Israel Archives - Page 10 of 51 - Michael Horesh Business Coach and Mentor

29 March 2018

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

On the surface, it is that time of year when the Israelis and Palestinians are about to strike up another round in their war of rhetoric. Tomorrow, residents of Gaza are threatening to march on the border fence with Israel. The week has already witnessed a series of illicit border crossings.

And meanwhile, the USA is ready to impose financial sanctions on the Palestinian Authority if it continues to use its budget to support convicted terrorists in Israeli prisons. Sweet news for Israelis, who have been campaigning on this issue for nearly two decades, to the understandable disgust of their opponents.

So, the summer Mediterranean heat is nearly upon us. The politicians are becoming more agitated. The peace process is looking more and more like a stagnant pond.

And yet………

Just over a month ago, the Israeli Minister of Finance, Moshe Kahlon, paid a visit to Ramallah. Press reports indicate that this was his third meeting since June 2017 with the Palestinian Prime Minister, and the next one is planned to take place in Jerusalem. Evidently both Abbas and Netanyahu are fully aware of all the details.

What has been on the agenda?

Setting up a joint industrial zone near Modi’in Illit. Not solely designed for Palestinians, it will also target finding employment for around 2,000 ultra orthodox Jews.
Reaching an understanding so that the tens of thousands of Palestinian labourers in Israel receive full pension rights, which are also paid out accordingly.
Further improvement of the sewage systems, as the polluted drain offs have made its way into Israel.
Improvements to the Palestinian mobile phone infrastructure.

Kahlon is not the only Israeli minister who has visited the Palestinian territories. Eli Cohen, the Minister for the Economy and a colleague in the same political party, has been looking at ways to improve the road system around a Palestinian new city.

I would not leap into the air too much over these moves. However, they do show what can be accomplished when there is good will on both sides. They also reveal the level of nonsense surrounding the public rhetoric of the negotiations from both sides.

This weekend, Jews around the world celebrate the festival of Passover, when Moses led the Jewish people out of Egypt. May senior politicians of both sides find the strength and wisdom to create more such talks, rather than guide their followers towards violence along border fences.

28 March 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

It is two decades since I learnt a very valuable lesson in human resources. The incident was painful and embarrassing, but remains hugely insightful even today.

I was attending an extended training session. I was sitting in a circle, amongst my colleagues, one of the more senior members of the team. My assistant complained that I had not listened to him on a certain issue. I answered back. He then proved to me that this had occurred several times previously. And on each occasion, there had been a negative fallout.

Punch line – said in front of everyone. “Michael you cannot keep ignoring all the time what somebody is warning you. And then once the mistake has happened, you blame somebody else.”

In other words, at what point in time was I prepared to take responsibility for my actions, and how I had trained my own unit?

I went home a lot of humble pie.

I have since move on to become a business coach and mentor, primarily in the Jerusalem area. I have frequently confronted by CEOs, determined to shift the focus of their troubles on to the shoulders of their employees. Showing these leaders how they can change and thus an impact a situation is one of my challenges and thrills of my work.

And all of these thoughts can flooding into my mind when yet again I was reading about Jeremy Corbyn, the leader of the Labour Part in Britain. Now, as somebody born and educated in London, UK politics still interests. And to observe the need for British Jewry in the year 2018 to demonstrate against the demonic rise of anti-semitism in the Labour Party is deeply concerning.

We know that Marxists have a fundamental problem with Judaism. They, including Corbyn, claim not hate Jews. However, the religion is also a nation, which emerged long before the modern Israel-Palestinian conflict. That is an anathema; complete no-go territory.

Has Corbyn been warned previously that his words and actions (or lack of) and those of his supporters are offensive, degrading and unacceptable? The answer is a categorical yes, as this link will testify.

How many times? According to Labour MP John Mann:

Seventy-four is the official figure but there is a very significant number of others that have not been properly registered. It is many more than 74. There are around 130 other cases I know of which have been put in. They are going to be resubmitted, and I am asking for them to be properly assessed. What is depressing is that there are so many cases being dealt with officially – and that it had taken so long to deal with them. We are talking the last two or three years.

So Corbyn has been told of the issue. And he has done nothing about it, or next to nothing. That makes him the root of the problem. As per the theory laid our above, he is the one that must change.

Maybe he can start by recognising that Jews pray to Zion, and that is located in Jerusalem. That could be so confrontational, that it might conjure up a painful shout of “oi vay”!

(Just as I finished writing this blog, it emerged that Corbyn has been a member of 5 virulently anti-Semitic Facebook groups).

25 March 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Israel is on the verge of celebrating 70 years of Independence – a massive opportunity for a fun day with the family, as well as mega photo shoots for the politicians of today.

And there are two causes for all of this. First, for all the geopolitical threats over the decades, Israel is here to stay. Even Saudi Arabia is now letting planes fly over its airspace to Israel. Second, Israel has transformed itself from a backward agricultural economy to a high-tech giant. Israel is an OECD member with a stock market that has a top tier ranking.

The question is how has Israel moved from rank bottom to top 25?

Go back to 1948 and the early 1950s. The country was broke. Minimal imports. High unemployment. No industry. War reparations were a miracle gift. Still, the victories of the Six Day War in 1967 were followed by another depression. And nearly twenty years further on, Prime Minister Peres had to freeze prices and wages, while the stock market was temporarily closed.

So the question remains, why is Israel of 2018 a headline-setting example of innovation, entrepreneurship and hightech wonders? What has made the difference?

Sever Plocker is one of the country’s leading economics reporters. Writing in Hebrew last Friday in Yediot Ahronot, Plocker highlighted Israel’s immigration policy. In effect, what he was saying that every economic boom was preceded by a significant amount of new arrivals to the country.

