New Analysis – March 2018

General News Summary

Netanyahu’s Election Gambit

Prime Minister Benjamin (Bibi) Netanyahu’s March maneuvers almost succeeded in pushing forward Israeli elections to this coming June. In the end, the gambit put a scare into his coalition partners and ended up in a compromise of avoiding a showdown over a bill that would exempt ultra-Orthodox young men from military service.

June would have been an opportune time for election, at least from Netanyahu’s point of view, while he’s still basking in the spotlight of Israel’s gala 70th anniversary celebrations, celebrated on the Hebrew date, which this year falls on April 18, the scheduled opening of the I.S. Embassy in Jerusalem, possibly even another visit by President Donald Trump. Of at least equal importance is that it’s best for him to get the elections over and done with, with him winning a sweeping majority before the final decision is made on criminal indictments in four pending corruption cases involving the prime minister. Bad as it might seem, it is clearly far better for Bibi to face the electorate as a suspect rather than under indictment, when he is still claiming that current investigations “will find nothing because there is nothing”.

The early-March coalition crisis swirled around ultra-Orthodox threats to vote against the state budget if the bill exempting Yeshiva students from military service wasn’t passed, Finance Minister Moshe Kahlon’s promise to leave if the budget wasn’t passed (it was, see below) and Defense Minister Avigdor Lieberman and his party’s opposition to a law that exempted the ultra-Orthodox from military service. Lieberman said he would take his Yisrael Beitenu party out of the government if the conscription bill passed, leaving the coalition with an unworkably fragile two-seat majority in the 120 member Knesset.

Opinion polls at the height of the crisis played a role in the decision of several coalition members to back down. On the one hand, the ultra-Orthodox parties could not have been pleased by the projected gains for the secular, centrist Yesh Atid opposition party led by former TV host (and more recently finance minister Yair Lapid). On the other hand, Lieberman read polls indicating that his party, which now has four seats, may not pass the 3.25% of the total vote threshold, therefore get no Knesset seats at all. Though the same surveys showed that Netanyahu’s Likud and while he, personally, remained the overwhelming choice for prime minister, would make modest gains, the relative strength of his current coalition partners would erode.

In the end, Netanyahu went to the Knesset podium to claim victory, saying that averting the crisis had ensured stability till the end of the government and Knesset’s term in November 2019.

The Netanyahu Files (Continued)

Prime Minister Benjamin Netanyahu continues to maintain that four criminal investigations involving him will end up without charges against him. Despite the denials, the pressure on the prime minister appears to be mounting, with yet another confidant agreeing to be a state witness in exchange for promised concessions from the police and prosecution.

The latest Netanyahu confidant to be cooperating with investigators is Nir Hefetz, a former spokesman and long-time confidant of both Netanyahu and his wife Sara. Hefetz follows two other men close to the various cases – former bureau chief Ari Harow and Director General of the Communications ministry Miki Ganor, who formerly represented the German shipbuilder ThyssenKrupp in Israel. Recordings by Harow are a key in Case 2000, involving efforts of Netanyahu and publisher Arnon (Noni) Mozes to strike a deal that would give the PM favorable coverage in Mozes’s Yediot Aharonot newspaper. Ganor is deeply involved in Case 3000, involving the purchase of submarines from Germany. Hefetz may be ready to provide evidence on a number of subjects, including Case 4000, involving government generosity to tycoon Shaul Elovich and his Bezeq telecom in exchange for favorable coverage on the Walla! Internet news-site, another of Elovich’s enterprises.

Mounting reports of corruption in the four cases have so far not affected Netanyahu’s popularity. A large segment of the public accepts Netanyahyu’s claims of a campaign against him by the police and the media. That support seems likely to remain strong at least until – and if, of course – actual indictments are filed against the prime minister.

Kushner’s Peace Plan 

The Trump administration says that Jared Kushner, the president’s son-in-law, is still working on his long-touted Middle East peace plan. Recent developments have made Israeli and Palestinian sources, most of whom were skeptical from the beginning about the Kushner’s prospects, a novice in international diplomacy, even more doubtful that he can achieve something that’s eluded peacemakers for seven decades.

One new factor and major stumbling block has been added to the equation: Trump’s impending move of the U.S. Embassy, in Tel Aviv for 70 years, to Jerusalem. Trump contends that the move, due to take place on or around Israel’s Independence Day, is proof that he stands behind his promises. The Palestinians call the formal recognition of the city as Israel’s capital a deal-breaker that destroys U.S. credibility as an impartial broker even before a deal is even placed on the table. Palestinian figures say they’ll boycott any talks.

