News Analysis – October 2018

General News Summary

Are Elections on the Way?

Elections for Israel’s Knesset, its 21st in just over 70 years of the country’s existence, aren’t formally due until November 2019, but the Israeli political establishment with the Israeli media and at least part of the electorate are weighing in if and when Prime Minister Benjamin Netanyahu might call early elections.

Over the last few months, there have been signs that Netanyahu may bring Israel’s nearly 6 million eligible voters to the poll stations ahead of schedule. The main reason he’d want to do so, observers agree, centers around his own legal troubles rather than some political issue that’s tearing his government apart; in fact, Netanyahu’s current ruling right-religious coalition has seen more stability than most in Israeli political history.

The reason Netanyahu might push voting ahead is three criminal investigations focusing on him and his political entourage involving possible collusion in an effort to get the support of Israel’s most powerful paid-for daily newspaper, favorable treatment extended to a telecom magnate under investigation for massive securities violations, illegal gifts received by Netanyahu and his wife Sara from influential business “friends,” and a probe into circumstances surrounding Israel’s 2B euro purchase of two submarines from a German shipyard. Decision on whether to bring criminal charges in any or all the cases rests with Attorney General Avichai Mandelblit, who is likely to hand down a ruling within the coming six months.

Netanyahu has repeatedly insisted that he’s innocent of any wrongdoing, and that the four cases are all part of a conspiracy against him. Suspicions aside, it’s obvious that campaigning would be much easier for him if criminal charges have not been formally filed against him.

For now, the cases seem to have little effect on public opinion polls, where he’s still the most popular choice for another prime ministerial term. Recent public opinion polls show the Likud party, led by Netanyahu, collecting the largest number of seats in the Knesset and members of his current coalition capturing enough seats in the 120-member parliament to maintain a majority.

All that could, of course, change if Netanyahu is indicted. But as things stand now, possible challenges inside the Likud from former government minister Gideon Saar, outside it from Finance Minister Moshe Kahlon of the Kulanu party, Education Minister Naftali Bennett of Jewish Home, or from opposition politicians and potential outsiders, Netanyahu is a heavy favorite to lead the Likud to its fourth consecutive victory, whenever elections take place.

Gaza

A brief late October weekend flare-up of violence along Israel’s border with the Gaza Strip ended almost as quickly as it started, with what Palestinian Islamic Jihad claimed was a cease-fire brokered by Egypt. But despite continuing efforts by the Egyptians, together with UN Middle East mediator Nikolay Mladenov in indirect negotiations with Gaza’s Hamas rulers and Israel, and parallel talks between rival Palestinian factions, Hamas and Fatah, prospects of reaching a longer-term understanding seem dim.

The exchange on the last weekend in October was particularly heavy. Within the space of a few hours, 36 rockets were fired into Israel, and the Israel Air Force retaliated by striking 95 targets in Gaza. Although Islamic Jihad apparently was responsible for the hostile fire (according to one report in the Israeli press, the attack was a protest for being excluded from cease-fire talks being held in Cairo), Israel often responds by hitting installations connected with Hamas, who it considers responsible because it rules the Gaza Strip.

Violence seems to flare up almost every weekend since March 30, when thousands of Palestinians begin demonstrations at the border fence that include launching of incendiary kites and balloons that set fire to agricultural fields and forests on the Israeli side of the frontier. Inevitably, Israeli firing at individuals attempting to breach the border fence results in casualties, often followed by Palestinian firing of rockets into Israel by the military wings of Hamas and Islamic Jihad. Israel blames Iran, a major supporter of Hamas terror activities, with encouraging much of the violence.

“We are not willing to accept the level of violence we see one week after another,” the defense minister told reporters during a visit to the Gaza Division, adding “a serious blow to Hamas could bring us at least five more years of quiet.” Lieberman said in mid-October.

