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Emblaze – a story of what could have been

31 May 2009
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Categories: Business, Israel

Emblaze used to be a symbol of Israel’s hightech success. It provides a plethora of technologies to telecom and mobile operators. It was one of the first Israeli companies to launch itself on London’s AIM financial market. Within 3 years, it had been upgraded to a full listing on the London Stock Exchange.

Just over 2 years ago, I met with a VP in biz dev in the Emblaze Group, offering him an attractive media package. Young, and proud of his arrogance, my host told me that the company had no need to push itself forward, as journalists constantly sought out Emblaze.

I was told that the company had raised around a US$1 billion in recent years. Despite continuous losses, the company was still cash rich. And out I walked.

Jump forward to this week’s news. Eli Reifman, the founder and president of Emblaze, owes around US$60 million and has been placed under temporary receivership.

Surprise? I checked the companies market data. The reports for 2008 show a 50+% rise in revenue, matched by a 700% drop in net income! Stunning. The share price has managed to regain its former level of a year ago, despite attacks from corporate raiders.

When I left Emblaze’s corporate offices after my meeting, you did not need to be genius to see that something was fundamentally wrong. I was accompanied by a savvy international business person, who was simply disgusted by what they had witnessed.

I sincerely hope that Emblaze will see better days. They have exciting new products, already on the market and generating interest. Elements of the software section of the group are performing very well. 

And yet, you really get the feeling that if the top team had led with a little less pride and with more respect for old fashioned commercial practices, Mr Reifman and his colleagues would be in a far more healthier position today.

Funny how this story reminds you of many former giants who have diasppeaered recently from the global commercial map.

Managing HR and the Israeli ant

28 May 2009
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Categories: Business, Israel

Bibi Netanyahu, Israel’s Prime Minister, has a master’s degree from MIT Sloan School of Management.

Last week, a close friend of mine sent me a satirical presentation on how successful companies often wither through poor management of human resources. In brief: –

An ant was known to be happy and productive working on its own. So the lion boss wondered how much more could be achieved with a supervisor, providing direction. So the cockroach supervisor, oh and its secretary, drew up wonderful and pretty reports, helped by the new IT department.

The lion decided that the whole structure needed to be controlled, which led to the recruitment of further staff and resources. But nobody was happy as there was too much paperwork and too many meetings to attend, while production levels remained static.

So the lion turned to the owl for its suggestions. And the wise old bird declared that the organisation was overstaffed. So guess who was the first to go and why???? The ant…for lack of motivation, which had impacted on others.

And what is the connection to the Israeli mouse? For all Bibi’s experience as former leader of the opposition and a previous term as Prime Minister, he has appointed a government of 30 ministers and 9 deputies – for a population of 7.5 million and 120 members of the Kenesset.

This large team, in the space of less than 3 months, has managed to: –

  • Oversee a serious deteriation in realtions with the USA, Israel’s most important ally
  • Watch placidly as economic and academic boycott’s of Israel continue to sprout up
  • Initiate a strong budget, which was replaced at the whim of Bibi’s own economic advisor and with the connivance of the trades union organisation. 

The result? Well, no result. Confusion, fear, lack of leadership.

It is time, now, for Bibi to show the country what management skills he really posseses. In the months ahead, the choices and the decisions will only grow far more difficult. Either Bibi puts his team to better use, replacing rhetoric with actions, or he dumps them. Then we will see if Bibi really knows how to handle the ants of Israel.

How SMEs create wealth in a recession

26 May 2009
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Categories: Business, Israel, Jerusalem

Stats show that from Israel to Chine to America, SMEs – small and medium sized enterprises – make up over 95% of a country’s economic activity.

Last night, I moderated the monthly meeting of the Jerusalem Business Networking Forum. Over the past 20 months, this group has seen new businesses expand, secured employment for members, garnered contracts for attendees, and much more. The classic use of a small network group!

Last night’s meeting was no exception. The event was hosted by Paula Stern, the CEO of Writepoint, who spoke about the commercial potential of social networking. Twitter or join LinkedIn or prepare this blog, for most of us these are vital tools today in marketing strategy.