For example, the 1950s were noted for the hundreds of thousands who fled Arab countries such as Egypt and Iraq. Between 1956 and 1958, 37,000 rushed out of Poland, due to the country’s new anti-semitism. Add in the many who left Russia in the 1990s, and Plocker suggests that over three million people have arrived in 70 years.

The main waves occurred just before an economic boom. The current GDP per person is about US$40,000, twenty times that of 1948. And today’s total population is a little over 8 million, roughly equivalent to the size of Wales. It is the talents of these people, who support the phenomenal changes realized at companies like Checkpoint, Mobileye, Elbit and others.

Where are today’s core economic problems to be found? The OECD finds that Israel’s roads are amongst the most congested in the world – ironic for a country that was subject to an oil embargo. There is a chronic shortage of beds in hospitals. And large members of the potential workforce, particularly in the ultraorthodox and Arab communities remain just that – potential participants only.

To that list, I would add the centralisation of certain sectors; the lack of reforms at Israel’s ports and the restrictions on food imports are just two obvious examples. And these are opportunities to be exploited by vested interests. From here, it is only a short jump to cries of corruption amongst senior politicians.

That said, Israel has done phenomenally brilliantly in 70 years. I raise my glass to the next few decades of economic freedom and triumphs in the Holy Land.

13 March 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

When it comes to SMEs – small medium sized enterprises – around the globe, two themes repeat themselves. First, they comprise over 90% of all commercial activity. Second, all governments claim to support them, while the civil servant often takes a different attitude.

And in Israel?

If you are looking for a miracle from the Holy Land, I am sorry to disappoint you. My experience as a business mentor and coach in the Jerusalem area throws up story and story, a veritable reservoir of material, as to how officials insist on being small minded when it comes to “helping” SMEs.

Just look at these instances faced by clients and associates just recently.

An owner of a launderette has just opened a second outlet in North Jerusalem. He excitedly posted a notice on his glass door, announcing the premise was open for business. A few days later, two officials from City Hall turned up unexpectedly and declared that the A4 piece of paper was a “sign”. That requires a full license, which he did not have. He was duly fined about 1,100 nis – say US$300. By the way, if the notice had been placed on the outside of the door, the sum would have been around 1,500 nis!
My client was busy with some administrative tasks in his Jerusalem premise, when in walked two officials from the income tax authority. They found that he did not keep a diary of all appointments, apparently a foul crime. He had also not managed to receipt two cheques from the previous day. Their value was around 4,000 nis. His total fine was close to 5,000 nis for his heinous crimes against humanity, about half his take home pay per month.
My office is in an area, known for a chronic shortage of parking. Last week, I could not find one spare spot for my vehicle. After all, due to new construction, lorries were parked in some of the spots. And road works ensured that another 30 places had been dug up. With pressing appointments waiting for me, I parked illegally. And you have guessed the next line – one 500 nis parking fine was waiting for me several hours later.
I am furious on behalf of one of my clients. Due to a technical issue, the income tax authorities demanded additional paperwork. This held up vital procedures at the bank. The pieces of paper were rapidly delivered. However, a glitch meant that the bank could only see on the computers that they were not allowed to process their work. Despite protests over weeks, the tax officials could not fix the problem. My client was asked to pay a large fine – thousands of shekels – and suddenly everything was fixed!

I could go on. It is assumed that in some of the instances, the officials are paid some for of bonus or success fee for their efforts. And you are reading this and shouting out “appeal, appeal”, I have to ask: “Have you got the time and effort”? In one case, the person involved was explained the process and cautioned that it could end up with a stiffer fine.

The good news is that……………the government believes in supporting SMEs………assumedly via the extra taxes that collect through situations as described here.

6 March 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

About three weeks ago, I wrote about the strong and deepening trade connections between the UK and Israel. Since then, tearing up 70 years of protocol, it has been announced that Prince William will make a formal visit to Israel in June. To be blunt, royal travels are almost invariable followed by an increase in trade between countries.

However, what drew me to these comments was my visit yesterday to a small start up in Tel Aviv, as part of the delegation of the Israel Britain Chamber of Commerce. We were hosted by Eitan Attir, CEO, and Gal Levin, business development, at the Milk and Honey Distillery.

Some background is required. The distillery was created on the whim of some entrepreneurial spirit – pun intended – back in 2012. The idea was to make Scottish whisky in the Holy Land. Yes, the origin of the word whisky is the “water of life”, possibly associated with Medieval monks creating a passionate drink.

As Eitan carefully explained his passion, it was clear how his start up is linked to Britain, and far beyond the basic concept. For example:

They contracted Dr. Jim Swann, who before his untimely death last year, was a pioneer in setting up distilleries in hot climates. His knowledge has proved to be invaluable.
Second hand equipment was purchased from Scotland.
Malted barley is imported from Yorkshire.
Of the four main export markets to be targeted later this year, UK is on the list.

For the IBCC, the event was labelled as a power networking breakfast. Certainly, sampling tastings so early in the day did take some extra effort from the participants.

As for the distillery, last year, Milk and Honey became the first Israeli distillery to release a 3 year old whisky. The 300 or so bottles, or what is left of them, are apparently already available on the sites of ‘hard to find’ whiskies. It is currently expanding its floor space by a further 20%. This will allow it to produce to around one million bottles a year, placing it alongside some of the smaller Scottish producers.

1 March 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

Israeli start-ups raised US$500 million in February 2018. There are apparently ten overseas stock exchanges looking to possess that Tel Aviv establishment. Intel is considering a US$5 billion expansion plan in the Holy Land.

Yup, overseas investors are still flocking to Tel Aviv and to Jerusalem in order to discover what goodies are available, even when (or because of?) there are uncertainties caused by Trump and Brexit.