Liberman’s statement seemed to be confirmed by a TV news report suggesting a “growing understanding” in the defense establishment that reaching a longer-term ceasefire deal with Hamas was impossible, and that Israel must launch a full-fledged military operation to restore calm. The report said the IDF was mulling a short but intense operation, targeting the more affluent neighborhoods in Gaza City to exert the maximum pressure on Hamas leadership. A military campaign in Gaza, it said, would not seek to oust Hamas, but force the ruling terror group to agree to an understanding with Israel.

In the current state of affairs, there’s always the danger that some unforeseen event will trigger escalation into more extreme violence. That almost happened in mid-October, when lightning hit two Hamas rockets on their pads, accidentally launching in Israel’s direction. One landed harmlessly in the sea off Tel Aviv, the other hit a house in Beersheba. The house was destroyed, but fortunately its occupant, Miri Tamano, managed to rush her three children into a safe room seconds before the Grad rocket fell through the roof.

Waiting for the Plan

The Middle East is still waiting for the U.S. administration’s peace plan. Despite reports last summer about its imminent release, Washington is still holding back on its disclosure and its prospects for success seem to be diminishing even before it is presented to the parties.

Arab and Israeli leaders say that they have little idea of the specifics in the plan, prepared by an American peace team led by President Trump’s son-in-law Jared Kushner and U.S. Mideast envoy Jason Greenblatt. But Trump has said that he favors a two-state solution and commented that Israel would have to “pay more” in the form of concessions after the relocation of the U.S. embassy from Tel Aviv to Jerusalem earlier this year.

Beyond the question of what concessions Israel would be willing to make, the Americans can’t even be sure who to present the plan to on the Palestinian side. Palestinian President Mahmoud Abbas broke off all diplomatic contact with Washington after Trump announced the embassy move almost a year ago. Other administration moves, including decisions to cut off U.S. funding of UNRWA, the UN’s relief agency for Palestinian refugees, and to close Palestinian offices in Washington, have only served to amplify Palestinian anger.

A key figure in the current Palestinian leadership doesn’t think the world will ever see the American plan. “I don’t think they’ll ever introduce a plan,” says Saeb Erekat, the chief negotiator for his side in previous talks and general secretary of the Palestine Liberation Organization. “The whole world is rejecting their ideas. They are already implementing their plan by changing the terms of reference.”

A different view was taken, though, by Yusuf bin Alawi bin Abdulla in late October, a day after Netanyahu visited Oman, a Gulf state with which Israel does not have diplomatic relations. Speaking to a regional security conference in Bahrain, bin Abdullah, his country’s foreign minister, expressed optimism about the still-undisclosed American proposal. The Netanyahu visit was followed a few days earlier by PA President Abbas.

Does Palestinian refusal, assuming it continues, mean that Israel won’t have to make uncomfortable choices on settlements, refugees and other core issues of the conflict when they are asked to “pay more” as Trump has stated? Things aren’t that simple.

In late October, two Israeli TV stations simultaneously reported that Alon Ushpiz, the Foreign Ministry’s political director, told a closed session of a Knesset committee that French President Emmanuel Macron is preparing a peace plan of his own. France, he said, is waiting out the November 6 U.S. midterm elections, but that if Trump does not present his long-awaited plan in the first few weeks after that vote, Macron will publicize his own formula.

France has denied the report. But one way or another, indications are that Israel and the Palestinians may soon have to grapple, as they have in the past, with international peacemaking efforts. “The status quo between Israel and the Palestinians is not acceptable,” Kushner recently told a CNN interviewer. “The situation is only getting worse. At some point, the leaders will have to take a bold step and compromise. We hope to find leaderships that are ready to do so.”

S-300s to Syria

Russian delivery of advanced S-300 missile defense systems to the Assad regime poses new limitations on the Israel Air Force’s freedom to operate over Syria. But Israel officials insist that presence of the advanced system will not prevent Israel from acting when it deems necessary.

