WHILE THE ECONOMY EMERGES AS A KEY ELECTION ISSUE— ISRAEL ’S START-UP & HIGH-TECH SECTORS PROSPER

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Contents:

Economics Will Decide the Israeli Elections in Netanyahu’s Favor: Gidon Ben –zvi, Algemeiner, Feb. 6, 2015 — Forget Hezbollah, Hamas, Abbas, and Iran: the primary driver in Israel’s upcoming elections is the high cost of living.

Crowdsourcing the Real Israel: Brian Blum, Jerusalem Post, Dec. 25, 2014 — Pick up any international press these days, and you might think Israel is on the verge of catastrophe – with sanctions from Europe just around the corner, boycotts being adopted by academia and beyond, terrorism back in vogue on the streets of Jerusalem and tourism in a tailspin.

Israel’s Splendid Isolation: Yoram Ettinger, Algemeiner, Jan. 11, 2015 — Despite the conventional claim that Israel is becoming increasingly isolated, the multinational accounting firm PricewaterhouseCoopers determined that 2014 was a record year of overseas investments in Israel’s high-tech industries…

China’s Emergence as a Middle Eastern Power and Israel’s Opportunity: David P. Goldman, BESA, Feb. 1, 2015— China’s “New Silk Road” might become history’s most ambitious investment in infrastructure.

On Topic Links

Netanyahu’s ‘Bibi-Sitter’ Ad Draws Praise From U.S. Conservatives: Robert Mackey, New York Times, Feb. 6, 2015

3 Israeli E-Commerce Startups to Watch in 2015: Avishai Sam Bitton, Times of Israel, Jan. 31, 2014

Israeli High-Tech Exits Doubled to a Record $15 Billion in 2014: Shiryn Ghermezian, Algemeiner, Jan. 2, 2014

Under Modi, Israel and India Forge Deeper Business Ties: Tova Cohen & Ari Rabinovitch, Reuters, Nov. 23, 2014

ECONOMICS WILL DECIDE THE ISRAELI ELECTIONS IN                                                   

NETANYAHU’S FAVOR                                            

Gidon Ben –zvi                                                                                                    

Algemeiner, Feb. 6, 2015

Forget Hezbollah, Hamas, Abbas, and Iran: the primary driver in Israel’s upcoming elections is the high cost of living. Recent polls have consistently shown that domestic policy and economics, rather than security and Palestinian peacemaking, are what most Israelis will be thinking about when they cast their votes on March 17. With Israeli Prime Minister Benjamin Netanyahu’s bedrock issue, national security, no longer the focus of many voters, the Zionist Camp smells blood. The left-center bloc led by opposition Labor leader Isaac Herzog and Tzipi Livni is campaigning hard to persuade stressed out Israelis that the era of sky-high rents, stagnant salaries, and limited job opportunities will end once Netanyahu is sent packing.

Beyond the populist blather that passes for political discourse, it’s the staleness of the Zionist Camp’s ideas on how to fix Israel that voters should be wary of. For example, outraged members of the Zionist Camp recently lashed out when it was revealed that the Netanyahu government has pumped one-third of the country’s funding for subsidized housing into settlements: 35% of the funds for less than 5% of Israel’s population, while engaging in a campaign of diplomatic suicide. Blame Israel’s economic troubles on the settlements. It’s an old leftist canard that delegitimizes the very real trials and tribulations of more than 400,000 Jewish men, women, and children – Israelis – who happen to be living over the Green Line. In addition, the Zionist Camp believes that the current government’s policies vis a vis West Bank settlement activity has unleashed a potent anti-Israel boycott, divestment, and sanctions movement that is growing stronger by the day.

If Benjamin Netanyahu is re-elected, we are warned, Israel will inevitably find itself economically and politically isolated. In fact, it’s the Israeli left’s socialist and statist heritage that bred an inefficient economic system that is only now beginning to be reformed. Hertzog and Livni claim to be the heirs to Herzl and Ben-Gurion. Hilik Bar, the Secretary General of the Israeli Labor Party recently wrote, “The Labor Party, which together with Hatnuah is running as the Zionist Camp, founded and built the State of Israel.” As such, a quick history lesson is in order. Israel’s Zionist founders, on whose ideological shoulders today’s Zionist Camp stands, asserted that World War I was caused by the failures of capitalism. After Israel’s independence in 1948, Socialist Zionism established a highly centralized economic system dominated by political cronyism. While the statist policies of Israel’s successive labor governments failed to create a socialist paradise, they did succeed in building monolithic, unresponsive bureaucratic institutions that retarded the country’s economic growth for decades. Israelis learned to live in a perpetual state of impoverishment.

