General News Summary
Syria, the Saudis, Security
Prime Minister Benjamin Netanyahu has not deigned to comment publicly on Crown Prince Mohammed bin Salman’s shake-up of the Saudi Arabian hierarchy, but there’s little reason to doubt that he’s not entirely displeased by its effect. Although the ostensible reason for 31-year-old son of King Salman’s consolidation of power was aimed at corruption and nepotism in the desert kingdom, there are also distinct overtones of Saudi Arabia’s escalating rivalry with Iran.
Two events with Saudi-Iranian overtones took place almost simultaneously with the moves of Mohammed bin Salman, often known in the West as MBS: the surprise resignation of Saudi-backed Lebanese Prime Minister Saad Hariri, and the successful interception of missile fire on Riyadh, the Saudi capital, by Iranian-based forces in neighboring Yemen. Hariri, in an announcement made when he was in Riyadh, rather than at home in Beirut, denounced intervention in Lebanon by Iran and Hizballah, its Lebanese proxy. MBS called the missile attack, fired by Yemeni Houthi rebels, “direct intervention” by Iran and “an act of war.” In response Sheikh Hassan Nasrallah, the Hizballah leader, charged that it was Riyadh which had intervened in Lebanese affairs and said it was the Saudis who were guilty of warlike provocations.
In Israel, Netanyahu took the opportunity offered by Hariri’s announcement to call it “a wake-up call to the international community to take action against the Iranian aggression that is trying to turn Syria into a second Lebanon…which endangers not only Israel but the entire Middle East.”
The statement echoes mounting concern over an increased Iranian presence in Syria, including the posting of Iranian military units not far from the Syrian-Israeli frontier in the Golan Heights, and the increased confidence of battle-tested forces of Hizballah, Iran’s Lebanese ally, which played a key role in the survival of President Bashar al-Assad’s regime in Syria’s winding-down civil war.
Mounting tension between Saudi Arabia and Iran could hardly suit Netanyahu any better. For months he has been preoccupied with two subjects (outside his own domestic woes) – the intensifying Iranian threat, and Israel’s improved relations with moderate Arab states which remain unnamed, whose identity could hardly be clearer.
The Israeli leader has been telling anyone who’ll listen that Israel and the moderate Arabs, most of whom are Sunni Muslims, share an overriding interest in countering the regional ambitions of Iran, the epicenter of the rival Shi’ite strain of Islam. In that state of affairs, the suggestion is the Israel-Palestinian conflict has become a secondary issue which can be pushed aside to deal with the common threat.
Some observers sharing that view note that about a week before MBS launched his crackdown, Jared Kushner, President Trump’s son-in-law who has a major role in the administration’s Mideast policy, visited Riyadh for talks with various top leaders – naturally including MBS himself. (There have also been suggestions that Kushner’s talks centered on a nascent Trump Administration plan for Israeli-Palestinian peace, which would have Saudi backing.)
Those are not the only indications. Ron Dermer, Israel’s ambassador in Washington and a long-time Netanyahu confidant, recently told a Jewish group that things in the Middle East had changed in recent years, with numerous Arab governments having interests that align with Israel’s. And an Israeli TV station recently reported that the Foreign Ministry in Jerusalem (where Netanyahu is acting minister) had sent Israel legations a list of talking points with a pro-Saudi spin on events in Lebanon and Yemen.
The Saudi upheaval comes as tensions along Israel’s northern border are increasing. Reported Israeli air strikes against Iranian-linked military installations in Syria have drawn threats of retaliation, but no definitive action so far, from Damascus. At the same time, Iran has been moving to consolidate its presence in Syria and Lebanon, where there are reports that it already has begun building at least one permanent military base.
Israel says it won’t allow Syria to become what Defense Minister Avigdor Lieberman calls Iran’s “Shi’ite axis.” That attitude appears to be unchanged, despite the early-November U.S.-Russian-Jordanian agreement on a cease-fire in southern Syria, which ostensibly requires all foreign forces, including the Iranian Revolutionary Guard, to leave Syria at an unspecified date and distance themselves from the Israeli border in the interim.
In this context, the de facto alignment with the Saudis could be more than Netanyahu bargained for. Dan Shapiro, who left his post as U.S. ambassador to Israel in January but still lives in the country, suggests that Riyadh wants to make Lebanon the new theater of its confrontation with Iran, and may be trying to maneuver Israel being its unwilling proxy on its borders.
In any event, Israel can be expected to continue its air attacks against the shipment of Iranian advanced arms into Syria and to Hizballah, Iran’s Shi’a Muslim surrogate in Lebanon. One misstep, or misinterpretation by either side, could ignite a confrontation that might spread across the region. That misinterpretation didn’t happen on November 11, when a Syrian unmanned aerial vehicle flew into the demilitarized area on the border between Syria and the Golan Heights. The UAV, which apparently was assumed to be on an intelligence-gathering mission, was shot down by an Israeli Patriot missile. This time that appeared to be the end of the story, in another case it might not be quite so simple.
The Netanyahu Files
During U.S. President Donald Trump’s visit to Israel last summer, Israeli First Lady Sara Netanyahu reportedly told her American counterpart, Melania Trump, that while the media were against their respective husbands, they were loved and supported by the people. Continuing police investigations into three criminal cases involving Benjamin Netanyahu have cast a shadow over Mrs. Netanyahu’s assessment; several recent polls have indicated that, were elections to be held now, Netanyahu’s Likud party would not win the plurality necessary to give him another term as prime minister.
