountains nor lochs, but the noise of major road works and urban redevelopment.

The founders and original investors brought in Dr Jim Swann, the go-to expert for setting up distilleries in humid climates. (Unfortunately, he passed away, before he could taste the success of his efforts.) They rescued a pot still, abandoned in central Europe. They launched a micro funding campaign. They opened a visitors centre, which has hosted over 18,000 guests and sold much gin in the gap years.

Whisky from the first cask was sold after three years of maturation. (For the record, 36 months in a cask in Israel is the equivalent to a much longer time than in Scotland).  This week, the Founders’ Edition was released at a stunning gala event in Tel Aviv. I did enjoy a small drop of a 62 percent sherry cask, just 20 months after being distilled.

The distillery is now experimenting by placing casks not just in mountainous areas, similarly to Scotland. They are utilising the costal plain and also the Dead Sea region, the lowest point in the world. Export orders to around a dozen countries have already been fulfilled.

It has been a pleasure to be one of the founding investors in the micro funding project. And I do look forward to opening my bottle this week. The distillery itself will be exhibiting around Europe over the next month.

And as for the Jewish New Year…..Well, it is a tradition to welcome it by dipping apple into honey. Need I say more!  Lechayim and Slainte!!






Israeli has survived two election campaigns in 2019 and still there is no end in sight and the formation of a stable government. Meanwhile, the economy seems to be surviving, almost in spite of everything.

True, unemployment has risen slightly. As ever, there has been a mild threat regarding the level of Israel’s international credit rating. And the governor of the Bank of Israel declared yesterday that:

The next government will face a significant challenge in the budget deficit and low productivity in the Israeli economy.

Exactly how much needs to be cut is up for debate. Estimates over the summer centred around 14 – 15 billion shekels – over US$3.5 billion.

So let’s just try to give that sum a little bit of perspective.

In Israel’s first government, just 16 ministers were appointed. By March 2019, that number had almost doubled to 31. Not everyone has a portfolio, but that is the price of having a secure coalition government.

Hmmm. We are told that the annual cost of a government minister’s bureau is about 5 million shekels. Assume just five of those ministers are redundant, than that is a saving of around 25 million shekels per annum. Add on the overheads and you are probably looking at an “investment” of taxpayers’ money at around 130 million shekels.

More perspective? Earlier this year, Zvi Eckstein, a former deputy governor of the Bank of Israel, and labor economics researcher, Sergei Sumkin, published a report. They concluded that: –

Israel’s bureaucratic red tape is costing the state NIS 14 billion ($3.9 b) a year; 1% of its gross domestic product (GDP).

That 14 billion seems to be a very familiar number, no?

I recall a meeting from many years ago, when I was working in the Ministry of Health as a junior economist. We were tasked to come up with ideas for how to cut the budget. The discussion was long and varied. Nobody was interested in my thoughts about reducing the number of civil servants…..let alone the ministerial aides.

Israel’s economy seems intent on defying logic. The country has been and remains in political flux for over  a year. And yet the economy grew by 3.6% in the first half of 2019, a better performance than 2018 and way ahead of many competitors in the OECD.

There is no doubt that much of that success is garnered in and around the high-tech sector, roughly 15% of employment in the country. And it should also be pointed out that the gap between the those who have and those who have not is one of the widest in the West. That said, almost every week brings a new set of shining headlines:

  • The relatively new area of Foodtech already boasts around 250 companies in the Holy Land and has raised nearly US$150m in this year alone.
  • American vehicle trading and services giant, Cox Automotive, is the latest to form a partnership with a Tel Aviv-based smart mobility innovation centre.
  • Facebook announced the acquisition of yet another Israeli start up, Servicefriend, that creates bots — chat clients for messaging apps based on artificial intelligence.

All very neat. What prompted me to focus on these tidbits of news was the latest survey from IVC. It is a 60 page survey, covering nearly 50 years. Here are some of the highlights.

  1. M&As in the past decade have totaled almost 1,900, close to double the previous period.
  2. Around 3,000 overseas corporations have activities in Israel, with over half coming from America. (I am not sure how BDS proponents deal with that issue.)
  3. Of the top ten foreign corporations, Microsoft has 161 sets of activity, Intel – 116 and Samsung – 63. (Again, this looks to be a massive BDS failure.)
  4. Since 1990, over 350 r&d centres have been opened by foreign companies; Phillips, SAP, Sony, Alibaba, et al.