However, Labor economic policies do much more harm than merely restrict competition and stifle productivity. A recent Jerusalem Post piece by Jerusalem Institute for Market Studies Director Corinne Sauer noted that a series of studies drew one conclusion: countries considered anti-business are also the most corrupt. This grim economic landscape began to be overhauled in 2003, when Benjamin Netanyahu was appointed Israel’s Finance Minister. Netanyahu initiated a series of pro-market economic reforms that Israelis are only now beginning to benefit from. Don’t look now, but Israel’s economy is actually showing signs of robust growth. Exports to Europe are on the rise, with nearly 10 percent growth in the past year alone; Israel’s hi-tech industry is having a record year, with a number of Israeli companies going public and a record amount is being invested in Israeli companies.

But surely, these successes are few and far between. Certainly, ‘ordinary’ Israelis are worse off today, no? Truth is, Israel has enjoyed virtually uninterrupted growth for over a decade. The worldwide Great Recession has largely bypassed the Start Up Nation. While debt crises and bank bailouts have hobbled European economies to this day, Israel hasn’t just persevered, but prospered. And while the cost of living has undeniably increased, household income has also grown since the percentage of homes with two wage earners has risen from just 30% a decade ago to 44% today. Wages growth has been slow, but it has grown faster than in Europe.

For these positive trends to continue, Israel needs to improve its labor productivity to ensure sustained and higher levels of economic growth. Does the Zionist Camp’s platform encourage a climate of freedom, competition, and entrepreneurship critical to helping Israel realize its full economic potential? According to Secretary General Hilik Bar, Israel’s ongoing challenge of developing an economy in which the country’s wealth stimulates domestic innovation and prosperity can best be addressed if the government does not “pump your taxes into wealthy settlements in the West Bank while ordinary Israelis are suffering.” Oh Labor, there you go again…                               

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CROWDSOURCING THE REAL ISRAEL                                                                                            

Brian Blum                                                                                                                    

Jerusalem Post, Dec. 25, 2014

Pick up any international press these days, and you might think Israel is on the verge of catastrophe – with sanctions from Europe just around the corner, boycotts being adopted by academia and beyond, terrorism back in vogue on the streets of Jerusalem and tourism in a tailspin. You wouldn’t be faulted for assuming that businesses around the world would certainly soon be pulling out of the Start-up Nation – after all, who wants to fly into a war zone or consort with an international pariah? That assumption would be very wrong, judging from the turnout at the first conference put on earlier in December by OurCrowd, the Jerusalem- based crowd-investing platform.

OurCrowd makes it possible for individuals to jump into the once-exclusive venture capital game, as long as they have a minimum of $10,000 to invest. The company identifies promising start-ups; its investor members decide where to spread their money. OurCrowd has generated plenty of buzz since it launched in early 2013, in no small part due to its energetic founder, Jon Medved – who has been either leading or backing Israeli hi-tech companies for close to 30 years. (Among his better-known ventures: the VC firm Israel Seed Partners, and mobile social applications maker Vringo.) OurCrowd, though, may be Medved’s biggest success yet; in less than two years, the company has made it possible for 6,000 individuals to invest more than $80 million in 55 companies, with more on the way. Make that $84m.: At the conference itself, some of the nearly 1,000 participants must have been doing some serious tapping on their smartphones; another $4m. was invested before the day was over. Some of the receiving companies were on hand at the conference, which I attended.

Below are some of the most exciting up-and coming Israeli start-ups. – VocalZoom has built a technology that filters out background noise so that when you talk on your cellphone in a loud public place, the call will sound crystal clear. VocalZoom works by picking out the vibrations coming from your face when you talk, in order to isolate just the voice. Already working with Apple as well as Toyota, the company’s been around since 2010 – but recently received an additional $700,000 from OurCrowd.