To make my point, earlier today, I watched a fascinating 30 minute documentary highlighting the strengths of Israeli innovation. Introduced by Jonny Caplan of the Tech-talk show, the script introduced several companies that were dominating new industries overseas, despite having emerged from the backwaters of the Middle East.

China has been a country looking to muscle in on the ‘start up nation’. Although the IVC Research Center feels that the ‘day of the dragon’ has yet to happen, there has clearly already been an impact to date. Jack Ma of Alibaba is due in Israel in May. About 12% of all overseas capital raised has come from China for the years 2015 to 2017. Times are changing.

What follows is a full copy of the IVC report:

In recent years there has been a lot of buzz about Chinese investment in Israel’s high-tech sector. Not a day goes by without reports in the Israeli media about economic cooperation between Israel and China. All the associated hype gives the impression of China being a major factor in Israel’s high-tech sector. IVC’s data suggests otherwise: the world’s most populous country and second largest economy in fact remains a relatively minor player, with its focus almost exclusively on strategic investments. One Israeli insider with years of experience with the Chinese dubbed their strategy as “drain the brain.” Put simply, Chinese companies invest in innovative Israeli technology that they can utilize for their own specific needs.

The most recent story to receive banner headlines is a planned visit of Alibaba founder and chairman Jack Ma to Israel in May. His company recently finalized a relatively small deal to acquire Visualead, a QR codes startup and announced plans to set up an office in Tel Aviv as part of a $15 billion global R&D initiative. The Chinese retail giant has also invested in several other Israeli startups in the past two years that focus on strategic technologies for Alibaba. Two years ago, Alibaba also invested in Israeli VC JVP’s $160 million seventh fund. No exact amount was given at the time, but it was thought to be around $20 million.

Alibaba is typical of Chinese investors who are primarily interested in Israeli innovation, while the local high-tech sector views China as a huge potential and largely untapped market. An apparent win-win situation for both sides, the data paints a very different picture. In recent years China has become a more significant player in Israel’s technology sector, though IVC data shows that its role is still relatively minor. Chinese direct investments and M&A and buyout activity accounts for at most 5% of the total, and while the percentages and dollar amounts have risen from 2013 levels they have changed little over the past few years (see graph). While for Israeli high-tech companies, few have successfully cracked the Chinese market.

According to IVC’s data, the actual number of Chinese entities that invested in Israeli high-tech companies has gone from 18 in 2013 to 30 in 2015 and to 34 last year, and they invested on average annually in about 40 startups. The dollar amount invested in those startups ranged around $500 to $600 million in 2015–2017. This represented on average around 12% of the total capital raised by all Israeli startups in the corresponding years (see graph)

Startups generally raise from several investors during a round. They also do not usually detail dollar amounts invested by each participant in a round. In fact, the lion’s share of the investments was by Chinese venture capital funds or high-tech companies and were in startups described as having strategic importance. Even if the Chinese accounted for 50% of the funding in those startups (which is highly unlikely), that would still only translate into 6% of the total.

There have been relatively few financial investments by Chinese entities. Chinese participation as investors in Israeli venture capital funds peaked in 2014 and has dropped considerably since then both in actual numbers of investors and actual dollar amounts. The rule of thumb is investors in venture capital funds usually take a maximum position of around 10%. In this category as well, Chinese investment clearly played a relatively minor role.

In the fields of M&A and buyouts of Israeli tech companies, Chinese firms have taken a backseat position to American, European, and even Japanese firms. The only exception was in 2016 when China’s Giant Interactive paid $4.4 billion for Israeli gaming company Playtika, which accounted for 44% of all M&A activity that year. The year before and after, Chinese interest waned sharply, accounting for 8% and 1.1%, respectively. Even if the huge Mobileye-Intel deal is excluded from 2017’s record tally, the percentage would only rise to 3.5% and three M&A deals done by Chinese.

Few would dispute the fact that the Chinese market represents a huge potential for Israel’s high-tech sector and specifically startup companies. However, this market is extremely complex for Israeli high-tech companies, far more familiar with the US and European markets, where they face far fewer cultural and language barriers and more familiar business practices.

The $64,000 question is whether this will change. In November, ten Israeli startups were selected to take part in the first-of-its-kind accelerator program in Beijing. They were chosen from 100 startups that applied, based on their chances of cracking the Chinese market. The accelerator was established by Israel’s Economy Ministry and ShengJing Group, one of China’s largest management consulting and private equity firms, and DayDayUp, a group that focuses on connecting international and Chinese investors. This represents a small but significant change that could start a trend, which could have long-term impact on the China Israel high-tech equation.

19 February 2018

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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Nearly a week has passed since Israel’s police recommended pressing charges against Benyamin (Bibi) Netanyahu, the country’s longest standing Prime Minister. This is not the first time that he has faced charges. And as ever, he denies them all, firmly.

Many political analysts in Israel have long felt that Bibi looks at most issues in terms of how he will be perceived by his supporters at the polls. To understand the full story, we have to remember Bibi’s core strength as a politician.

A former soldier in a crack unit, Bibi is a master communicator. He was a brilliant success at the UN in the early 1990s. On at least two occasions, he has snatched victory at the polls, when he was facing defeat. He is fully bilingual in English and in Hebrew. When briefly out of politics, he was a sought-after speaker in the private sector.

And this is the irony. Most of the police investigations into Bibi involve the media in some form or another. For example, in Case 1000, Bibi is suspected of helping Arnon Milchan to secure his commercial role in the world of Israeli TV. In Case 2000, Bibi is accused of seeking a deal with the owner of Yediot Ahronot, the country’s leading newspaper, and at the expense of its major rival.

Yesterday, Sunday, the police finally announced it was formally pushing ahead with Case 4000. Here, the Prime Minister has yet to be summonsed for an interview. However, following an investigation by the Stock Exchange, seven close associates of Bibi and / or his friend, Shaul Elovitch are in custody.

