On Tuesday, I went for a wonderful walk in the midst of Samaria. Today, I finally realised what was disturbing me about the trip. For all the beauty of the nature, what I also saw was the very core of the Israeli – Palestinian conflict. For either side, it is no way to live (NWTL).

What do I mean?

 The walk itself was along the banks of the River Shilo. Spring flowers were out in full, and their colours won over the hearts of even your sarcastic author. The last winter rains mixed with some early summer sunshine ensured we were surrounded by a lush green backdrop.

The town of Shilo is nearby, built near the ancient city where the Tabernacle or Mishkan was located. This is holy for many different religions.

So why the phrase NWTL?

To get there, we travelled north out of Jerusalem along Route 60. Palestinian and Israeli drivers happily took turns breaking the speed limit. Each had their own number plates. Each was able to move freely to where they wanted. Fine, but then look again.

Under current peace proposals, Israel will be asked to surrender control of Shilo. Jews will not be allowed to return to a key holy site nor have access to the nature trail I trapsed. NWTL.

Sure Palestinians were zooming freely up and down the road. But on the edge of Jerusalem, they have to undergo security checks to visit friends and family. NWTL.

The security checks are staffed by young 18-20 year old soldiers, who are being asked to make immediate and sensitive decisions, all day every day. Not a fair imposition, leading to unsatisfactory results for all. NWTL.

Looking at the Palestinian villages from a distance and comparing them to the set up of Israeli towns, you can see that the Palestinian Authority is clearly unable (and unwilling) to invest resources in their social development. NWTL.

The route back to Jerusalem was poorly marked, and Israeli drivers nearly caused accidents as they desperately tried to ensure not to take an incorrect turn and thus drive into the wrong village. Who needs that danger or fear? Who needs to be humiliated by these drivers? NWTL.

The list goes on. But do not misunderstand me. Israelis have rights like any other people on the planet – to live their social /religious dream in peace and security. In parallel, the Palestinians deserve better.

And here’s the punchline. As Obama is sucked in to the depths of office, his lackies are also beginning to resort to the spin of the past. They are clearly gearing up to pressure the new Israeli government, assuming that this will bring results.

BUT, the fact is that there is no peace plan – Saudi, American, Israeli, European, etc – that gives a full and genuine resolution to these on-going subjects described here.

World leaders, including Israelis and Palestinians, must start to engage with those real, day-to-day, and on-the-ground issues, and in a manner that replaces rhetoric for realism and multi-level understanding. Then, maybe, we will see a sustainable peace process emerging for the Middle East.

Obama, Miliband and co have yet to reach that stage.

I am increasingly asked why people want to boycott Israel.

Ignoring outright anti-semites, what makes somebody deliberately want to isolate the sole proclaimed democracy in the Middle East? So I invite you to take a few minutes and join me in analysing the background and to come up with a solid intellectual argument.

Background:

Briefly, Arab countries have been demanding a boycott of Israel, even prior to its creation in 1948, at least 19 years before the issue of the West Bank cropped up. And this demand includes a wish to force non-Arab countries to comply with sanctions against Israel.

Skipping forward to the current decade, left-wing activists have taken the lead in calling for a boycott, primarily in Britain.

1)      Trades Unions have repeatedly called for universities not to employ Israeli academics, specifically if they do not comply with a set political point of view.

2)      NGOs have encouraged the British government to demand from retailers that all goods manufactured in Palestinian territories are clearly labeled, way beyond what the EU has agreed with Israel. (The government has reverted to the spin of saying it is responding to consumer pressure, although that abstract has never been proven).

3)      The influential Cooperative Movement in the UK, which sponsors several MPs, is under increasing pressure to boycott Israeli goods.

4)      Where the UK leads, Canada follows. There is a growing movement to launch an academic boycott and stop the import of Israeli wines.

5)      A few Australian professors have also felt a need to climb on to the bandwagon.

6)      In America, Motorola (Israel) sales have been plagued by Palestinian campaigners.

7)      You can search utube for films of how campaigners violently tear Israeli goods of the shelves of French supermarkets or terrorise vendors of Israeli products in UK shopping malls.

