News Analysis – May 2018

General News Summary

The Embassy

President Trump’s decision to move the U.S. Embassy from Tel Aviv to Jerusalem left Israelis with a feeling something long overdue had happened on May 14. Jerusalem had been the capital of Israel 70 years ago. The country’s significant institutions are located in Jerusalem – the Knesset, all government offices, including the Prime Minister’s Office, the Supreme Court, Bank of Israel are in the Capital, and now following the U.S., Guatemala and Paraguay opened their embassies in Jerusalem.

The atmosphere at the ceremony itself remained festive, thought partially overshadowed by the violent clashes taking place on the Gaza border at the same time (see The Gaza March, below). Nor did the positive feelings extend to nearby Ramallah, where Palestinian Authority President Mahmoud Abbas called the embassy a “new settlement” and said that its establishment ruled out the U.S. from any role in Middle East peace efforts. Widespread condemnation in Arab and Muslim countries was accompanied by an emergency meeting of the Arab League to discuss the “illegal” American move, and the PA called on Arab states to recall their ambassadors to Washington in protest. However none had done so.

Trump’s Nuclear Decision

Prime Minister Benjamin Netanyahu was among the first to react to U.S. President Donald Trump’s withdrawal from the nuclear agreement with Iran, calling it a “brave decision.”

Netanyahu capped his campaign against the nuclear agreement with a dramatic disclosure in late April, a cache of Iranian files stolen from a warehouse in Teheran, proving that Iran had “lied, big time” about its compliance with the agreement signed in October 2015. Israel’s Mossad secret service reportedly discovered what Netanyahu called an “atomic archive” consisting of 155,000 pages of documents and over 180 CDs in a Teheran warehouse in 2016, and managed to smuggle them out of the Islamic Republic.

The capture of the documents seems certain to take its place as one of the most spectacular achievements of the Mossad, Israel’s external intelligence agency, alongside such known and acknowledged operations as the capture of Nazi Adolph Eichmann and the infiltration of Israeli agent Eli Cohen in the Syrian political-military elite in the 1960s.

The Gaza March, Setting the Record Straight

The widespread view of May 14’s Great March of Return on the Gaza-Israel border as a protest against the dedication that same day of the U.S. Embassy in Jerusalem is a misconception. The march was the culmination of a campaign lasting over several weeks, designed to coincide with the anniversary of what Palestinians call Nakba Day, the anniversary of when many of them left the just-born State of Israel 70 years ago. The Palestinians alongside the Arab countries decided, in 1948, to demolish the newly born Jewish State. However, against all odds, the small number of Israelis won the war.

Equally erroneous is the idea that what the Hamas leaders conceived was a peaceful demonstration. Yehiye Sinwar, the leader of Hamas’s military (i.e: terror) wing in Gaza, said that “we will cut down their border and cut out their hearts,” in other words, to invade Israel. At least one Israeli source reported that Gaza civilians had been told that Hamas leaders would lead prayers that afternoon at three separate communities on the Israeli side of the border that they planned to overrun.

Though many Western capitals were quick to proclaim that Israel was within its rights, that indeed it had the duty to protect its own territory against this threat of invasion, much international attention has focused on the 62 Gazans killed, and the scores wounded, when Israeli troops fired live ammunition on Gazans approaching the border fence, planting explosives designed to blast openings in the barrier, and launching flaming kites and balloons to ignite fires on the Israeli wheat plantations at the border.

Israel has noted that it has an uncontested and absolute right to defend its territory, released documentation showing several attacks against its forces by terror gangs posing as civilian demonstrators, and introduced a statement by Hamas officials that over 50 people of the May 14 fatalities were members of Hamas military units. (Sami Bardawi, a Hamas operative in Gaza, later said that 50 of the 62 killed were Hamas members) and that despite the mortal danger involved, Hamas exhorted Palestinian civilians – and in some cases allegedly paid them – to approach and break down the border fence. Gaza writer Atef Abu Saif, writing in the New York Times, described an unnamed speaker at the border near the Jabalya refugee camp as telling those gathered there: “If you are not here to cut the fence down and cross over to our own land, he said, you may as well not be here.”

Defense Minister Avigdor Lieberman recently said that Hamas leaders “treat their children as armaments.” Beyond that there seem to be at least two purely operational factors which may have affected the IDF’s decision – that there were simply not sufficient resources at hand or obtainable to defend the entire border area effectively, particularly considering concentration of protesters at 13 different points along the frontier. There’s little doubt that the loss of life would have been much greater had thousands of Palestinians, including armed Hamas units, succeeded in crossing into Israel.

In fact, Hamas turned to the Great “March of Return” after the failure of other “weapons,” political and media as well as military, in its arsenal. These include terror attacks by organized units, the effectiveness of Israel’s Iron Dome anti-missile system, Israel’s development of technology that seems on the verge of neutralizing the threat from terror tunnels under the Gaza border, its inability to break the Israeli and Egyptian blockade of the Strip, eroded support from much of the Arab world, and the failed effort, once again, to reach a unity deal with Mahmoud Abbas and the Palestinian Authority on the West Bank.

