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A taste of Israeli innovation for the New Year

29 September 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

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

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

But what if……..

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

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

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

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

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

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

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

 

 

 

 

 

After the Israeli elections, the economy is how relevant?

25 September 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

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

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

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

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

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

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

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

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

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

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

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

The start up economy that will not slow down

23 September 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

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

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

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

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

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

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

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

 

 

Why vote for Bibi, September 2019?

17 September 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Palestinians

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

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

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

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

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

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

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

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

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

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

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

 

 

Israel’s global economic success

30 August 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

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

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

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

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

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

 

 

UNRWA: Saving a billion dollars of taxpayers’ money in the Middle East

28 August 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Palestinian Society, Palestinians

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

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

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

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

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

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

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

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

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

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

Can Bibi afford to talk “economy” during the election campaign?

11 August 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

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

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

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

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

So where are the “buts”?

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

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

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

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

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

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

Brexit, The Palestinians, and a troubling technicality called accountability

2 August 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Israel, Palestinian Society, Palestinians

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

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

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

Nothing new there?

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

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

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

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

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

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

Why? It has emerged that:

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

Ooops!

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

Double that ooops!

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

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

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

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

Can you hear what is happening to the Israeli economy?

30 July 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

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

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

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

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

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

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

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

 

Bahrain’s failed economic conference & Israel’s economic success

3 July 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

So here’s the deal.

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

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

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

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

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

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

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

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

 

 

Jerusalem’s global economy hits a traffic jam

1 July 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

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

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

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

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

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

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

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

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

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

 

 

What Netanyahu will not tell about the Israeli economy

29 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

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

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

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

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

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

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

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

How to estimate the value of what Israeli tech means to Europe?

6 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Palestinians

Israel has its detractors in Europe. For decades, car manufacturers would not sell to the Holy Land. Today, the leader of Britain’s main opposition party, Jeremy Corbyn, cannot mention the word Israel, except in a manner that challenges the right of the country to exist.

The question remains. Can Europe do without Israel?

Israel…….. (has) around 1 startup for every 1,400 people. Some of these startups have gone on to be high-profile exits — Waze, which sold to Google for $1.3 billion, and recently Mobileye to Intel for $15.3 billion, among many, many others – (technologies used by hundreds of millions of Europeans daily). Just for comparison, France has .112 startups for every 1,400 people. Germany has .056 startups for every 1,400 people, and the UK has .21 startups for every 1,400 people.

I just read today that the “European Union has awarded 742 Million Euro to 1,062 Israeli Scientific Research Projects”. That must be a reason for that.

Now those same detractors of Israel may object to this use of taxpayers money. At least it is being handed out in a transparent and accountable manner, as opposed to the billions available for the Palestinians. At the same time, it is money that eventually benefits peoples of all kinds, across national divides.

I recommend that you read the press release in full.

The EU Delegation to Israel, together with the Israel-Europe Research and Innovation Directorate (ISERD) and the Israel Innovation Authority, celebrated scientific cooperation under the Horizon 2020 program with an awards ceremony on June 4th at the Peres Center for Research and Innovation in Jaffa. Awards were presented to 423 Israeli companies and researchers that won Horizon 2020 grants in 2018. Grants totaling over 742 Million Euro have been awarded to 1,062 Israeli projects since the beginning of the program through the end of 2018.

The Horizon 2020 program is the largest research and innovation program in the world, amounting to approximately 80 Billion Euro over seven years.

International cooperation in research and innovation is a strategic priority for the EU. It allows for tackling global societal challenges more effectively, creates business opportunities, and makes scientific diplomacy a driving force for the external policy of Europe.

Israel has been a partner in the EU’s research and innovation framework programs since 1996 and was the first non-European country to join it. Over the years, the EU-Israel partnership has strengthened Israeli academic and industrial excellence, led to investments in research infrastructure, and enabled long-term, innovative research

The program has enabled Israeli companies, researchers, and innovators to gain access to European partners, to integrate into an extensive infrastructure of European research, and participate in flagship projects in the fields of quantum technologies, graphene and brain research. The European Research Council (ERC), which is part of Horizon 2020, supports ground-breaking research at the frontiers of human endeavour. Israeli researchers have been extremely successful in the ERC programme and Israeli universities and research institutes can be found among the top 10 organisations, worldwide, hosting ERC grantees.