8)      The Dutch Labour Party is demanding that Israel talks to Hamas or face sanctions.

So Why Boycott:

Let’s look at 4 possible reasons.

1)      To promote human rights.

Well in that case, there would be calls to boycott 50% of the countries in the world, yes? Type the word “boycott” into google. Around 95 out of the first 100 entries refer to Israel – note “Israel” and not just a call to boycott goods made in the Palestinian territories alone.

It can be assumed that most of these activists are content to accept the repression in Zimbabwe, the slaughter of Christians in Sudan, the racism of Venezuela, or even the totalitarianism of several Islamic regimes including Hamas. For example, the Dutch Labour Party has made no equivalent demand on any Arab party in the conflict.

2)      To help Palestinians.

Israel’s trade union organization, the Histadrut, has a long and strong tradition of working with minority sectors, including Palestinians. They have estimated that a boycott of Israeli products manufactured in Palestinian territories will immediately affect approx 25,000 Palestinian workers.

·         This figure does not include dependants and family member, ensuring that the figure rises towards 150,000.

·         Behind the stat is the fact that these wages are relatively high for the Palestinian sector.

·         Threatened economic instability will threaten new investment.

·         And a boycott of Israel is likely to hit at those sectors that employ tens of thousands of Palestinians working within the pre-1967 armistice agreements.

 

3)      To stop Israel’s violence towards the Palestinians.

This is certainly a noble objective. However, the narrative ignores that fact that most of Israel’s policy in Gaza or elsewhere is based on response. For example, the military action in Gaza in January 09 followed a refusal by Hamas to renew a ceasefire and after 8,000 rockets had landed in Israel over 8 years.

Sanction supporters might have created some credence if they issued a similar demand to boycott Fatah, Hamas and Hizbollah for their violence against Israeli and local civilians. But that balance is consistently lacking in all the arguments.

4)      To help peace

Again highly praiseworthy: But we know that trade between nations and peoples helps to foster understanding and progress. A boycott seals off those very opportunities for all sides.

Boycott’s Raison d’Etre:

So, once you tear away the spin of all these excuses, what are you left with? I looked at the website of Palestine Solidarity Campaign (PSC). The senior team reads like a “who’s who” of participants of trendy causes since the early 1960s. With a couple of exceptions, I would not associate any of them with being anti-semitic. There are even some non-practicising Jews.

BUT, if you compare the language of the website, it reads strikingly similar to that of the Arab League of the 1940s. Then, these people called for: –

 “Jewish products and manufactured goods shall be considered undesirable..” thus declared the Arab League Council on December 2, 1945. All Arab “institutions, organizations, merchants, commission agents and individuals” were called upon “to refuse to deal in, distribute, or consume Zionist products or manufactured goods.”

 

And the difference with today’s cries against Israel? Very little, as PSC site describes. It is the same venomous hatred as 60+ years ago, except that the spin today is more subtle and comes from politically acceptable Western celebs.

History will judge any future boycott as a triumph of evil; a deliberately racist tool, based on a combination of misinformation, phobias and enmity.

The Passover festival has commenced. Easter for many Christian communities is on its way. The Holy Land is full of strange stories just now, but if there is no overt Middle East crisis, then the world press ignores us.

What do I mean? Well take this Wednesday morning, around 6.40am. Hundreds of thousands of worshippers all over the country rushed out to watch the sunrise. The rabbis have calculated that the sun returns to its starting position every 28 years, and this week was that big moment. Yup, there were sarcastic mutterings about Stonehenge, but there we all were, bright and early.

And then, the country completed its preparations for Passover. Leavened food is a no-no for 7 days, as we recall the Exodus from Egypt. The cleaning goes so far that even bottled water from underground springs has to have a special certificate to say that it has no bread content.

Whether that was what Moses intended for future generations, I do not know. But I am at a loss to  explain some of these customs to outsiders.