It’s far too early to write off the possibility of another term for Israel’s long-standing prime minister. For one thing, the elections aren’t being held now, they’re only scheduled to take place two years from now, in November 2019. For another, the identity of the opposition candidate who might defeat Netanyahu at the ballot box is far from clear. Those same public opinion polls that seem to spell electoral doom sometimes favor Yair Lapid, leader of the centrist Yesh Atid party, sometimes the Labor party and its new leader, Avi Gabbay, who just happens to have been a member of Netanyahu’s cabinet before abandoning the Kulanu party, a coalition partner, to run for and win the Labor leadership.
In the interim, there’s the matter of the investigations. One of them – called Case 1000 – involves expensive gifts lavished on the Netanyahus by rich friends in general and Israeli Hollywood producer Arnon Milchan in particular. Police have been looking into a link between Milchan’s regular shipments of expensive cigars and pink Champagne to the Prime Minister’s residence and Netanyahu’s intervention on his behalf with former U.S. secretary of state John Kerry, to arrange a 10-year U.S. residency visa for the billionaire producer. There are also questions about possible Netanyahu intervention to help Milchan in connection with the producer’s interest in an Israeli TV station. Some sources close to Netanyahu have been saying that the prime minister’s intervention was for a very different reason, in recognition of Milchan’s (unspecified) contribution to Israel’s security.
A second investigation, Case 2000, centers on conversations between Netanyahu and Israel’s media mogul, and a newspaper publisher Arnon (Noni) Mozes, over a possible deal involving more favorable coverage in Mozes’s Yediot Aharonot, the country’s best selling newspaper, in exchange for legislation to hamper free distribution of the Israel Today newspaper, owned by Netanyahu supporter and U.S. casino magnate Sheldon Adelson.
It’s a third investigation, Case 3000 that holds the most potential danger for Netanyahu, even though it has repeatedly been said that the prime minister is not a suspect in it. That case involves Israel’s purchase of submarines and naval patrol craft, a multi-billion euro deal in which a tender was bypassed, allegedly at Netanyahu’s insistence, in favor of a deal with Germany’s ThyssenKrupp shipyards that included substantial subsidies from the government in Berlin.
The problem is that several Netanyahu confidants are deeply involved. These include Yizhak Molcho, an attorney who has served for more than a decade as the prime minister’s personal envoy on the most sensitive missions, Molcho’s law partner David Shimron, Netanyahu’s relative and personal attorney, who also represented ThyssenKrupp as a lawyer and as its alleged agent. Shimron and Netanyahu, who denies involvement and reportedly is not a suspect in the case, insists that the prime minister did not know of Shimron’s German connection, which involved millions in legal fees, and that Netanyahu had no personal financial interest in the deal. Molcho, for his part, reportedly insists that he had no inkling of the connection between Shimron, his long-time partner, with the German firm. Shimron and Molcho are but two of a long list of influential Israelis questioned under caution in the case, including former Israel Navy commander Eliezer Marom, former National Security Council deputy head Avriel Bar-Yosef, and Miki Ganor, the German firm’s representative in Israel who has turned into a state witness.
While Netanyahu continues to insist that there is no wrongdoing on his part, several key members of his party are pushing parliamentary legislation, including a bill preventing criminal investigations of a sitting prime minister.
Though the pressure on him is mounting, Netanyahu can take solace in the fact that despite his fall in the polls, there’s no other potential successor with anywhere near the experience necessary to steer Israel through challenges facing it in the immediate and short-term future – Iranian penetration into Syria with the end of the civil war there, the unpredictability of the Trump Administration’s Middle East policy, the effect of a reconciliation between Palestinian Authority President Mahmoud Abbas and the Hamas rulers of Gaza, the possibility of a new Israeli-Palestinian peace plan coming out of Washington. In those circumstances, lack of an alternative could also prove to be Netanyahu’s salvation.
Sub Sale Approved
The German government in late October formally approved the $2B sale to Israel of three submarines to be manufactured by Germany’s ThyssenKrupp shipyards. Germany is due to cover about a quarter of the cost. According to various Israeli sources, the deal is still contingent on the outcome of an Israel Police investigation into allegations of corruption involving the deal, centering on a number of senior Israeli figures, some of them confidants of Prime Minister Benjamin Netanyahu.
Prime Minister Netanyahu said in late October that Israel’s position on the Palestinian reconciliation agreement signed by the Palestinian Authority and the Hamas rulers of Gaza was very simple – Israel would accept it if the parties recognized Israel, if Hamas militias were disarmed.
In an agreement signed in Gaza after brief negotiations, the Fatah organization, which controls the Palestinian Authority, and Hamas decided to end the 7-year rift between them, hold elections and form a unity government.
Fatah and Hamas have signed similar agreements over the past decade. Deadlines for the implementation of those accords came and went, without any progress. In the interim, both sides have entrenched their positions in the territory they control, Fatah in the Palestinian Authority in the West Bank and Hamas in the Gaza Strip.
The two sides set up committees to work out details of the pact, but prospects for implementation seem faint this time as well. Hamas says it will not disarm its military wing, and PA President Mahmoud Abbas says that the PA will not take over the governing of Gaza, as the pact stipulates, unless Hamas cedes its control.