EU Ambassador to Israel Emanuele Giaufret said: “Every year, we celebrate EU-Israeli collaboration in research and innovation and honor the Israeli winners in the EU’s research and innovation program, Horizon 2020. We hosted a ‘plastic-free’ ceremony and event to show support for a critical area where the EU has taken on global leadership. Policies promoting sustainability of the planet for future generations need to be supported with technologies, research, and innovative solutions, where EU-Israel cooperation can play a key role.”

Dr. Ami Appelbaum, Chief Scientist at the Israel Ministry of Economy and Industry, Chairman of the Israel Innovation Authority, and Chairman of ISERD’s Steering Committee noted that: “The prestigious European Framework Program enables industry and academia in Israel to compete in the world of excellence and innovation. The average success rate for eligible applicants is only about 14%, so winning a grant in the program is a sign of quality and excellence for both researchers and companies. The European Framework Program allows for individual proposals and combined proposals with European partners, opening the door for research and business cooperation with European entities beyond the significant funding they already receive.”

Nili Shalev, Director General of ISERD, added: “The European Framework Program provides companies and researchers with numerous advantages besides the generous funding grants. It elevates the quality of research, enables recruitment of high-quality workers, provides investment in advanced equipment, and facilitates work at international standards. The grant enables companies to cut the time it takes to go to market and enables interaction with many potential customers. The program places participants at the forefront of global research on issues of environmental and social importance. The program offers a wide range of opportunities and benefits, and we are calling on all interested parties to contact the ISERD director, who serves as a gateway to the program.”

Projects and research that received funding in 2018 include:

Israeli company Vectorious received funding via the European SME Instrument Phase II program in early 2018 to conduct clinical trials and continue developing its V-LAP product – a miniature wireless heart implant that monitors heart function, accurately measures left atrial pressure (LAP), and sends all data directly to the HMO or the hospital where the patient is receiving treatment. For the first time, physicians can make informed decisions and provide their patients with better treatment based on real-time clinical data.

Optima Design Automation from Nazareth was granted approximately 2.5 Million Euro to continue development and scale-up of its innovative product: a software platform for chip manufacturers designed to ensure functional safety of chips used in autonomous cars.

A joint project of the Agricultural Research Organization (ARO) – Volcani Center and the company Fluence for a decision support-based approach for sustainable water reuse applications in agricultural production (DSWAP) that aims to find holistic solutions for wastewater irrigation that ensures environmental safety and health with minimal energy investment. This project included research groups from Israel, Germany, Cyprus, Spain, France, Italy, and Portugal.

Triox Nano from Jerusalem won a 2 Million Euro grant to continue development of its new drug delivery platform SMARTIOX, which combines material and DNA techniques to provide breast cancer treatment for women by injecting the active ingredient used in chemotherapy directly into the tumor area alone. This platform could be applied to other disease treatments as well in the future.

The PlaMOS project, led by Mellanox and IBM’s Haifa Lab, is developing a powerful integrative platform that allows an eight-fold increase in the speed of optical transmitters and receivers used in datacenters. PlaMOS relies on small-scale wafer integration of novel ferroelectric-based plasmonic-photonic modulators, silicon germanium photodetectors, and BiCMOS electronics combined in a super-fast, micrometer-scale optical engine capable of transmitting and receiving data at the world’s fastest speed of 200 Gbit/s per optical channel.

The (hidden and obscene) costs of a general election in Israel

4 June 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

To cut a long story very short, Israel’s Prime Minister called for a general election in the winter of last year. It was held in April 2019, and his coalition partners won a majority. However, Mr Netanyahu has been unable to secure agreement amongst his buddies, and so is going back to the electorate…… on 17th September 2019.