What specifically impressed me was the dynamism of the participants. The world is in the depths of a recession, and Jerusalem is part of that economic cycle. Each and everyone of those present is in the process of creating something new, all staring at the level of SME.

A visitor from Canada is launching a mobile advertising solution on the net. An American has created a small team, successfully involved in mining raw materials in Israel. A new immigrant had launched a photography business which is thriving despite private incomes being cutback. And there was a senior rep of a new foreign currency trader in Herzylia.

My message is simple. In order to create wealth in a recession and in order to enter commercial food chain, a necessary ingredient is the initial dynamism of the founders of an SME.

My question is: If most of us in social networking and outside know that, why has the Israeli government and the Finance Ministry missed this basic point? 

(Disclaimer: I am an associate of the Institute of Independent Business, whose Business Support Programme is designed to offer practical advice and support to senior execs of SMEs).

Israel in China

24 May 2009
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Categories: Israel

My previous posting, signalling Ken Loach’s hypocritical attitude on Israel, picked up some good pull.

It is classical socialist ideology, so desperate to protect the purity of its spirit, that it misses the true story. Thus, in looking to protect human rights of one side of the conflict, Loach resorts to racist spin of previous epochs.

So, it came  as a refreshing change to see what China, of all countries, is doing to promote Israeli culture, and big time at that.

Next year, China will host the Expo exhibition in Shanghai. Brand Israel has opted for a major display, coordinated by Haim Dotan Architects. One of over 200 exhibits, this promises to be one of the most adventurous.

See the following futuristic clip.

With 70 million people expected to look into Israel’s golden offering to the world, Loach must be feeling very unhappy. (Oh dear! How sad!)

Ken Loach locks out George Orwell

22 May 2009
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Categories: Israel, Palestinians

Ken Loach is a brilliant British film director. That is a precious skill, because cinematography is a key medium to ensure that holders of differing opinions communicate with each other. And Loach has an excellent history of bringing difficult subjects to the attention of big screen viewers.

This week, Loach spat in the eyes of his own profession. He actively and successfully campaigned to ensure that the Edinburgh International Film Festival did not receive a small grant to feature an Israeli film.

The film is a romance set in a sex-therapy clinic, and makes no reference to war or politics. It recently won an award for Best Film at Israel’s International Women’s Film Festival. The film is produced by a Tel Aviv University student

So what? Loach was looking to ban Israeli participation.

EIFF had commented that: “Not accepting support from one particular country ‘would set a dangerous precedent by politicising what is a wholly cultural and artistic mission. We are firm believers in free cultural exchange, and do not feel that ghettoising filmmakers or restricting their ability to communicate artistically on the basis that they come from a troubled territory is of any benefit.”

A few days later, the organisers capitulated, pathetically.

The actions of Loach are detestable. He claims that his argument against Israel is based on the country’s excessive force. If that were true, why does he not complain about Palestinians to the same degree? With true irony, as he was campaigning, rockets landed on people’s homes in Sderot, southern Israel.

Loach is a hypocrite. By isolating one group of people in the global society to relieve his hatred, he opens himself to the accusal of racism. He copies tactics employed by those who have hated Jews over the centuries, and wraps in acceptable 21st century spin.

The acclaimed director has learnt how to control the communication of others.

I bet that Ken Loach cultivated his political activism partially on the works on George Orwell, the author of 1984.

One key message of Orwell’s philosophy was the need to speak out when people try to clamp dows on freedom of expression. Loach has crossed that line of human decency.

Palestinian economic progress

18 May 2009
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Categories: Business, Israel, Palestinians

I have long opposed aid for the Palestinians, when it inexclicably seems to disappear down a black hole. Donors and intended recipients become the victims to the owners of greed and violence.

So it is refreshing to come across some positive news.

Tonight, the Israel Palestinian Chamber of Commerce will hold a gala dinner. 