Syria has been asking for S-300s for more than a decade, but Russian President Vladimir Putin only agreed to supply them after Syrian air defense accidentally shot down a Russian Il-20 surveillance plane that had been monitoring an Israeli air raid against a Hizballah arms depot near Latakia, killing all 15 crew members. Russia first said the Israel F-15 aircraft had been using the Russian plane as a shield against Syrian air defenses, but Putin later called it part of a “tragic chain of events.”

The S-300 system and the more advanced S-400 have been deployed in Syria since 2016. So far, the Russian army has used them to protect its aircraft and Russian assets in Syria. Though their delivery to the Syrian army represents a new dimension, the effect is not expected to be immediate, due to the considerable time needed to train Syrian crews in operating the system.

Israel insists that the S-300s will not deter it from preventing the flow through Syria of advanced Iranian arms into the hands of Hizballah terrorists in Lebanon and has said it would destroy the system as necessary to protect itself.

Israel’s Saudi Ambivalence

The international furor surrounding the untimely death of Saudi journalist Jamal Khashoggi has presented the West with a dilemma. After all Saudi Arabia, particularly with Crown Prince Mohammed bin Salman (aka MBS) as its de facto ruler, had been viewed as the linchpin of regional resistance to Iranian expansionism in general and Teheran’s nuclear ambitions in particular, a position that has been weakened considerably by the Khashoggi case, particularly since it followed the erosion of the Saudi image of moderation caused by its treatment of local dissidents, the Saudi-backed siege of Qatar, and its detention of Lebanese Prime Minister Saad Hariri.

While much of the Western world has been open in its condemnation of Saudi actions, Israeli Prime Minister Benjamin Netanyahu has been conspicuously silent. The circumstances of Khashoggi’s death have deflated Israel’s unofficial relationship with moderate Arab states and it’s certainly not in Jerusalem’s interest to see Riyadh’s position in the region diminished in favor of Tehran. MBS’s immoderate behavior over the last year, topped off by the Khashoggi case, has certainly caused some Israeli policy-makers to have second thoughts about the long-term reliability of cooperation with the Saudis.

In September, reports from Arab sources indicated what may have been one indication of security cooperation, a Saudi order of Iron Dome missile defense systems from Israel. Though Israel denied the report, outside it should be noted that the Saudis do face a missile threat from Houthi rebels in neighboring Yemen. According to the reports, the first Iron Dome batteries were due to be delivered in December. After the Khashoggi killing, there has been no indication, or even speculation, that the order, if exists, will be honored.

Dan Shapiro, the former U.S. ambassador who has remained in Israel and now is attached to a Tel Aviv think tank, says that all Israel can do is try and sustain ““whatever can be sustained” of security cooperation with Saudi Arabia. Shapiro adds that the Khashoggi affair “has weakened a central pillar of Israel’s strategic concept in the Middle East in a way that Israel can’t do very much to repair it. That’s the damage in having such an unreliable Saudi leadership as we currently, unfortunately have.”

Jordan Nixes Treaty Provisions

Jordan has not renewed two annexes to the 1994 peace treaty with Israel. The annexes, which ran out in late October, concern the leasing of two small areas for 25 years. The areas, both adjacent to the border between the two countries, are Naharayim, south of Lake Kinneret, in the north of Israel, and Zofar, south of the Dead Sea. Israeli-Jordanian relations have been strained in recent years, with the two countries differing on the future of Jerusalem and of the Temple Mount, and a 2017 incident in Amman in which an Israeli security guard at the country’s embassy there shot a Jordanian who allegedly tried to stab him. Prime Minister Benjamin Netanyahu said Israel plans to negotiate an extension of the lease with Jordan.

Textiles for Terror

Israeli authorities at Ashdod port in late September confiscated four containers of textile products, proceeds of whose sale would be used to finance Hamas terror activities. According to press reports, Hamad Houdri, owner of a Gaza money-changing business that Defense Minister Lieberman has declared a terror organization, induced textile merchants to work with him in the financial scheme. Some of the funds would have gone to pay Hamas terrorists’ salaries, while others were intended for use in funding terror attacks and acquiring illegal weapons. According to the reports, proceeds of the sale were destined to pay the salaries of Hamas fighters, fund terror attacks in Gaza and the West Bank, and to acquire weapons.