In this context, the march can be seen for what it is, a weapon of last resort. And it’s already achieved part of its goal, of getting some kind of deal to relieve the mounting pressure it’s been under at home: Egypt’s President Abdel Fattah el-Sisi has ordered the Rafah crossing-point, at the southern end of the Strip, stay open for all of the Muslim holy month of Ramadan. Israel acted quickly to partially restore the flow of natural gas and transfer of vital goods through its Kerem Shalom crossing point into the southern Strip, where vital infrastructure was torched and destroyed by Hamas-inspired protesters.

Abbas Hospitalized, Again

Palestinian Authority President Mahmoud Abbas was hospitalized for the third time in a week on May 20, media sources reported. Abbas, popularly known by Abu Mazen, his code name in the Fatah movement he now heads, first went in for minor ear surgery, was readmitted briefly for tests and a surgical correction, and went in again after complaining of chest pains and a fever. According to Saeb Erekat, the senior PA official who saw him, the president was doing well, though doctors say there is a possibility that the 83-year-old leader may have pneumonia. Earlier this year, Abbas, who had previously been treated for prostate cancer and undergone a cardiac catheterization, was admitted to Johns Hopkins Hospital in Baltimore.

According to a report in March by Yoni Ben Menachem for the Jerusalem Center of Public Affairs, the Fatah movement has named long-time activist Mahmoud al-Aloul as temporary stand-in in the case of death or incapacitation. Aloul, however, is not seen as a leading candidate if and when a permanent replacement for Abbas becomes necessary. Abbas personal choice is said to be Gen. Majid Faraj, Head of the General Intelligence Services. Other possible successors include Jibril Rajoub, former head of Palestinian Preventive Security on the West Bank, Mohammed Dahlan, who held a similar post in Gaza after the Palestinian Authority was established in the 1990s, Gen Tawfik Tirawi, former head of PA Intelligence in the West Bank who led the Authority’s inquiry into the death of Yasser Arafat, and Marwan Barghouti, a top Fatah activist who is currently serving five consecutive life sentences in an Israel prison for multiple murders committed during the Second Intifada.

Waiting for a Response

Israeli sources do not think that the May 10 counterstrike, in which Israeli hit dozens of installations of Iran’s Quds force inside Syria, is not the beginning of the end of the Israeli-Iranian conflict, or even the end of the beginning. The expectation, in fact, is that Iran is planning a response to what Israel says was both its largest air strike on the territory of its neighbor to the northeast since the 1970s Yom Kippur War, targeted Iran’s air defenses inside Syria, targeted weapons manufacturing and logistical installations and permanent Iranian bases, came in response to a barrage of 20 BM-27 rockets aimed at Israeli villages in the Golan heights. Israel said it destroyed five Syrian Army anti-aircraft batteries, which Haaretz said were Russian-built Sa 2, SA-5, SA-17 and SA 22 models.

According to a report in Yediot Aharonot, Israel’s target on April 9 was the Iranian Khordad 3 air-defense system. The paper’s military commentator, Ron Ben-Yishai said that the system had just been unloaded from an Iranian plane and was not operational. Ben-Yishai said that senior Iranian Islamic Guard officials were standing by on the tarmac as the system was being unpacked.

Khordad 3 is an Iranian-made version of the Russian S-300. The Russian system is capable of intercepting planes, missiles, cruise missiles and unmanned aerial vehicles, with a range that would extend into Israel, denying Israel not only air superiority over Syria but freedom of movement in its own territory.

Israel and Iran have directly conflicting interests. Iran wants to deploy its forces in Syria in order to safeguard its Shi’ite land corridor all the way from its territory via Iraq and Syria to Lebanon and the Mediterranean coast. Israel, on the other hand, categorically rejects the idea of Iran deepening its Syrian presence. Prime Minister Netanyahu, Defense Minister Lieberman and the Israeli military chiefs share the same perception and goal. The blunt-talking Lieberman made the point even more strongly, saying “they must understand if it rains here, it will pour there.”

Russia, which is stuck in the middle, is trying to mediate between the two sides. President Vladimir Putin knows that Israel holds the key with its capability to destabilize Syria. In this sense, Israel is a beneficiary of the Russian interest to support the Assad regime. However, Putin also knows and understands Iranian interests in Syria if faced with the difficult task of accommodating both. In that context, it is far from clear whether Putin’s pledge that foreign forces would soon begin leaving Syria, made to Syrian President Bashar al-Assad in Sochi on the Black Sea in mid-May, applied only to the Russians or to Iran as well. 

Observers in Israel have read Russia’s apparent decision to stay on the sidelines of the Iranian-Israeli escalation indicates how much leeway Putin is prepared to give Israel, which has made it clear that it has no intention of endangering saving the Assad regime, the Kremlin’s signature achievement in Syria, so long as there is no long-term Iranian military presence in its northern neighbor.