Myanmar Role Denied
Israel’s Foreign Ministry has issued a vigorous denial of reports that Israel had sold advanced weapons to Myanmar during that government’s campaign against Rohingya Muslims, which has been described in the international press as ethnic cleansing. The ministry said that Israel maintains tight control and regularly reviews its foreign arms sales, taking “the human rights situation in the target country” into consideration.
Speaking to a group of rabbis in New York, Israeli deputy consul Amir Sagie said Israel “does not discuss publicly” Israel’s military or defense relationships. He stressed that all weapons exports are “done with due diligence,” and that human rights are taken into consideration in the approval process.
The Israel Securities Authority has recommended criminal prosecution for alleged fraud and collusion in a case involving senior managers at the Bezeq telecommunications company, the YES satellite broadcaster and Spacecom Satellite Communications, plus civil servants who dealt with Bezeq. A key part of the case involves the inflated price paid by Bezeq, which is controlled by majority shareholder Shaul Elovich, in YES, which Elovich’s company, Eurocom, owns. The investigation also includes alleged activities favoring Elovich by various officials, including Shlomo Filber, the director-general of the Ministry of Communications. Filber was appointed to the Communications post by Prime Minister and acting Communications minister Netanyahu, for whom he formerly served as chief of staff; Elovitch is reported to be a personal friend and confidant of Netanyahu.
Margalit Leaving Knesset
Erel Margalit, an unsuccessful candidate for the leadership in the recent Labor party primary, announced in mid-October that he was leaving the Knesset. The 56-year-old businessman said he would “continue his work as a social and economic entrepreneur, “returning to head Jerusalem Venture Partners, one of Israel’s largest investment firms which he founded, and the B’kehila social action/welfare NGO.
Israeli unemployment amounted to 4.1% in August, down from 4.3% in July and the lowest figure since 1995, the Central Bureau of Statistics reported. Participation in the labor force exceeded 80% for the month.
Revenues Rise, Deficit Drops
Surging tax revenues have dramatically lowered the government deficit over the past 12 months to 1.4% of GDP, less than half of the 2.9% target in the 2017 budget. The reduction is mainly attributable to tax revenues of over NIS 30B in October, the second consecutive record-breaking month.
IMF Raises Forecast
The International Monetary Fund in early October raised its forecasts of the Israel economy’s growth in both 2017 and 2018, to 3.1% and 3.4% respectively. Earlier IMF estimates were for GDP growth of 3% in both years.
Tahal’s India Projects
Israel’s Tahal Group International has won contracts valued at $76M for planning and building a water-supply system at Nirsa in the Indian state of Jharkand. The projects involves surveying, planning, and construction work on a water treatment and supply system for 127,000 households in two stages, over a three-year period. According to a report in Globes, Kardan, a leader in the Israeli real estate market with headquarters in Amsterdam, is seeking to sell its controlling share in Tahal.
South Korea Trade Rises
Israel’s trade with South Korea has increased sharply during the current tensions between the United States and North Korea, according to a report in Globes. Israel’s Economic Ministry reports than Israeli exports to Seoul rose by 36% in January-August, reaching a total of more than $560M. In addition, Israel Aircraft Industries and a Korean firm have agreed to establish a subsidiary for the development of unmanned aerial vehicles.
Gas Estimates Increased
Independent assessments indicate about 136 billion cubic meters of natural gas in the Karish and Tanin offshore fields, Greek energy company Energean said in early November. The assessments, by a Dutch firm, are about double initial estimates for the field. The Greek firm is investing about $1B in development of the Israeli fields.
Former tourism minister Stas Misezhnikov has accepted a plea-bargain agreement under which he will admit to fraud and breach of trust and serve 15 months in prison, Globes has reported. The charges are part of an investigation of alleged corruption in Yisrael Beitenu, the party headed by Defense Minister Avigdor Lieberman. Misezhnikov will admit that as tourism minister in 2009-13 he gave a budget of NIS 1M to an event in Eilat and simultaneously got the organizers to employ his partner, paying her tens of thousands of shekels. Indictments in the Yisrael Beitenu case cover over 10 separate cases. The central figure in many of them is Faina Kirschenbaum, a former Knesset member, deputy interior minister and party secretary.
Gershon Salkind, founder and controlling shareholder of Elko Holdings, one of Israel’s largest industrial groups, died in Tel Aviv in late September. He was 87. The company, a leader in the consumer electronics field, operates through three main subsidiaries – Electra, Electra Consumer Products, and Electra Real Estate.
New Companies Head
Yaakov (Yanki) Quint is the new head of the Government Companies Authority. Quint, appointed by Finance Minister Moshe Kahlon, previously served as legal adviser to the Israel Lands Authority and represented the finance minister on the National Building and Planning Council and the committee that determines the “basket” of pharmaceuticals and medical treatments covered by health maintenance organizations.
Finance & Investment
Daimler Invests in StoreDot
Daimler, the German automotive giant, is the lead investor in the $60M financing round of StoreDot, an Israeli firm specializing in fast battery charging technology. Other investors in the company include Roman Abramovitch’s Norma Investments. StoreDot, based in Herzliya in the high-tech belt north of Tel Aviv, says its FlashBattery technology is designed to recharge the batteries of electric cars in about the time it takes to fill the tank of an internal combustion-powered vehicle with gasoline.