– Cimagine allows shoppers to place a 3D picture of a piece of furniture from any website into an “augmented reality” version of their own living room. Cimagine does this by adding a “Visualize” button next to that sofa you’re interested in. Click it, then aim your phone’s camera at the spot you imagine the sofa should go; on your phone screen, Cimagine shows you how the sofa will look in the space. You can move to another part of the house, click Visualize again, and the furniture appears there; you can also swap out different pieces of furniture, change colors and more.

– Pixie: You might have heard about “beacons,” little plastic devices that broadcast where they are so you can track your luggage, phone, keys or kids. Pixie one-ups that by adding “distance” and “direction” – you won’t just know your car is nearby, but by using the accompanying cellphone software, you’ll be directed right to it. A physical device about thumb-size, Pixie will cost $10-$15, has a battery that lasts 18 months and, most importantly, works indoors – which GPS can’t do. The beta is coming next month.

– Up-n-Ride is a new take on the wheelchair. The trick: It rises up into a vertical position, so the person in it is essentially standing. That’s not only healthier than sitting all day, it also allows access to kitchen or bathroom counters, for example, where the disabled person can participate more normally in everyday activities. Up-n-Ride is a friendly spin-off on another Israeli innovation, the ReWalk wearable “exoskeleton,” also backed by OurCrowd (which went public at the end of September). But while ReWalk can only be used by about 10 percent of wheelchair-bound people, Up-n- Ride is appropriate for anyone who using a regular wheelchair. The first prototype will be out in February, with full production starting in 2016…

– eVigilo started as a warning system for the rockets fired from the Gaza Strip; eVigilo manages the alerts, primarily text messages to your phone. Now they’ve started selling it to civilian customers – for example, to alert people of a potential tsunami after an earthquake. In this way, in 2010, exactly such a tsunami killed 600 people in Chile. This year, an earthquake and tsunami in the same location killed only five people– because the eVigilo alert system was in place. Other potential clients include gas and chemical plants where residents living nearby need fast alerts. The system uses the location of cell towers, not your phone number – so if you’re out of town, you won’t get an emergency alert about something happening hundreds of miles away.

– Consumer Physics is the closest thing to science fiction I’ve seen in many years of technology reporting: It’s a molecular scanner that fits in the palm of your hand. This little black dongle – the smallest spectrometer ever built, the company says – uses light waves to analyze the chemical property of physical things. Aim it at the pesto pasta on your plate, and it can tell you the ingredients and number of calories. It can be used to sense what’s in pharmaceutical packages (great for drug stores and law enforcement); really, anything other than metals. Connected to a cellphone, the device sends what it scans to the cloud, where it’s matched to Consumer Physics’s massive and growing database. You’ll be able to pick one up as early as next year, for around $50.

And those are just companies OurCrowd is backing; the start-up ecosystem in Israel is a hundredfold larger. Some of these companies may make it to the big time while others will fail; that’s the nature of venture capital. But collectively, they represent the continuing vitality of Israel’s hi-tech sector; a mass of brute brainpower that international business cannot – and does not – avoid. Gonzalo Martinez de Azagra may have said it best. De Azagra heads Samsung Ventures in Israel; in the closing panel at the conference, he was asked why Samsung had opened an office in Israel only five months ago. De Azagra looked sheepish. “We were already late in the endgame,” he told the audience, which was still packed after nine hours of pitches, panels and ever-replenishing snacks. But after arch-rival Apple acquired Israeli flash memory design firm Anobit for $500m. in 2011 and 3D sensor maker PrimeSense in 2013, Samsung had to follow. In the last two years, first from Korea and now from Tel Aviv, Samsung has invested $30m. in seven start-ups. There is just too much talent to not be here, de Azagra said, “and today we are coming in strong.” That ought to be the real headline when reporting on Israel.