Even the Kenesset has joined in the silly season. Bibi Netanyahu is back in power. He controls the Kenesset, yes? Well…how come the opposition party of Tzipi Livni, with barely 25% of the seats was able to filibuster the budget debate for nearly 24 hours? Just wait till the new PM tries to pass a contentious peace package through the chamber!!!

There are many more stories, but I will leave you with a note from Israel’s football team. They have received one of the easiest routes ever towards the World Cup Finals in South Africa next year. The main task was to beat Greece.

But, our 11 heroes failed, if only because they have clearly been trained to pass the ball to the opposition.  It now turns out that at a crucial point in the match, some Greek intellectual tried to blind the Israeli goalkeeper from long distance. Considering how Israel  played, this tactic may have had the opposite to the intended effect. In any event, the 3 points may be transferred from Greece to the Israeli clowns.

Could these stories happen in other countries? Probably. Could they all occur, and together, and in such a short space of time, I doubt it. And that is why I love living here.

Best wishes to all my readers, whatever you are celebrating this month.

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

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

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

What does this amount to?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But it needs more than bold character.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If only it would end there.

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

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

What the hell did these people fight an election for?

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

As the Tourism Ministry has reported: –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

With hindsight there were many people warning over Madoff, years before he was forced to tell the truth about his Ponzi scheme.

Now turn to the Middle East. Since the Oslo Accords of 1993, roughly 25% of revenue of the Palestinian Authority comes from taxpayers in Europe, America and other donor groups. For example, in a statement released from Brussels last week, the commission observed that: 

The EU is the largest donor to the Palestinians. In recent years, the combined contribution of the European Commission and EU Member States has reached €1 billion per year, which is not sustainable.

 The question is: Do we know where the money is going to? Are the transfers accountable and transparent?

Just look at the work from the pressure group, Funding for Peace Coalition. With reports dating back to 2003, 2004 and 2005, the team has warned that large amounts of foreign taxpayers investment in the Palestinian Authority has simply disappeared.

What makes this a Ponzi scheme?

A combination of political correctness, goodwill and pressure from the Arab League has encouraged Europeans to support the Palestinians financially, just as America is perceived to help Israel.

It is no secret that the Arab countries have rarely delivered on their promises. The Europeans are finally wondering what they are getting for their Euro.

Benita Ferrero-Walder, European Commissioner for External Relations and Neighbourhood Policy, intended to pledge on 2 March in Sharm El Sheikh (Egypt) €436 million ($554 million) to the Palestinian people for 2009 at the “Conference in Support of the Palestinian Economy for the Reconstruction of Gaza”.

This will be on top of a similar amount of direct aid alone delivered in 2008, much of which went to pay for Hamas civil servants in Gaza. The new gold is supposed to be used for rebuilding Gaza. However, it is to be handed over to Abbas of Fatah, who has no control in Gaza!

So here comes the sting! The Europeans have opened the door as widely as possible for Barak and Hilary from the new-can-do White House. The Yanks have promised US$900 million extra bucks. But to whom and why?

To Fatah? Er, remember that Arafat died as one of the richest men in the world. To Gaza? But again Abbas does not rule Gaza. To UNRWA, whose stores are openly ransacked by Hamas operatives? Etc etc.

So what we have is: A bottomless pot, designed to feed aid to the Palestinians. European taxpayers, who have poured in loads of wealth but seen little in return. Americans, who are used to parting with money without conducting due diligence.

This week’s confrence in Egypt has promised US$4.5b  to 3m Palestinians. Will they get it? Would some of this be better used in Darfur, Zimbabwe or elsewhere? Learning the truth about Gaza and the Palestinians is often more complex than unravelling a Ponzi scheme.

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

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

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

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

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

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

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

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

The Western media has concluded that Israel’s air force and artillery flattened the Gaza Strip. Many are homeless. And Hamas, yes they are naughty for firing rockets at Israel, but it needs to be helped in order that the population at large does not suffer further.

According to a debate in the British Parliament, “the Muslim community in Blackburn raised £150,000 for a Palestinian charity in just one week.” Praiseworthy indeed, and let us hope that transparency has improved since the days when the Arafat and Dahlan team pocketed much of such donations.