By way of summary, during the first quarter of 2019, over US$14 billion was paid in 66 exits, the best performance in five years.

You have to wonder how the macro economy would have performed if there had been a functioning central government in Jerusalem for the past 12 months.



Since its establishment and due to the country’s PR system, Israeli governments have always been coalitions. The previous general election in Israel this April did almost produce a result, that could enable the PM to cobble together a team.

Unfortunately for the PM, Bibi Netanyahu was caught off-guard by a slick move from a former close ally, Avigdor Lieberman. Thus, rather than returning the mandate to the president – and thus risking the hurrying up of the criminal procedures mounting against him – Netanyahu called another general election.

There are about 6.4 million people allowed to vote. 31 parties are standing, of which about 15 have a realistic chance of sending representatives to the Kenesset. The participation rate was 67.8% last time. Another 1.8% were disallowed and a further 370,000 votes ended up with parties who never made it across the line.

Netanyahu wants to set up a right wing government, supported by ultra-orthodox religious partners, some of whom want to create a state based on religion. In the outgoing government, five ministers are facing various criminal procedures, including the Prime Minister himself. Most could see themselves back in power tomorrow night.

Clearly, this does not inspire confidence. Nor do the words of Yair Netanyahu, Bibi’s son and an active team member of his re-election campaign. He accused a different former PM of murdering Holocaust survivors, a statement that Bibi did not condemn.

I could write about how operations against Hamas and Hizbollah seem to be declared openly in the press, almost as an electoral statement. I have repeatedly voiced my concerns of the mismanagement (or the non-supervision) of the economy. The price of housing, a flagship policy from two years ago, has started to climb – 2.5% in the first half of 2019. All round, something seems amiss.

What symbolises for me the rule of Netanyahu is his appearance at an election rally in Ashdod about a week ago. Unusually, the event was publicised in advance and then broadcast live on Facebook. During his speech, missiles were fired from Gaza. Bibi was rushed off the stage to safety. The crowd had to fend for themselves.

Opposition politicians claimed that they would not have left the area. I am not so sure. What is of interest to me is why Bibi made sure that the world knew where he was speaking and when. It seems that he was so anxious for others to hear him talk about his successes and promises that he ignored the safety of the lives of his faithful audience!

Bibi ignored their safety. In the same way, he regularly insults the Arab community. And before the last election, he launched a vicious verbal attack on a female TV personality who had criticised him. The list goes on.

Who will win? Few are rash enough to predict. However, I do not feel that Israel deserves or needs another four years of Bibi Netanyahu’s very personal and individual form of Zionism, even if it does suit his own specific needs.

A few days ago, Benny Begin, son of Menachem Begin, a hero form the days when the state was set up and latter founder of the Likud, Bibi’s party, categorically called on the electorate not to vote for Bibi. I too cannot see a good positive reason to vote for that man.



I have had my complaints about how the Israeli economy has been managed over the past year. And there are still several unfavourable signs. However, it is now time to stand up and to salute a success, an achievement which other countries could be jealous about.

You see it is not just that Israeli exports have risen 3% in the first half of 2019. The two key points are that:

  1. “High-tech services exports made up some 60% of the sector’s revenue and 30% of Israel’s total goods and services’ exports.” The significance going forward is that these orders tend to be recurring. And that is good news.
  2. Israel’s exports to Europe,  an enormous but very shaky economy, rose 12%. And despite everything, exports to the USA rose 3%.

Cautionary note: Israel’s exports are dominated by 10 large companies such as Intel. The latter had held up production in 2018. And there was a particularly large one-off contract to the UK in the chemical sector.

In any event, given the global worries over downturns, this is a very impressive performance. And this is one of the key reasons why Fitch, a credit rating agency, still grades Israel at A+



UNRWA was set up in 1949 to help Palestinian refugees. Today, it has an annual budget of around one billion dollars. And, special programmes or campaigns can see similar additional amounts raised from donor countries, via their taxpayers.

UNRWA is a nebulous body. It uses the UN initials, but does not seem to come under UN auspices or jurisdiction. Last year, President Trump suspended American funding and Washington was the largest donor. In recent months, four other countries have followed suit. Even New Zealand, no friend of the Israeli government, is withholding support.

