News Analysis – June 2017

General News Summary

A Letdown, an Enigma and a Dilemma

Israelis felt let down on June 1, when U.S. President Donald J. Trump changed his mind and was not going to move the U.S. Embassy from Tel Aviv to Jerusalem. Truth to tell, Trump’s failure to live up to his oft-repeated campaign promise on the embassy move was just the latest in what’s turning into medium-sized disappointments and king-sized ones for members of the prime minister’s Likud party and his partners in the ruling coalition.

The outright hopes that greeted Trump’s election victory last November has considerably diminished under clouds of doubt and uncertainty. Coalition members who talked about an American carte blanche for extensive settlement activity on the West Bank – and who applauded the appointment of settlement supporter, soft spoken David Friedman as Trump’s ambassador to Israel – have not been mollified by administration assurances that the embassy decision should in no way “be considered a retreat” from the President’s strong support of Israel, or persuaded by statements that Trump made the decision “to maximize the chances of successfully negotiating a deal between Israel and the Palestinians.”

Days earlier, visiting Saudi Arabia, Israel and the Palestine Authority on his first presidential overseas trip, Trump played the consummate deal-maker in public, saying that both Netanyahu and Palestinian President Mahmoud Abbas had assured him they were willing to work toward that goal “in good faith.” In his major speech in Jerusalem, Trump was significantly short on specifics, repeating his assertion that both sides were willing to talk peace but – perhaps pointedly – failing to mention the key issues that have stood between the two sides for more than two decades, including the status of Jerusalem, settlements and the repatriation to Israel of a number of “Palestinian refugees”. Things were no more encouraging behind the scenes. According to several published reports, in a private meeting Trump shouted at Abbas and said the Palestinian leader had tricked him by talking peace but remaining involved in incitement against Israel.

Immediately after Trump’s election, Education Minister Naftali Bennett was saying that there was an opportunity for Israel to abandon its stated commitment to the establishment of a Palestinian state. But in late May, Bennet, the leader of the religious-nationalist “Bayit Yehudi” partner in the coalition was telling party forums that Trump’s “tune has changed.”

According to some reports, senior members of Bennett’s party suspect that Netanyahu, has already agreed to the outlines of a deal, or at least to act as if he has, in the hope that the Palestinians will save his day by backing out of it. Any peace arrangement would necessitate a coalition reshuffle, perhaps by replacing Bayit Yehudi (which isn’t interested in any deal) with the moderate Labor/Zionist Camp opposition. If there is anything in Israeli politics that can be said with near-absolute certainty it’s that the current governing coalition, the most right-wing in Israel’s 69-year history, could not survive a diplomatic process involving significant and difficult concessions from Israel.

Would Labor, the main component of the Zionist Camp bloc, join such a coalition? Much may depend on the outcome of Labor primaries due to take place early July. Isaac Herzog, the current Labor leader, and Netanyahu have talked about peace plans in the past; if he’s re-elected, Labor’s path into the coalition seems preordained and smooth. That’s less true with other contenders, including Knesset members Amir Peretz, a former party leader, venture capitalist turned politician Erel Margalit, and Avi Gabbai, a former minister from “Kulanu” party, who recently joined Labor. Margalit and Gabbai say that while they wouldn’t join a Netanyahu government they’d support it from the outside if it were to embark on peace talks. Netanyahu is unlikely to stake his political future on that kind of support, which in effect that the supporters would do no more than not vote against the government in a no-confidence motion.

The bottom line: Netanyahu is faced with two less than pleasing alternatives. On the one hand, he can – if he hasn’t already – accede to Trump’s hopes that self-destructs his current coalition and alienates the substantial segment of his political base, which isn’t interested in major compromises with the Palestinians, much less territorial concessions or a Palestinian state. On the other hand, Netanyahu has the option of defying Trump, in which case he would maintain the considerable segment of his political base that’s not interested in making concessions but risking the wrath of the unpredictable leader of Israel’s most valued ally and protector.

The embassy issue and a possible peace initiative have overshadowed at least one other issue touching Israel, the massive $110B sale of U.S.-made arms to Saudi Arabia. Israeli security sources expressed deep concern that shipment of such large quantities of state-of-the-art weaponry to the desert kingdom would affect the quantitative advantage Israel needs to defend itself. Yair Lapid, head of the opposition Yesh Atid party, accused Netanyahu of negligence, “almost recklessness,” in failing to protect Israel’s interests. Even though it shared with Israel a common interest against the Iranian threat, Lapid expressed concern about some of the arms being supplied to Riyadh. “Saudi Arabia is the most powerful Sunni (Muslim) country. Terrorist groups like al-Qaeda and ISIS are Sunni, and millions of people in the country support them…So even if the threat doesn’t come from Saudi Arabia itself, those weapons are inches away from the Sunni terrorists.”