Iran Upgrading Hizballah Arms

Iran has been providing Hizballah, its Lebanese Shi’a Muslim ally, with advanced GPS guidance systems that turn conventional rockets into precision guided missiles. According to a Fox News report, an Iranian Fars Air Qeshm flight delivered the sophisticated technology on a flight to Damascus and Beirut, for its final destination at Hizballah arms factories in Lebanon.

Mnuchin Visit

U.S. Secretary of the Treasury Steven Mnuchin and Finance Minister Moshe Kahlon announced the appointment of a joint task force to review the Israel-U.S. tax treaty designed to avoid double taxation, and to identify sections of the treaty that need to be updated. Mnuchin, in a late-October visit, stopped at leading Israeli technology companies and attended a session of JEDG, the US-Israel Joint Economic Development Group. But the focus was concern about the consequences of President Trump’s tax reforms for Israeli exporters to the U.S.

Life Expectancy

Israel rose from 13th to 7th in a table of life expectancy for the year 2040 produced by the University of Washington. The longevity rankings: 1. Spain 85.8 years; 2. Japan 85.7; 3. Singapore 85.4; 4. Switzerland 85.2; 5-6 Portugal and Italy 84.5; 7 Israel 84.4 8; France 84.2; 9-10. Australia and Luxembourg 84.1.

Indonesia Ties

Israel is seeking to improve ties with Indonesia and would like “excellent relations” with the largely Muslim nation, the world’s fourth most populous country. Speaking to a Christian gathering in Jerusalem, Prime Minister Benjamin Netanyahu said he would like Indonesia’s tens of millions of Christians to visit Israel.

Israel has no diplomatic relations with Indonesia, but there are some commercial relations. In 2016, according to the Jakarta Post, total trade between the two countries reached almost $200M in 2016, mostly through third countries including Singapore and Jordan.

New Pomegranate Market

Thailand’s Agriculture Ministry has authorized the import of Israeli-grown pomegranates, according to a report in Israel Today newspaper. Israeli pomegranates are already exported to North America, Europe, Russia, Africa and Far Eastern countries.

The Economy

Yaron Tapped for BOI Post

Prof. Amir Yaron, a specialist in banking and finance at the University of Pennsylvania’s Wharton School, is the choice of Prime Minister Netanyahu and Finance Minister Moshe Kahlon as the next governor of the Bank of Israel. Yaron, who has degrees from the University of Chicago and Tel Aviv University, is due to succeed the current governor, Dr. Karnit Flug, whose five-year term ends in November.

IMF Ups Forecast

The International Monetary Fund has raised its forecast for Israeli GDP growth in 2018 to 3.6%, up from the previous 3.3%. IMF also revised its prediction of expected inflation this year from 0.7% to 0.9%. In addition, the IMF predicted Israeli GDP growth of 3.5% in 2019; 3.3% in 2020 and 3% in 2021-2023.

August Unemployment Down

The unemployment rate fell to 4% in August, down from 4.1% during the previous month, according to the Central Bureau of Statistics. Average wage was NIS 10,800.

CPI Slight Rise

The Consumer Price Index rose by 0.1% in September, according to Israel’s Central Bureau of Statistics. The 12-month inflation rate, at 1.2%, is at the lower end of the government’s annual inflation target of between 1% and 3%.

Record Tourism

A record 3.1 million tourists entered Israel in the first nine months of 2018, up15% from January-September 2017. 2.6 million tourists who were in Israel for more than one day flew into Israel and 324,000 came by land. There were 300,000 tourists in September.