The atmosphere deteriorated even more with Palestinian President Mahmoud Abbas’s speech calling David Friedman, the U.S. ambassador to Israel who’s both a religious Jew and a supporter of the settler movement, “son of a dog.” Jason Greenblatt, a partner in Trump’s Middle East peace team, reprimanded the Palestinian leader by saying Abbas had to choose “between hateful rhetoric and practical efforts to improve the life of his people.”

Abbas is also frustrated by the failure of the latest effort at reconciliation between the Fatah organization he heads, which controls the Palestinian Authority and the West Bank, and the Hamas, which controls Gaza. Whatever hopes of success that remained appeared to have been shattered in mid-March, when PA Prime Minister Rami Hamdallah survived an attempt on his life during an official visit to Gaza.

Then there’s the matter of Kushner himself, who’s recently had his top security clearance revoked by White House chief of staff John Kelly and come under increased scrutiny over dealings, both before and after the 2016 elections, of the family real estate firm he headed. Those recent troubles, observers on both sides suggest, may deny Kushner the political muscle that would doubtless be necessary to push any viable deal – assuming one could be formulated – through two sides whose maximum concessions have up to now failed to meet the other’s minimum expectations.

Tensions, Tensions…And More Tensions 

Sporadic violence along Israel’s border with the Gaza Strip, together with a flurry of attacks by terrorists in the West Bank and Jerusalem, raised tensions in advance of Israel’s spring holiday season. Security levels were raised with Passover, Easter, Holocaust and Israeli Memorial days and Israel’s 70th Independence Day just around the corner.

Israeli actions on the Gaza border included retaliatory air and artillery attacks in response to terrorist bombs and rocket fire, and the destruction of attack tunnels built by terrorists from Gaza into Israeli territory. Israel holds Hamas responsible for the attacks, as the ruler of the territory from which they are launched.

Part of the danger is that there are two elements which could push Hamas into escalating the already-tense situation into a conflagration it really doesn’t want. One is the intensifying humanitarian crisis in Gaza, the other, imminent for it, end to the threat posed by tunnels under the Gaza border. Utilizing a combination of advanced intelligence and technology, Israel has gradually been rooting out and shutting off the tunnels terror groups could use to enter its territory. In fact, one Israel officer said in early March that all of the Gaza tunnels would be dealt with by year’s end. Given that, Hamas might feel the need to make whatever use it still can of the tunnels, which gained importance as a primary “weapons system” after Israel’s Iron Dome system dealt with the danger posed by rocket fire from Gaza.

According to press reports, Elbit Systems, a partner in developing the new tunnel-detection system, hopes to be able to offer it to foreign clients pending approval from the Defense Ministry. The system, details of which cannot be published, is based on sensors which monitor activity underground and detect the presence of hollowed-out spaces.

Minister May Be Indicted 

Police have recommended criminal indictments against Minister of Labor and Social Services, Haim Katz, Israel Aerospace Industries workers’ committee officials and others on charges of widespread fraud and corruption involving the government-owned aerospace firm. Katz, the former head of IAI’s workers union and other committee members are accused of fraud, breach of trust and other offenses in acting for their own personal benefit in contracts with firms supplying goods and services to IAI.

Details Released 

More than 10 years after its aircraft bombed and destroyed a nuclear reactor being built in northeastern Syria, Israel has allowed the release of details of the raid and the diplomatic maneuvering around it. The reactor near Dir a-Zur, bombed in September 2007, would have been virtually identical to the Yongbon facility in North Korea, which produced plutonium for nuclear bombs.

Various accounts published in the Israeli press on March 21 describe political maneuvering involving Ehud Olmert and Ehud Barak, respectively Israel’s prime minister and defense minister at the time, detailed descriptions of the raid itself and its various code-names, president George Bush’s negative response to an Israeli expectation that the U.S. may take action against the reactor and silence, deemed to be assent, to Israel carrying out the raid, and analysis suggesting that Israel’s release of the fascinating story at this time was intended as a warning to Iran of its capability, and willingness, to take action to avert what it sees as an existential threat.

Aerospace & Defense

Juniper Cobra 

U.S. and Israeli military officials stressed their joint preparedness for a number of eventualities, including an Iranian missile attack on Israel, and demonstrated that preparedness in early March in Juniper Cobra, the ninth biennial exercise held by the two nations in Israel. The exercises involving thousands of troops, which one Israeli officer called a “dress rehearsal” for a possible war, are in the framework of Joint Task Force Israel for the planning and command of interoperable forces trained in a common doctrine language and rules of engagement. With reports of Iranian forces deployed not far from Israel’s borders, this year’s exercise seems to be coming less hypothetical.

Later in March, the Israel Air Force participated in a joint air-defense exercise together with forces from Greece, the U.S. and UK, Italy, Cyprus and the UAE. According to a report in Haaretz newspaper, the Greek hosts of the annual Iniohos exercise, did not mention Israel in its list of participants. No explanation for the exclusion was given.