UNRWA’s history has been unusual. It is nearly 15 years ago, when one commentator observed that:

Despite over 50 years of experience and employing around 25,000 local Palestinians, UNRWA simply does not do its job effectively. A recent World Bank report on the Palestinian territories noted that “55% of those who receive emergency assistance are not needy… 32% of the needy do not receive emergency assistance.” If UNRWA’s money does not help solve Palestinian poverty, then who are the true beneficiaries of its lavish funds?……..

Most Palestinians in Jordan have resolved their economic issues without UNRWA. The 1997 report from the Norwegian Fafo Institute for Applied International Studies compared the situation of the 13% of Palestinian Arabs in the Hashemite Kingdom who were being catered to by UNRWA to the remaining 87%. It concluded that the Palestinian Arabs cared for by UNRWA continued to live in destitution, while the others maintained a similar economic level to their fellow non-Palestinian Jordanian citizens.

The Norwegian Refugee Council has invested much resources into the Palestinian issue. That said, it has just published a report, which concludes: –

Today, 25 August 2019, marks the two-year anniversary of the start of the largest ever stream of refugees out of Myanmar….. Since 25 August 2017, around 740,000 Rohingya have fled Myanmar to Bangladesh. More than 630,000 are living in Kutupalong, the world’s largest refugee camp.

I am prepared to bet that these wretched people do not receive even 50% per capita of what the Palestinians do. And what does reach them is carefully accounted for.

Meanwhile, the UN is allowing a Palestinian oligarchy to support itself, at the expense of unknown taxpayers and to the detriment of other needy causes. What conclusions would you draw?

Postscript: I just checked the UNRWA website. I could not find budget figures for post 2017.

Stop screwing yourself over” is an excellent Ted Talk by Mel Robbins. One of her key points is that when we are asked how we are doing, we often reply “fine”, and with the flattest of intonations. In effect, we are lying to ourselves.

Self employed, just starting out in a company, or C-Class executive, we all look for something meaningful to do at work and with our lives. Earlier this week, I read an item from somebody who today is a practicing Jew. His article traces his past from Woodstock and the heavy culture of the late 1960s to his life in Jerusalem today.

Finding out the true definition of ‘fine’ was a slow and sometimes very painful story. He learnt that what he had valued as a golden lifestyle was simply worthless. He needed to change all ways up.

Trying to answer the question “what is it that we actually do?” often appears so simple, yet it is rarely so straightforward to answer. When discussing this topic with CEOs, I tend to rephrase the conundrum:

“What is it that you are selling”?

The answer is not a service nor a product nor a piece of entertainment. As Ray Kroc of McDonalds was soon to realise, he was offering a family experience. He did this by pricing out chips and sugared drinks to his clientele.

Yesterday, I spent some time pitching to a new potential client. They are seeking help to raise funds for a new social project. They described their achievements to date in glowing terms.

Then came my turn to play business coach and mentor. They could not even begin to respond when I questioned what would make the financial contributor “fine” if they are to be associated with such an effort.

So, be honest. How are you doing today……..and why? More importantly, what do you need to change in order to answer with a smile in your voice.



Israel’s second general election for 2019 is scheduled for 17th September. What we know is that:

  • It is about which key politician can more successfully ‘dirty down’ their prime opponent in the eyes of the public.
  • Policies are rarely mentioned by anyone.
  • The PM, Benjamin (Bibi) Netanyahu is fighting for his personal freedom.
  • The result is too close to predict.

Historically, Israeli elections are determined by the question: Which party is seen as the most resolute to resolve the country’s military and diplomatic issues? This is a direct contra to many Western electorates, who are more connected to economic and social policies.

Ostensibly, over the economy, Bibi is seen as having an advantage. He is perceived as having been a great Minister of Finance at the beginning of the millennium, leading the country out of a small recession. Today, the Israeli currency, the shekel, is considered a safe global bet. And despite a concern over a growing budget deficit, Israel’s credit rating remains unchanged.

So where are the “buts”?

Let’s start with that same budget gap, which is growing, sharply. At nearly 4% and rising, you cannot ignore it. The only reason that harsh cuts have not been forced through in the public is because it is election time. They will have to be put off until October or later.

Meanwhile, economic growth is slowing down to around 1.5%. This has been reflected in the unemployment figures, which have risen unexpectedly to 4.1%. Awkward for anybody in power to admit.

And as for the structural anomalies, they exist everywhere. The government has neither the strength nor the interest to haul them in. To take a simple example, look at the olive oil industry.