Electric Bike Regulations

Israel’s government has announced strict new regulations for the use of electric-powered bicycles. The rules, which came in the wake of an uproar over an accident in which an entertainment figure’s teenage son was killed, include speed limits, fines for those caught riding without a safety helmet, and confiscation of bikes of riders under the age of 16. Accidents involving riders of electric-powered bicycles and scooters, particularly those that are uninsured, have increased sharply in recent years.

Gas Pipeline

Noble Energy of the U.S. and Israel’s Delek Group, operators of some of Israel’s offshore gas fields, have teamed with East Gas Company of Egypt in purchasing 39% of a currently unused pipeline connecting the Israeli coastal city of Ashkelon with the northern Sinai Peninsula. The consortium paid just over $500M for its share of the East Mediterranean Gas Company pipeline. The pipeline, which is mainly undersea, will transport natural gas from the Tamar and Leviathan reservoirs to Egypt from as early as 2019, as part of a 10-year $15B deal Delek and Noble signed in February with Egypt’s Dolphinus.

Israeli Tech for Ethiopian Farmers

Farmers in southern Ethiopia will get access to Israeli agricultural technology and low-cost loans in the framework of a new cooperative project sponsored by the American Joint Distribution Committee. The $14M program includes training the farmers on how to use Israeli drip irrigation systems and hybrid, disease-resistant seeds developed in Israel, according to a report in the Times of Israel online newspaper.

Critical Water Report

Israel’s current water problems could have been avoided with better planning and management of existing resources, according to a highly-critical State Comptroller’s Office report. The report cites flawed managerial decisions contributing to the water shortfall, which has cost the Israeli economy about NIS 1.1B a year. The problem has been exacerbated by four years of drought.

Finance & Investment

Arison to Sell Hapoalim

Shari Arison, the controlling shareholder in Bank Hapoalim, plans to sell her stake in the bank on the Tel Aviv Stock Exchange. Under the terms of a permit issued by the Bank of Israel, Arison’s Arison Investments will have four years to sell its 20% stake in the bank, currently valued at about NIS 7B. In a statement, Arison Investment said that the decision to sell the bank is not connected with an investigation into alleged illegal payments by its Shikun & Binui Group.

Desalinated Tunnel Project

Israel is seeking the assistance of the European Union and Germany to finance an ambitious NIS 5B project to pump desalinated seawater from the coast to the shrinking Sea of Galilee (Lake Kinneret). The Water Authority and Energy Ministry are developing a plan to pump between 300 million and 500 million cubic meters of water to the inland lake.

Israel, which has been experiencing water shortages in recent years, has been desalinating increasing quantities of seawater. According to a report in Yediot Aharonot newspaper, Israel now produces about 660 million cubic meters a year, with plans to increase that figure to about a billion over the next five years.

According to the newspaper, reserve major general Giora Eiland, former head of the National Security Council, is handling Israel’s negotiations with the Europeans.

Fiverr Aims High

Fiverr, the Israeli freelancer platform, is readying for an initial public offering on the NASDAQ exchange at a valuation of $1B, according to a report in The Marker, the financial section of Haaretz newspaper. Founded in 2010, Fiverr bills itself as “the official marketplace” for professional marketing, design, writing, graphics and digital services for “the lean entrepreneur.”

Mergers & Acquisitions

Thoma Bravo-Imperva

U.S. private equity firm Thoma Bravo has acquired Imperva, a cyber security specialist, for a reported $2.1B. Imperva, an American company based in Redwood Shores, California, was founded by three Israelis including Shlomo Kramer, one of the founders of Israel’s Check Point Software, and has an estimated 500 employees at its Israeli offices in Tel Aviv and Rehovot.

Medtronic-Mazor Robotics

Medtronic, an Irish-American medical device firm, has acquired Israel’s Mazor Robotics for $1.6B, the largest sum ever paid for an Israeli biotech firm. Mazor, based in Caesarea, midway between Tel Aviv and Haifa, develops robotic surgical systems including software for anatomy recognition that streamlines preoperative planning. Medtronic previously owned an 11% stake in Mazor and has been marketing the Israel firm’s lead product since 2016.