IMI Sale to Elbit Agreement, Finally 

The Ministry of Finance has reached an agreement with Elbit Systems for the sale of government-owned Israel Military Industry Systems to the private defense contractor. Elbit will pay the government NIS 1.8B (around $500M), plus another NIS 100M depending on financial results. Elbit has agreed to vacate IMI’s headquarters in Ramat Hasharon, northeast of Tel Aviv by 2024, to make way for residential construction.

The decision to privatize IMI, taken in 2013, has taken almost five years to implement. Elbit was the only candidate to reach the last stage of a competitive bidding process. According to a report in Globes, the sale is due to be completed by July 1.

Meanwhile, Elbit reported that its 2017 sales had increased by 3.6% over 2016, reaching $3.4B. Sales of land-based systems improved as a result of increased sales in Europe of electronic warfare systems and tanks systems. Elbit also benefited from a rise in sales of electro-optical systems, featuring sales growth in air intelligence systems, night vision systems in the Asia-Pacific region, and airplane defense systems.

Super Patrol Vessels 

The police investigation into possible irregularities, including fraud, in the purchase of four advanced patrol boats and three Dolphin-class submarines, hasn’t stopped the Israel Navy from preparing for the scheduled 2020 delivery of the Saar 6 patrol vessels from Germany’s ThyssenKrupp. According to Globes, the craft, whose mission is defense of installations in Israel’s offshore natural gas fields, will be fitted with naval Iron Dome missile defense systems from Rafael Advanced Defense Systems, Israel Aerospace Industries‘ Barak missiles, Adir radar from Elta Systems and Sikorsky Seahawk helicopters purchased from the U.S.

IAI’s Electric Plane 

Government-owned Israel Aerospace Industries is developing an electric-powered airplane, according to reports in Calcalist and Globes business newspapers. The company is investing hundreds of millions of dollars in the project.

The first plane on the development schedule is a battery-powered short-range aircraft capable of carrying about 10 passengers at altitudes of 10,000-20,000 feet with a range of 320 km., about the distance between Paris and London.

The electric plane can bring about significant savings in fuel costs, the most expensive component of current air travel. An IAI official told Calcalist that inter-city car travel costs one-tenth of air travel and that electric planes hopefully can bring the difference down to 2 or 3-1.

Technology Is Best Threat Answer 

Advanced technologies are Israel’s best answer to changing and expanding threats against it, says Israel Aerospace Industries chairman Harel Locker. Speaking to a mid-March business conference, Locker predicted that development of new technologies by Israeli defense firms was unceasing, particularly in the world which, he said, has become digital. “Everyone is connected. Cyber has become a huge and decisive virtual front: in which small countries and organizations, even single individuals, can be a determining factor. These challenges, and the resources necessary to meet them, have an economic effect,” he said, “and one of the reasons for the strong financial performances of defense contractors around the world.”

DOD Grant 

MeMed, an Israeli diagnostics developer, has received a $4M grant from the U.S. Department of Defense for development of its novel blood test that quickly differentiates between viral and bacterial infections and help clinicians decide if treatment with antibiotics is indicated. MeMed is based in Tirat Hacarmel, near Haifa.

Latvia Buys Spikes 

Latvia’s Defense Ministry has contracted to purchase a family of Spike missiles developed by Israel’s Rafael Advanced Defense Systems in a deal valued at 108M euros. The deal was concluded with EuroSpike GmbH, a joint venture of Germany’s Diehl GBT Defense, Rheinmetall Defense Electronics and Rafael set up to facilitate European marketing of the Spike system. The order presumably includes both Spike ER which can be mounted on a variety of platforms and the man-portable Spike LR.

Rafael in UK’s Sky Sabre 

The British Army’s new Sky Sabre air-defense system will incorporate a battle management, command, control, communications, computers and intelligence (BMC4I) network developed by mPrest, a subsidiary of Rafael Advanced Defense Technologies. The contract is valued at $108M. Sky Sabre, due to be operational in 2020, also includes a Saab radar targeting system and launchers for CAMM missiles. Britain’s Babcock Group is Rafael’s local partner in the Sky Sabre contract.

Peruvian Contract 

Two PCGP patrol vessels ordered by the Peruvian Navy from the local Sima Shipyards will be fitted with Rafael Advanced Defense Technologies‘ Typhoon and Mini-Typhoon weapons stations. Value of the contract was not announced.

Singapore Deal 

STE (Singapore Technologies Engineering) is investing $20M in Satixfy, a provider of space satellite communications equipment based in Rehovot, southeast of Tel Aviv. According to the Israel Defense website, the Singapore-based engineering giant said it would concentrate on technologies for providing Internet services to passenger aircraft, including a small antenna on the fuselage that would not interfere with the aircraft’s aeronautics.