Guests of honour at the event will be President Shimon Peres, Tony Blair, official Envoy of the Quartet on the Middle East and his wife Cherie Blair, the Vice Prime Minister and Minister for Regional Development Silvan Shalom and Deputy Foreign Minister Danny Ayalon.

If this role of honour is impressive, of more importance for me is the sign of Palestinian commercial interests beginnings to take a lead. This is the beginnings of the creation of an independent economy, which looks to build wealth through normality and not via political dominance.

For example, The Portland Foundation is working in the Ramallah region, building new affordable homes. In a secondary field, they are developing long-term savings schemes. 

(Place this against the number of senior Palestinian officials, who have been accused of controlling the cement industry or similar rackets.)

Maybe Obama and Netanyahu should start by fostering similar positive schemes, create a stable framework, and then go for a comprehensive peace arrangement.

Tax breaks for Palestinians

17 May 2009
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Categories: Business, Israel, Palestinians

It seems that the international community has finally found a way to channel money to the Palestinians in a manner that clearly gets around the “Hamas factor”.

The aim seems to be to use UN institutions. Clearly even the Saudis have been worried, as there hundreds of millions is still in Riyahd as opposed to Palestinian bank accounts.

Certainly this is a positive step. But it begs one horrible question. What has happened to the money until now?

The Funding for Peace Coalition long campaigned for greater transparency and accountability of Western tax payers money going into Gaza and into Ramallah. EU, UNWRA, USAID and others have all invested billions.

We know that Arafat died as one of the wealthiest men in the Middle East. Crawl the web and you will find that he son of President Abbas has been censured for his new-found wealth. Hamas has finessed the art of smuggling, profiting on the building of the tunnel, their use, and the goods eventually sold.

A recent convert to this need for monitoring has been the Taxpayers Alliance. In a report released last month, the group detailed how the EU in particular funds a Palestinian educational curriculum filled with direct and indirect hatred.

To quote the key findings: –

  • Over €729 million of EU taxpayers’ money spent on aid to the Palestinian territories each year.
  • Donations to the Palestinian territories create a responsibility to ensure that the Palestinian Authority does not misuse its budget. That responsibility exists whether EU taxpayers are directly supporting the promotion of hatred and violence, providing the Palestinian Authority with funds that it can use to do the same or providing services that Palestinian authorities would otherwise be expected to provide, freeing up their budget to use as they like.
  • 42% of the Palestinian population are under 15 years old.
  • The Palestinian media is dominated by official newspapers, radio stations and television channels, paid for by the Palestinian Authority’s budget which is in turn supported by British donations. That media frequently broadcasts statements that advocate the continuation of violent struggle instead of pursuing peace.
  • Breakdown of the €729 million: €420m from the EU; €67m – France; €67m -Sweden; €55m -Germany; €27m -Italy; €93m – the UK.

The point? Well, tax collection by the Palestinian Authority and by Hamas is negligent. So if they are going to use other people’s money, especially in tight times as today, they should have the decency to use it on morally justifiable measures, which will feed into a genuine peace process.

Israel’s economy – some world beaters

13 May 2009
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Categories: Business, Israel

The Pope and the Israeli Prime Minister seem to be running a competition. Who can make the most silly mistakes each day in Jerusalem, and then get caught out in the press.

Meanwhile, quietly, professionally, away from the cameras, Israeli commerce is getting on with the job of creating wealth for the country.

Item 1: Forbes has named 13 Israeli companies in its annual rankings of the top 2000 global public companies. Not bad bad for a country of 7.4 million people and stuck in a war zone, especially as America took over 25% of the placements.

Item 2: Seeking to emulate those 13 firms, 14 Israeli start ups have been named by the prestigious magazine, Red Herring, in a top 100 of most promising companies in Europe and Asia.  Again, a stunning achievement considering the meagre resources of the country and against such strong competition.

Item 3: Nilit has just concluded its fourth overseas acquisition in as many years, paying out US$20 million for an American company. I can personally vouch for a number of other Israeli manufacturers who are cash rich and are scouring potential M&As very seriously.