With some irony, despite history and geographic location, Israel imports much of its olive oil. These imports, like many other food imports are heavily regulated via tariffs. Earlier this year, the tariffs were relaxed. Local manufacturers were forced to drop their prices.

I do not believe that any worker was laid off due to this price war. And now that the tariffs are about to be reinstated? Simple, the local manufacturers can raise their prices. And does the government care?

By the time prices of olive oil will start to climb again, the election will be over.

I am indebted to a great article in Psychology Today magazine by Preston Ni. And he recalls:

The term gaslighting originated from the 1944 film Gaslight, in which a husband systematically tormented his wife by convincing her that she’s insane, thereby robbing her objectivity and self-worth.

Ni goes on to cite eight types of manipulative scenarios. For example, politicians who rule through isolate and divide. Or there are bosses who perpetuate the ‘fake savior of a situation’, thus making others subservient. And all of this is wrapped in a combination of false promises and psychological control.

In my work as a business coach and business mentor, I have come across many cases, where clients are uncertain how to break free from situations. Their employer seems so nice. The client seems so important. And ‘what will happen without them if they leave’ is a cry I often hear.

Such episodes can be seen as a ‘golden cage’ situation. You feel that life is so good where you are and / or things cannot possibly be better elsewhere and / or that you cannot abandon your superior that you have to stay. Unfortunately, that picture in your head is frequently just an illusion.

That picture bears as much reality as the ones drawn by those same politicians and bosses who scare you into staying with them. After all, they cry, there is nobody else out there but me. Who could replace me and how could you think about letting me down?

So what is the tell-tale sign that you are up against one of these dangerous manipulators? Well, they are so busy pointing the finger at you and you are so concerned about protecting your image in their eyes, you forget what is most important. The word “I”. In other words, yourself.

The gaslighters do not allow you that freedom.

Now look around you. When do you next have an opportunity to vote? When are next due to talk with your department senior? When are you about to face up to a supplier you cannot tolerate? Consider if they might have a role in that 1941 film, and then find an appropriate response ……. based around your own requirements.




One of the core arguments of the British “Leave Europe Campaign” is that the EU is one big amorphous bureaucracy. For example, accountability and transparency are words that rarely find their way into the diplomatic nous. Nowhere has this been more true than the issue of paying out money to the Palestinians.

Back in the early 1980s, the EU took a deliberate decision to match the USA aid for Israel (and Egypt). The Palestinians needed support. Within two decades, the World Bank had declared that the Palestinians were receiving more aid per capita than any other target population, including Tsunami victims.

Not only was much of this cash was coming from generous EU taxpayers. Analyses of the Palestinian Authority’s budget had revealed that the PA was failing to raise taxes by any significant amount. And what did enter the coffers of the Treasury in Ramalalh was often disbursed to the families of those imprisoned in Israel on terror charges, to the security forces fighting Israel, or simply to the families of the leading leaders of the PA and Hamas.

Nothing new there?

In 2016, the British public informed Brussels what it thought of its policies. Somewhere in that message was the whole theme of vast sums disappearing into black holes to fund the favourite political campaigns of the few. And this included the politically correct issue of helping the Palestinians. For example:

The EU is the largest contributor to UNRWA. Together with the EU Member States, the EU’s contribution for 2016, 2017 and 2018 amounted to €1.2 billion……EU support to the Palestinians covers a wide range of areas, including humanitarian assistance, capacity building, democratic governance and socio-economic development. In 2018, it amounted to a total of nearly €350 million. The funding is framed by the “European Joint Strategy in Support of Palestine 2017-2020” agreed by the EU Institutions, 22 EU Member States, as well as Norway and Switzerland.

Add in the money for support to various NGOs. Then season that off with contributions by individual governments for pet projects. That €1.2 billion has easily doubled!

For years, pro-Israel pressure groups screamed. One of the initial campaigners was Arnold Roth, whose daughter was murdered by a Palestinian called Tamimi, whose family find support in the actions of the EU. The Palestinians do deserve a better life, but make sure that you now where the money is going. As for UNRWA, who is supervising this amorphous multi billion body, employing 30,000 people and which has yet to resettle even one Palestinian in over seven decades?

Last week, by some ironic coincidence, the extent of the gross misuse of funds for the Palestinians leaked out in two separate news items.