Three U.S. companies raised a total of about NIS 1B on the Tel Aviv bond market in early September, according to a report in Globes. The companies are Urban Investment Research Corp., which rents out properties to U.S. federal and local governmental bodies, Chosen Properties, which is involved in nursing services, and Noble Assets, which focuses on residential properties in New York. Israeli sources say that the Tel Aviv bond market is a source for relatively inexpensive corporate financing.
Crowdfunding on the Rise
145 Israeli start-ups raised a total of $145B through crowdfunding over the past 5 years, according to a survey by Israel’s IVC Research Center. IVC Research said that 17 of the companies had successful exits. Largest player in the Israeli crowdfunding market is Jerusalem’s Our Crowd, headed by venture capitalist Jonathan Medved, which accounted for 58% of the investments and 81% of the capital raised.
Mergers & Acquisitions
Hapoalim Stake Being Sold
The University of California Retirement System has been disclosed as one of the prospective investors in controlling shareholder Shari Arison’s planned sale of 49% of her controlling interest in Bank Hapoalim, one of Israel’s two largest banks. Through her Arison Holdings, Arison held 20% of the equity in Hapoalim, whose shares are traded on the Tel Aviv Stock Exchange. Total value of the shares being sold is NIS 3.3B. Announced in late September, the deal is subject to due diligence and regulatory approval, a process that is expected to take at least several months.
Software giant SAP has purchased Gigya, a Tel Aviv and Mountain View, California consumer identity management start-up, for a reported $350M in cash. Gigya, which currently manages a reported 1.3 customer identities, says its platform allows companies to manage customer profiles, preferences, opt-in and consent settings, with customers maintaining control of their data at all times.
Cloudigo, an Israeli data center company, was acquired by IBM in late September, Financial details were not announced. Cloudigo, based in the Tel Aviv suburb of Givatayim, builds next-generation data center infrastructure and networking.
Aeronautics, an Israeli developer of unmanned aerial vehicles, has acquired Chassis Plans of San Diego, California. After a year of negotiations Aeronautics, based in Yavne, southeast of Tel Aviv, paid $6M for the California developer of command and control systems for UAVs, for military and industrial applications.
Alcobra Ltd., a Tel Aviv-based developer of treatments for central nervous system disorders, is merging with California firm Arcturus Therapeutics. Based in San Diego, Arcturus specializes in DNA-based therapy for rare and orphan diseases. Arcturus shareholders will own about 60% of the merged company, compared to 40% for Alcobra. The merged company plans to specialize in gene-based treatments for infectious diseases including cystic fibrosis and rare liver ailments. According to Yediot Aharonot, the merger is based on an Alcobra valuation of about $47M.
Apax Buys 3M Unit
Apax Partners has purchased 3M‘s Israel-based electronic unit for a reported $200M. The business will now have the name Attenti, called before 3M acquired the company for $230M in 2010. The Tel Aviv-based unit, previously called Dmatek, provides electrical monitoring services worldwide.
Booking.com, the online travel reservations giant, has acquired Tel Aviv-based Evature for an undisclosed sum. Evature, based in Tel Aviv, develops chat-based interaction technology between travel providers and their customers. The acquisition comes shortly after Booking.com announced that it would open a R&D center in Tel Aviv. 5e of Evature’s current 10 employees will remain in Tel Aviv, the other 5 will be transferred to Booking’s operations in Amsterdam.
German Firm Eyes Argus
Continental, a German supplier of auto parts, has been identified as the principal bidder for control of Israeli start-up Argus Cyber Security. Projected purchase price is in the $400M range.
Argus, founded by graduates of the IDF Intelligence Corps famed 8200 technology unit, has developed a system that protects autonomous vehicles by preventing intrusion of hackers into their control system. The Israeli purchase is one of several acquisitions being explored by Continental, an international firm with annual sales of about $40B.
Science & High Technology
Teva gets new head – finally
Kare Schultz, a 56-year-old pharmaceutical executive, has been approved as the new CEO and president of Teva Pharmaceutical Industries, Israel’s world-class Big Pharma. Schultz succeeds Dr. Yitzhak Peterburg, the interim CEO for the past year while Teva, based in Jerusalem and Petah Tikva, searched for a new head.
Schultz, who most recently headed H. Lundbeck, a Danish international pharmaceutical company, faces many challenges at Teva, whose market cap declined sharply in the year after its $40 acquisition of New Jersey-based Actavis Pharmaceuticals, due to both massive debt and a sharp drop in revenues from generic drugs and from the introduction of generic competition for Copaxone, its blockbuster treatment for multiple sclerosis. The day after Schultz’s appointment was confirmed, Peterburg, who is remaining on in the transition period, announced that Teva would dismiss 7,000 employees, shut down 15 plants and cease activities in 45 countries as part of a recovery plan.
Even before Schultz took over, Teva had been selling off assets to cover some of the massive debt incurred in the Actavis acquisition. In late summer, the company sold women’s health assets for about $2.48B – Paragard, its copper intrauterine contraceptive device to Cooper Surgical, a portfolio of women’s health products to CVC Capital Partners, and a line of emergency contraception products to Foundation Consumer Healthcare.