A lot of money and very little talk. A message for the busy politicos?

Bibi babbles with Israel’s economy

12 May 2009
1 Comment
Categories: Business, Israel, Palestinians

Yesterday, Pope Benedictus XVI commenced his vist of Israel, arousing a certain degree of disappointment.

Off stage, Israel’s Prime Minister, Bibi Netanyahu, was opening himself up for criticism. Ostensibly, Bibi was in Egypt, talking with Mubarak. However, the much of the local media was concentrating on his capitulation of his economic plan.

Step back for a moment and recall. First, Bibi’s election promises included lower taxes. Second, he has appointed a finance minister who will play second fiddle to Bibi’s role of economic supremo. Third, as usual in formulating a new budget, the Finance Ministry leaked details of cuts and frightening new measures.

And what are we left with? Well, according to the papers, cuts in child allowances, hospital payments, less tax breaks for working women, etc have all flown out the window. Meanwhile, VAT could go up by 1%, a direct burden on the poorer members of the community.

It is not clear if Bibi buckled to the pressure of interest groups like rich trades unions or industrialists. However, even during his own successful term as Finance Minister some years ago, he was also known to cave in.

Which brings me back to Bibi’s meeting with Mubarak. And in a few days time with Obama, and then with the Palestinians. Bibi’s skillful oratory is not in doubt. It is his ability to deliver a safe economy and …….well long-term overall safety that concerns me more. It is time for leadership.

Can the Pope count?

11 May 2009
1 Comment
Categories: Business, Israel, Jerusalem

Pope Benedictus XVI arrives in Israel today, Monday. What’s the fuss?

Last night, Tel Aviv traffic came to a halt for several hours, as 50,000 people turned up to watch Depeche Mode in concert. And as I write, crowds as surging towards Mt Meron near Safed to commemorate “Lag Ba’omer” the cessation of a plague that killed thousands of rabbinical student nearly 2,000 years ago. The expected attendance is estimated at 500,000.

As for the Pope, how many can he count on? Officially, there are around 150,000 Christians in Israel, the one country in the Middle East with a growing Christian population. Most of these are from the Eastern Orthodox groups. Catholics are few in number.

The Pope’s visit is important for a number of reasons. It is not just that he is expected to make some definitive statements denouncing anti-semitism. His delegation will push to seek control of Vatican owned property in sensitive areas, like the Old City of Jerusalem. How all this will help to further the continually awkward Vatican- Jerusalem diplomatic loop is difficult to assess at this early stage.

One thing is clear. At best, the Pope will draw with him around 15,000 pilgrims – and no doubt others will follow later where he has lead. But these numbers are still insignificant compared to other mass events in Israel. (Pun not noticed, until after it was written – MH).

The Pope will learn that Christans are free to pray in Israel, something he will struggle to find elsewhere in the region. However, he has much more work to complete if he wants to secure a greater role in the Middle East for the Vatican.

Water and droughts – Israeli leadership is flooded out

10 May 2009
1 Comment
Categories: Business, Israel

FACT: Israel is one of the world’s leading countries in developing new agricultural techniques.

FACT: Israel has developed a string of technologies for purifying water without chemical treatment.

FACT: Israel suffers from a drought, cutting deep into its own farming output.

Last week, I visited “Agritech”, Israel’s annual show, displaying its latest techniques in the agricultural field – pun intended. Clearly visible were the strong delegations from India, Honduras, Chile, Australia, Brazil and elsewhere. The event is a quality circus on the exhibition calender.

It would take too long to survey all that was on view. I stopped off at Aquatal, delivering sweet drinking water from the liquids in the atmosphere. A research team, led by the Volcani Centre,  presented a thermal imaging solution for mapping the water status of crops.

And it is in water technology where the world has chosen to follow Israel. It leads in drip irrigation, water recycling, and desalination techniques. There are signed agreements with the Beijing, Melbourne and Madrid Water Authorities.