First, The United Kingdom’s Information Commissioner Elizabeth Denham has ordered the Department for International Development (DFID) to disclose audit reports of accounts into which British grant money was transferred and allegedly used to pay salaries to convicted Palestinian terrorists.

Why? It has emerged that:

a) In the period 2008 to 2015, Britain gave grant aid to the PA’s Central Treasury totaling £430.5 million (NIS 1.85 m.), via the World Bank. The aid was untied and not earmarked for a specific project.…..
b) PA pays more than 8% of its total budget through its Central Treasury to fund salaries for convicted terrorists, which serve to reward and encourage terrorism. As such, it is possible that some of the funds provided by the UK were used to pay these salaries.


Awkward piece of news no’ 2 is that it leaked out that UNRWA has not just failed to deliver on its remit. It has been cited for corruption, nepotism and sexual abuse. At least for now, Switzerland and the Netherlands have ceased funding.

Double that ooops!

Meanwhile, as ever, only Qatar is propping up the finances of the PA. Quelle Surprise! Yet again the government of President Abbas has run out of money! It is even turning to cryptocurrencies for help.

So after nearly four decades of positive intervention, what have the European taxpayers got for their buck – or should I say Euro – regarding the Palestinians? And we are talking about billions of Euros that could have gone to Greece or Spain or internal structural projects or ….you name it.

It is difficult to argue for anything positive. There again, questions abound.

  • If billions had been allocated to any other project without a net social gain, would there have been such a placid response by the EU bureaucrats or its politicians?
  • Why is it that the EU has consistently rejected the classic Israeli argument for a new approach to helping Palestinian society? What are they not telling us?
  • And on this basis, can anyone really blame the UK for bolting the EU? The taxpayers deserve better, and so do the Palestinians.

Two months ago, the Times of Israel wrote a positive summary of the Israeli economy.

Unemployment in Israel is at around 4%, inflation is at the lower edge of the nation’s target of 1% to 3%, and the increase in gross domestic product (GDP) in 2018 was 3.3% , still higher than the average growth in 2018 for OECD nations — the world’s richest — forecast to be 2.37%……The economy has not faced a recession in the last 15 years, and GDP in dollar terms has increased by over 55% since 2010. …….GDP per capita in Israel was $40,270 in 2017, up from just $1,229 in the 1960s, and is now “firmly in line with high income nations,”……..

To ram the point home, GDP for Q119 has just been revised upwards to 5%. Egypt and Israel are contemplating joint liquid oil exports from the Sinai desert. The shekel is considered a solid performer on global currency markets. What could be wrong?

Well for a start, the government’s budget is spiraling out of control, 3.8% of GDP and seemingly rising. The cost of living is relatively high and getting higher, thus ensuring the continued extremes in wealth variations between rich and poor. Strikes in the public sector – teachers, diplomats – are looming up ahead. And the voice of the Minister of Finance is not to be heard.

And then we come to that minor nuisance of the general election on 17th September. The point is that the Prime Minister, Netanyahu, is completely engrossed in ensuring that he secures yet tenure – and thus, he assumes, multiplying his chances of avoiding trials for embezzlement etc,

Almost daily,  we hear Netanyahu’s complaints about opposition politicians. We rarely hear about new policies on social and economic matters. For example, labour productivity remains weak and thus reflects on the economy’s ability to rejuvenate itself. For all the positive stats, poverty effects around 25% of the Israeli population. Traffic jams clog the 3 major cities. The high-tech industry cannot fill thousands of places. And the food sector is so regulated and protected that prices to the consumer continue to be bloated.

The pain is there for all to see and most citizens to feel. And meanwhile, the interim government is holidaying on the beach, while plotting how to stay in power come September 17th. I ask that you keep the noise down and not disturb them so that they can enjoy their well deserved break from work.


So here’s the deal.

Trump says to the Palestinians: “I will get you peace and a homeland. The route starts at a conference in Bahrain, where I will deliver to you a US$50 billion economic package.”

President Abbas – in his mid 80s, last elected nearly 20 years ago and now for funding the Munich athletes massacre – responds with a ‘no way’. In fact, he even arrests a businessman from Hebron, who attended in a private capacity.

It is not clear what will be the outcome of the conference, where neither the Israeli nor the Palestinian governments were in attendance. Israel scored a few cheap PR points by claiming it was prepared to go along with the concept. However, with more elections coming up in Israel and also the midterms in the USA, further progress will probably be limited for the next few months.

And yet, Israel seemingly does get quite a bit out of ‘these silent changes’.