In addition to the impact on its own shareholders, Teva’s troubles have affected the Israeli economy as a whole and almost every Israeli citizen, as the long-time “people’s share,” pension, retirement and provident funds had invested heavily in the seemingly invincible former giant. According to one estimate, between 5% and 6% of Teva’s total share capital is held by these institutions; Globes put their total loss at around NIS 10B, or close to $3B. The bottom line: The entire country must be rooting for Schultz to bring Teva back to economic vitality.
Economy Minister Eli Cohen has appointed Dr. Ami Applebaum as head of the ministry’s Office of the Chief Scientist. Applebaum currently serves as president of KLA Tencor Israel, the local subsidiary of a Silocon Valley developer of processes for the control of semiconductor production. Other candidates to head the office, which fosters industrial R&D in Israel, included former Intel officials Maxine Fassberg, David Perlmutter and Shmuel Eden.
Weizmann Institute Ranked High
The Weizmann Institute in Rehovot has been named the top research institute outside the United States and sixth overall in nature.com’s 2017 Nature Index, Weizmann was the only non-U.S. body in the top 15 of the list, in which San Diego-based Scripps Research Institute was first, Rockefeller University of New York second, and the Massachusetts Institute of Technology (MIT) third.
Joint Cornell-Technion Campus
A joint campus of Cornell University and Israel’s Technion Institute of Technology was recently inaugurated on Roosevelt Island in New York City’s East River. Graduates of advanced programs at the new facility will receive joint degrees from the U.S. and Israeli institutions of higher learning. The Technion was chosen over other non-U.S. institutions to participate in the project, launched by Mayor Michael Bloomberg when he was New York City’s mayor.
CollPlant, a producer of human collagen from genetically engineered tobacco plants, has received its first order for biological ink for use in 3D printing. The company, based in Nes Tziona southeast of Tel Aviv, says its technology focuses on orthopedics, 3D printing of tissue and organs, and advanced wound healing. Two CollPlant products, one for treating inflamed tissue and another for treating wounds, have already been approved for European marketing.
Developers expect Tookaid, a prostate cancer drug developed by Israeli-Swiss company Steba Biotech, to be granted final European Medicines Authority approval for marketing before the end of 2018. An EMA subcommittee recently recommended the treatment, developed by Prof. Avigdor Scherz and Dr. Yoram Solomon of the Weizmann Institute in Rehovot, for public release in a 29-2 vote.
An Israeli reconnaissance balloon played a key role in security for a recent visit of Pope Francis to South America. The balloon, deemed more reliable than unmanned aerial vehicles and manufactured by RT Aerostats of Yavne, southeast of Tel Aviv, was used during outdoor prayer ceremonies conducted by Pope Francis in Medellin and Bogota, Colombia. It has been deployed by Israeli security services, and on previous papal visits to Africa and Israel.
Alibaba’s Israeli Lab
Chinese e-commerce giant Alibaba has announced that it will open an R&D lab in Israel. The lab is part of a $15B global research program which involves the opening of seven new Alibaba facilities in the next three years. In addition to Tel Aviv, labs are scheduled for Beijing, Hanzhou, San Mateo, California, Bellevue, Washington, Moscow and Singapore.
New IBM Center
IBM has invested about NIS 200M in its new development center, which was opened in mid-September in Givatayim, just outside Tel Aviv. The center, which occupies 7 floors of an office tower, will facilitate contact and idea-sharing between teams dealing with separate disciplines, including artificial intelligence, cloud computing, cyber, data storage and analytics.
Development Center Deal
Medical equipment maker Medtronic, based in Minneapolis, Minnesota, is becoming the first company to set up an Israeli development in cooperation with the Economics Ministry’s Innovation Center. In exchange for opening two new centers – in Jerusalem for brain monitoring and in Yokneam, near Haifa, for medical big data – Medtronic will receive a $14M grant, reportedly spread over three years, to cover about 30% of the new center’s staff. The expansion of Medtronic’s existing activity in Israel was agreed last summer, during company head Omar Ishrak’s visit to Israel.
Delphi coming too
Delphi Automotive, the international automotive technology giant with principal offices in Gillingham, Kent, England and Troy, Michigan in the U.S., is becoming the latest of its industry’s leaders with research facilities in Israel. Delphi’s announcement came not long after Daimler Benz launched its own Israeli R&D center.
Delphi’s announcement follows several Israeli investments made by the firm in 2017 – $60M in microchip developer Valens, $25M in Otonomo, which developed a platform for communications between automakers and service providers, and Innoviz Technologies, which makes laser-based sensors for autonomous vehicles.
Corephotonics, a Tel Aviv start-up founded by a university professor, has filed suit against computer giant Apple for patent infringement. In the suit, Corephone claims that Apple has violated four of its patents in iPhone 7 and iPhone 8 models – two on mini telephoto lens assembly, one on dual aperture zoom digital cameras and one on high-resolution thin multi-aperture imaging. It alleges that Corephone’s founder, Prof. David Mendelovic, initially cooperated with Apple until negotiations broke off. It alleges that Apple’s lead negotiator “expressed contempt for Corephotonics’ patents, telling Dr. Mendlovic and others that even if Apple infringed, it would take years and millions of dollars in litigation before Apple might have to pay something.”
Aerospace & Defense
Loitering Naval Munitions
Government-owned Israel Aerospace Industries has unveiled the Maritime Harp, a loitering munitions unmanned aerial vehicle launched from a variety of platforms including naval vessels and which is capable of locating and attacking land or sea targets with what the manufacturer says is a high degree of accuracy.