Successful Arrow 3 Trial 

After two cancellations, the Ministry of Defense and the U.S. Missile Defense Agency in mid-February conducted a successful test of an advanced flight test of the Arrow 3 missile defense system. The test of the Arrow 3, which is designed to intercept and destroy ballistic missiles outside the Earth’s atmosphere, was conducted in cooperation with the Israel Air Force. The successful test was conducted in Israel; subsequent testing, over larger landmasses than are available in Israel, will be conducted later this year over unpopulated regions in Alaska. Two previous tests were canceled at the last minute, due to what were said to be malfunctions of communications systems and the target missile. Arrow 3, part of Israel’s four-tiered missile defense system which also includes Iron Dome, David’s Sling and Arrow 2, has been operational with the Israel Air Force for a little more than a year.

Russian Stealth Planes in Syria 

Photographs taken by an Israel Eros B satellite disclosed the presence of Russian Sukhoi-57 stealth aircraft at Russia’s Khemimum airbase in Syria, according to late February reports in the Israeli media. The advanced aircraft, designed as a parallel to Israel’s U.S.-made F-35 planes, reportedly are still not fully operational, and press reports speculated that they might have been sent to the Middle East for testing. Russian press reports indicate that an A-50 early warning aircraft and several Sukhoi25 attack warplanes have also been seen in Syria.

Joint IDF Command 

The Israel Defense Forces plans to unify the Infantry, Armor and Engineering corps into a single command in 2019, according to press reports. Preparations for the revised command structure, which eventually will lead to unfed units including elements of all three existing corps, are already under way.

Elbit in Korea Helmet Deal 

A joint venture of Israel’s Elbit Systems and U.S. defense contractor Rockwell Collins are providing a helmet-mounted cueing system for South Korea’s F-16 aircraft. The system includes night vision capability, pilot health monitoring and heads up display technology. Value of the contract was not disclosed.

More Tanks to Get Trophy 

Six months after first announcing that it had chosen Israel’s Trophy active protection system for armored vehicles, the U.S. Army in February said that it was purchasing additional systems to protect 261 of its Abrams M1A2 tank, amounting to an entire brigade, with the system developed by Rafael Advanced Defense Systems in cooperation with Israel Aircraft Industries’ Elta subsidiary. The U.S. is the first country, other than Israel, to deploy the system. IDF armor has been equipped with the system since 2009.

Replacing “Wooden Leg” 

Toyota Cruiser 70 and Mercedes G Class are the leading candidates to replace Land Rover Defender patrol all-terrain vehicles in IDF service. The manufacturer stopped production of the Defender, called Regel Etz (Wooden Leg) by the Israeli army and in service since the early 1990s, in early 2016.

Spike Deal in Doubt 

Rapid development of a made-in-India anti-tank missile has some Israeli experts wondering if Rafael Advanced Defense Technologies‘ recently-signed $500M sale of Spike missiles may be in danger. According to reports in Globes, India’s Defense Research and Development Organization has completed successful tests of its NAG 190 system. Indian experts are said to expect that development of NAG 190 may be completed by the end of the year, though Israeli sources estimate the Indian missile “has a long way to go” and won’t be ready for about five years. The Indian Army prefers the Spike, which is already operational, and while the DRDO is pushing for its missile. Prime Minister Netanyahu got confirmation that the Spike sale would go ahead when he visited the Subcontinent in January, and Rafael, together with its Indian partner, Kalyani, has opened a new plant in Hyderabad to manufacture Spikes.

IAI Competes for Belgian UAVs 

Israel Aerospace Industries and General Atomics of the U.S. are competing for a 230M euro contract to supply unmanned aerial vehicles to the Belgian army. IAI’s candidate in the deal is its Heron TP (aka Eitan), while General Atomics has offered its MQ9 Reaper, its successor to the Predator in long-time service with the U.S. Air Force. IAI recently was chosen over General Atomics for a 580M euro contract to lease Herons to Germany, a deal that was upheld when a German court dismissed an appeal by General Atomics.

Elbit Wins Asia-Pacific Contract 

Private defense contractor Elbit Systems has been awarded a three-year, $65M contract to supply search-and-rescue systems for an unnamed Asia-Pacific country. The contract includes airborne locator systems, emergency transmitters and personal survival kits. In early March, Elbit won a deal to supply advanced cockpit avionics system to the U.S. Navy’s Boeing F/A-18 Super Hornet fleet.

Ground Forces Upgrade Gets OK 

The Defense Ministry has approved a major upgrade to the army’s ground forces, including a new fleet of hundreds of armored personnel carriers and the development of a new cannon. The upgrade is part of the five-year Gideon Plan, designed to make the army operationally more efficient and more cost effective, partly in response to lessons learned in 2014’s Operation Protective Edge in Gaza. Starting in 2020, the eight-wheeled, lightweight Eitan vehicle, which uses technology from Merkava tanks and Namer armored personnel carriers, will begin replacing the IDF’s current M113 fully tracked APCs.