Not Leaving Climate Pact

Israel is not following U.S. President Donald Trump’s lead to abandon the Paris Climate Agreement, Environmental Protection Minister Ze’ev Elkin says. Elkin issued a statement assuring the world that Israel would fulfill its obligations under the agreement. “The working assumption that Israel needs to change something in its conduct because the U.S. president has decided to resign is wrong. We will continue to hold our part of the bargain and the government decisions that were made.”

8.7 Million Israelis

Israel’s population grew by 1.9% in the last 12 months, reaching 8.68 million on the eve of the country’s 69 th Independence Day. According to Central Bureau of Statistics figures, there were 6.48 miilion Jews (74%), 1.8 million Arabs (20.8%) and 388,000 people classified as others (4.5%), most of them Russian-speaking immigrants eligible to immigrate under Israel’s Law of Return because they have or had at least one Jewish grandparent.

PMO Says 72% of Goals Met

The Prime Minister’s Office released a report in early April claiming that the current government had attained 72% of the goals it set for itself in 2016. Among them were a deficit amounting to only 2.1% of GDP, compared to the budget’s 2.9% target; meeting the government revenue target of NIS 312B; a significant increase in the number of high school graduates passing the highest level of math matriculation exams; an increase in students passing matriculation exams; number of new immigrants aged 18-35; workplaces created for young people in the periphery; and expenditure on infrastructure projects.

Plastic Bag Use Declines

Use of disposable plastic bags has declined by 80% in the first three months of 2017. A law requiring supermarkets to change NIS 0.10 (about 0.25 U.S. Cents) for the bags went into effect on January 1.

Upward Mobility

Children born into lower socio-economic levels in Israel have greater possible upward mobility than children in other developed countries, according to Treasury data reported by Yediot Aharonot. While there’s still a connection between parents’ income level and their children’s upward mobility, Treasury economists found that the link in Israel is less pronounced, even though the gap between rich and poor Israelis is one of the largest in the developed world. The economists theorized that one possible reason for the surprising difference was that Israel is a country of immigration, where children of immigrants, including immigrants from the former Soviet Union, a developed society, and less developed societies in Asia and Africa, have a higher success rate than members of veteran families.

The Economy

Record Tourism

Incoming tourism to Israel reached a record 739,000 in the first quarter, up 24% from the parallel period in 2016, according to Ministry of Tourism figures. March tourism amounted to 293,000, up 22% from March 2016. The January-March winter period is usually the lowest quarter for incoming tourism to Israel.

Incoming tourism rose by a healthy 40% in April. But the rise wasn’t as good for the hotel business as might have been expected: Hotel overnights were up only 6%, according to a report in the Globes business daily.

U.S. Trade Hits Record

Bilateral Israeli-U.S. trade rose 3% in 2016, reaching a record $19B. The figure includes $11.6B in exports of goods to the U.S. Preliminary figures for the first quarter of 2017 indicate another increase in export of goods, which was up 5% to $3.1B.

More Airlines

Three foreign airlines – Armenia Aircompany, Air Malta and Iceland’s WOW, began flying to Israel in early spring. The three carriers’ announcements follow recent inauguration of Ural Airways flights linking Ben-Gurion International Airport with Sochi, a resort city in southern Russia. Other airlines announcing new Israeli routes include China’s Hainan and Cathay Pacific.

April Revenues Up

Government revenues totaled NIS 24B (over $6B) in April, up 10.8% from April 2016. The increase came despite a decline in net revenue from real estate taxes (about NIS 680M). Finance Ministry sources said net revenue for the year so far was NIS 1.6B higher than budgetary estimates.

Defes to Succeed Chairman Cohen at El Al

Eli Defes is due to succeed Amikam Cohen as chairman of Israel’s El Al. Cohen, 69, has held the chairman’s post since 2009, after serving for 11 years as the airline’s general manager-partner. Defes previously was director of the Clalit HMO.

Fitch Confirms Rating

Fitch has confirmed Israel’s credit rating of A+. In a late-April report, the international credit rating agency said its rating and stable outlook were based on strong external accounts, institutional soundness, and solid macroeconomic performance despite political and security risks and against a ratio of government debt to GDP that is still higher than that of reference countries.