I am curently associated with a company that has perfected an efficient green solution for purifying liquids – both for local authorities and industry (food, chemical and other sectors).

So the question is: Why does Israel have a drought? Why does it lack enough water to “feed” the River Jordan and the general populace? For all these wonderful capabilities, why has the country not overcome the low rainfall levels?

And the answer: Well, I find that Israeli politicians love to talk. They jabber on about the economy, the Palestinians, and football, even when they have no real idea what they are talking about.  Turn to the environment, they are also invariably ignorant, but here they need to make real decisions which make effect interest groups. So why bother?

 It is only the future that will suffer, and thus no need to trouble the voters of the present. Politicians and civil servants drowning in their own selfishness, as the land cracks open around them.

Israel Economic Survey – a recommendation

5 May 2009
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Categories: Business, Israel

Like many, I glean my info from many sources.

I am reluctant to name names, but every so often it is worth reconsidering a cardinal rule. And today, I am going to direct you to the work of my good friend, Seth Vogelman.

For some years now, Seth has been compiling a fortnightly survey of economic activiy in the Middle East, with a special emphasis on Israel. The latest work is posted at https://www.atid-edi.com/index.php/Fortnightly.htm ,as well as on his facebook.

Seth is a rare breed, with access to contacts in many commercial places which the average Israeli has not even heard about. The analyses are sharp, if not always to the taste of everyone. The range of opportunities posted is possibly unique. He drags in many untouched markets.

Happy reading

Out of the box management 2 – Israeli model

4 May 2009
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Categories: Business, Israel

I have previously written that part of the strength of Israeli management psyche is  out-of-the -box thinking. It is why Israelis are renowned for bringing through new technologies against the odds into the marketplace.

So what happens when the company is up and running? What happens when Mr Israeli CEO has to start selling? Where does this creative thinking lead him or her?

Here comes the down side of Israeli character. In Hebrew, it is called “magi’a lee”. A rough translation is: “I deserve it”.

What do I mean? For much of the pre state period and for 3 decades afterwards, Israel was run by socialists. The state looked after you. You could rely on the state, because..well, because you deserved it for all those taxes you paid.

On top of which, Israel faces a constant existential threat. Israeli is in danger, “so at least buy our great goods”, we shout to everyone.

In commercial terms, this has a naive and childish parallel. So many new start ups outsource their sales efforts. It is mostly paid for on the basis of “success fee”. The contractor sells the products and services, which deserve to sell well, and the client will pay a large commission. In other words, work for us for several months, fork out all the expenses for that period, and then we can make you rich…maybe.

As I learnt way back at university, if you pay peanuts, you get monkeys. The so-called success fee provides no commitment to the sales team, which invariably gives up after a while.

The result – everyone is a loser!

And this is one prime reason that for all of Israel’s wonderful tech, so much stays in the country.

As for Israeli management psyche, it becomes a double-edged sword. Great for getting you going, but potentially a mother of company-destroyers. And only when Israeli CEOs resolve this conundrum will the economy’s structure take a major leap forward.

Out of the box management 1 – Israeli model

3 May 2009
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Categories: Business, Israel

Over the past decade or so, Israeli management has earned a deserved reputation for innovative management. With limited natural resources, the country is known as a world leader for new techs in bio and nanotech, as well as IT and telephony.

Why? Well, the country has had to think quickly in order to survive. It is part of the national pysche.

Consider the origin of the phrase “out of the box thinking”. The idea is to resolve a problem from an unexpected direction. Israelis excel at performing unusual tasks.

To illustrate the point, I recall an anecdote told to me by a former naval officer and now leading market analyst for a successful high tech company near Netanya.

Years ago, he was stationed at a UK naval port on a training mission. They received an evening off to watch TV. 2 sets were available, one to watch the Eurovision Song Contest and one permanently set on a different channel. All the graduates poured into the one room. All?

All, except a few Israelis. They let everyone settle in a crowded room, moved next door, closed the door, and promptly switched the TV station to…the Euro contest.