In the past few months, there has been growing evidence to suggest that Hamas is in fact far wealthier than it wants to admit.

1) Khaled Abu Toameh is one of a rare breed. An investigative Palestinian journalist, he has eyes and ears in many parts of the territories. In a recent interview, he noted that:

Hamas could not have taken control of the Gaza Strip in 2007 had it not been for support from Iran and Syria. They had logistical and financial support, which means weapons. Most of the weapons coming into Gaza are being financed by Iran and facilitated by Syria.

2) Hamas is also not burdened with having to provide over a million people with education and welfare. Much of that role has been taken on by UNRWA. In a recent report,  UNRWA was slammed for becoming a political institution, managed by Palestinians for Palestinians, even open to abuse by terrorists. Ironically, on at least 3 separate occasions since early January, Hamas members have stolen UN property, including UNRWA supplies.  

3) It is the smuggling tunnels that have historically been the financial lifeblood of Hamas. Speak to any journalist, like Matt Rees, who has covered the Gaza Strip over the years. During the Intifada, cease fires with Israel were broken because gangs could not bring in their contraband. Toameh notes that the tunnels have existed for decades.

 And new evidence is emerging that Hamas has actively encouraged the tunnel industry since 2007. The tunnels provided a way to bring in weapons and raw materials. Hamas sold “licenses” for the building of some tunnels, raking in a fortune in undisclosed taxes in a poor economy. Individuals made a fortune out of commissions, just like Dahlan of Fatah in the past.

To quote Hamas Finance Minister Ziyad Thatha:

A number of investors collected millions of dollars in a way that is against sharia (Islamic law) and we will operate against them.

At least now we know why Muslims around the world have to collect money for their brothers and sisters in Gaza. No wonder, national appeals have been started for them. it will be interesting to see if that includes donations from governemnt ministries.  

On the surface, Israel’s economy is heading the same way as America, the UK and others.

Initial figures show unemployment doubling to 20,000 people between October 2008 to February 2009. The two largest banks, Hapoalim and Leumi, have reported large losses. In fact, Leumi’s share price has now lost over half its value. High tech companies are looking at a 4-day working week.

And yet, as I keep stressing, Israel does not need to panic. For the moment, I am not alone in that view, as reflected by the stock market, still on the up in fits and starts.

Just as encouraging is the latest report from the IMF on Israel. It predicts a small but positive growth of 0.5% for 2009. This is down from its previous analysis but still higher than the 0.2% as suggested by the Bank of Israel.

The IMF went on to praise the monetary and fiscal policies of Israel. It did find that there was room for selected budget stimulus and an even lower interest rate. However, the general picture is encouraging, hopefully leading to a major pick up in 2010.

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

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

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

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

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

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

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

Israel has voted. The results are in. And the financiers reacted by causing a 2.6% drop in the Tel Aviv Stock Exchange (TASE). They don’t like change, especially when political uncertainty remains in the air.

Now look again.

Despite the fall, the TASE has still risen 5.36% since the beginning of the year. And there was a war going on as well for much of the time.

Some of the Israeli companies listed overseas are also being sought after. In the healthcare sector, Teva’s continuing success is well documented. Card Guard is located in Rehovot and has a strong reputation for devising remote patient monitoring systems. 

On the internet front, Michael Eisenberg recently identified 3 Israeli companies that may be well positioned to take off financially; Incredimail (MAIL), Answers.com (ANSW) and Babylon (traded on TASE: BBYL).

On more fundamental issues, the local papers remain full of pessimistic news about high tech companies going on to a 4-day working week. Yet on a rainy election day itself, most of the shopping malls were packed. Many reported a 200 – 400% increase in normal trading volumes. That spending power came from somewhere.

I don’t hold positions in the companies mentioned. I was not shopping on election day. Yet, while I recognise that 2009 will not be a pretty year for everyone commercially, there is still a lot of business out there in Israel.

Israel goes to the polls today. 33 parties to choose from – green, Jewish religious, Arab, pensioners and the usual lot – they are all there competing on the basis of strict proportional representation.