Turkey Hurts Itself

The current Turkish-Israeli diplomatic crisis, triggered by President Recep Tayyep Erdogan’s angry denunciation of Israel’s actions on the Gaza frontier, has centered on mutual expulsions of diplomatic representatives. The deeper effect may be on Turkish-Israeli economic relations, where Haaretz economic commentator Sami Peretz observes that Turkey has a lot to lose. Peretz points out that Erdogan’s country benefits from a huge advantage in the trade of merchandise, exporting $2.9B in goods against imports of only $1.4B from Israel. Even more significant is the expectable drop in Israeli tourism, which has revived in recent years after falling off during the previous crisis over the Israeli attack on the Turkish Mavi Marmara “peace ship” en route to Gaza. Last year, more than 1 million Israelis traveled to Turkey, either as vacationers or as a transit point for Turkish Airlines flights to other parts of the world. In addition, with the civil war cutting off passage through Syria, Israel has become a transit point for Turkish trucks carrying goods to Jordan, and potentially on to the lucrative market in Saudi Arabia. Then there is the diminished prospect of Turkey acquiring desperately needed natural gas from Israel’s offshore fields; given the ups and downs of Israel-Turkey ties, finding an investor willing to put up about $2B needed to build a pipeline to Turkey has become even more unlikely than it has been in the past.

Diplomatic Visit, Culinary Bad Taste

Japanese Prime Minister Shinzo Abe visited Israel in late April, discussing economic relations, the Iran nuclear deal, Israel-Palestinian talks and the Iran nuclear deal with Prime Minister Benjamin Netanyahu. The Japanese delegation also included business executives.

Historic Flight

Air India flight AI 139 from Delhi to Tel Aviv made history on March 22 as the first commercial flight to fly to Israel over Saudi Arabia. The flight via the airspace of Oman, Saudi Arabia and Jordan took 7½ hours, 2 hours less than if it had been required to circumvent Saudi Arabia. The Indian airline has schedules three weekly flights to Tel Aviv using the new route; Israel’s EL AL has objected, saying the route gives Air India an unfair advantage, since it cannot overfly Saudi territory. Shorter flight time means lower fuel consumption, allowing Air India a substantial price advantage over the Israeli airline.

Dining Powerhouse

Israel has one of the world’s “most exciting dining scenes,” according to a report by the Bloomberg news service chief food critic Richard Vines. Vines, who visited the country in March, noted that Tel Aviv is just beginning to be recognized as a food destination on a par with New York or London, and quotes restaurateurs as saying that foreign visitors make up as much as 30% of their customers.

The Economy

Treasury, Bank, Collision Course

The Bank of Israel’s annual report for 2017, issued in March, contained fulsome praise of the Israeli economy’s performance, citing strong export growth, rising wages and falling unemployment. At the same time, criticism of some policies which resulted in a deficit amounting to 1.2% of GDP, the highest in more than a decade, accentuated major differences between the two top officials responsible for economic policy, Finance Minister Moshe Kahlon and Bank of Israel Governor Dr. Karnit Flug.

The conflict raised speculation that Flug, who has headed the central bank for the last five years, would not be asked to stay on when her term ends in November. One major point of contention, accentuated in the report, involves the desire of both Kahlon and Prime Minister Benjamin Netanyahu for a tax cut in line with the Trump administration’s U.S. tax reform program. Warning that some of the positive achievements of the economy last year were due to a one-time increase in tax revenues, the bank said that lowering taxes, in addition to endangering Israel’s fiscal situation, may also slow economic growth by decreasing funds available for economic “engines” including improved infrastructure and education, as well as government spending on health care.

Unemployment Drops Again

Israeli unemployment declined from 3.8% in February to 3.6% in March, according to figures released by the Central Bureau of Statistics in early May. At the same time, the rate of participation in the economy dropped slightly, from 64% in 2017’s last quarter to 63.8% in the first quarter of 2018.

Lots of Tourists

1.36 million tourists entered Israel in January-April 2018, 25% more than in the corresponding period last year. While the Tourism Ministry hopes that 2018 tourism will exceed 2017’s record 3.6 million, industry sources are already expressing concern that current security tensions may affect bookings in the coming months.

India Gets Gas License

An Indian consortium has been granted a license to search for gas and oil in Israel’s economic waters. The Ministry of National Infrastructure, Energy and Water granted the license to a group composed of ONGC Videsh, Bharat PetroResources, Indian Oil Corp and Oil India, which bid on the license in a competitive tender, in which there was only one competitor, Energan of Greece.

Construction Safety

Unmanned aerial vehicles may be used for safety inspection of building sites, according to a report in Globes. The paper said that the UAVs are part of a Ministry of Labor and Social Welfare’s drive to use video collected from the air and ground in inspection of construction sites where safety hazards may exist.

Most Important Invention

The Iron Dome missile defense system developed by Rafael Advanced Defense Systems was named the Most Important Invention in Israel’s history in a survey conducted by the Economy Ministry and Yediot Aharonot. Waze, the traffic advisory application, was second in the survey, followed by the drip irrigation system developed by Netafim in third place.

More Chinese Bikes

Two Chinese short-term bicycle-rending companies are expanding operations in Israel. Ofo, which has run a pilot project at Bar-Ilan University, is expanding operations to all of the city of Ramat Gan, near Tel Aviv. Meanwhile Mobike, which is also based in Beijing, is adding Tel Aviv University’s campus and the city of Rehovot. Ofo and Mobike bikes do not need to be returned at a specific spots, but can be collected from anywhere – scanning a QR code enables them to be locked and unlocked.