Some minutes later in walked one of the senior members of staff. Initially worried that they had blotted their books, they were soon reassured. He burst out laughing, and I quote: “No wonder you guys always win your wars.”

So why does Israel have a lot of successful start ups? Because in order to succeed, you need to bulldoze your way through or around the numerous and varied obstacles. Israelis possess that capability.

Israel and hypocrisy – the new UNRWA?

1 May 2009
2 Comments
Categories: Israel, Jerusalem, Palestinian Society, Palestinians

I recently came across a wonderful book: “Not In My Name: A Compendium of Modern Hypocrisy”, written by Chas Newkey-Burden and Julie Burchill, and published by Virgin Books.

The section on Israel was written by Burden and can be found at: https://www.oyvagoy.com/israel. The author asks a challenging question.

The anti-Israel brigade would have us believe that the motivation for this vitriolic hatred of Israel is a genuine, compassionate concern for the fate of the Palestinian people. But do they really care about the Palestinians, or is their compassion somewhat selective, to put it politely? In reality, are they only interested in Palestinian suffering for as long as it gives them an opportunity to bash Israel?

As Burden notes: When Palestinian women are stabbed to death in “honour killings” across the West Bank and Gaza Strip, no anti-Israel Westerners lose a single moment’s sleep on their behalf.

So what?

Well, yesterday, I read about a new and challenging extension of this hypocrisy.

UNRWA was set up 60 years ago to help Palestinians and their social problems. It has a standing annual budget of over US$400m, which is regularly topped up for special campaigns. European taxpayers are particularly generous donors. Even since Israel left Gaza in 2005, UNRWA has still to resettle even one refugee outside the camps.

Israel and her supporters have been consistently critical of UNRWA and its increasingly political role. The Lindsay Report is the best documented comment to that effect.

In return, UNRWA through John Ging, its chief rep in Gaza, has never pulled its punches. The most notable occasion was during the January war in Gaza, when UNRWA claimed that Israel has deliberately shelled a school killing 42 civilians. UNRWA is proud of its record of supporting schools, funding school books, founding clinics and far more on behalf of Palestinians. It openly accepts that Hamas is its partner in Gaza, and works with this proscribed organisation.

And yet: Well, we all know that the 42 turned into 12, and 9 of those were Hamas operatives. Christopher Gunness, an UNRWA spokesperson, had to censure Hamas for stealing aid during the war. Ging has just called on the Western and Arab communities to deliver on its aid pledges to Gaza.

And now for the hypocrisy. For all the bending over backwards to help the Palestinians, often deliberately cooperating in tandem with militias, Ging has been censured by Hamas.

In effect, on 16th April, the Hamas paper “Felesteen” called on Ging to resign, as he opposes the “resistance”. His crime is his efforts to work within UN ethical standards. In other words, the man whose job is to funnel millions of Western money into Hamas projects is now seen as a traitor, because he is calling for transparency and opposing some of the violent methods.  

Fortunately for Hamas, Obama is currently trying to see it included in a new Fatah government. European politicians are also queuing up to visit its leaders, as they refuse to even consider recognising Israel. Phew, no hypocrisy here, either.

Blessings from Israel

29 April 2009
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Categories: Israel, Jerusalem, Palestinians

This week, Israel marks two important days in the calendar; Remembrance Day and Independence Day.

The former honours 22,437 civilians and members of Israeli security services killed since 1948. Rabbi Ari Kahn noted in his article on facebook that one of the strongest blessings that he can offer to soldiers and to all Israelis is that “they return home safely along with all their comrades, and live normal lives …..” .

When you balance those remarks with current trends in the peace process, they take on greater significance. President Abbas appears to be retreating on previous commitments to recognise Israel. In the words of an official from the Israeli Foreign Ministry: –

The Palestinians cannot negotiate for a two-state solution where one is Palestinian and the other is Palestinian-to-be. This is essential; it is the choice between ending the conflict or failing to end the conflict.”