Each election throws up its own irony. This year, when the winter rains have been almost non-existant, it is puring down as I write. Maybe this will put off a few people.

The non-Jewish voter is never short of choices. For example, the Druze are represented on many of the lists of the major parties. The Balad group and others, openly and consistently critical of Israeli governments, are trying to encourage their supporters to turn up and vote.

What is undisputed is that everyone has a right to one vote and cast is freely.

Palestinians can look on with wonder. , Hamas continues is rule by threat and violence. The Palestinian-run Independent Commission for Human Rights reported in a press release on February 8th that yet another Palestinian has been tortured to death by Hamas in a Gaza hospital.  Jameel Shafiq Shaqqura was 51, and heralded from Khan Yunis. In a separate incident, UNRWA has finally convinced Hamas to return supplies that were stolen in broad daylight.

No doubt, the result of the election will produce yet another coalition government. Weak or strong, right or left, whatever its formation, today confirms yet again that Israel resides firmly in the camp of pluralistic, democratic societies.

This week, Bank Hapoalim posted a massive 4th quarter loss. Deutsche Bank is concerned that Israeli banks are hiding too much bad debt, whose significance has yet to be fully appreciated. And in a troubling conversation, a private banking analyst told me that the Israeli public has yet to internalise fully the depth of the world recession.

Crisis? Well, the jury is still out. Yoram Ariav, the DG at the Finance Ministry, has gone on record saying that he knows of no Israeli bank in trouble. Good! And most banks have yet to cut the pay packets of the humble board members, as is happening in other countries.

This week, I spent some time with a specialist in private banking, who occupies most of his time in European financial centres. Having conducted several days of back-to-back meetings in Israel, he finished his visit totally confused. Why aren’t the Israelis worried, he pondered.

To paraphrase his comments: There is a financial downpour soaking the global economy. Yet, Israelis are not reaching for an umbrella and waiting under a bus stop. They are running forward to get to the next stage in the economic cycle.

They want to know how to invest anything, somewhere, in order to be ready for the next sunny day. He may not have understood the pysche,  but I felt that he had had a successful trip. 

It is not all rosy in Israel. But this story is more than simply anecdotal inference. Shimon Peres, the President of Israel, believes that Dell will consider a large investment in the Jerusalem region. Daniel Vasella, the CEO of health giant Novartis, will raise their presence in the Holy Land.

Israel entered this recession with a fine economy. Since the mid 1980s, the banking system has been reformed consistently and sensibly. Wise and measured domestic policy will see the country through the rough. These factors indicate why there is cause for cautious optimism.

This week, I attended a get-together with reps of Israel’s defence industry under the auspices of the Israeli Export Institute.

Surprise no’ 1: An introductory talk was given by the head of the Defence Ministry’s licensing team. The rules are clear and getting tighter by the day. Israeli companies need approval before signing contracts.

Opponents of Israeli arm exports beware – many of your complaints are without justification de facto. Israel does not export the naughty countries of the world.

It turns out that there are around 900 companies involved in this sector. The number of licenses have trebled in the past 4 years, but they are only given out once due diligence has been thoroughly completed.

Actually, the speech drew the wrath of manufacturers present in the room. They complained of a long drawn out process. And here’s the joke – for all the country’s high tech capabilities, the ministry is working with a software over a decade old. No wonder approvals often come through after competitors have overtaken their Israeli counterparts.  

Surprise no’ 2: Most of the companies in this sector are not related to weapons manufacture. For example, ZAG Industries is entering the fray of RFID tech. Whitewater Security has a comprehensive platform to prevent terrorist penetration of water works.

I was very impressed by the capabilities of R.K. Diagostics. they provide a tailor-made solution for manufacturers, particularly for heavy vehicles.

And the irony: After the successes of previous Olympic games,  150 licenses were issued in 2008 for Israeli firms to submit tenders to Beijing. But none of them won a contract. Meanwhile, the UK, which is clamping down again on arms exports to Israel, has just signed a massive trade deal with the lovers of human rights in Red Square.

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