So what? Through holding companies, Elovitch controls Bezeq, which has a near monopoly of regular phone lines throughout the country. While Bibi served as Minister of Communications, there were clear attempts by the ministry to ensure that Bezeq received financial and commercial benefits to the tune of hundreds of millions of shekels, although not all succeeded. Further, there are claims that Walla, an online news agency owned by Elovitch, deliberately provided favourable coverage of the Prime Minister and his family.

As Bibi sits in his office in Jerusalem, one can understand why he feels that there is a media witch hunt against him – and his wife, who has also faced charges as to how she runs their official home. Bibi has never been prosecuted. And his standing in the polls is little damaged, for now.

For all that, there is another point here, which I will describe in three parts. First, I did not forget Case 3000, where the police believe that many close confidants of Bibi secured a large military submarine contract unwanted by the navy. Second, there are numerous other politicians and civil servants under investigation, such as Ari Harrow ,Danny Dannon and Dudu Bitan, who are or who have been part of the Prime Minister’s closest circles.

And finally, let me revert back to Case 1000, where the suspicion is that the Prime Minister and his wife received gifts to the value of one million shekels. As asked by the Minister of Education, Naftali Bennett, why would a politician need such a benefit?

At the very least, it is ethically unacceptable.

15 February 2018

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Categories: Blog, Business

According to the Bank of Israel, the outlook for the economy in the Holy Land remains very positive.

GDP is expected to grow by 3.4 percent in 2018 and by 3.5 percent in 2019. Inflation is expected to converge to within the target range during 2018 and reach 1.1 percent at the end of the year. The Bank of Israel interest rate is expected to remain at its current level until the third quarter of 2018, and rise in the fourth quarter.

While much is told about the impact of the start up economy for the past three decades, I would like to focus on one area where for years Israel has not featured so well, but times are a changing. And that is the area of international trade.

Historically, Israel has run a balance of payments deficit. In recent times, the figures have become more even. In 2017, for the first time, Israel’s exports topped the US$100 billion, a 5% growth in dollar terms over twelve months.

One continuous part of this change around has been the trading relationship with the UK. Combining both exports and imports, this was valued at almost US$8 billion in 2016.

Recent news explains why there is such a strong commercial bond, which is not just based around the dramas of the Brexit debate.

First, as was mentioned this week in the House of Commons:

The British Government helped to establish the UK-Israel Tech Hub, a non-profit organisation based in Tel Aviv and London, to help British companies looking for cutting-edge innovation or Israeli start-ups seeking to grow through the UK. Over the last 5 years the Tech Hub has generated deals worth £62 million.

Second, as reported by Reuters, the British embassy in Tel Aviv “launched a programme designed to help incorporate Israeli digital health technology into the UK and its National Health Service”. Three times a year, IBM’s Alpha Zone accelerator program and DigitalHealth, London will seek to seek out and mentor those Israeli companies, which can best service the HNS.

Barry Grossman, the British embassy’s Director of International Trade in Tel Aviv recently observed that “in the year following the referendum, Israeli financial institutions invested over £150 million in the UK”. Evidently, this bilateral partnership has much more to offer both countries.

31 January 2018

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Exports jumped 6% in 2017. Inflation hovers at around 1%. Unemployment remains low at under 5%. GDP growth pushes 3% or more. These are great overall indicators for the Israeli economy.

It is not too difficult to find stories of good news about what is happening in Israel vis-a-vis commerce and industry. For example, last week Prime Minister Netanyahu met with Chairman of the Board of Mitsubishi Corporation, Ken Kobayashi at Davos. According to the press release afterwards:

Israel is a major player on Mitsubishi’s map and added that they are now starting to consider investments in cyber and other areas. He noted that he intends to send a delegation to Israel soon in order to evaluate possibilities for investment and cooperation.

Looking at investments, 2017 was an excellent year. The US$5.2 billion figure represents a 9% upturn on 2016. Interestingly, Israeli venture capital was at its highest level since 2013.

Specific sectors are recording some spectacular growth. “420 Israel-based cybersecurity companies raised $815 million in 2017, up 28% from 2016.” In the medical arena, 13 of the most significant breakthroughs of 2017 were based in Israel, as reported by Tom Gross.

However, what I find most encouraging is the continuing development of the Jerusalem economy and how it strives to become more pluralistic. Labs/02, a startup incubator operated by Jerusalem-based equity crowdfunding company OurCrowd Management Ltd., plans to invest in around 100 early stage startups.

More significantly for me is how more and more Arabs are gradually integrating into the greater economic basin of the capital city. According to Bloomberg, this is one of the prime reasons why there was relative calm in the Jerusalem following President Trump’s recent declaration on the Middle East. While everything may not be perfect as yet, salary gaps are narrowing.

It is this acceptance and transparency that is at the heart of the success of the concept of the start-up nation. Unfortunately, and in contrast, American diplomats were violently chased away yesterday from a meeting held at the Bethlehem Chamber of Commerce.

Once Israel’s neighbours learn mutual acceptance and embrace it in full, then peoples of all backgrounds will be the direct beneficiaries.

26 January 2018

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

The Palestinian economy has never been large. Advocates of the cause of the Palestinian Authority (PA) have ritually blamed Israeli occupation for the financial woes of the people of the streets of Gaza and Ramallah. The threatened sanctions of the USA this month now force us to confirm the facts hidden behind the rhetoric.

There are two issues that cannot be disputed. The Palestinian economy is tiny compared to that of Israel. Exports in July 2017 were valued at a paltry US$8.1m, primarily to Jordan. And the continuing the struggle with Israel, especially through the use of terror from Gaza, understandably enforces the government of Jerusalem to restrict movement from the Palestinian territories.