As one person asked: If it takes the UK with tens of millions of voters and 650 constituencies only three weeks to prepare for an election, why on earth does it require the ‘start-up nation’ with four million voters five months? No answer. But just think how much extra money can be wasted in PR campaigns over that period, …..mostly funded by the taxpayer!

It is estimated that the direct cost of the election is around US$130 million. That makes for disappointing reading at a time when the country does not have a Minister of Finance and when the budget deficit has been lurching out of control for the past six months. The problem is that no real fix is in site before the winter, which means that the remedy will eventually be even more painful…..not that the present government will admit that to an electorate.

But there are other hidden costs.

After the elections in April, the 120 members of the Israeli Parliament, the Kenesset, were sworn in.

By the time the next election rolls around on September 17, Knesset Member Osnat Mark of the ruling Likud Party will have served in the Knesset for 10 months without performing any of the duties of a lawmaker. Nevertheless, she will receive a monthly salary of 43,000 shekels ($11,850), as well as a budget for aides and advisers.

Nice work if you can get it.

Moving on, let us recall why that first election was called earlier than required by law. The consensus in the press was that Mr. Netanyahu was seeking to delay the process of the four legal investigations against him. And by all accounts the main subject of discussions when trying to form a new government just now – a process which failed and resulted in those additional elections – was how to create a law that would weaken the prosecution’s cases against Netanyahu.

Add up the value of the charges against Netanyahu, and we are talking about billions of shekels.

Finally, let me turn my attention to the ultra-orthodox community, whose political parties see themselves as natural coalition partners of Netanyahu. They currently constitute about 16.5% of the populace, a figure expected to rise to 20% over the next decade.

However, 98% of 18 year olds from the community graduate without a proper education. Thus, when they do eventually enter the workforce, they are underqualified.

Actually, I should state “if” they work, because nearly 50% of ultra-religious men between the ages of 25 and 64 are estimated not to be a part of the working population. In order words, when Netanyahu agrees to the demands of his rabbinical partners, he is encouraging a form of enforced poverty.

Statistics indicate that 53% of the ultra orthodox live under the poverty line, as opposed to 9% for the rest of the population.

What the heck? Unemployment is at an all time low. The economy continues to grow in real terms. Loads of top musicians are turning up to play open air concerts this summer. So why should we care about a few squandered billions of dollars, if the Israeli government does not want us to think about them?

 

 

Who needs a business mentor?

30 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

About 18 months ago, I gave a talk at a large conference near Tel Aviv of owners of SMEs. The subject was why they should consider hiring a business mentor.

For many of these people, they consider a mentor as just another expense. After all, how can an outsider known their business better than themselves?

I drew an analogy to the world of sport. In athletics, football, swimming  and the rest, there are many, many, many naturally talented human beings. Yet just about all of them have a coach.

Why? Because that extra voice and set of eyes have an experience that is able to bring the best out of others. Coaches and mentors have a special, somewhat undefined, skill that adds so much more to the achievements of the client.

It is the same in business. Sometimes, in order to get over that finishing line, you need an additional head and pair of hands, and there is nothing to be embarrassed about by admitting it.

To understand further what I mean – and to examine my table tennis skills – have a look at this video.

 

Customer service: Can it be taught or does human nature win over?

27 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

The headline of the article says it all: “Tough Israeli airport security can be insulting”.

It is a fine balancing act. Israel has to be ultra vigilant when it comes to security. However, does it have to be so rude, when questioning suspicious types at its airports? Read the responses of those in charge. At least as reported, there is not a hint of empathy at the plight of those turned over, many unfairly. Take it or leave it!

The issue comes to mind following my visit to a distillery in Islay, off the west coast of Scotland. Yes, Bruichlladich is a long way from home. However, the tastings on offer were a major comfort.

The staff were friendly and welcoming. Their explanations were excellent. It was the end of an early summer’s day – well, summer for that part of the world – and if you pardon the pun, everyone was in fine spirits. I decided to purchase a bottle.