Gas Compensation

A Swiss court has rejected an appeal contesting a compensation award under which Egypt must pay as much as $3B to the Israel Electric Corporation and the Israeli-Egyptian EMG gas pipeline for the abrupt end to gas supplies to Israel. The flow of Egyptian gas across the Sinai desert was halted in 2012, after repeated attacks by insurgents on the line. The original award by a French court gave IEC $2B to cover the cost of more expensive gas from other sources until Israel gas became available. IEC had a 20-year contract with two Egyptian companies.

Private Power Plan

National Infrastructure Minister Yuval Steinitz has unveiled a plan for private power stations to replace existing coal-burning stations at Hadera, on the coast between Haifa and Tel Aviv. The change is part of a plan to reform the government-owned Israel Electric Company.

BOI Credit Warning

Bank of Israel banking supervisor Hedva Ber says consumer credit has increased and that the central bank will intervene if it reaches dangerous levels. Ber, speaking on publication of her department’s annual report, compared credit to salt, saying that “food without salt has no taste, but too much salt tastes bad and is dangerous.” She called on banks to use greater discretion in granting consumer credit.

Finance & Investment

Clal Selling Shipyards Stake

Clal Industries is negotiating to sell its 19% stake in Israel Shipyards (which it has held for 20 years) at a company value of NIS 700M. The move is part of a sell-off of holdings in which Clal, an Israeli conglomerate controlled by billionaire Len Blavatnik, has minority holdings.

Isramco Dividend

Gas exploration company Isramco, which owns 29% of the Tamar offshore gas field, intends to distribute $417M this year and $400M in dividends to shareholders in each of the next two years. The distribution is contingent on the firm’s financial condition, expected cash flow, and legal requirements.

ECI Rescue

In an effort to maintain control of ECI Telecom, Israeli billionaire Shaul Shani is investing an addition $40M and enlisting the JP Morgan Bank to raise $150M to cover foreign debts of the company, which was one of the flagships of Israeli high-tech in the 1990s. Shani, together with Ashmore Equity Investment (which he later bought out), acquired control of ECI about 10 years ago.

Private Equity

Private equity firms invested $316M in 24 deals during the first quarter, down about 45% from the preceding quarter, according to a report by IVC and the Shibolet law firm. On the brighter side, the investment was up 21.5% from the parallel quarter of 2016.

Mergers & Acquisitions

Francisco Partners-R2Net

Francisco Partners, a U.S. private equity firm, is acquiring 50% of R2Net, a leading Israeli marketer of jewelry on the Internet. Sale price is at a reported valuation of $300-$320M. R2Net, whose founder and CEO Oded Edelman comes from a family of Israeli diamond traders, is incorporated in Israel but does much of its business out of its headquarters in New York. The company’s operations center on the James Allen website, is the second largest ecommerce website in the U.S. for diamond engagement rings and jewelry for other special events. The sale includes the 25% of R2Net owned by Israel Growth Partners (IGP), plus 25% of Edelman’s larger equity.


New York-based ticketing platform company SeatGeek is acquiring TopTix, an Israeli developer of ticketing software, for $56M. TopTix processes ticketing for 500 institutions and businesses around the year, totaling a reported 80M million transactions in 16 countries.


Biolight Israeli Life Sciences Investment is selling part of its stake in IOPtima, a developer of laser surgery technology for treating glaucoma, to Chengdu Kanghong Pharma of China at a company value of $30M. Biolight is headed by Israel Makov, the former head of Israel’s Teva Pharmaceutical Industries.


British private equity firm Apax Partner is acquiring Syneron Medical, a medical aesthetics developer with corporate, manufacturing and R&D headquarters in Israel, for $300-$500M. In the past few years, two other Israeli medical aesthetics and laser companies have been sold, Alma Lasers to China’s Fosun for $240M, and Lumenis to XIO of London for $510M. Syneron, which bought Candela of the U.S. in 2009, was founded by Shimon Eckhouse after he was pushed out of Lumenis, which he also was one of the founders.

ICL Selling IDI Stake

Israel Chemicals is selling its 50% stake in Israel Desalination Industries for $175M. According to a report in Globes, the buyers are Clal Insurance Enterprises and the Teachers and Kindergarten Teachers Training Fund, each of which will buy 20%, and Avashalom Felber, the IDI CEO, with the remaining 10%. According to press reports, the Delek Group, which owns the other 50% of IDI, has held off selling because it believes that the price offered ICL was too low.