Yes, Israelis are still very much in need of the blessing of peace. The IDF Chief of Staff, Gabi Ashkenazi commented this week how: 

Even after dozens of years of struggle, we have still not lost our hope to live by your side in peace and mutual respect; but I don’t recommend that anyone tests the strength and determination of the IDF.

In direct contrast, as we review Israel’s celebrations for her 61st year, we can see just how much President Abbas has to learn from his adversary. The official event to start the 24 hours of celebrations saw the customary participation of all parts of society, including Druze and Bedouin. Pluralism at its best.

But it is more than that. Israel is a beautiful country. In the winter, you can ski on the Hermon, and then a few hours later you can sunbathe in Eilat. In Jerusalem, you can almost literally walk back thousands of years and touch elements belonging to the First Temple Period. Israeli technology is literally universal, as she has become one of the few countries to possess satellite capabilities.

Israel’s modern history is replete with triumphs, which others would be proud of, but have difficulty in bringing themselves to acknowledge.

Israel has many blessings to offer other peoples and nations around the globe. All are welcome to receive them in peace and with good health. They too have much to celebrate from Israel’s 61 years of independence.

Israel’s PM makes a weak start

27 April 2009
1 Comment
Categories: Business, Israel

The Israeli Finance Ministry is preparing a rolling budget for a 20 month period. Great – should cut out the usual financial uncertainty that would be expected to accompany the 2010 budget, as it would hit the Kenesset debating tables later this year.

But hang on, so what are the brave new measures of this new government?

The press has received leaks re the upping of tax on mobile phones given to employees. Wow! Tourists may be required to pay VAT on hotel bills. Staggering! Increased taxes on petrol. Clearly a sop to the green vote on the backs of the poor.

As for structural changes, well, public housing may be sold off through enhanced use of the financial sector. Again, not exactly earth shattering stuff. And so on.

Bibi Netanyahu has been in office for 2 months. Consider his experience. He is a former Finance Minister and former Prime Minister. And this is all he can come up with?

No strategy. Just a set of measures cobbled together. Vague mutterings of tax cuts delayed to 2010. No help for abandoned rail projects. No kick-start measures for SMEs, still coping with the awful paperwork and credit demands of local banks.

Compare that to the efforts of the Bank of Israel, which is demanding that Israeli banks conduct their affairs with far greater transparency and less recklessness. For example, whatever the outcome over the board of Bank Hapoalim, the country’s largest bank, the industry knows that the rules have been changed for the future. 

And the stock market has responded positively following the BOI’s efforts.

So, why do I write about Bibi and not his Finance Minister? Because the minister is a novice. In this week’s round of discussions with cabinet members over budget cuts, the individuals are being invited to the PM’s office. The Finance Minister is not even expected to be present!

It is too early to give a first term report or hand out marks. But on his performance to date, Bibi is merely dabbling with the economy. His spin has not covered that up. The economy demands more. The people deserve better.

Israeli tech meets Palestinian water crisis

26 April 2009
1 Comment
Categories: Business, Israel, Palestinians

Rainfall in the Middle East has always been an issue. This year, the winter rains in the region have been around 20-25% below average, and that average itself has been in constant retreat for some years.

So when the World Bank issues a report stating that  “Israel extracts 50% more water from the aquifers it shares with the Palestinian authority than it is authorised to do so”, ears prick up.

Double back to a detailed report from the office of the Israeli Water Commissioner. It carefully details the obligations of all sides under the 1993 Oslo Accords, and who has fulfilled what. In brief, Israel has gone way beyond the letter and spirit of the agreements in helping the Palestinians.

It is the Palestinians, who have yet to drill or to operate half the required wells in the Eastern Aquifer. And in the Northern District, they have sunk over 250 illegal wells.

But here’s the killer fact. Over 60% of Palestinian sewage is deliberately not treated. Its run off contaminates into the already precious reserves of water, rivers or lakes.

An internet search will show how loads of NGOs and other pressure groups have sunk tons of resources, research, man-hours, money into deligitimising Israel’s use of water. I personally have had correspondence with such activists over the years. If all that investment had been turned away from hate and ploughed into coexistence, much of the Palestinian water shortage could have been resolved.