I was told that in order to receive a tax refund, I should take my receipt to the appropriate desk at the airport. They did not offer the service of the paperwork at the distillery itself, which I thought was unusual. Unfortunately, at Heathrow airport, I was told that I had been misinformed and that I was required to submit the papers I did not possess.

Annoyed, I wrote to Bruichlladich. They responded (twice) within 24 hours. The response was understanding. They informed me that there would be some staff retraining. I was told that I could expect to receive a small item in the post.

Bottom line. Full apology. It was not possible to wind the clock back, but the distillery had risen to the occasion. Let’s face it. Islay is an island of 3,500 very friendly people and a lot more sheep than that.

By way of contrast, yesterday, I phoned a hotel near Jerusalem. I am trying to arrange a group booking for a family event. I eventually tracked down the relevant person.

When she spoke to me, I was able to enjoy the subtle background noise of lorries hooting nearby. Without explaining what was included, she cut straight to the price, as if I was supposed to absorb all its meaning in a quick gulp of breath. And then, she could not get me off the phone quick enough.

And if you think she called me back to follow up, you are wasting your time.

I can only assume that in all three stories, people have received some form of training in customer service. Clearly, in two of the incidents, the matter is seen of lesser importance. So the questions remain:

Where do you think I would want to purchase (again) if I had the choice, and why? And why don’t those people, who need to learn that lesson, fail to learn that lesson?

What makes Jerusalem’s high-tech scene so vibrant?

23 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

Occasionally, I have mentioned the amazing buzz over the past few years created JLM BioCity. There is a wealth of ideas and innovation coming out of that team, yet in the relatively tiny city of Jerusalem, is world class. But what of the other sectors?

Earlier this week, I received a briefing of what else is happening around the city. I was stunned by the range of activity. What follows is a summary of that same bulletin published by the umbrella organisation, called JNext.

The weekly report starts off with a comment on the role of designers and ‘design mindset’ in general, became much more significant and crucial for tech companies to grow and succeed. They believe Jerusalem can and should become the place ‘Where Tech Meets Design’ and we are happy to invite you to the flagship conference of the ‘Tech Meets Design’ initiative as part of the annual Jerusalem Design Week.

A. THIS IS BIG. Jerusalem was ranked by Startup Genome as Israel’s leading life-science cluster in Israel and one of the top-10 life-science ecosystems worldwide. The city was also ranked as one of the top-20 global ecosystems for Artificial Intelligence companies. Check out the full report and the Jerusalem page on the Startup Genome website. 🏆

B. Ben Wiener of Jumpspeed Ventures, the fund the invests only in Jerusalem based or born startups, announces its new fund, injecting more capital into the capital city. Ben is awesome, everyone loves him, including us. 💸

C. Bitemojo, the most delicious startup in the world (and one of Ben’s portfolio companies), has won the Global Gastronomy Startup Competition of the World Tourism Organization out of 300 startups from across the globe. If you haven’t tried it yet, Bitemojo is a culinary experience of self-guided food tours with nothing but your smartphone. Check out recent interviews with their co-founder, Michael Weiss on the WTO website and on TheMarker. Yummy 😋

D. Genetika+ (another one of Ben’s portfolio companies..) was featured in JPost’s ‘Companies that Make the World a Better Place’ section. Genetika+ is developing a personalized medical testing tool to better treat depression by helping physicians find the best drug therapy for their patients.

E. The Hebrew University hosts a Canna-Tech conference to promote more collaborations between the academy and industry in one of the world’s hottest trends. The Hebrew University is one of the leading institutions globally with expertise in Cannabis-related research and patents. ☘️(**the closest to a cannabis emoji..)

F. From a heavy metal band to a gaming company. Capricia, a Jerusalem-based gaming studio is about to release its first game. Check out the interview with the creators on Geektime 🎸

G. Mellanox, one of Israel’s biggest success stories (recently acquired by Nvidia) are in the process of starting an R&D activity in Jerusalem. They are looking for an excellent SW Team Leader manager to join 5 Years experience in C and Linux and at least 2 years of experience in leading SW teams is a must.