Perforce-Perfecto

Perforce, a Minneapolis-based developer of application development software, has acquired Perfecto, an Israel software quality assurance and testing company. Purchase price for Perfecto, with offices in Rosh Ha’ayin northeast of Tel Aviv and Burlington, Massachusetts, was $200M.

Vista-Starhome

Vista, a U.S.-based private equity firm, has purchased Israel’s Starhome for a reported $100M. Sale of Starhome, a developer of retail and roaming fraud protection technology based in Ra’anana northeast of Tel Aviv, represents a profit to the seller, Fortissimo Capital Fund of between two and three times what the Rosh Ha’ayin-based fund paid for it in 2012.

Venus Meditech-Keystone Heart

Venus Meditech, a Chinese developer of heart valves, reportedly has signed an accord to buy Keystone Heart Ltd., a medical device firm. Keystone, based in Caesarea, develops and makes medical devices to reduce the risk of brain injuries after cardiovascular procedures, such as transcatheter aortic valve replacement (TAVR), surgical valve replacement or arterial fibrillation ablation.

Flipkart-Upstream

Flipkart, an Indian e-commerce specialist with 2017 revenues of over $3B and headquarters in the city of Bengaluru, has acquired Israeli retail analytics firm Upstream Commerce for a reported $40-$50M. Upstream, which has offices in Tel Aviv and New York, provides retailers with pricing and analytics services. According to a report in the Times of Israel, Walmart recently acquired a 77% stake in Flipkart for $16B.

Solaredge-Kokam

SolarEdge Technologies, based in Herziliya north of Tel Aviv, has paid $88M for a 75% stake in Kokam, a South Korean manufacturer of lithium ion cells and other energy storage solutions for a range of industries, including aerospace and electric-powered vehicles. SolarEdge has developed technology that optimizes and lowers the cost of harvesting solar-generated energy from photovoltaic cells.

Leumi Stake Sold

Israel has sold off almost all its remaining stake in Leumi, the country’s last bank to be fully privatized, for close to 1.9B shekels ($525M). 5.37% of Bank Leumi, Israel’s second-largest financial institution was sold to Citigroup, which had outbid five other financial institutions. The state, which retained 0.5% of the bank’s equity for sale to employees, acquired nearly all the shares of Israel’s banks after a crisis in 1983, but the other top leaders — Hapoalim, Israel Discount, Mizrahi-Tefahot and First International — have been fully privatized.

Temasek-Sygmia

Temasek, a Singapore-based investment firm, has acquired Sygnia of Tel Aviv. No financial details were announced, but Globes quoted an estimated price of $250M. Sygnia, founded by a group of graduates of Israel’s military high-tech units, offers high-end consulting and incident response support for corporations and government organizations worldwide. The sale represents a major coup for Team8, an Israeli company that invests and builds start-ups and invested only $4.3M in Sygmia.

Team8 has also raised $85M in committed capital for a new cybersecurity fund. Investors are Walmart, Japan’s SoftBank Group International, while Europe’s largest aerospace company Airbus Group SE have joined a group of 14 multinational companies that already included Singapore’s governmental holding company Temasek Holdings, Moody’s Investors Service, Microsoft, Barclays PLC, South African IT company Dimension Data Holdings PLC, a subsidiary of Nippon Telegraph and Telephone Canada’s Scotiabank, Nokia, and Cisco.

Check Point-Dome9

Check Point Software Technologies, Israel’s world leader in firewall Internet security systems, has acquired Tel Aviv-based Dome9 Security. Terms were not announced, but market sources estimated the price at $175-$200M. Dome9 develops SaaS-based cybersecurity technology for multi-cloud deployments across Amazon AWS, Microsoft Azure and Google Cloud.systems.