First, we know that the Bahrainis welcomed Israel pretty openly. Interviews were awarded to journalists from the Holy Land. An isolated moment? No, because second, Israel’s Foreign Minister, Yisrael Katz, popped up at a conference on climate in the United Arab Emirates.

Do not kid yourselves! Trade between Israel and the Arab block is taking another move forward. There are no official numbers, but they must be in the billions, bilaterally. So much for BDS.

And as for the conference itself? I do not believe that individual Israelis sat around politely and interested parties from Saudi Arabia, Egypt, UAE, et al also sat around politely without talking to each other and without discussing some numbers. The Palestinian issue may hold back full disclosure between the parties but their are rumours of tech deals and more.

A shame for all nations and their economies that President Abbas prefers antagonism and hatred to some definitive initial steps towards mutual recognition.



Not far from the central bus station in Jerusalem is a run down building that was once a well known powerhouse in the national economy. The current owners are demanding a lot of money for anyone to renovate it and then rent it. Equally significantly, the site owns about 20 parking places.

Let me clarify: Each space is worth about 700 nis a month, close to US$200. Jerusalem is a city that suffers from daily traffic jams. A light railway is being constructed right through several of the main congestion points. And several major public buildings are also going up, often in the same areas.

To add to the picture, the parking problem in the high-tech centres is a bad joke. You can now begin to appreciate that the aforementioned property is even more valuable than ever.

The issue was highlighted in a recent article. It is estimated that “highteckies” are highly mobile people – around 20% swop positions each year. One common reason is that side benefits, which include easy drives to work and parking facilities, are better elsewhere.

Jerusalem is no longer a city, where the key jobs are in the civil service or in tourism. The city today hosts 485 high-tech enterprises, including 300 start ups. Other stats: –

  • 144 are in the sciences or biotech.
  • 31 starts ups were added to the list since the beginning of 2018.
  • There are 19 r&d centres
  • The city hosts 22 venture capital groups.

The growth of Jerusalem’s economy has been amazing. And there is seemingly no end to the progress. For example, earlier this week Jerusalem launched an accelerator programme for ultra-Orthodox (Haredi) entrepreneurs looking to establish startup companies. Although comprising around 11% of the population, barely 1% of such people are engaged in the high-tech world.

At the same time, we saw New York Governor, Cuomo, touring high-tech successes in Israel’s capital city. Clearly the man and his team feel that this is something that his ‘small’ city can learn from.

Jerusalem’s high-tech sector needs to be serviced. (BTW, the new train service from Tel Aviv was launched recently, but with technical faults and delays galore). There is no doubt that much of the construction is much needed, but you cannot but feel that the central planners have got their coordination and timing wrong.



When it comes to the economy and you are an incumbent Prime Minister chasing another term, there are two rules: talk up the good news and hide the bad news.

Israel’s PM, Binyamin Netanyahu, last week was rightly able to boast about Israel’s success in cyber technology and also the country’s low unemployment rate of 3.6%.

The problem is that Israel is about to have a second general election within 6 months. That means that Netanyahu’s government spent the run up to tone recent election ignoring economic woes. Those awful numbers and their implications can no longer be hidden from the eyes of the voters.

Recap: By the end of 2018, it was becoming increasingly evident that the government budget deficit was getting out of control – shooting through the accepted target of 3% of GDP. The previous Governor of the Bank of Israel had warned against tax cuts and found herself out of a job. The Ministry of Finance repeatedly assured everyone that everything was a temporary blip. Aha!

I and other commentators have been writing on the subject for a long time. And what action of leadership have we seen this month to tackle the problem?

  • The new Governor of the Bank of Israel, initially seen as a puppet of the Prime Minister, has warned of a debt ratio of 4.5%. That will damage the country’s ability to raise money for infrastructure projects. The larger the debt, the harsher the measures required.
  • Apparently, the DG of the Ministry of Finance, Shai Babad has stated that Shaul Meridor is unfit to head the budget department. In other words, the two top civil servants on the matter do not trust each other. Oops!
  • Some initial budget cuts were made a few days ago, but it looks like a hatch job to appease the markets. Everyone accepts that until there is an election on September 17th and a new government is formed  – probably many weeks later – nothing will happen.

In other words, Netanyahu and his ministers are so busy saving themselves and their party that the country’s financial safety will just have to wait.

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.

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?



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.”

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.


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