Man-Made Island?

Prime Minister Benjamin Netanyahu has raised once again the idea of building artificial islands off Israel’s coast, to compensate for the country’s limited available coastline. Similar ideas have been floated in the past, for islands that would house an international airport, a military base, desalination and power plants. None has been implemented.

Housing Prices Decline

For the first time in a decade, the average price of Israeli housing declined over the 12-month period ending in March 2018, according to the Central Bureau of Statistics. Housing prices were down 0.2% nationwide in March, and 0.1% in April 2017-March 2018. At the same time, the CBS reported a 0.4% rise in the Consumer Price Index, following March’s increase of 0.3%. The figures represent an upward trend over the last half-year, with a rise in the CPI totaling 2.7% since September 2017.

Finance & Investment

Start-ups Raise $400M

Israeli start-up companies raised more than $400M in April, according to calculations published in early May by Globes, which said that this sum was in addition to the $1B raised by start-ups in the first three months of the year. Start-ups raised $5.2B in all of 2017, and $4.8B in 2016.

Investment Rules Changed

Israel’s government in early May approved changes in regulations that will streamline technology-related investments of state-owned companies. According to a report in Yediot Aharonot, the companies will be able to invest up to 10% of their equity, though no more than NIS 200M ($55.5M) overall, and hold a stake no greater than 20% in a single start-up. There is no limit on the number of startups state-owned companies have in their portfolios.

Ports Bond Issue

Israel Ports Development & Assets completed a NIS 2.5B bond issue, with demand totaling NIS 5.1B. Most of Israel’s investment institutions participated in the bidding.

Thai Bank Team with OurCrowd

OurCrowd, the Jerusalem-based crowdfunding equity firm headed by Jonathan Medved, says it is partnering with Bangkok Bank Public Company Ltd., Thailand’s largest bank. The two sides hope to connect OurCrowd‘s portfolio companies with the customers of the bank, which has about $102B in assets, and interested investors, according to a report in Yediot Aharonot. 

Full Digital Banking

A fully digital bank may only be one year away, says Bank of Israel supervisor of banking Hedva Bar. The Central Bank, she said, had been approached by both small and established groups have requested license for new digital banks specializing in credit for households. Bar said the public should learn to utilize and rely on smartphones for banking and financial services, which simplifies operations and increases efficiency, and that banks must understand that they must accelerate their adaption to the new age.”

Mergers & Acquisitions

Frutarom Sold for $7.1B

International Flavors & Fragrances, based in New York, has entered into an agreement to acquire Israel’s Frutarom Industries for $7.1B. The sale, due to be completed by the end of the year, is the second largest acquisition in Israeli history, after Intel‘s purchase of Mobileye last year for $15.1B.

Over the past few years, Frutarom, based in Herzliya, purchased smaller companies in the flavors and fragrances field around the world. In 2017, it made about a dozen acquisitions, followed by several more in the first months of 2018. Sales in 2017 amounted to $1.3B, towards what Frutarom said was an ultimate target of $2.25B. Controlling shares in Frutarom are owned by company Chairman John Farber (92), his wife Maya (80) and their daughter Sandra (60).

Frutarom president and CEO Ori Yehudai said, “Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focus on natural products in the growing world of health and taste.. Today, we are extremely excited to combine Frutarom with IFF and together create global leadership in natural taste, scent and nutrition.” 

Avgol Sales in Works

Avgol Industries, an Israeli maker of nonwoven fabrics used in disposable diapers and other products, said mid-May that its two controlling shareholders were in talks to sell their stakes. The announcement didn’t offer further details, but Globes said the buyer was Thailand’s Indorama Ventures, which is offering to buy control in a deal valuing the entire company at NIS1.7B ($470M). Indorama, a global chemicals company controlled by the by Indian businessman Aloke Lohia with 75 production sites in 25 countries and 2017 revenue of $8.4B, has not commented on any talks.

Avgol has 18 manufacturing plants around the world, including sites in Dimona in southern Israel, North Carolina, Russia, China and India that produce nonwoven fabrics for use in adult incontinence and feminine hygiene products as well as diapers and medical and industrial applications.

Fortissimo-Gadot Chemicals

Israel’s Fortissimo fund has acquired Gadot Biochemicals for NIS 40M. The seller is Delek, controlled by Yitzhak Tshuva, a main player in Israel’s offshore natural gas fields. The sale represents a substantial loss for Delek, which had invested a total of $136M in the chemical firm between 2010 and 2015. Gadot, which produces lemon citric acid and citric acid salts used in the food industry, drugs, and detergents, as well as fructose used as a sugar substitute and premium sweetener, has suffered heavy losses running into hundreds of millions of shekels in recent years.

United Therapeutics-Steadymed

United Therapeutics of Silver Spring, Maryland, has purchased SteadyMed of Rehovot and San Ramon, California for $216M. SteadyMed, founded at the Zisapel family’s RAD Biomedical incubator, develops drug candidates for the treatment of “orphan” and high-value diseases including pulmonary arterial hypertension.