How so?

Take Cequesta, a small Israeli company, based just outside Jerusalem. Using environmentally friendly tech, it recycles water from industrial or other use. The systems are not expensive, support the environment and provide a clear solution to populations with water shortages.

Whether it be Cequesta or other solutions, the Palestininas have much to gain from cooperating with the Israelis. They only people to lose out will be those determined to see Israel suffer, whatever the cost to truth.

Israel’s economy – the next phase 2

20 April 2009
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Categories: Business, Israel

As I was blogging yesterday about Israel’s economic status, Professor Stanley Fisher, Governor of the Bank of Israel, was presenting his annual report to the country.

With no small irony, the TV  cameras captured the new Finance Minister thanking Fisher for his efforts and then promptly forgetting the book on the table. Freudian slip, if ever there was one!

Much of the press has slammed Fisher. In another irony, nobody is interested in what happened in 2008. Everybody is focusing on the corrected and increasingly pessimistic predictions for 2009 and 2010. For the BOI, growth will recede by 1.5% and then rise by only 1% respectively. Allowing for population changes, this is a double whammy.

A headline in Yediot Ahronot, Israel’s largest daily newspaper explains why people are confused. Fisher talks with quiet optimism, but his stats are not looking good. He is now playing down Netanyahu’s call for lower taxes. Seasonal sales remain cool. Fisher is warning that there is more bad news to come before the upswing.

But I disagree with the critics.

The global recession is unprecedented in scope and form for at least 2 generations. Thus, any response cannot rely on standard formulas, usual policies, or spin. And that is what Fisher is saying today.

In fact, if I recall a briefing of his back in July 08 to a UK trade delegation, and before the credit squeeze really set in, Fisher was saying the same thing thing.

Any measures must be considered, now more than ever. Tax cuts to please politicians will not help the populace as a whole. calculated policies are the order of the day. Stay cool, endure some more nasty pain, and the economy could well already be seeing the first early stages of recovery.

The fact is that neither journalists nor politicians have a better solution to the crucial issues. Fisher’s opponents have chosen the easy path of being critical without providing an alternative.

They would be better off demanding that the Finance Ministry finally implements a package of measures to encourage small and medium sized businesses. That will clearly boost long-term and sustained growth.

Confused? For the moment it is Fisher who has the explanations. Stay tuned to him.

Israel’s economy – the next phase 1

19 April 2009
1 Comment
Categories: Business, Israel

I have long argued that Israel will survive this terrible recession better than others, and possibly come through even stronger.

The jury will remain out for some months to come. However, when the local stock market rises around 24% since the beginning of March, it is time to take stock.

First, in comparison to global equity prices, the Tel Aviv Exchange is on par. Good start. And we know that current prices often reflect future expectations and known prospects.

Further, like counterparts around the world, Israel’s leading bankers have been muttering that “maybe” there are “signs” that “possibly” we are somewhere around the bottom of the trough. OK, so they would not place their fat salaries on an open table if there was not some basis for that.

Evidently, there are still hard times ahead. Sales of cars and household appliances have yet to pick up. Traditional industries have still threatening lay offs due to lack of credit.

I have identified 3 indicators, which together can form a solid base for hope.

Since the beginning of the year, the shekel has lost almost 10% of its value against leading currencies. Israel is an export driven economy. So this stat convert towards higher corporate revenues, and thus investment and employment.

There are some indications that high tech is beginning to recruit again. Just as significant, when you consider what happened to AIG, Udi Klein, the head of the insurance agent’s assoc in Israel, believes that the industry will be short of 1,000 workers over the coming year.

And of course, there have been at least 2 significant discoveries of commercial gas in the past few weeks. The revenues are liable to have a major benefit on the economy and its long-term health.

Were to now? The Finance Ministry. Due to electoral consideration, Israel has lacked macro economic leadership for too long. It is time for the civil servants and politicians to come up and implement strategic and structural policies that will make a difference.

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