Czech Radar Deal Delayed 

The Czech Defense Ministry has delayed its 175M euro purchase of radar equipment from Israel Aerospace Industries subsidiary Elta due to questions about its compatibility with existing NATO radar. Agreement on the purchase was reached 18 months ago.

According to Globes, about 100 of Elta‘s multi-mission ELM 2084 radar, a key part of Israel’s Iron Dome missile defense system, have been sold to countries around the world at a total value of about $2B.

VTOL UAVs 

APG Aero Systems, based in Netanya north of Tel Aviv, has introduced the Peres, a ground-breaking family unmanned aerial vehicle capable of vertical take-off and landing and transition from vertical to horizontal flight. According to a report in Globes, the tactical UAVs can be used to take off and land from ships at sea and offshore drilling platforms, to provide tactical support of ground forces and for precision agriculture. The Peres 2 model, which has completed successful flight tests, has a wingspan of over 2 meters, can stay aloft for 8 hours, carry a 42-kg payload and can cruise at speeds of up to 55 knots at an altitude of 8,000 meters.

The Economy

Budget Passes 

The Knesset in early March passed the government’s NIS 479B budget for 2019, averting a coalition crisis which could have caused collapse of Prime Minister Benjamin Netanyahu’s government. The budget, which is 4.3% higher than that of 2017-18 and some 24% above that of 2015, includes NIS 72.8B for defense, NIS 100B for debt service, NIS 60B for education and NIS 42B for health services.

According to the Israel Defense website, the Defense Ministry budget is comprised of NIS 55.3B from government tax revenues and NIS 17B from other sources, including the annual allocation of military aid from the U.S. In addition to the acquisition of arms systems, military expenses and retirement pensions, the sum includes the cost of moving IDF facilities from the center of the country to southern Israel, replacing facilities including some that have been in use since before the founding of the state 70 years ago and making way for new housing construction in areas where demand is higher.

Egyptian Gas Deal 

Israel’s Delek Drilling and Noble Energy of the U.S. have signed a $15B 10-year deal to provide natural gas from their offshore Tamar and Leviathan fields to Dolphinus Holdings, an Egyptian company. Deliveries are due to begin when the necessary infrastructure is in place. According to Globes business daily, the possibility of using the existing EMG pipeline, originally used to transport gas from Egypt to Israel that is in the opposite direction across the Sinai Peninsula, is being examined. Other options under consideration include piping the gas through Jordan or a new undersea pipeline in the Mediterranean.

Tanin, Karish Gas Financing 

Energean has raised $1.275B to finance development of Israel’s offshore Tanin and Karish natural gas fields. Funding comes from a consortium of Israeli banks as well as three international banks. The Greek company acquired rights to the two fields from Delek Drilling of Israel and the U.S.’s Noble Energy, which were ordered to sell their interests by Israel’s Antitrust Authority.

India Water Pact 

Mekorot, the Israeli firm specializing in water infrastructure, has signed an agreement with India’s Maharashtra regional government to develop a master plan for the Marathwada area and subsequently aid the state government in development of a water grid. The contract, valued at $3.3M, involves an area of 60,000 square kilometers, more than double the area of the State of Israel with an average rainfall similar to Israel’s.

In early March, Tahal, part of the Kardan NV Group, won another Indian contract to upgrade water infrastructure in Bangalore, a city of 12 million residents and the capital of Karnataka state in southern India. The project is valued at $28M.

Last year, the Israeli water specialist firm was awarded contracts valued at about $125M for upgrading water supply and service to almost 250,000 residences in three separate locations in India.

Train Won’t Arrive On Time 

Opening of the new rail link between Tel Aviv and Jerusalem, due to take place this spring, has been delayed for about six months. The delay came in wake of engineering reports that additional safety testing was necessary. Construction on the high-speed line began in 2001.

Flight Schedule Crisis Averted 

The Finance and Foreign ministries have agreed on a plan to increase the number of security personnel available to EL AL, Israir and Arkia, averting a crisis that may have caused cancellation of as many as 1,000 flights this summer. Difficulties arose after the three Israeli airlines increased their overseas flight schedules, in which each flight requires a number of airborne and ground security personnel. Prior to resolution of the problem in early March, Israeli carriers had been booking their passengers onto some flights by foreign airlines.

Meanwhile, EL AL received its fourth Boeing 787 Dreamliner in early March. The Israeli airline has ordered 16 of the advanced aircraft, which gradually will replace older aircraft in its fleet for 43 planes.