Elbit-Universal Avionics

Israeli private defense contractor Elbit Systems said in early April that it had completed the $120M acquisition of Universal Avionics. Based in Tuscon, Arizona, Universal develops and manufactures commercial avionics systems for fixed and rotary aircraft types.

Palo Alto Networks-Secdo

Palo Alto Networks, a California-based cybersecurity firm founded by Israeli Nir Zuk, is acquiring Israel’s Secdo for a reported $100M. Secdo, based in Ra’anana northeast of Tel Aviv, is a developer of quick incident-response solutions for enterprise security. Zuk was one of the earliest employees at Israel’s Check Point Software, the Israeli pioneer and world leader in Internet firewall systems.

Nike-Invertex

Nike, the international sporting goods giant, has acquired Tel Aviv-based Inertex. Purchase price was not disclosed. Invertex, which will become Nike‘s R&D center in Israel, main product is a technology it hopes will revolutionize the way people buy shoes, using artificial intelligence and 3D imaging technology to analyze users’ feet in stores and to suggest models and sizes that would fit best. The software can also help with online shopping, enabling smartphones to scan feet via an app and making suggestions about what would be the best buy.

Canon-Briefcam

International digital imaging giant Canon has acquired Briefcam, an Israel developer of machine learning and video synopsis technology. Purchase price was $90M. The technology of Briefcam, of Modi’in between Tel Aviv and Jerusalem, and Boston, uses video synopsis procedures developed at the Hebrew University of Jerusalem and licensed to it by Yissum, the university’s technology transfer company. Its technology was instrumental in identifying and capturing the perpetrators of the 2013 Boston Marathon bombing.

Google-Velostrata

Internet giant Google has purchased Velostrata, an Israeli company with headquarters in San Jose, California and an R&D center in Netanya north of Tel Aviv for an undisclosed sum. Velostrata, which deals in cloud migration technology, was founded in 2014 by CEO Issi Ben-Shaul and Chief Product Officer Ady Degani.

SolarEdge-Gamatronic

SolarEdge Technologies, a developer of systems for monitoring and optimizing solar energy based in Herzliya north of Tel Aviv, has acquired Gamatronic Electronic Industries, another Israeli company, for NIS 41M (about $11M). Gamatronic, headquartered in Jerusalem, specializes in uninterrupted power supply solutions.

Synchrony-Loop Commerce

Synchrony of Stamford, Connecticut, is acquiring personalized gifting technology specialist Loop Commerce. No purchase price was disclosed, but press reports estimated it as about $250M. Based in Menlo Park, California, Loop Commerce was founded and is headed by two long-time Israeli entrepreneurs, Alex Sirota and Roy Erez. Synchrony, a financial services company operating in the retail, health, auto, travel and home industries, had a net income of $1.9B in 2017.

Science & High Technology

Analyzing Human Bacteria

Biomica, a subsidiary of Rehovot-based gene analytics firm Evogene, is using big data technology to focus on the microbiome, the interface between the biological environment of humans and the human body. The company’s lead product is a molecule capable of destroying a single specific bacterium, a function similar to that of any new drug, but which concentrates on the bacteria rather than the human body.

Non-Surgical Tumor Removal

IceCure, a Caesarea-based company owned by Chinese investor Haixiang Lee, has reported 99% in a clinical trial in which cancerous breast tumors were removed without surgery, by freezing them with liquid nitrogen. The trial, carried out at 18 hospitals in the U.S., involved a 20-40 minute medical procedure with the company’s IceSense3 system, trial involved 146 women with early-stage breast cancer, who were monitored for five years after the procedure.

Bladder Cancer Trial

UroGen Pharma, a clinical-stage biopharmaceutical company based in Ra’anana and New York, has announced successful results of MitoGel, its proprietary treatment for upper urinary tract bladder cancer. UroGen‘s system for drug delivery to the bladder is a liquid at room temperature that becomes a gel at body temperature and preserves the drug within the bladder for a long time. It is viewed as a solution for the leading problem in delivering drugs for treating bladder cancer – that they are washed out of the body quickly.

Chocolate for Diabetics

A1C Foods, a developer of nutritious low glycemic foods for diabetes patients, has formulated chocolate and ice cream that does not affect blood sugar levels. The start-up, based in Ramat Gan, just outside Tel Aviv, says rather than instead of using artificial sweeteners it uses conventional ingredients including sugar, whose glycemic value is lowered significantly with A1C‘s proprietary, patent-ending “formulation” developed by an endocrinologist who treated founder Ran Hirsch’s daughter for diabetes.

Exotic Gadgetry

Almost everyone knows about Israeli technological breakthroughs that have become part of our daily lives, like the disk on key, Internet telephony, instant messaging. The Mako Hebrew website and Geektime have produced a list of eight other gadgets that some people might – and others might not – find indispensable. They are: WellBe, a light-weight bracelet with an app that provides personalized exercises to lower stress; NX Head Tracker, an attachment to your earphones that adjusts sound levels according to head movement; HomeBiogas, provides renewable energy for cooking; UprightGo, a jacket to improve back posture; Piqappo, a hands-free collector for doggie poop; Selfly, a flying cellphone case for hands-free shooting of selfies with your cellphones; Beaty, a keychain-sized device that monitors the effectiveness of cardiac massage in real time; and HeraBEAT, a smartphone-sized fetal heartbeat monitor for home use.