Game Point-Luck Genome

Game Point, a Dutch game developer, has acquired Tel Aviv-based Luck Genome for a reported $12.5M. The flagship product of Luck Genome, which was founded two years ago, is Slots Craze, a platform for more than 60 social casino games.

AID Partners-Genesort

AID Partners, a Hong Kong investment firm, has acquired Israeli molecular analysis firm GeneSort for $23M. The technology of GeneSort, based in Herzliya north of Tel Aviv, detects specific genetic mutations linked to various types of cancer, allowing oncologists to enhance results by adapting treatments that are specific to the individual patient’s genetic makeup.

ADM-Industries Centers EOD

Archer Daniels Midland (ADM), a Chicago-based agricultural supplies firm, is acquiring control of Israel’s Industries Centers EOD at a value estimated at tens of millions of shekels, according to a report in Globes. Industries Centers imports and markets animal feed, processes seeds and stores emergency supplies for the State of Israel.


Gett, the Israeli taxi-hailing firm (formerly Get Taxi), has acquired Juno, a New York-based competitor, for $200M. Gett, which has a strong presence in Israel and in Western Europe, has struggled to gain a foothold in the attractive New York market. So far, Gett has raised over $500M, including $300M from Volkswagen in 2016.

Plarium Talks

Advanced talks have been reported between an unnamed Australian games company and Herzliya-based Plarium, a developer of online games for Facebook and smartphones. According to reports in Yediot and Globes, sales price is $1.4B, of which $900M is in cash.

Plarium, founded by two sets of brothers from Georgia, the former Soviet republic, has 1,100 employees in Israel, Russia, Ukraine, the U.S. and the UK and sales totaling hundreds of millions of dollars. Michael Morgovsky, an Israel-Georgian billionaire, is the principal investor together with his son Yitzhak.

ORYX Gets Ormat Share

ORYX Corp., a Japanese firm, is purchasing 29% of Israel’s Ormat Technologies for $627M. Sellers of the stake in Ormat, a developer of geothermal power generating technologies based in Yavne south of Tel Aviv and Nevada, are the FIMI private equity fund and Bronicki Investments. In recent years Ormat, founded by Yehuda (Lucien) Bronicki, has expanded from its core geothermal business into energy storage.

One-Taldor in Talks

Israel’s One Technologies reportedly is negotiating for eventual control of Taldor, which develops IT solutions. According to a report in Globes, talks are based on Taldor’s market valuation of about NIS 313M (about $80M) in a two-stage transaction. In the first stage, One would acquire the 43% stake of DBSI, a private investment firm of Israelis Barak Dotan and Yossi Ben-Shalom, and subsequently seek to purchase shares on the open market.


Israeli wastewater technology specialist Emercy Group Ltd. has signed a letter of intent to merge with RWL water, owned by U.S. cosmetics heir Ronald Lauder. The new company, to be called Fuuence Corp., aims to become a global provider of innovative water treatment, desalination and wastewater solutions and expand Emercy’s operations on the China market. Emercy’s signature development is its Membrane Aerated Biofilm Reactor, for treatment of wastewater; RWL has built more 7,000 installations in 70 countries.


Microsoft has purchased Hexadite, a cyber-security specialist based in Boston and Tel Aviv, for an estimated $100M, according to a report in Globes. Hexadite’s software streamlines threat identification by probing anti-virus and firewall alerts and rating the urgency with which they should be addressed, which is especially important when dealing with multiple threats.


Stingray Digital Group, a Canadian provider of business-to-business music platforms, has acquired Israel’s Yokee Music Ltd. Purchase price was not announced, but is estimated in the $30-40M range. Three Yokee applications – Yokee, Yokee Guitar and Yokee Piano, which transform smart phones and tablets into wireless karaoke machines – have about 4 million monthly users worldwide.

Max Brenner Sold

The Strauss Group has sold its Max Brenner international chain of cafes specializing in chocolate for $5M. Buyers are Yaniv Shtanger and Dudu Vaknin, who hold the Israel franchise. The chain currently has around 60 locations in six countries, including the U.S. and Australia.


Eloxx Pharmaceuticals, a Rehovot-based developer of therapy for genetic diseases cause by mutations, will become a wholly-owned subsidiary of Sevion Therapeutics of the U.S. Eloxx is based on technology developed at the Technion Israel Institute of Technology in Haifa.