Positive Forecast 

Israel’s economy is in a positive position with expectations for a positive direction in the upcoming quarter, according to early-March assessments by Merrill Lynch and Morgan Stanley, two of the U.S.’s most important financial institutions. They base their optimistic projections on a number of factors, including rising consumption and the high-tech sector, but principally on the positive effect on the economy of offshore natural gas production. In fact, the report says, gas from the Leviathan field is likely to boost the Israeli economy even more than from the Tamar field, which provided an impetus for GDP expansion in 2013.

Household Debt 

Israeli average household debt amounted to 42% of Gross Domestic Product, according to the Bank of Israel’s stability report for the second half of 2017. According to Globes, the figure was relatively low for developed countries. Although consumer spending has increased rapidly in recent years, household debt remains relatively low due to a rapid rise in wages, analysts suggest: In other words, Israelis spend more as they earn more, rather than saving.

Governor’s Criticism 

Bank of Israel Governor Karnit Flug was sharply critical of Israel’s dependency ratio and its education system in late February. She noted that Israel was second, to Japan, in the number of people dependent on a single wage earner, though for vastly different reasons. In Japan, the unfavorable ratio is due to its aging population, in Israel to the relatively large number of dependent children. She also attributed relatively low performance of many Israeli students on international tests to inadequate teacher training.

Growth Forecast 

Gross Domestic Product will increase by 3.4% in 2018 and 3.5% in 2019, according to forecasts published by the Bank of Israel‘s research division in late January. Also predicted: annual inflation this year of 1.1%, following a 0.5% increase in the Consumer Price Index for January, and an increase in interests in the fourth quarter of 2018.

Meanwhile, Standard & Poor‘s international credit rating firm gave Israel an A+ score in its credit rating and economic outlook. Predicting 3.1% growth for 2018, S&P said that the continued reduction of the debt-to-gross domestic product ratio and decreased geopolitical risks may support a higher credit rating for Israel in the future.

Fuel Ban by 2030? 

Israel will ban import of gasoline and diesel-fueled vehicles by 2030, National Infrastructures, Energy and Water Minister Yuval Steinitz told a Tel Aviv environment conference in late February. Steinitz said his ministry is already working on a plan to allow only vehicles using electricity or natural gas power. If the prediction comes true, Israel will be the world’s third country, after Norway and the Netherlands, to ban fossil-fueled vehicles.

3.7% Unemployment 

Israel’s unemployment rate fell again, to 3.7%, in January, according to the Central Bureau of Statistics. The figure, down from December’s 4%, was the lowest since the 1970s. Unemployment among men was even lower, at 3.5%.

Saudi Overflights 

Air India direct flights between Tel Aviv and Delhi, a new service due to begin on March 22, will fly through Saudi Arabian airspace, the Indian carrier announced in early March. The route, which saves two hours by taking the more direct route, is the first time an airline has been able to fly in or out of Israel over Saudi territory. EL AL, the Israeli carrier, has asked the Israeli government and international transport organizations to guarantee it Saudi overflight rights as well.

Finance & Investment

IAI Share Plan Mooted 

The Government Companies Authority is working on a new plan for offering 40% of the shares of government-owned Israel Aerospace Industries at a company valuation of NIS 11B (about $3.2B), according to a report in Globes. The Finance Ministry declined to elaborate.

Intel to Invest $4.5B 

Intel, the international chip making giant, plans to invest $4.5B to enhance its facilities in Israel, according to a report in Globes. The plan, which still has to be approved by a government committee, reportedly includes government benefits and tax breaks amounting to 20-30% of the total investment. Intel’s holdings in Israel currently include one of the world’s most advanced fabs in the southern town of Kiryat Gat, where it has invested about $6B, and Jerusalem-based Mobileye, which it has made its Autonomous Driving Group.

Buffet’s Teva Investment 

Warren Buffett’s Berkshire Hathaway recently purchased a 1.2% stake in financially troubled Teva Pharmaceuticals, company documents have disclosed. Purchase price: $348M. The information triggered a sharp rise in Teva’s share price, but Buffett, in an interview more than a week after the disclosure, said that the investment decision had been made by an aide and he had no idea why the position had been taken.

$500M Raised 

Israeli start-up companies raised more than $500M in February. An assessment by Globes suggested that the figure may be even higher, due to the fact that not all companies make investments they have received public. The figure almost doubles the $260M raised in January and would put the annual figure back on track to equal the $5.2B raised by start-ups in 2017.

New Merck Fund 

Merck of Germany is launching a new 20M euro fund to invest in early-stage biotechnology companies in Israel. Partners in the fund, called ExploreBio, include Arkin Bio Ventures, Pontifax Fund, and Chinese company WuXi Apptec. Merck already operates two Israeli tech incubators – BioIncubator, specializing in drug development companies, and PmatX, dealing with next-generation electronics.