Statistically, the economy is contracting again. GDP growth in 2017 was down slightly at 3%, and a further slow down is expected in 2018. There are few positives. West Bank residents have finally been allowed to receive 3G internet services in recent weeks. And overseas aid still plays a primary role is supporting key services. To take just one instance, The British Parliament reported in October 2017 that it funds “around 25,000 young Palestinians to get an education, provides up to 3,700 immunisations for children, and around 185,000 medical consultations annually.”

Therefore, it can only be assumed that if the USA is to cut at least US$100 million of aid to the Palestinians, that will be a significant blow for its social services. What is disturbing is how you have the feeling that the Palestinian economy could be managed so much more effectively and efficiently.

The World Bank long ago confirmed that under Israeli supervision the Palestinian GDP grew annually in real terms by 5.5% even beyond the Oslo Accords. That achievement is long forgotten. And corruption has long been endemic in Palestinian politics has closely documented in previous years by the Funding for Peace Coalition.

The evidence indicates that the pattern of poor financial leadership in Palestinian society has continued up to today:

In 2017 alone, despite their meager funds, the PA under President Abbas paid out over US$350 to Palestinians convicted of crimes of violence against Israelis. The sums vary according to the amount of death caused.
Earlier this month, Israeli customs officials:discovered the largest ever consignment – including thousands of items – of military clothing including vests for holding military equipment. Also seized were thousands of pairs of special military boots and winter jackets in camouflage colors. The Gazan importer of the consignment, which originated in China, was due to receive it via the Kerem Shalom crossing.
Presumably, Hamas had paid for the goods.
At the same time, we have learned that due to a power struggle between the PA and Hamas, people in Gaza are being forced to pay taxes. This will include the imposition of 17% VAT.
And of course, there is the near-farcical news item earlier this week that “even as the Palestinian Authority faces major funding cuts from the US, it has purchased a new luxurious $50 million private jet to be used by President Mahmoud Abbas.”

I would love to read a serious analysis of how much the Palestinian economy could grow by over 10 years if (a) the struggle against Israel was political rather than a military conflict, and if (b) transparency and accountability could be truly applied.

14 January 2018

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Categories: Afternoon Tea in Jerusalem, Business, Israel

A series of stats published a week ago revealed just how successful the Israel economy has become.

Inflation has run at less than 0.5% p.a. for the past four years.
In a country of over 8 million people, there are 3.4 million vehicles on the road.
Incoming and outgoing tourism has never been so strong.

And so the list goes on. From a historical perspective, the numbers are even more stunning. Below is a set of data available from the Start Up Nation Facebook page:

No automatic alt text available.

Israel’s GDP per person is measured at US$40,000. By way of comparison, the numbers for Britain and Germany are US$41,000 and US$42,000 respectively. To emphasise how the economic map has changed, the proposed budget for 2019 reveals that the biggest taker of resources will be the Ministry of Education and the not the defense sector.

So where is the “proverbial” but” in all of this glory? First, the statistical survey also pointed out that 13 senior current or prior politicians and civil servants are now under investigation by the police for various forms of corruption. That includes the Prime Minister and some of his closest aides. In parallel, it has been the case for many years that within the OECD community Israel has some of the greatest levels of disparity between the haves and have nots. Concerning!

Coincidence it may be, but this week also saw the leak of a video showing the son of the Prime Minister at a strip club. The film was taken surreptitiously by his chauffeur, who is paid for by the state. He was chaperoned by a body guard, also provided at the expense of the taxpayer. The haves and the have nots.

The initial impressive stats do not lie. However, the reason why more people are not benefitting from this additional growth is all too apparent and very disturbing to see. Time for a change.

4 January 2018

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Last week, Lorde, a talented singer from New Zealand, cancelled a trip to Israel, fearing it would be seen as an act that supports the actions of the Israeli government against Palestinians. In an ironical twist, she actually ended up highlighting just how open Israeli society is.

Lorde’s justification of her decision, encouraged by BDS – the campaign which supports a boycott of Israel – is filled with hypocrisy. For example, she is still committed to travelling to Russia, whose leader has sent war planes to massacre thousands in Syria. In fact think about it. Can you imagine artists of any kind refusing to perform in …well let’s say France, because of that country’s policies in parts of Africa? And what about the UK or the USA or……? Hypocrisy!

At the same time that Lorde was speaking out, it emerged that the Israeli economy had grown by 3% in 2017. This achievement lies in parallel with the OECD average for the period. Estimates for 2018 expect a slightly improved result.

Nothing specifically remarkable in that, except when you begin to look at two of the key growth sectors. I shall start with exports, which shot up 5% in the year and topped the significant mark of US$100 billion. Two interesting facts emerged from an analysis of the figures. Israeli companies have made a massive return to the European scene, an area where BDS is historically strong. Second, of that US$100 billion, 3.5% includes items sent to the Palestinian territories.

In other words, the very people that Lorde feels she is helping are doing the opposite to her. They are sticking with the old adage that peace is usually achieved when two sides find a way to cooperate.

The other sector, which I wish to highlight is tourism. 2017 was another boom year for the industry with over 3.6 million overseas visitors to Israel. Over 50% as ever were not Jewish, and nearly 60% were first-time visitors. That is a lot of people not just rejecting the calls of BDS, but then also then sharing their stories back home afterwards. Just as pertinent is the fact that around 200,000 locals are employed directly by the industry, a relative large proportion of whom are not Jewish.

Less than three decades ago, Israel economy was relatively insular, protected by tariffs. Today, it is a start-up success, whose model is copied by France, the UK and others. Artists from all over the world continue to perform in the country, happily and openly, including the group Queen, Bryan Adams, Culture Club. Lorde’s misguided gesture only emphasised these positives, while ensuring that she remains bound up in an argument of hatred.