Why Israel?

Culture Trip, a developer of a popular tourism and culture-sharing application, recently raised $80M in a private offering. So why did the company, which is based in London and has no obvious Israeli or Jewish connection, choose to set up a development center in Tel Aviv, employing 30 Israelis? Dr. Kris Naudts, who founded the company in 2011, explains that he lived in Tel Aviv in the 1990s, during his medical residency. “When the number of our users grew so that we needed engineers and a technical team,” he told Calcalist, “I understood that kind of team would be very expensive in long, if I could find one at all. In addition, if I could not find a good team, the company would not succeed. I decided to discuss things with Yariv Eden, who had a senior position in Google, and we thought about where we should set up our team. I decided to do it here in Israel, which has a good reputation and an ecosystem that fits us very well.”

Cardiology Talent Search

A team of specialists from the American College of Cardiology, one of the world’s leading heart-care organizations, has sent a team of experts to Israel to choose 10 start-ups for a cooperation program. In a visit coordinated by the Haifa Economic Corporation and the Israel Innovation Institute, the experts met with 40 digital health and medical equipment start-ups.

Shin Bet and Start-Ups

The Shin Bet, Israel’s famed internal security agency, at Tel Aviv University’s TAU Ventures are accepting applications for a new accelerator program for start-ups. The first round of the program, which is to open formally in June, will focus on companies in the fields of artificial intelligence, natural language, robotic and data science. According to a report in Calcalist, Yediot Aharonot, the companies are not required to focus on the intelligence, security and military markets. Some months ago, the Mossad, Israel’s external security agency, said it would provide funding and other support to selected start-ups through Libertad, a venture capital fund.

Life Science Investment Soars

Israeli life science firms raised a record $1.2B in 2017, according to a report released in mid-May by the PwC consulting firm and Israel Advanced Technology Industries. The capital came from local and foreign funds, public offerings, private equity investments (mainly from China) and support by the Israel Innovation Authority. The figure was up 40% from 2016 and 400% higher than a decade ago, according to a report in Globes.

Intel to Expand in Kiryat Gat

Intel, the global semiconductor superpower, plans to invest $5B in expansion of its existing production facilities in Kiryat Gat, a city in the northern Negev. Pending approval by relevant Israeli government authorities, Intel will purchase over NIS 3B (about $800M) from local suppliers and add about 250 employees to its existing Israeli workforce. The plan, which is the first major investment by a multinational in Israel since President Trump’s tax plan made investment in the U.S. more attractive, includes a 5% Israeli tax rebate and a NIS 700M (about $200M) government grant.

Aerospace & Defense

Defense Exports Up Sharply

Israeli defense exports rose by 40% in 2017, reaching a record high of $9.2B, according to figures published in early May by SIBAT, the Defense Ministry’s Foreign Defense Assistance and Defense Exports Organization. Keys to the dramatic rise include IAI $2.5B sale of Barak 8 missile-defense systems to India, part of a process that was many years in the making and included joint development with India’s defense establishment. Other Israeli companies registering significant overseas sales were Elbit Systems, the country’s largest private defense contractor, and government-owned IMI Systems (formerly Israel Military Industries) and Rafael Advanced Defense Systems.

New Jobs for Autonomous Vehicles

Israel Aerospace Industries’ (IAI) robotics lab is developing autonomous vehicles for use in mining and quarrying. The vehicles, which can be directed from a distance, will be designed to operate heavy equipment and huge trucks, utilizing advanced algorithms in a system called Euphemus.

India Tank Gets LAHAT

India’s Arjun Mark 2 battle tank, on display at the recent Defexpo in Chennai, was equipped with Lahat anti-tank missiles from IAI. The Lahat, a third-generation laser-guided missile, was first designed to be fired by 105 and 120-mm guns fired by Israel’s Merkava tanks.

India Lifts Restrictions

India has removed IAI and Rafael from its “restricted procurement” list after finding no evidence of possible corruption in arms sales. In February, Delhi’s Ministry of Defense imposed restrictions on the two Israeli companies, permitting them to carry out business dealings only in cases of operational urgency, national security and lack of alternatives. The restrictions had been imposed as part of a case dating back to 2006 and allegations of corruption in the sale of Barak missile systems. According to the usually authoritative Defense News, pending contracts that may have been held up the deal include sale of two Phalcon AWACS aircraft and UAV systems by IAI, and Spike anti-tank missiles from Rafael.

Meanwhile, Indian defense contractor Mahindra Systems and Aeronautics, based in Yavne south of Tel Aviv, have agreed on joint production on unmanned naval aerial vehicles that can be launched from and recovered by Indian Navy warships. The UAV is an adaptation of the Orbiter 4 produced by Aeronautics.

Philippine Deals

First deliveries of Israeli-made MZ-4 and Galil Ace assault rifles to the Philippine police have already begun, according to a report on the Israel Defense website. They are part of a larger order of thousands of weapons from two Israeli firms, Emtan Karmiel and Israel Weapons Industries (IWI)

In a related development, the Philippine Army has deployed the first of three mobile radar systems ordered from Israel’s Elbit Systems in 2016, and reportedly is negotiating with Elbit for the purchase of Hermes 900 and Hermes 450 unmanned aerial vehicles.