Mobileye Founders’ Next

Jerusalem-based OrCam Technologies Ltd., which produces what it claims is the world’s most advanced wearable aid for people with impaired vision, has completed a funding round that values the company at $1B pre-money. The device is designed for people who are partially sighted, blind, or who have reading difficulties or reading fatigue. The company’s founders, Prof. Avraham Shashua and Ziv Aviram, previously founded MobilEye, sold to Intel in 2017 for $15.3B.

‘Come See Me Personally’ 

Prime Minister Netanyahu offered world business leaders a package of incentives including tax breaks and grants – and some personal intervention – in a meeting just before the start of the mid-February Munich Security Conference. According to the Times of Israel Internet newspaper, Netanyahu told top world business leaders in a group that included heads of Siemens, Deutsche Telekom, Raytheon and International Monetary Fund head Christine Lagarde, “Come and see me personally. I’ll take the time.”

Solaredge Shines 

The market cap of SolarEdge Technologies, a developer of solar energy optimization and monitoring systems, broke the $2B barrier in late February. At the time of its Initial Public Offering three years ago, the total value of its shares was just over $600M.

New TASE Dual Listings 

The Tel Aviv Stock Exchange reached new dual-listing arrangements with the stock exchanges of Singapore, Hong Kong and Toronto in January. Listings require approval by the Knesset Finance Committee.

Mergers & Acquisitions

KLA-TENCOR in $3.4B Orbotech Deal 

KLA-TENCOR, a global supplier of yield-management and other systems for the semiconductor industry based in Milpitas, California, is purchasing Israel’s Orbotech at a company value of $3.4B. Among the sellers is Kobi Richter, who together with his brother Yochai, was among the founders in 1983 of Orbot, which later merged with Oprotech to form Orbotech. Based in Yavne, southeast of Tel Aviv, Orbotech develops and manufactures automated optical inspection equipment used in the production of most electronic devices.

Netafim Sale 

Kibbutz Hatzerim, one of the three kibbutz founders of Netafim, will continue to hold 20% of the drip irrigation system pioneer after final approval of its sale to Mexichem, at a company valuation of $1.9B, received regulatory approval and was completed in February. Netafim, whose products are sold in over 100 countries, now has more than 4,500 employees in Israel and abroad, 29 subsidiaries and 17 manufacturing plants.

Desilu Studios-Vonetize 

Desilu Studios says that it plans to go public in the U.S. as a second stage of its acquisition of Vonetize, an Israeli developer of live-channel streaming and on-demand technology. The U.S. film studio famous for producing classic shows such as “I Love Lucy,” “Star Trek” and “The Untouchables” bought a 10% stake in Vonetize from controlling shareholders at a company valuation of $50M, with an option to buy another 44% in the next 12 months. Vonetize, which operates in 60 countries, has global partnerships with LG, Disney, Warner Brothers, Fox and Sony Universal.

Laborie Medical-Cogentix 

Laborie Medical of Canada has purchased American-Israeli medical technology developer Cogentix from a group of sellers including Israel’s Accelmed investment fund for $242M. The sale price is more than triple what Accelmed, controlled by Israelis Mori Arkin and Uri Geiger, paid when they acquired just over 26% of the company in 2016.

FIMI-Aitech 

FIMI, the Israeli private equity fund headed by Ishai Davidi, has acquired 100% control of Aitech for $30M. A global supplier of rugged electronics systems for the defense, aviation and space industries based in Chatsworth, California and Herzliya, north of Tel Aviv, Aitech was previously owned by Dutch investors.

Sapiens-Adaptik 

Sapiens, a provider of software solutions for the insurance industry, has acquired Adaptik of Bethlehem, Pennsylvania for up to $22M. The acquisition of Adaptik, which develops billing and management solutions for insurers, will provide Holon-based Sapiens with enhanced coverage capabilities in the North American property and casualty insurance market.

Uster-Elbit Vision Systems 

Uster Technologies AG of Uster, Switzerland is purchasing Elbit Vision Systems, a Casearea-based developer of visual fabric inspection systems for $32M. EVS systems are used in textiles for the automotive industry, technical fabrics, apparel, home furnishing, flooring, composite materials, coated fabrics and glass fabric for printed circuit boards, plastic films, metal and other applications.

Frutarom’s 37th 

Frutarom, the Israeli flavorings and specialty ingredients firm, recently signed an agreement to purchase 70% of Argentina’s Meroar SA for just over $11M. The purchase, Frutarom’s first entry into the Argentine market, was the company’s 37th acquisition around the world and its 8th in Latin America in the past six years.

Cyberark-Vaultean 

CyberArk Software, a cybersecurity firm based in Petah Tikva, east of Tel Aviv, has purchased Vaultive. Vaultive is an Israeli-American start-up based in Boston which has developed cloud-based security systems. Financial details were not disclosed, but Globes estimates that the purchase price exceeds $19M.