29 December 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Professor Leo Leiderman is the chief economist at Israel’s largest bank, Hapoalim, and has held senior positions at Deutsche Bank, The Bank of Israel and elsewhere. So when he says that the Israeli economy is starting off 2018 in its best position since 2006, that is a statement worth listening to.

Leiderman was speaking at a conference earlier this week in Israel. And the core stats speak for themselves. The OECD has already predicted that growth will remain steady and bullish for the next two years at over 3%. This is due to the impact of new gas reserves and low unemployment. The ‘start up” sector remains strong. Exits in 2017 were worth more than double the 2016 at US$7.4 billion, and these numbers do not include Intel’s purchase of Mobileye for US$15.3 billion nor Mitsubishi picking up NeuroDerm for US$1.1 billion. And key commercial sectors like tourism are bubbling away with record numbers.

So is there a catch? It is interesting that 2017 was a year when many big Israeli financial moguls were sent packing. The most glaring story is the demise of Teva, previously the country’s largest private company. The greed and misjudgment of the board brought the conglomerate humiliation. In turn, this has led to a new CEO implementing a draconian rescue plan. It is evident that a new generation of business leaders is emerging, such as Nati Saidoff: quieter, less demonstrative, whose ambitions do not require (for now) bank loans that cannot be repaid.

That is positive.

What about the housing market. While inflation is barely recognizable, the price of accommodation is still rising by around 5% per annum. The population continues to grow. Not enough land is released by the government, which continues to benefit from huge taxation on real estate transactions. New couples just cannot afford to buy. Liederman is vocally concerned.

However, the most crucial factor for me is where all the new wealth is going. Israel has one of the highest levels in the OECD of discrepancy in between the best and worst off. Now, weigh that fact against the corruption issues encroaching on the current government, the Prime Minister and senior civil servants. Only this week, it was claimed that the PM’s wife, Sara Netanyahu, insisted on receiving expensive gifts from tycoons such as Arnon Milchin.

There is something inherently imbalanced in the way the rulers are looking after (or not) those under them. There is a feeling of the few rich people getting richer, while the rest………

Is that far fetched? Just consider the vested interests. Here are just three examples. The workers at the ports and airports that enforce restrictive practices, as their wages remain high (for the most). Fruit and vegetables from abroad are heavily taxed, even at times of year when the items are not available in the Holy Land, thanks to the farmers’ lobby. And car importers, Unilever and many companies are allowed to maintain monopolies so that others cannot compete, ensuring their prices remain unchallenged.

Where is the government on all of these issues? I am not sure. I am subjected to a vast amount of information about potential corruption, but I see so little reported about new genuine reforms on behalf of the man in the street. That is what really worries me (and Liederman) about the economy in the Holy Land in 2018.

25 December 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Israel’s Prime Minister is currently under police investigation in at least four different cases. In parallel, Teva, until recently the largest company in the Holy Land, has seen its power melt away in a sea of corporate debt. Although there is no substantial connection, the two subjects are connected, unfortunately.

Let me start with the Parliamentary scope. In recent years, several Israeli politicians, including a former Prime Minister and a President, have landed up in prison. Now the fact that the serving PM, Benjamin Netanyahu, has been questioned may be seen as the new norm. His party’s rating in the polls has barely dropped, for now.

Bibi, as the PM is known, claims innocence on all counts. And there are still no recommendations to press charges, to date, even if he has been visited several times by the police. In no order of preference, it is claimed that:

he received favours from a local press baron.
he received favours from people of wealth, possibly in return for legislative support.
his lawyer and other confidants ensured a submarine was bought from Germany, when it may not have been needed and this then resulted in substantial commissions paid out.
a friend was able to run Bezeq, the national telephone company, while he remained as acting Minister of Communications.

In addition, his Likud party has pushed through, although not always succeeded, a welter of legislation that is heavily biased towards key sectors of the electorate. And that sectorial effort had been led until two weeks ago by another confidant, David Biton, who himself is now being investigated for possible financial misdemeanours in his home city of Rishon Lezion.

I have no idea if Bibi is or is not guilty. At the very least, he seems to be surrounded by advisors, who have evidently slipped over the line of what is acceptable in public governance. In my view, that is equally unacceptable . This demands his immediate acknowledgement of responsibility, which has yet to be admitted.

Teva is (was?) the largest generic pharmaceutical company in the world. It grew from modest beginnings. It was to hit on a wonder drug called Copaxone and made a fortune from it. Based solidly in the Tel Aviv and Jerusalem areas, most of its workers and profits are located overseas. Shares in Teva were considered “shares in the State”. You could not go wrong!

When no replacement was found for Copaxone, the directors decided to expand through acquisition. After several successes, they approved the takeover of Allergan for over US$40 billion, and thus draining most of its US$5 billion reserves.

That debt has proved too much to bear. The company is to lay off 25% of its workforce, which will include the closure of two flagship factories in Jerusalem.

And who are the directors? A small group of leading industrialists, who have grown up together in the business world, many of whom have no experience of the pharmaceutical industry. They are the ones who made rash decisions, impacting on the lives of thousands of relatively poorly paid workers, while they received payment for their services way above the average wage. And this privileged group will apparently face no payback for their recklessness.

My point is as follows. Both those elite politicians and those secretive leaders of finance felt that they were so elite and secretive that they had the right to do what they want, and that they could not be touched. Ironically, in an electronic age when we have heard of news before it is made, they all simply felt they could “get away with it”.

Greed, avarice, lack of care – call it what you want, it is generation of leaders that have simply misunderstood what leadership really means. Alternatively, they knew but power corrupted their decision making. They all need to go – both lots of them – and go now.

14 December 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It is an accepted fact that in most countries, small and medium sized enterprises (SMEs) make up over 95% of the economy. Israel is no exception to that rule. What makes Israel a case study to analyse is many a successful high-tech starts up has emerged from this grouping.