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ISRAEL’S SPLENDID ISOLATION                                                                                    

Yoram Ettinger                                                                                                                                        

Algemeiner, Jan. 11, 2015

Despite the conventional claim that Israel is becoming increasingly isolated, the multinational accounting firm PricewaterhouseCoopers determined that 2014 was a record year of overseas investments in Israel’s high-tech industries: $15 billion in acquisitions of 52 Israeli startups (compared to $7.6 billion in 2013), in addition to $9.8 billion raised by 18 Israeli companies in overseas stock exchanges (compared to $1.2 billion in 2013). Once again, Israel’s impact on global medicine, health, agriculture, irrigation, energy alternatives, science, cyber, homeland security and defense, as well as Wall Street, outweighs the impact of the Gaza Strip. But, Israel is becoming increasingly isolated.

Since 1948, a recycled assumption (e.g., the 1975 “Zionism is racism” UN resolution) has maintained that an anti-Israel global tsunami is about to drown the Jewish state, triggering unprecedented isolation, the collapse of its international standing and the breakdown of its ties with the US, unless it promised — in the unpredictable, unstable, violent Middle East — to redivide Jerusalem, uproot over 500,000 Jewish settlers, and retreat to a 9-15 mile sliver along the Mediterranean dominated by the mountain ridges of Judea and Samaria. However, the collapse of the USSR (which facilitated the 1991 revocation of the USSR-sponsored “Zionism is Racism”), the affirmation of the US as the dominant super power, the upgraded, mutually beneficial US-Israel relationship and the emergence of Israel as a global commercial and military high tech power, have all enhanced Israel’s global standing, dramatically expanding Israel’s global networking beyond Europe into India, China, Russia, the former Muslim republics of the USSR, Latin America — all irrespective of diplomatic setbacks.

Thus, the Israel-India trade balance catapulted from $200 million in 1992 (following the 1991 establishment of diplomatic ties) to $5 billion in 2014. According to the Jan. 3, 2015 issue of the London-based Qatari daily, Al Araby al Jadid, the substantial improvement in the attitudes of Africa and India toward Israel reflects the growing benefits they reap from Israel’s advanced civilian and military technologies. “The shift in India’s position will have an impact on the behavior of other countries. Technology has also played a key role in the development of relations between Israel and China, which is interested in Israel’s advanced technology to boost its economic capability, especially in industry and agriculture. … Israel’s advanced technology developments have boosted its diplomatic ties and enhanced its security.” According to Bloomberg, Israeli exports to Asia have soared significantly, from 13 percent in 2000 to 23 percent in 2014, equaling exports to the US. But, Israel is becoming increasingly isolated.

The Israel-China trade balance has surged from $51 million in 1992 to almost $11 billion in 2013, with China rising to become Israel’s second top export destination. Free trade agreement negotiations will be launched in 2015. On Dec. 4, 2014 The Wall Street Journal reported that Chinese investors had joined American, European and Russian investors who regularly visit Israel’s high tech parks in search for companies, startups and investments. Giant Chinese insurance group Ping An Insurance, which has already invested in eight Israeli startups, considers the US and Israel as the two key arenas for venture investments. In 2011, ChemChina acquired Israel’s Adama, a pesticides manufacturer, for $2.4 billion. In 2013, China’s Fosun Pharma acquired Israel’s Alma Lasers for $240 million. In 2014, China’s Bright Food Group acquired a majority stake in Israel’s Tnuva Food Industries for $960 million. But, Israel is becoming increasingly isolated…

[To Read the Full Article Click the Following Link—Ed.]   

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CHINA’S EMERGENCE AS A MIDDLE EASTERN POWER                                                                                

AND ISRAEL’S OPPORTUNITY                                                                                       

David P. Goldman                                                                                                       

BESA, Feb. 1, 2015

China’s “New Silk Road” might become history’s most ambitious investment in infrastructure. Some Chinese strategists predict an Israeli role in the project on par with, or possibly even more important, than that of Turkey. China calls the project “One Belt and One Road,” referring to a belt of railroads, highways, pipelines and broadband communications stretching through China to the West, and a “maritime Silk Road” combining sea routes with port infrastructure from the Indian Ocean to the Mediterranean.