Canadian Sonar

GeoSpectrum Technologies of Dartmouth, Nova Scotia, Canada – a wholly owned subsidiary of Israel’s Elbit Systems has delivered the containerized version of its TRAPS (towed reelable active passive sonar) to the Royal Canadian Navy. TRAPS is a variable-depth-sonar for detection, tracking and classification of submarines, midget submarines, surface vessels and torpedoes. Purchase price was not disclosed.

Lieberman Rwanda Visit

Defense Minister Avigdor Lieberman visited Rwanda, Tanzania and Zambia in late March. In Kigali, Rwanda’s capital, Lieberman, the first Israeli defense minister to visit the African country, met with President Paul Kagame, Defense Minister James Kabarebe and Foreign Affairs Minister Louise Mushikiwabo.

U.S. Loral Corp. to Build Israeli Satellite

Israel’s Spacecom said in late March that it had contracted with Loral, a U.S. company, to build Amos 8, its next communications satellite. The California firm was chosen over IAI, which previously had said that manufacture of Amos 8 outside Israel “may signal the end of Israel’s satellite industry.” Spacecom, which is owned by embattled telecoms tycoon Shaul Elovitch, said it had wanted to support a fellow Israeli company but was obligated to its shareholders and bondholders to choose the best option. A previous satellite, the $160M Amos 17, built by Boeing, is due to go in orbit sometime next year.

Hayman Takes Over At MI

Maj-Gen Tamir Hayman has taken over as head of IDF Military Intelligence. Hayman, who previously headed the army’s Northern Division and military colleges, succeeds Maj-Gen Herzi Halevi, who becomes head of the army’s Southern Command.

Ben-Eliyahu Resigns

Eytan Ben-Eliyahu, a former commander of the Israel Air Force, has resigned as chairman of Aeronautics UAV manufacturer, a post he’s held for the past six years. He is succeeded by Yedidya (Didi) Ya’ari, a former Israel Navy commander, and president of Rafael.

Good Year for Rafael

Rafael reported record-high results for 2017 – NIS 8.1B ($2.2B) in sales, NIS 446M ($124M) in profits, new orders of NIS 11.1B ($3B) and a NIS 24B ($6.9B) orders backlog. Almost half of the government-owned defense contractor’s sales are to clients outside Israel.

German UAV Deal Revived

The Euro1B German army plan to lease unarmed aerial vehicles from IAI was revived in March, nine months after it was suspended and almost terminated by the Bundestag, Germany’s parliament. According to the usually authoritative Defense News, the German Ministry of Defense plans to request parliamentary authorization for the leasing of five Heron PT UAVs. The reason: A change in the position of the Social Democratic Party, a member of Chancellor Angela Merkel’s coalition, which voted against the deal last year, when it objected in principle to the use of UAVs on bombing missions. The UAVs will be stationed in Israel under the management of the military division of Airbus, at least in the first stage. Initially tasked with intelligence missions and surveillance, the drones may subsequently be deployed to attack ground targets, including targeted killings.

Polish Deal “Unaffected”

Advanced Defense Systems‘ $1B deal with Poland has not been adversely affected by the dispute over a new Polish law absolving Poland of responsibility for the Holocaust, the Israeli defense contractor said. Interceptor missiles developed for Israel’s David’s Sling air defense system are a key component in the larger $7.6M sale of Patriot air-defense systems by Raytheon of the U.S. It will be the first overseas sale of the Israeli interceptor, marketed around the world as SkyCeptor. Poland chose SkyCeptor over an American interceptor due to both better performance and its unit price of $450K, compared to $4.5M for its U.S. counterpart.

Lithuania Buys IAI Radar

Lithuania’s Armed Forces have purchased five short-range air surveillance radar units and logistic maintenance services from IAI. The radar, manufactured by IAI‘s Elta subsidiary, will be installed in Varėna, Švenčionys, Vilnius, Jurbarkas, and Pagėgiai. Total purchase price is around Euro2.8M. The radar is due to be integrated into Lithuania’s air defense system by the end of 2019.

Croatia Buying Israeli F-16S

Croatia has decided to purchase 12 used F-16 warplanes from Israel. In a deal valued at about $500M, the upgraded F-16C/D Barak aircraft to replace outdated MIG-21s currently in Croatian Air Force service, as well as two flight simulators, training and maintenance and unspecified munitions. The Israeli was chosen over Sweden, which offered a squadron of new Gripen fighters. Three other countries, the U.S., Greece and South Korea, also submitted bids.

Israeli Component in Swedish Sale

Head-up displays made by a Brazilian subsidiary of Israel’s Elbit Systems are a component in the $5.4B sale of 36 Gripen fighters to Brazil, according to Swedish contractor Saab. The wide-area touchscreen is manufactured by AEL Sistemas, an Elbit Systems subsidiary based in Brazil.