Science & High Technology

Airbus R&D Center Planned

European aerospace giant Airbus reportedly plans to open a research and development center in Israel. According to a report in Calcalist, the economic supplement of Yediot Aharonot, the center will not deal with aviation, but will concentrate on cyber and artificial construction technologies.

Meditornics Too

Meditronics, one of the world’s largest developers of medical equipment, plans to open a research center in Israel. According to press reports, the center will employ a staff of 80 in Jerusalem and Yokne’am, near Haifa with the help of government grants, which will cover 30% of staff salaries for the first three years.

Nanopigments for Cars

Germany’s BASF and Israel’s Landa Labs have formed a partnership aimed at bringing Landa’s nanopigment technology to the automotive industry. The base technology was established by Landa Labs Israeli-Canadian founder Benny Landa in the 1990s for printing at Landa’s previous company, Indigo, which was subsequently sold to HP. Landa’s nanopigment technology will be the basis of Colors & Effects, a new portfolio of ultra-high transparency pigments offering unprecedented color depth while significantly simplifying the production of automotive coatings.

High-Schoolers’ Satellite

A satellite built by Israeli high school students was one of 23 mini-satellites (called cubesats) launched into deep space in mid-April as part of the EU’s QB50 program to measure the density of the Earth’s atmosphere. According to a report in Globes, the satellite, called Duchifat-2, was built by over 80 students from high schools in five Israeli localities – Herzliya north of Tel Aviv, Ofra in the West Bank, the Negev development towns of Yeruham and Ofakim, and Hura, a Beduin township. Duchifat-2 was sponsored by the Israel Space Agency, with the assistance of the Herzliya Science Center and volunteer engineers from Israeli Aerospace Industries.

Medical Discovery Tower

Haifa University and the Rambam Medical Center have announced plans to build a 20-story tower dedicated to medical research, according to a report in the Jerusalem Post. The project, at an investment of NIS 400M, will provide medical researchers with advanced technologies in fields such as imaging and genetics.

On the Road

Chinese automaker JAC is conducting a pilot test of the technology of Foresight Autonomous Holdings, an Israeli developer of software solutions for autonomous driving. The test of the Foresight system, which uses two cameras and other imaging technology to detect nearby objects, will be conducted on JAC vehicles. Foresight’s shares are traded on the Tel Aviv Stock Exchange.

Meanwhile Porsche, a subsidiary of Germany’s Volkswagen, said it would invests tens of millions of euros in Israeli smart-car start-ups through the Magma and Grove venture capital funds.

Snapchat Founder Visits

Evan Spiegel, co-founder of Snapchat, secretly visited Israel in late May, according to a report in Yediot Aharonot. Spiegel reportedly visited start-ups looking for investment opportunities.

Orbotech Gets China Deal

Orbotech, an Israeli specialist in automated optical inspection technology, has received a $24M order from Xianyang Caihong Optoelectronics Technology, a Chinese manufacturer of flat-panel displays.

Aerospace & Defense

India Deal is IAI’s Biggest-Ever

Contracts valued at about $2B – the largest security-related deal in Israeli history, principally with state-owned Israel Aerospace Industries – were announced in early April. IAI will supply advanced medium-range surface-to-air missile systems (MRSAM) to the Indian Army and long-range air and missile defense systems (LRSAM) for the first locally produced Indian aircraft carrier. The remaining $400M goes to Rafael Advanced Defense Systems, which will provide components for the IAI systems.

Announcement of the contract comes at a good time for IAI, which is under pressure due to a police investigation of alleged bribery involving, among others, the son of Welfare Minister Haim Katz. The elder Katz is the former head of IAI’s workers union.

In a second deal with India, announced in mid-May, Israel Aerospace Industries will provide launch, radar, fire control and other systems for the Barak 8 surface-to-air missile it is developing in collaboration with the Indian Ministry of Defense. The contract with Indian state-owned company BEL (Bharat Electronics Ltd.) is worth $630M. BEL with supply the Indian Navy four new warships equipped with the maritime version of the Barak 8 system.

Defense Expenditure

Israel was ranked 15th in total defense expenditure and first in percentage of Gross Domestic Product in the annual ratings of the Stockholm International Peace Research Institute. The U.S. ranked first in total spending, with $611B, followed by China’s $215B, Russia’s $69B, Saudi Arabia’s $63B and India, with $56B. But in terms of percentage of GDP, Israel’s 5.8% was the uncontested leader, compared to, for example, 3.3% for the U.S. The nearest contenders in percentage of GDP were UAE (5.7%), Russia (5.3%), and Saudi Arabia (10%). Most Western European countries were in the 2-3% range.