IAI has also introduced another system – Ammad MK II, a device that uses a magnetic field to identify and neutralize concealed magnetic land mines and IEDs at stand-off range and minimizing danger to personnel and vehicles.
Mexico has deployed the Aerostar unmanned aerial system manufactured by Israeli defense contractor Aeronautics through Mexican company Balam Security. Value of the deal was not disclosed, but it’s estimated at about $15M. Aerostar, a next-generation tactical UAV with advanced intelligence-gathering capabilities, is in service with 15 armies, security services and law enforcement agencies around the world.
Engine Deal Expanded
Israel’s Beit Shemesh Engines says it expects its revenues from an agreement with Pratt & Whitney to increase by more than $100M as the result of expansion of its deal with the American company. The agreement, which mainly involves engines for narrow-bodied aircraft, raises the total value of agreements between the two companies from $530M to $640M.
TAT gets Airline Contract
TAT Technologies, an Israeli company based in Gedera southeast of Tel Aviv, has been awarded a $40M contract to renovate and maintain auxiliary power units for a U.S. airline’s Boeing and Airbus aircraft. The maintenance will be performed by Piedmont Aviation Component Services, a TAT U.S. subsidiary located in North Carolina. TAT is controlled by Ishay Davidi’s Tel Aviv-based FIMI Opportunity Funds.
Elbit Asian, African Contracts
Private defense contractor Elbit Systems has won a $300M, three-year contract to supply command and control systems to an undisclosed customer in the Asia-Pacific region. Announcement of the deal in late September came a few days after it was disclosed that the Haifa-based defense firm had received an order for $240M for military equipment, including infra-red based systems protecting aircraft from shoulder-fired antiaircraft missiles, to an unnamed African country. The announcements follow an earlier announcement of a $93M contract to upgrade U.S.-made F-5 warplanes for another unnamed customer in the Asia-Pacific region.
IAI Chinese Deals
Israel Aerospace Industries has signed a $10M contract with the city of Shantou in Guangdong Province to build a training center where Israeli teams will teach the Chinese to maintain passenger aircraft. The contract was signed as part of a conference for business cooperation between Israel and Guangdong Province. IAI will also build a robot to streamline container story in Guandong’s Gwangju Port.
Roboteam, based in Tel Aviv and Gaithersburg, Maryland, unveiled TIGR, its Transportable Interoperative Ground Robot, at a recent defense show in Washington, D.C. The company, which develops robotic systems for defense and law enforcement agencies, describes TIGR as an all-weather highly mobile system capable of operating on all types of terrain, fitted with 6 HD video cameras.
At the same show, Rafael Advanced Defense Systems introduced its Samson Dual M230LF RWF, its latest remote weapons system. The newest addition to the combat-tested RWF system features significant improvements, including armor protection and under-armor reloading capabilities to enhance protection of the crew, two main and secondary armaments including a 30 mm cannon and 7.62 mm machine gun.
Trophy Crosses Atlantic
Trophy, the active protection system for armored vehicles developed by Rafael Advanced Defense Systems, is headed for the U.S. Army. In mid-October the U.S. Department of Defense awarded General Dynamics a $10M contract for research, development and adaptation of the Israeli missile-protection system on MiA2 Abrams battle tanks.
According to Yediot Aharonot, the current plan is to equip an American armored brigade with Trophy (Windbreaker in Hebrew), which has been fitted on IDF Merkava tanks. Total value of the final deal is expected to reach $300M, though it still has not been determined whether General Dynamics or a Rafael subsidiary in the U.S. will be in charge of manufacture.
Iron Dome Interest
The United States is exploring the possibility of acquiring Israel’s Iron Dome missile defense system to protect its European bases, according to various reports in the Israeli and international press. The system, which has registered numerous successful interceptions of missiles fired from Gaza during 2014’s Operation Protective Edge, was developed, with substantial U.S. funding assistance, by Israel’s Rafael Advanced Defense Systems and Israel Aerospace Industries in cooperation with Raytheon, which produced much of the Tamir missile used in Iron Dome. Iron Dome has already undergone numerous tests in U.S. facilities; if the Americans decide to purchase it, American defense firm Raytheon will be the lead contractor, with the Israeli firms as subcontractors. Even if that is the case, the contract probably would be worth hundreds of millions of dollars to the Israeli firms.
IAI Wins SATCOM, Fuse Contracts
Israel Aerospace Industries has been awarded, what it says is a major follow-on contract to provide advanced satellite communications for an undisclosed customer. Value of the deal, through IAI’s Elta subsidiary, was not announced; it involves several dozen airborne terminals and ground facilities for medium and heavy-lift helicopters.
IAI will also develop and supply new fuses which will significantly improve precision of Israel Defense Forces artillery shells. IAI’s TopGun uses a guidance integrated fuse to convert standard artillery ammunition into precision-guided weapons. Contract for the fuses, to be used on IDF standard 155mm artillery shells, is valued at several tens of millions of dollars.
Raytheon Wins India Deal
The Indian government has chosen U.S. defense contractor Raytheon to supply two ISTAR (intelligence, surveillance, target acquisition and reconnaissance aircraft. Israel Aerospace Industries was considered one of the front-runners for the lucrative contract, valued at about $1B, due to several systems the Israeli contractor had supplied to India. IAI had offered India a system similar to the Nachshon deployed by the Israel Air Force, based on a Gulfstream 550 executive jet platform adapted to the intelligence tasks by IAI’s Elta subsidiary.