Israeli Space Suite

NASA has agreed to test AstroRad, a radiation suit made by StemRad during a deep space mission, the Israel Space Agency announced in mid-April. The suit is designed to protect vital body organs and tissues, which are especially sensitive to radiation damage, including lungs, bone marrow, the large intestine, the chest and the ovaries of female astronauts. The company, headquartered in Tel Aviv and with offices in Tampa, Florida, has developed garments protecting workers in nuclear plants from gamma radiation, and for first responders in emergency situations. It hopes the results of the experiment will lead NASA to use the suit in future manned missions.

IAI Joins OA-X Competition

IAI has entered into a cooperation agreement with Czech defense contractor Aero Vodochody in production of the L-159, which the Czech company plans to offer to the U.S. as a light attack aircraft in the American OA-Xprogram. The A-29 Super Tocano developed by another Israeli defense contractor, Elbit Systems, is participating in the same competition. The U.S. plans to acquire about 350 of the light aircraft.

There is a major difference in price between these light planes and modern warplanes, notes Guiseppe Giordo, the Aero Vodochody general manager. Aircraft of the 4/4.5 generation cost about $100M and $25K for an hour of flight time, as compared to the $15M and $1,800 per hour costs of the lighter planes.

Satellite Antenna Breakthrough

NSLComm, headquartered in Airport City just outside Ben-Gurion International Airport, says it has developed a way to exponentially expand the bandwidth capacity of nanosatellite antennas, enabling the satellites to receive and transmit data at speeds that are much higher than existing satellites, at a fraction of the cost. Raz Itzhaki-Tamir, one of the company’s founders, says the technology involves launching a very small satellite with a stowed antenna and multiple solar reflectors to supply power, all of which can be unfolded in space. NSL says it plans to launch its first satellite, on an Indian launch vehicle, this coming November, with a second due next year.

Long Range UAV Control

In what it describes as breakthrough technology, IAI has developed the capability of its Heron family of unmanned aerial vehicles to land automatically at remote runways located thousands of kilometers from the launch site. The system is based on satellite communications and precision technology for automatic takeoff and landing. At the remote location, the UAV can be serviced by a small team before taking off again.

IAI sources say that the technology gives Heron UAVs, many of which are in Israel Air Force service, new operational capabilities. The Heron currently has a range of up to 1,270 km., flies at up to 120 knots at an altitude of 28,000 feet, with a 300-kg. Payload.

Russian Arms in Syria

Russia has deployed more than 200 new arms systems in Syria, according to various press reports and statements by Russian officials. These apparently include a prototype of its SU-57 stealth fighter, Kaliber and X-101 missile systems, Su-33 and MiG-29K naval-based aircraft, plus S-400 and Pantsyr air defense systems. Many of the systems were showcased or have had their first operational use in support of the regime of President Bashar al-Assad during the 9-year-long Syrian civil war.

IAI Turns Profit

Government-owned IAI reported net operating profits of $121M in 2017, compared to a $105M loss in the previous year. Sale for the year fell fractionally, to $3.52B from 2016’s $3.577B, and the orders backlog grew by $2.2B from 2016’s $9B to 2017’s $11.2B.

According to a report in Haaretz, Harel Locker, IAI chairman, feels that the company sorely needs an infusion of new funds, and that Yanki Quint, director of the Government Companies Authority, favors a partial offering of 40% of IAI equity, to raise $4-$4.5B. The future of any privatization scheme has and still depends on the assent of the powerful IAI workers committee, particularly in the Bedek Aviation and Civilian Aviation divisions, both union strongholds, where the union is particularly strong. Sale of one of these divisions could be the determining factor in any privatization sale. The situation is complicated by the fact that the worker’s committee at Bedek is under police investigation into alleged corruption, and that Labor and Social Services Minister Haim Katz, who formerly headed the IAI workers committee, has been mentioned as a suspect in the investigation.

Downscaled Trophy APS

Rafael will test a “downscaled” version of its Trophy active protection system for armor (known as Windbreaker in Hebrew) late this year. The system will be integrated with Rafael’s Samson Mk II remote weapon station. Rafael has contracted to develop two separate Samson stations for different customers, the standard configuration (main 25 mm/30 mm/40 mm gun, secondary 7.62 mm machine gun, and two Spike anti-tank guided missiles [ATGMs]), for Lithuania’s GmbH Boxer 8×8 armored fighting vehicle; and a lighter version to be mounted on an unspecified platform for a customer whose name has not been disclosed.

Boeing Signs Deal with Assemrix

International aviation, defense and aerospace contractor Boeing will use technology of Assembrix, an Israeli start-up, to secure its intellectual property during the 3D manufacture of parts. The two companies signed a cooperation agreement in mid-May. Assembrix, based in Tel Aviv, has developed cloud-based software that optimizes 3D printing processes for industrial use while securing the intellectual property of companies using subcontractors for their 3D printing jobs. The software enables protection of data from interruption, corruption or decryption during distribution and manufacture.

IDF Appointments

The IDF has begun the process of senior staff appointments, due to take effect in 2019, pending approval by the defense minister. Among the appointments made in early May were of Rear Admiral David Salame and head of the Israel Navy staff, and Col. Omer Dagan to head of the Lotem.

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