Artillery Purchase Review

Defense Minister Avigdor Lieberman and Chief of Staff Gadi Eizenkot have agreed to reexamine the $1.5B plan to purchase self-propelled artillery from Elbit Systems. A committee headed by Deputy Chief of Staff Aviv Kochavi will look at possible irregularities in the purchasing procedure, and the need for the system upgrade. Elbit had been chosen over a consortium led by Israel Aerospace Industries, which included Israel Military Industries and KMW of Germany; it will develop and produce the Atmos-155 mm self-propelled howitzer, to gradually but eventually replace M-109s currently in IDF service. The IDF has been seeking a weapon firing six shells a minute at a 40-km range.

Elbit’s USN Contract

Elbit Systems of America, a subsidiary of Israel’s Elbit Systems, has won a $50M contract to supply the U.S. Navy with its Helmet Display and Tracker System for MH-60S helicopters. The work will be performed in Fort Worth Texas, and will be completed by June 2021. According to Elbit, it is the first production order for the line-of-sight helmet tracking system and the integration of targeting symbology in the Armed Helicopter Weapon System (AHWS) for the MH-60S fleet.

Wheeled APC Passes Tests

Eitan, the small wheeled tank being developed by the Israel Defense Forces and the Ministry of Defense’s Tank Administration, has successfully completed rigorous rough-terrain testing at IDF training grounds in southern Israel and in the Golan Heights. In addition to greater mobility than traditional tracked vehicles, the Eitan can be moved from place to place on regular highways, at speeds of up to 90 kph, rather than relying on tank transporters.

African Inroads

Israeli defense contractors have established themselves as a significant factor on the African security market and seem to be on the upswing, according to a report by Erwan de Cherisey, a journalist specializing in African defense writing for Shephard Media. Israeli companies’ 2016 sales on the continent amounted to $275M, up 69% from the previous year but still about $40M lower than 2014, which was a record year. His detailed examination of past and present Israeli arms sales ranges from Galil and assault rifles for armed forces in Cameroon, Chad, Tanzania, Nigeria, Uganda and South Sudan; Israel Aerospace Industries Ram MK3 armored vehicles reportedly sold to Senegal and Chad; Thunder MK1 APC from GAIA Automotive Industries in Cameroon and Ethiopia; the SandCat armored vehicle from Plasan, reportedly in service with the Gendarmeire of Senegal; and Soltam‘s Cardom self-propelled mortars, reported to have been deployed by Cameroon and Uganda. According to de Cherisey, the African arms market will continue to be dominated by China and Russia as it has in the past but Israeli companies, which provide battle-tested weaponry and relatively short delivery cycles, seem likely to retain a significant share in the near future.

DOD Contract

MeMed, based in Tirat Carmel near Haifa, has been awarded a $9.2M U.S. Department of Defense contract to develop technology that distinguishes between bacterial and viral infections. The contract was awarded by the DoD’s Defense Threat Reduction Agency, whose mission is protecting the U.S. against chemical, biological and other weapons of mass destruction.

India Agreement

Automotive Robotic Industry, based in Nazareth in northern Israel, has signed a cooperation agreement with Croni, a military information systems developer based in Mumbai, which will result in the deployment of Automotive Robotic’s Amstaf unmanned surface vehicle with Indian border forces. According to press reports, India plans to deploy 30 Amstafs on its frontier with Pakistan. The vehicles reportedly will be equipped with laser penetration-detection devices and an automated system for launching surveillance UAVs.

Joint Venture Mooted

Israel Aerospace Industries‘ board of directors is due to consider a proposal to develop a new executive jet in a joint venture with Aviation Industry Corporation of China, which is owned by the Chinese government. The planned venture is designed to boost IAI’s civilian aircraft division, which currently manufactures Gulfstream executive jets that are marketed by Gulfstream Aviation of the U.S.

IDF Robotics

Israel has long been a leader in the development and deployment of unmanned aerial vehicles for its defense. But over the last couple of years, the UAVs have been joined by unmanned surface vehicles (USVs) deployed by the Israel Defense Forces for patrolling its frontiers. These include the Guardium, developed by G-NIUS and based on the chassis of Israeli Tomcar off-track vehicles and the Segev, based on a Ford pickup truck, as well as Protector, an unmanned patrol vessel developed by Rafael Advanced Defense Technologies, and Roni, a portable robot, is already operational with IDF infantry and special combat units.