H. Taboola, one of the world’s leading content discovery platforms are in the process of setting up an R&D site in Jerusalem. They are looking for Algorithms Engineering team leader and SW team leader (JAVA) to lead the site.

Jerusalem has around one million inhabitants. Over half is compiled of two large conservative sectors; the ultra-orthodox Jews and the Arabs. And despite that natural restriction, which can limit industrial growth, the city is as vibrant as ever in the high-tech world.

The hidden numbers of Israel’s high-tech success

22 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel, Jerusalem

A few years ago, I was acting as the business mentor for a biotech company that had entered the Mass Challenge incubator in Jerusalem. Alongside them were a couple of people developing an app for the culinary tourist market. And today?

The biotech entrepreneur is still pushing ahead. Bitemojo has just won an international gastronomy competition (UNWTO). Is this one tiny step to becoming another Israeli high-tech success?

Every now and again, there are journalistic gripes that Israel does not produce enough commercial Unicorns. Well, I was recently wading through the updated stats of Israel’s success as a start up nation. What is impressive how the numbers seem to keep growing, almost exponentially.

Just look at the base of Israel’s ecosystem. For example, Comverse, which hit troubles and was sold off in 2016, saw 299 of its employees set up 386 start ups. ICQ, the founder of ‘chat technology’ and sold for US$400 million to AQL had 42% of its staff create 66 enterprises. Anobit, Intel’s first Israeli purchase, fostered an additional 11 businesses.

Another aspect of the high-tech industry is its impact on the lesser developed elements of the working population. Roughly 160,000 people are employed in high-tech, and there are about another 10,000 unfilled positions. Back in 2010, maybe 3,500 came from the ultraorthodox sector. That number had close to trebled by the end of last year.

Not only does this ensure that two conflicting parts of society are able to meet each other in the workplace. Significantly, many of these observant workers are female. Their work hours are frequently adjusted to match their domestic demands, often allowing husbands to study all day in religious seminaries.

Overall, women compromise around a quarter of the Israeli high-tech sub economy. Since 1995, at least 24 ladies have led exits of US$ 30 million or more. At the top of the list is Dalia Prashkar, who sold to BMC for US$650.

The Non-Jewish population is also beginning to make its mark. 24% of the overall population, barely 8% work in high-tech. Intel, CISCO and others had taken major steps to change the balance. And there is now a government sponsored high-tech incubator in the Arab city of Nazareth.

What next? Fivver, Waze, Wix have all succeeded on the global stage. ReWalk is helping paraplegics move about. Mobileye, started out to prove to Toyota that a solitary camera could protect a car from accidents. The company was sold to Intel for US$15.3 billion last year. It has already seen a unicorn spun off from it.

So what will we be saying about Bitemojo in five years, or maybe  we will only have to wait twelve months?

The value of a picture

21 May 2019
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

If you had to choose one picture to sum up or to encapsulate how you feel about your work, your profession, your business, what would it be?

Now, I am a lousy photographer. The question came to me, as I was going through some snap shots of my recent holiday. I unexpectedly came across this item.

 

Loch Lomond (2)

This beauty spot was captured on the northern tip of Loch Lomond, near Glasgow, far away from my home in Israel. In better resolution, readers would be able to pick out the reflections in the water. And from here, I could go on to sing the joys of a recent wonderful holiday.

However, my point is different. I have had the pleasure of visiting the lake in the past. And on each occasion, it brings out a reality test in me. Strange, but the backdrop and tranquility allow me to reassess what is and is not important in my business.

In other words, the atmosphere helps me to focus and to appreciate what I want to be doing and how to achieve those goals. Yes, even experienced business mentors need a wake up call from time to time.

Too often, that reality check for many of us comes after having to cope with an unpleasant crisis in our lives. The truth is  very different. We have opportunities to ‘stand back and to think’ all the time. Yet we refuse to avail ourselves of those moments, usually because we are too afraid.

A picture – and yes, it can express 1,000 of your words in one breath – can help you to re-establish that focus. So I ask once again: What is that visual moment does it for you and are you prepared to use it more often?

 

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