Gainsight-Aptrinsic

Gainsight, a customer success specialist based in Redwood City, California, has acquired Aptrinsic Inc. for an undisclosed sum. Aptrinsic, founded in 2016 with offices in San Francisco and Tel Aviv, deals in product trends and usage analytics.

FSD Pharma-Therapix

Therapix Biosciences, an Israeli developer of drugs derived from cannabis, has been acquired by Canada’s FSD Pharma for $48M in FSD shares. Based in Givatayim in Greater Tel Aviv, Therapix is developing several cannaboid-based pharmaceuticals for treatment of various disorders, including Tourette’s disease, sleep apnea, and traumatic brain injury.

In a separate cannabis-related development UNV-Medicine, based in Ashkelon in southern Israel, announced that it will produce a cannabis product in its facility for a start-up, in exchange for an initial payment. When UNV begins producing medical cannabis oil, the startup will buy the active ingredient for its more complex products.

Algomizer-Viewbix

Viewbix, a developer of interactive video advertising technology based in Beit Shemesh, about halfway between Tel Aviv and Jerusalem, has been acquired by Algomizer in an all-shares transaction with an estimated value of $2.5M. Algomizer, with offices in Petah Tikva just outside Tel Aviv and in Manhattan, develops online marketing tools for publishers and advertisers.

Science & High Technology

Multinational R&D

Multinationals spent NIS 24.1B (around $6.6B) on research and development in Israel in 2016, up 8.7% from 2015, according to the Central Bureau of Statistics. Multinationals accounted for 46.2% of the overall R&D expenditure in the country in 2016.

Intel AI Center

Intel, the multinational chipmaker, and Israel’s Technion Institute of Technology, have inaugurated a new R&D center dedicated to artificial intelligence. The center will be headed by Shie Mannor, a professor of electrical engineering at the Haifa Technion.

Walmart Teams with Israeli Video Firm

Walmart, the world’s largest retailer, has entered a joint venture with Eko, an Israeli developer of interactive video technology. Eko, which has offices in Tel Aviv and New York, has developed a platform that allows participants to affect, control, and influence interactive entertainment. It has partnered with media companies, independent creators and top brands. Walmart will invest $250M in the joint venture, which experts say is part of an effort to expand into video business, an area in which Walmart’s arch-rival Amazon has been active for some time.

Morphisec Gets U.S. Deal

The U.S. Department of Homeland Security has commissioned Israel’s Morphisec to develop and test an enhanced moving target defense to protect financial institutions against attacks without reducing the overall performance of virtual desktop infrastructure (VDI). Morphisec, based in Beersheba, develops cyber security products that protect organizations from advanced persistent threats, zero-day and ransomware attacks.

DSP Gets Tablet Deal

DSP Group, the Israeli wireless chipmaker, has agreed with Samsung to provide its chips to the South Korean multinational’s newly-launched Galaxy S4 Tablet. Value of the contract is estimated at tens of millions of dollars.

Tumor Test Collaboration

Israel’s Compugen and international drug maker Bristol Meyers Squibb have entered into clinical collaboration to test the effectiveness of Compugen’s COM701 with BMS’s Opdivo immune checkpoint inhibitor in four tumor types – small cell breast, lung, ovarian and endometrial cancers. The deal involves a $12M investment by BMS.

Teva’s Ups and Downs

Teva Pharmaceutical Industries, Israel’s financially troubled Big Pharma, suffered a setback in early October when a U.S. Federal District Court upheld a lower court’s decision canceling its patents on Copaxone, its bellwether multiple sclerosis drug. The decision opened the way for generic competition for Copaxone, which in 2017 generated revenues of $2.7B for the Israeli firm.

At about the same time, the U.S. Food and Drug Administration moved closer to approval of Teva’s CT-P10, Teva’s monoclonal antibody which is similar to Rixutab, a popular cancer treatment drug. If it gets final FDA approval, CT-P10 will be the first biosimilar generic version of Rixutab to reach the market. Teva and Celltrion of South Korea last year agreed to market CT-P10 on the North American market.