Dexia Israel Sold 

Europe’s Dexia SA has sold its shares in Dexia Israel to financial institutions for a total of NIS 350M, a 13% discount on the Tel Aviv Stock Exchange share price. Dexia specializes in credit for municipal institutions. The sale was part of a recovery program for the European financial institution.

Science & High Technology

Shwed Gets Israel Prize 

Gil Shwed, founder and CEO of Check Point Software, will be honored with the first-ever Israeli Prize in technology on Israel’s Independence Day. Education Minister Naftali Bennett, who before entering politics founded and managed Cyota, a developer of identity theft protection, said the technology category was one of several he was introducing this year. Shwed, a graduate of the IDF Intelligence Corps fabled 8200 technology unit, founded Check Point, a pioneer and world leader in firewall computer network security systems, in 1993 together with Marius Nacht and Shlomo Kramer.

Merck Opens HU Lab 

German pharmaceutical company Merck has opened a technology innovation laboratory on the campus of the Hebrew University of Jerusalem. The lab, located at the headquarters of Qlight Nanotech, Merck’s subsidiary, will develop advanced materials and nanotechnology. Merck acquired Qlight, established in cooperation with Hebrew U technology transfer firm Missus, in 2015.

UPS Incubator 

UPS, the international package delivery service firm, is seeking applicants for Ship Your Innovation, its new Israeli technology incubator specializing in shipping and transport. Tutoring and other services will be offered to selected start-ups in fleet efficiency, delivery solutions, robotics, data-driven supply chain management, smart packaging, Internet of Things and sensors, and location-based services.

Mini-Brain Discovery 

A team of researchers at the Weizmann Institute of Science in Rehovot has discovered a way to grow miniature versions of the human brain that undergoes wrinkling similar to that of a real brain. The organoid is expected to help research into the causes of a birth defect, smooth brains in some infants, and in the study of brain-linked diseases including epilepsy and schizophrenia.

Growing Bones in a Lab 

Bonus BioGroup of Haifa says it has entered the second stage of developing technology for growing human bones in a laboratory. The process, which the company says successfully passed a 4-year trial on 32 patients, involves drawing fat cells from the body with liposuction, isolating certain cells which are then grown in a bioreactor, a device which simulates the human body, and then injected into the patient as tiny living bone particles called BonoFill. Company officials contend that the repaired bones can be up to seven times stronger than human bone.

ECI Gets India Deal 

ECI, based in Petah Tikva outside Tel Aviv, has been chosen to upgrade the optical network of India’s Idea Cellular, the Subcontinent’s third largest mobile operator and sixth-ranked in the world, ECI’s technology provides maximum utilization of Idea’s existing infrastructure and a sound base for future upgrades. Value of the contract was not announced.

Desert Truffles?

Researchers at the Ramat Hanegev Desert Agriculture Center in southern Israel say they may have found a way to cultivate truffles, an underground fungus much prized by gourmet chefs, in symbiosis with a common desert shrug. According to a report in Yediot Aharonot newspaper the rare fungus, terfezia leonis, has been cultivated at the roots of Heliantheumum sessiliflorum, which grows wild in Israel’s Negev desert. The shrub’s roots appear to provide quantities of sugars that the fungus requires to thrive and Negev farmers may be able to begin farming them within a year. According to the Times of Israel Internet newspaper the market price of truffles, which have never been grown in the Middle East, is slightly less than the $120 per pound price of silver.

Delek Motors Diversifies 

Delek Motors is expanding its business. The importer of Mazda, Ford and BMW automobiles has contracted to purchase 70% of Veridis, an Israeli group specializing in environment and energy, for NIS 1B (slightly less than $300M). Veridis, formerly known as Veolia Israel, deals in collection and disposal of industrial and domestic waste and has holdings in the seawater desalination plant in Ashkelon, a power plant at Mishor Rotem in the Negev, and steam-generating facilities at two Israeli kibbutzim.

Walking in China 

ReWalk Robotics hopes to expand its presence on the Chinese and world markets after signing a $20M strategic agreement with Timwell Corp. of Hong Kong. Based in Yokneam near Haifa, ReWalk has developed a wearable robotic exoskeleton that enables patients with spinal cord injuries to stand upright, walk, turn and go up and down stairs. The company is also working on technology for stroke victims.

New Tomcar 

Tomcar, the Israeli manufacturer of off-track vehicles, has introduced a new and upgraded version of the car it’s been selling in Israel and abroad for almost two decades. It’s the first version with four-wheel drive, rather than the previous read-wheel propulsion system. Yoram Zarchi, Tomcar’s founder and owner, claims that the new TX 47 is “more than just an off-track vehicle” capable of carrying more than the Toyota Hilux, outperforming the Land Rover Defender and has higher speeds than dirt-track racing vehicles.

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