Russia Developing UAV

Russia is developing an unmanned aerial vehicle based on IAI‘s Searcher. The UAV, called Forpost-4, will carry some Russian-developed technology. Moscow has been purchasing UAVs, including BirdEye and Searcher 2, from IAI since 2009. Some models are now assembled in Russia.

Spike Deal Gets OK

The German Parliament has authorized the Bundeswehr’s 137M euro purchase of Spike anti-tank missiles from Israel’s Rafael Advanced Defense Systems. Delivery of the missiles and launch systems is due to begin next year.

Engine Contract

Beit Shemesh Engines anticipates $173M in orders from recently-signed follow-up orders to provide jet engine parts to Germany’s MTU Aeroengines. Earlier this year, Beit Shemesh Engines, which is controlled by Israel’s FIMI fund, signed a long-term contract with ITP of Spain, a member of the Rolls Royce group.

Polish Patriot Deal

Poland is close to closing a $7.5B deal to acquire Patriot missile-defense systems from Raytheon, the U.S. defense contractor. The deal, involving eight Patriot batteries, also includes the SkyCeptor, which is based on the Stunner hit-to-kill interceptor missile originally developed by Israel’s Rafael Advanced Defense Systems. The Stunner, a relatively low-cost interceptor which destroys target with the force of its impact, is an integral part of the David’s Sling intermediate range missile defense system which recently became operational in IDF service. Elements of David’s Sling are produced in the U.S. as part of the arrangement for U.S. financing of the Israeli-developed system.

IDF Testing Merkava Helmet

The IDF plans to conduct trials of Elbit‘s IronVision helmet-mounted armored fighting vehicle situational awareness system on Merkava main battle tanks, according to reports in both Jane’s and Defense News. IronVision employs cameras and imaging technology usually found in aircraft systems to project 360-degree views of surrounding terrain onto visors attached to the helmets of tank crews “buttoned up” inside the sealed vehicle.

Brazil Deal

Elbit Systems has been awarded a $40M contract to supply C4I (Command, Control, Communications, Computers and Intelligence) and electronic warfare systems to Brazil’s Marine Corps. The contract includes cutting-edge technology in battle management, C4I for artillery, and advanced Soldier c4I suits.

Elbit Gets Satellite Contract

Private defense contractor Elbit Systems has won an Israel Defense Ministry contract for satellite on the move (SOTM) systems. Elbit’s Elsat 2100 SOTM makes broadband capabilities available to moving land vehicles, can be installed on a variety of platforms and provide seamless communication in difficult terrain.

Naval Gun Sale Approved

The U.S. State Department has informed Congress that it approves the possible sale of 13 76-mm naval guns to Israel in a deal valued at about $440M. The guns, whose principal contractor is DNS North America, are to be mounted on Israel Navy Saar missile boats.

Russian AWACS in Syria

Israel satellite imagery indicates the presence of at least one Russian A-50 Aerial Warning and Control (AWACS) aircraft, Defense News reported in early May. Defense News published a satellite photo of the aircraft on the ground at Syria’s Latakia airbase; it said the photo was taken by the ImageSat International Eros B satellite. Russian A-50 aircraft were stationed in Syria in 2015, but withdrawn last year on orders of President Vladimir Putin.

Maritime Defense

Eight Israeli companies exhibited maritime defense systems at a recent defense exhibition in Singapore. Among the systems on display were Trigon, Israel Military Industries rocket system for attacking land targets from the sea, Israel Aerospace Industries Alpha maritime radar, and Elbit Systems‘ Skylark C mini-UAV, specifically designed for naval systems and Seagull, designed to combat submarines.

European Contract

Elbit Systems, Israel’s largest private defense contractor, has won a $390M contract to provide ground-based electronic intelligence capabilities for an unnamed European country. The equipment includes command and control solutions.

Export License Rules Changed

The Knesset’s Foreign Affairs and Defense Committee has approved a new set of regulations which exempt unclassified systems or support for classified systems that have already been through the export licensing process. One new rule allows items exported under a license within the last 10 years to be exported for repair as long as the servicing does not improve the product, another exempts certain products to be displayed at defense exhibitions.

Remote-Controlled Weapons

The IDF is deploying advanced remote-controlled weapons systems on unmanned surface vehicles used in border patrol, according to a report on the IDF website. The vehicles, which have been in service for about six years, already carry advanced cameras and imaging equipment. According to the website, the IDF is the world’s first army to deploy fully autonomous vehicles.