Just recently there have been several articles on the subject in the Hebrew press. I have pulled the numbers together and they reveal much.

According to CofaceBdi, of the 0.5million enterprises in the Holy Land, 51.5% are self employed or 1-person companies. A further 172,000 have up to four employees. Barely, 3,582 employ over 100 people.

To show how emphatic is the role of the small operation in the economy, 110,625 set ups have annual revenues of under 100,000 nis (almost $30,000). By way of comparison, the average wage is about 9,000 nis per month.

There are probably two key areas where small businesses suffer. The first is the level of bureaucracy and / or paperwork. Here the banks have made big improvements in recent years. And last week, the government announced that receiving a business license should become an issue of weeks rather than 12 or more months.

The second issue concerns local taxes. Most municipal authorities fix rates without any due consideration for SMEs. They are seen as fair game rather than a way to generate life into a suburb. For example, a business may have to pay for a sign outside their shop, fire license for the premise, and even a security tax. And if you are a food outlet, you have to add in the costs of supervision from “both” the Ministry of Health and the local rabbinate. There is even a by-law, still enforced, not allowing to prepare dough and bake on the same premises.

It is worth considering that Israel is a country of immigration. Many entrepreneurs were born overseas. Thus they have a problem with both the language and also a lack of understanding of the local corporate culture of mentality. This will be especially true in centres such as Jerusalem, where the sector of business mentors and coaches is rightly prevalent.

A positive note was struck by a report from the department for small businesses within the Ministry of Economics. In 2016, there was a 28% increase in the number of SMEs reporting an increase in profits. Just as significant, there was a 2.6% increase in the total number of businesses, an encouraging indication of the future growth expected in Israel’s economy.

7 December 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

President Trump’s statement over Jerusalem seems to have caused those European and Arab countries, who are seen as friendly towards Israel, to shiver in their diplomatic pants. And the near-jerk reaction has been to take out their frustrations on the politicians in the Holy Land.

All Trump said was that Jerusalem is the capital of Israel. No change there. He went out of his way to say that he is not fixing the final borders. Why so many countries have a problem with that goes towards the heart of the Arab-Israel conflict. Why they have reacted coldly to Israel, when this is at the first level an internal American issue, is also beyond me.

However, I am more interested in how this will impact on commercial links between trading partners? For example, I was supposed to moderate this morning a networking session, hosting a delegation from New York. The overseas participants were officially warned by the State Department not to leave their 5 star hotel.

Somehow, I think that all countries concerned are far too interlinked to go round boycotting each other. Just look at recent economic news emerging from Israel.

Amazon

It is barely two weeks ago that Amazon announced that it is to open a large warehouse in Israel. This is on top of other investments in Israel, such as the purchase of Annapurna Labs in 2015 for US$360 million. Yesterday, the Hebrew newspaper “Yediot” described details of Amazon’s collaboration with the Swedish company Assa Abloy, the key supplier of products for the Amazon Key project. In order to meet Amazon’s specifications, Assa Abloy established an r&d project with Multilock in Israel, which has resulted in a sophisticated smart lock for the home.

Israeli gas exports to Europe

Yesterday in Jerusalem, the Israeli government approved the laying of a subterranean gas line. It will stretch along 2,100 km and cost around US$7 billion, with financing led by the European Bank. The aim is to take the natural gas from Israeli’s newly discovered fields into Cyprus, Greece and eventually Italy. From there, it can reach the rest of mainland Europe.

European cars in Israel

Just looking around the streets of Israel, you can see how people are gradually shifting towards cars of greater complexity and value. To date this year, 165 Porsches have been sold, along with 21 Aston Martins and 9 Ferraris. Not much compared to other countries, but a massive revolution for the desert nation. Joining in from 2018, Bentleys – German owned and British made – will be seen on the streets of Jerusalem and Tel Aviv.

Clearly Trump’s words are not going trading between Israel and the rest of the world. If any recent political angst has resulted in a commercial shift, I did observe a comment this week that European banks have reduced their exposure to the British market by 20% since the Brexit vote. Can Israel also be blamed for that?

2 December 2017

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Categories: Afternoon Tea in Jerusalem, Israel, Jerusalem, Palestinians

During the month of December, the UN is expected to pass 15 resolutions condemning Israel. This is five less than in 2016, when the UNGA did find the time to tick off four other countries. Just how fair is this castigation of the modern Jewish state?

To answer the question in depth would take a book, of several volumes. So let us concentrate for three minutes on the medical sector.

In the past, I have written extensively about the Wolfson Hospital in south Tel Aviv, which hosts the Save A Child’s Heart scheme. Offering high level medical services for thousands of infants around the globe, roughly 50% have come from the Palestinian territories. For the record, the aid includes training for local doctors and hosting families of the children on site.

In the north of the country, Israel has treated a similar number of refugees from Syria since 2013. It is an operation that has no equivalent for all the world effort that has been distributed to tackle this humanitarian disaster. And it is even more remarkable considering how the two countries have no diplomatic relations.

And then there is little-known and near heroic story of Dalia Bassa. She is the health care coordination officer of the Civil Administration in the West Bank and Gaza (COGAT) , and is one of the few officials of either side to win the praises of just about everyone. Now 66 years old, Dalia has been working in this field for 47 years.

It is estimated that she is responsible for coordinating the medical attention received by around 5,000 Palestinians every year in Israeli hospitals. These are mainly life-threatening situations. Just as significant, COGAT makes strenuous efforts to ensure that Palestinian doctors are also trained. Hundreds of training sessions take place annually.

To make the point, the Israeli newspaper “Yediot Ahronot” was allowed to accompany Bassa last week on a visit to a 150-bed private hospital just outside Ramallah. 14 floors high, Istishari was opened in 2016 and has treated such notables as President Abbas. A further 850 beds are planned.