AMOS 17 Launch Plans
Israel’s Spacecom said in late October that its next geostationary telecommunications satellite, Amos 17, would be launched on a Space X Falcon 9 rocket. The Israeli company said payment for the launch, scheduled for mid-2019, would be covered by money Space X owed it for the failed 2016 launch of its Amos 6 communications satellite, destroyed when a Falcon 9 exploded on the launch pad.
Rafael in Jerusalem
Government-owned Rafael Advanced Defense Technologies has announced plans to build a new NIS 220M research and development center in Jerusalem. The center, in the Har Hotzvim industrial area of northern Jerusalem, is designed to increase scientific cooperation with researchers at the Hebrew University of Jerusalem.
In late September, it was disclosed that Rafael plans to establish a new joint enterprise in Australia. Partnering with Varley Australia, the plant will produce Spike LR anti-tank missiles and promote other Rafael systems, perhaps including the Iron Dome missile defense.
ImageSat to FIMI
Israel Aerospace Industries has sold control of ImageSat International, its satellite photography subsidiary, to Israel’s FIMI Opportunity Funds. FIMI, controlled by Israeli businessman Ishay Davidi, will pay $35-40M for 54% of ImageSat’s shares, amounting to a company valuation of $75M.
Patrol Boats to Cyprus
Israel Shipyards reports that it has sold offshore patrol boats to the Cyprus Navy. The boats, tasked to protect offshore gas and oil drilling sites in Cypriot territorial waters, are due to be delivered within 18 months. According to figures published by Yediot Aharonot, the vessels will be about 60 meters long, carry a crew of about 30, and cost about NIS 230M. The paper compared those figures with patrol boats Israel has contracted to buy from ThyssenKrupp of Germany, which are 200 meters long, fitted with Barak missiles, and priced at about NIS 700M.
Mexico Wall Prototypes
A North American subsidiary of Israel Aerospace Industries’ Elta Systems was one of four companies chosen to build prototypes of President Trump’s border wall. Each company erected two small segments of the wall near San Diego, a Southern California city not far from the Mexican border. Prototypes were due to be completed by late October, but there was no indication when, or even if, a technology or contractor might be chosen, pending allocation of funding for the project.
Meanwhile, a U.S. subsidiary of private defense contractor Elbit Systems has been chosen to provide a tower and radar system to the U.S. Customs and Border Protection Agency. Price for the installation, to be set up in Texas, not far from the Mexican border, was not disclosed.
Elbit Systems has introduced SmarTrack, a system that enables forces to maintain constant contact and situational awareness in environments lacking satellite or radio reception, providing fighters or first response teams with the ability to continually be aware of the location of friendly forces. The system uses Radio Frequency (RF) to supply commanders operating outside vehicles – in urban areas, inside buildings or when GPS signal is jammed – with 3-D location of force members and a data link to transmit information and orders between users. The signal emitted by the system, which weighs less than 150 grams per unit, can be read on almost any device.
Rafael Advanced Defense Systems plans to market its Spike missile systems in partnership with manufacturers seeking to sell armored vehicles to East European countries seeking to replace Soviet-designed fighting vehicles. Rafael is already supplying Samson Mark II systems, including Spikes, for the 88 Boxer vehicles being supplied to Lithuania by German’s Artec, and is exploring possible sales involving vehicle purchases by Slovenia, Romania and Macedonia. Similarly, Elbit Systems has won a bid to provide Croatia with weapons systems, incorporating Spike LR missiles, for its 126 8-wheeled Patria modular armored vehicles.
Azeri DM Visits
Azerbaijan Defense Minister Colonel General Zakir Hasanov met with Defense Minister Avigdor Lieberman and other officials during a visit to Israel in September. Reports on the visit were not detailed, but Azeri sources speculated that one of the topics on Hasanov’s agenda was the purchase of Iron Dome missile defense system, announced in 2016 in the wake of Armenia’s acquisition of short-range Iskander ballistic missiles from Russia.
Naval Missile Deal
Three multi-function Philippines Navy attack vessels will be equipped with Rafael Advance Defense Systems‘ Spike ER naval missiles, according to a report in the Hebrew-language Eton Shaharit newspaper. Vice Admiral Ronald Joseph Mercado, the Philippine Navy’s new commander, reportedly said that the systems would be delivered in December.
Campus Plan Rescheduled
The Ministry of Defense plans to publish in December, a tender for construction of the new intelligence campus, according to an early-December report in Globes. Original plans for the tender were suspended earlier this year. Publication of the tender will coincide with political and legislative level discussions on the improvement of transportation infrastructure to the southern part of Israel, where the IDF’s new intelligence and computer centers will be located.
Aeronautics, based in Yavne, southeast of Tel Aviv, which develops and manufactures unmanned aerial vehicles (UAVs) has won a $40M contract from a “major international entity” for intelligence-gathering services. The contract is a follow-on to the foreign customer’s previous order with Aeronautics.
Proof of Concept
Israel Aerospace Industries successfully demonstrated proof of concept of new autonomous systems to defense officials, the defense contractor said in early October. One of the systems, the Air Hopper, is an unmanned helicopter capable of carrying supplies and ammunition to units in forward positions at minimal risk to personnel, or to evacuate casualties under hostile fire. The other is a system for remote control of convoys moving in and out of the battlefield.