Israel’s location makes it possible for the Jewish state to “play the role of bridgehead for ‘One Belt and One Road’ with the completion of the ‘Red-Med’ rail project,” said Dr. Liu Zongyi at a November seminar at Remnin University. Dr. Liu based at the Shanghai Institute of International Studies, spoke of a $2 billion, 300 km rail line linking Ashkelon with the Red Sea. The “Red-Med” project is usually presented in more modest terms, as a way of absorbing excess traffic from the Suez Canal, or an alternative route in the event of political disruption. What China calls “One Belt and One Road” proposes that China, with the Mediterranean on the East-West axis, will have the opportunity to create high-speed rail lines in Southeast Asia, India, and Africa. China aims to double its 12,000 kilometers of railway track by 2020, with high-speed lines comprising most of the expansion. It is building a rail network south through Thailand, Laos and Cambodia to Singapore, and west to Istanbul.

Some Chinese strategists see “Red-Med” as emblematic of a more ambitious design for the region. For example, Sino-Israeli collaboration aims to include counterterrorism and anti-piracy operations, as well as economic support for Arab countries. Israel can provide advanced technologies, such as in agricultural, to support the industrialization of the Middle East in the context of “One Belt and One Road.”  The Chinese have even pointed out to Israel that their navy is conducting anti-pirate missions in the Indian Ocean and The Gulf of Aden that Israel can participate in. The project implies a radical shift in China’s perceptions of regional security in the Middle East. China’s net oil imports have nearly tripled in the past decade, from 100 million tons per month in 2005 to nearly 300 million tons today, and most of the increase has come from the Persian Gulf. China’s dependence on Middle Eastern oil will continue to rise. Until recently, China was content to follow America’s lead on Gulf security. After the collapse of Syria and Iraq, however, China’s complacency has turned to concern, and China is seeking ways to enhance its regional security presence without, attempting to play a superpower role in the region.

There is a new consensus in China that the world’s second superpower will have to play a more central role in the Middle East. But the suddenness of America’s decline in the region has left China unprepared and unsure of its next steps, as Chinese analysts are quick to acknowledge in private conversations. China has joined the P5+1 negotiations with Iran and offered to become a fifth member of the Quartet (UN, US, Europe, Russia), but these are pro forma proposals to assert China’s interest in the region rather than a policy per se. In the past, China has voted with the Palestinians at the United Nations, and it will not alter its diplomatic position in the foreseeable future. There is an overarching theme to Chinese policy, though, and it stems from China’s economic strengths. The transformation of the Eurasian landmass by high-speed transport and communications will lift large parts of the continent out of backwardness, China believes, and make long-term political stability possible. Building the New Silk Road, though, demands the suppression of security threats that could disrupt trade flows. In both respects Beijing is sizing up Israel as a strategic partner…                                                                                                                                                           

[To Read the Full Article Click the Following Link—Ed.]  

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On Topic

Netanyahu’s ‘Bibi-Sitter’ Ad Draws Praise From U.S. Conservatives: Robert Mackey, New York Times, Feb. 6, 2015—As campaigning intensifies ahead of elections next month in Israel, Prime Minister Benjamin Netanyahu is making his case to stay in office by playing the role of the nation’s babysitter in chief in an online comedy sketch posted on Facebook and YouTube.

3 Israeli E-Commerce Startups to Watch in 2015: Avishai Sam Bitton, Times of Israel, Jan. 31, 2014 —Among the many successful Israeli startups of recent years there are 3 e-commerce ones that stand out as having massive promise.

Israeli High-Tech Exits Doubled to a Record $15 Billion in 2014: Shiryn Ghermezian, Algemeiner, Jan. 2, 2014—Israel experienced its best-ever year in 2014 for the high-tech and biomed sectors in terms of exits, the Globes business daily reported on Tuesday.

Under Modi, Israel and India Forge Deeper Business Ties: Tova Cohen & Ari Rabinovitch, Reuters, Nov. 23, 2014—At the UN General Assembly in New York last September, Israeli Prime Minister Benjamin Netanyahu set aside time for a critical meeting. But it wasn't President Barack Obama he was keen to see. It was Indian Prime Minister Narendra Modi.

Rob Coles, Publications Chairman, Canadian Institute for Jewish Research/ L'institut Canadien de recherches sur le Judaïsme, www.isranet.org

Tel: (514) 486-5544 – Fax:(514) 486-8284 ; ber@isranet.wpsitie.com