Environmental Satellite

Venus, Israel’s first environmental research satellite, is headed for South America where it will be launched this summer. The satellite, built at Rafael Advanced Defense Technologies, together with Israel Aerospace Industries and Elbit Systems, is a joint project of the Israel Space Agency and CNES, the French space agency. A special camera enables the satellite to see details which may be invisible to the naked eye, can photograph large tracts of up to 700 square kilometers and supply scientists with dozens of images daily. Propelled by an innovative electric propulsion system developed by Rafael, it weighs 265 kilos and is designed to monitor land for environmental studies.

Trainer Upgrade

The Israel Air Force is upgrading the M-346 advanced jet trainers it purchased from Italy by adding inert bombs and external fuel tanks. The last of the 30 M-346 trainers purchased in a $1B deal from Italy’s Aleni Aermacchi arrived in Israel last July, replacing Lockheed-Martin F16 A-Bs formerly used as trainers. Last year, Aleni Aermacchi merged into its parent company Leonardo, a major Italian defense contractor.

South Korean Jet

South Korea reportedly is incorporating advanced Israeli-developed radar in its KF-X fighter jet program. South Korean sources said the radar, apparently made by the Elta Group, a wholly-owned subsidiary of IAI, would supplement radar developed by Hanhwa, a South Korean domestic defense contractor. Estimated value of the deal: $35M.

New IDF Deputy C-O-S, Spokesman

Maj.-Gen. Aviv Kochavi took over as ISF Deputy Chief of Staff in mid-May, replacing Maj.-Gen. Yair Golan. Kochavi, 53, previously headed the IDF’s Northern Command.

Col. Ronen Manelis took over as the IDF’s new spokesman in late May. Manelis, who was promoted to brigadier general, replaces Maj.-Gen. Motti Almoz, who now heads the IDF’s Manpower Directorate.

Internet-Connected Spike

Rafael Advanced Defense Systems was due to unveil Spike LR 2, its new 5G version of the best-selling missile system, at the Le Bourget Paris Air Show in mid-June. Rafael says the missile, called Gil 2 in Israel, is more accurate and effective than previous Spike versions under different battle conditions due to advanced systems and connectability to the Internet. The new Spike can be launched from land, ships and helicopters, weighs 12.7 kg and has a range of 5.5 km when launched from the surface and 10 km when launched from a helicopter.

Italian Copter Talks

Negotiations are under way between the Ministry of Defense and Leonardo of Italy over the possible reciprocal purchase of training helicopters for the IAF. According to a report in Globes, the talks have intensified due to a “window of opportunity” for a reciprocal deal in which the Italian government will make purchases from Israeli defense contractors. Bell of the U.S. and Europe’s Airbus are also competing for the contract, which is valued at about $350M. Elbit Systems, Leonardo’s Israeli subcontractor on the project, will supply maintenance service for 20 years.

India Ships Visit

Three Indian Navy ships, headed by the frigate INS Trushuli, docked in Haifa in mid-May. The vessels, part of the Indian Navy’s Western Fleet, visited the Israeli Navy and defense contractors which have supplied them in the past.

Private India Arms Plant

Israel Weapon Industries and Punj Lloyd of India recently opened India’s first private weapons manufacturing plant, at Malanpur in Madhya Pradesh state. The plant, first joint venture under the Delhi government’s “Made in India” program, will produce components – and eventually full versions – of the X95 carbine, the Galil and Tavor assault rifles, and the Negev light machine gun – all weapons already in service with Indian security forces. Israel Weapon Industries, the former Magen Division of government-owned Israel Military Industries, was privatized in 2005 and is now part of industrialist Samy Katsav’s SK Group. It is based in Ramat Hasharon, northeast of Tel Aviv.

Orbit in Russian Plane

Orbit Technologies, a provider of stabilized satcom communications systems based in Netanya north of Tel Aviv, has provided its Orion technology for Irkut of Russia’s innovative MC-21 passenger jet. With the MC-21, a $4.5B project, Irkut – Russia’s largest private aerospace firm – plans to compete with Boeing 737 and Airbus 320 aircraft.

NSO for Sale?

Francisco Partners, which purchased the 70% of the Herzliya-based NSO Group for $120M in 2014, reportedly is seeking to sell its share of the cyber-security firm at a company valuation of $1B. The company, best known for producing technology which enables security agencies and governments to monitor communications, recently paid out dividends totaling NIS 850M.