Naval Gun System
Rafael Advanced Defense Systems has introduced its Typhoon Mk 30c system for the Bushmaster 44 automatic naval cannon. The new device enables engagement of surface targets at a range of 2,500 meters, about 700 meters greater than existing systems. Rafael sees the new system as part of the defense it has developed against “swarm attack” in which small and fast vessels with relatively light armaments can engage and endanger larger ships, even missile cruisers and destroyers. It sees the Royal Australian Navy, which is in the midst of procuring new offshore patrol vessels, as a potential purchaser of the new Typhoon 30c.
Israel Aerospace Industries says it has received its first order for its revolutionary SATCOM satellite communications terminal for fighter jets. Without naming the client, IAI said that the terminal will be installed, for the first time, “on tens of very advanced Western fighters.” Deliveries are due to begin in 2021.
IAI said the system, which because it has no moving parts, offers enhanced reliability, includes an antenna installed in the fuselage, with an IP Lan connection to the plane’s avionics.
Arms Control Reform
The Defense Ministry has taken new calculated risks in its comprehensive reform of its controls over defense exports, according to Defense Ministry director-general Udi Adam. Speaking at the annual meeting of the ministry’s Export Controls Agency, Adam called the reform a boon to exporters, noting that the revised policy strikes a balance between “effective control and increasing exports and strengthening technology and the economy.”
Eviation, an Israeli start-up developing an electric-powered jet aircraft, was one of the stars of the Wall Street Journal Live conference for firms seeking investment, held in Laguna, California, in mid-October. Eviation head Omer Bar-Yohay said that in addition to eliminating fuel costs and reducing pollution, electric-powered planes have another advantage: durability. Electric components for airplanes are a fraction of the cost of comparable parts for engines in traditional aircraft, and are more reliable, according to Bar-Yohay. “You need to build machines that will never break; electric components are naturally like this,” he said.
Eviation, which exhibited a prototype at this year’s Paris air show, says it hopes to have a full-scale electric passenger aircraft by 2019. Its first project, the Alice is a commuter aircraft capable of carrying nine passengers up to 1,000 km. The eventual goal, Bar-Yohay says, is to produce autonomous airliners that can revolutionize the transportation industry – “sort of like Uber meeting Tesla in the sky.”
A number of Israeli companies exhibited new and upgraded products at the early-November Defense and Security exhibition in Bangkok, Thailand. Among them are IMI Systems Wave 30 remote-controlled weapons stations and Red Sky short-range air defense system, Nimda Israel vehicular upgrades, and platforms for mounting rapid-fire weapons for Special Forces and SWAT teams from FAB-Defense.
Satellite Bid Report?
Israel Aerospace Industries may have offered to sell three intelligence satellites to the German BND intelligence agency. According to a Reuters report citing the RND news group, government-owned IAI was possibly one of three bidders for the 400M euro project. Other bidders were Airbus and OHB, a German multinational technology firm with headquarters in Bremen. The satellite system, called George, is to provide rapid, independent information and threat assessment, rather than relying on obtaining such information from non-German bodies.
The Administration for the Development of Weapons and Technology Infrastructure (Mafat) prizes for creative thinking in defense R&D were awarded to a team from the ISD Intelligence Corps 200 technical unit for developing techniques to gather previously inaccessible intelligence data, and to a combined team including Defense Ministry and IDF units, the Rafael Arms Development Authority and Tel Aviv University for implementation of a multidisciplinary program dealing with one of the most serious threats to the State of Israel, which combines technological and operational elements. No additional details were disclosed.
Capt. Y, a navigator in the F-15 Spearhead Squadron flying out of the Tel Nof airbase in central Israel, has been named Israel’s first deputy commander of a combat squadron. The officer, whose name cannot be given, is married to another Israel Air Force pilot. Her grandfather, Maj. Shimon Ash, was killed when his Skyhawk crashed near Suez during the 1973 Yom Kippur war. As a result of her appointment by IAF commander Maj.-Gen. Amikam Norkin, Y will be promoted to major when she takes over her new duties.
Thailand’s defense ministry has unveiled Autonomous Truck-Mounted Mortar (ATMM), a new 120mm wheeled self-propelled mortar system developed in collaboration with Israeli private defense contractor Elbit Systems. ATMM mounted on a 4×4 military truck chassis and Elbit’s SPEAR 120mm mortar system, equipped with advanced fire control, navigation, automatic aiming and propulsion systems that facilitate autonomous operation, increased firepower and accuracy.
1,000 Spikes Ordered
Rafael Advanced Defense Technologies has been awarded a contract for rapid production of 1,000 Spike LR2 anti-tank missiles for the Israel Defense Forces. Spike LR2, which weights 12.7 kg, is an advanced multipurpose missile with a range of 5.5 km from ground launchers and up to 10 km when fired from a helicopter.
Fighter aircraft from Germany, France, Italy, Poland, Greece, India and the United States joined Israel Air Force F-16 fighter jets in an 11-day joint exercise held in early November. The exercise over the Negev and Arava deserts in southern Israel, being held for the third time, included simulated dogfights, unmanned aerial vehicles, and surface-to-air defense units and live bombing runs, Italy, France and Germany’s Lutwaffe were participating for the first time, while India sent a C-130 Hercules transport and a Special Forces contingent.