During the trip, Bassa sought to help a doctor extend his visa. She also looked for ways to extend cooperation. After all, the hospital lists several doctors who have been trained in Israeli hospitals, such as Hadassah in Jerusalem. Its PGD unit is so advanced that a few Israelis have found their way there to test the state of difficult pregnancies.

And meanwhile, this week, you can expect further condemnation of Israel at the UN. Makes sense, don’t it?

24 November 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel

The malicious philanderings of Foreign Office mandarins and the odious way in which parts of the British press handled the resignation of Priti Patel only partially managed to hide the fact the UK-Israel trade relations keep surging ahead.

The core of these growing commercial ties lies in the fact that “more than 300 Israeli companies operate in Britain, with 28 firms listed on the London Stock Exchange worth almost £11 billion.” In fact, Prime Minister Netanyahu was invited to open the trading of the London Stock Exchange earlier this month.

This week’s 35 strong delegation of British business people to Israel is just a further extension of how strongly the two countries are linked to each other. It is estimated that they met 41 entrepreneurs in just 72 hours. Not surprisingly, the UK-Israel Tech Hub is one of those vital elements driving innovation in the British Isles in the past few years.

Also this week, news was revealed of two significant contracts between Israeli companies and the UK. You could say that in spite of those diplomats in the Foreign Office, Britain is to purchase the Sky Sabre System from the Holy Land. The £78 million is designed to protect the strategic Falkland Islands against missile attacks.

And in a different area of commerce, Windward is a Tel Aviv based start up, whose original investors included former CIA director David Petraeus and Dan Senor, coauthor with Saul Singer of “Startup Nation. The company tracks all movements on the high seas of ships. It has signed an agreement with Lloyds of London to create an algorithm predicting levels of danger and suspicious maritime activity. In effect, most of Britian’s sea trade – in fact the vast majority of the world’s maritime trade – will be assessed commercially by a set of Israeli software engineers.

In decades gone past, there was a discussion as to whether Israel was more dependent on the UK in the bilateral relations. Today, the commercial friendship is evidently based on parity. The hateful and spiteful arguments of a few journalists, politicians and BDS supporters have failed to dent this progress.

18 November 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel

AT&T have been operating in Israel for over ten years. “The center functions like a startup incubator generating solutions for AT&T”. It is typical of many of the other leading multinational high-tech companies like Apple, which have established a bullish presence in the Holy Land.

There are over 350 overseas conglomerates in Israel. One estimate states that they are responsible for over 52% of all r&d in the country. And still they keep on coming. Just looking at the closing headlines of Thursday’s financial paper “Globes”: –

Daimler have opened a r&d centre in Tel Aviv.
Samsung have launched a cybersecurity division for car industry.
The purchase of Argus by Continental is discussed.

Evidently, the start up nation continues to live the dream. And that has to be one of the reasons why the Israeli economy grew by 4.1% in the third quarter of 2017.

Reaching back to AT&T, I read a short interview with Melissa Arnoldi, one of the company’s senior VPs, who has a determining role in technology development. She has just finished a site visit and was asked “why Israel”. To translate from the Hebrew text:

I have never seen such an r&d culture as in Israel. I am not just referring to the incredible skills and not just the determination. What is particularly impressive is the attitude of ‘nothing is impossible’. Here in Israel, you face up to a challenge, take a chance, create a solution and resolve the issue. Israel is our model for innovation.

17 November 2017

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Jonny Srouji is one of those characters that proves how high-tech is open to all. An Israeli, Christian, via Intel and IBM, he has made his way up the ladder to become Apple’s senior vice president of Hardware Technologies. In an interview last week, he gave a fascinating summary, detailing why and how Israel is so important to Apple’s future plans.

For example, Srouji is very proud of Apple’s A-11 Bionic chip. It’s CPU and graphics are the core of the wow part of the iPhone8. And that is not all. Israeli tech is powering the Apple Watch, and the storage component in every Apple device. As Srouji said:

The (Apple) team in Israel is a key part of the overall engineering team in the U.S. and other areas of the world – wherever we have our R&D. The things they do are key to any device we ship, to all devices.

The interview notes that Apple has been associated with Israel since 2011, currently employing around 900 techies. Much of this growth has been fostered via acquisitions such as Annobit Technologies. Srouji implied that more are being considered.

It is important to state that Apple is only following where companies like Intel had led the way. And in the current climate of female empowerment, the chip manufacturer has just announced that it intends to recruit hundreds more women software engineers for its plant in Kiryat Gat, southern Israel. According to information in the Hebrew press, barely 30% of positions in high-tech are filled by women. And when it comes to management, that ratio drops to 19%.

Who will be next? Dieter Zetsche, chairman of automaker Daimler A.G., opened the company’s r&d centre in Tel Aviv this week. This will be the company’s base to design user interfaces for its vehicles and biometric authentication for navigation. They are the fifth global automotive manufacturer to take such a step.

Pages

The silent peace process between Israel and the Palestinians

When an Israeli business coach confronted Jeremy Corbyn

Israel’s economy at 70

Israeli bureaucrats: Their fight against small businesses

UK – Israel trade links

So who is investing in Israel? The Chinese?

Making sense of the criminal charges against Netanyahu

Israel’s strong economy – the UK connection

Israel’s economy doing well, and here’s why

The Palestinian economy’s core problem

Israel’s economy: growing and changing for the better

What Lorde revealed about the Israeli economy

As Israel’s economy enters 2018, what next?

Is Netanyahu guilty, of the Teva syndrome?

Small businesses in Israel: How many and just who succeeds?

Business is burning brightly in Jerusalem

Israel’s medical system: The Palestinian interface

UK-Israel trade continues to march on – here’s how

AT&T choose Israel, again

The golden delicious Apple of Israeli hightech

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