HU Gets Cannabis Lab

The Asana Bio Group, an Israeli holding company specializing in medical cannabis ventures, has donated $2.3M to finance a cannabinoid research lab on the campus of the Hebrew University of Jerusalem. One of the first projects of the lab, headed by Lumír Ondřej Hanuš, a Czech analytic chemist and cannabinoid researcher, is with Gynica, an Israeli company specializing in women’s health issues.

Orphan Drug Approval

The U.S. Food and Drug Administration (FDA) has granted orphan drug status to the PLX cell therapy developed by Pluristem, the Haifa-based developer of placenta-based stem-cell therapeutics products. Pluristem’s PLX-R18 is currently being evaluated for the treatment of insufficient hematopoietic recovery following bone marrow transplants in a Phase 1 clinical trials in the U.S. and Israel.

Nvidia Opens Ai Center

Nvidia is expanding operations in Israel. The Santa Clara, California-based firm opened an artificial intelligence (AI) center in Israel in mid-October and expanded its engineering operations in the country. The center will be headed by Prof. Gal Chechik, a former senior executive at the Google Brain center in California.

Demisto Investment

Demisto, a developer of automated security response technology with offices in Tel Aviv and the Bay Area, has raised $43M in a third financing round. The round was led by the American Greylock Fund.

Engie’s Israeli Investment

French electricity and energy specialist Engie has made its first Israeli investment in HomeBio, located in Beit Yani north of Tel Aviv, which has developed an easily-assembled, small-size biogas digester that converts as little as 2 kg of food scraps or leftovers into 2 hours of cooking gas. Engie, known as Gulf Suez prior to 2015, paid an undisclosed sum for a 13% minority holding in HomeBio, whose device produces compost fertilizer in addition to the cooking gas. Headquartered in La Defense, Courbevoie, France, Engie is a leader in European nuclear power generation, has over 150,000 employees and revenues exceeding 65B euros.

Bike Riders Get Help

Bicycle riders in Israel rejoice! Help is now available, from Google Maps. Israeli users of the navigation app previously could use directions if they were going by car, on foot, or by public transport and taxi. Google‘s feature, which is available all over Israel, is already available in major world cities including New York, Paris, London, and Berlin.

DSP Chips for Deutsche Telekom

Germany’s Deutsche Telekom will incorporate chips made by the DSP group in its products, on the basis of a 5-year deal valued at about $90M. DSP, based in San Jose, California, with offices in Israel, India, Germany, Scotland, Hong Kong and Japan, is a leading provider of chipsets for VOIP, multimedia and digital cordless applications. It was founded in 1987 by Israeli entrepreneur Davidi Gilo.

Yandex Eyes Israel

Yandex, the Russian technology giant, is eyeing Israel. According to a report in Calcalist business daily, Yandex is seeking to recruit Israelis with experience in managing startups. The first objective, according to Calcalist: establishing a taxi-hailing service to compete with Israel’s Gett.

JVP, Sosa Chosen In NYC

Two Israeli companies, Jerusalem Venture Partners (JVP) and Sosa, have been given key roles in New York City’s ambitious project to create a Global Cyber Center “to train the cyber workforce of the future.” JVP, headed by former Knesset Member and venture capital pioneer Erel Margalit, will set up the city’s first international cybersecurity investment hub, “and create the next billion-dollar opportunity in cybersecurity,” according to a statement by the New York City Economic Development Corporation. Sosa, a global network of innovation hubs founded in 2014 by 25 Israeli investors and technology entrepreneurs, oversees building a 15,000-sq-ft center in Manhattan’s Chelsea neighborhood designed to bring together corporations, investors, start-ups and talented people in a collaborative atmosphere. The facility will also include a cyber testing range for simulations of new technologies.

Israeli-Polish Collaboration

Start-ups and entrepreneurs from Poland and Israel are due to meet in Tel Aviv soon for a 6-week basic training corporate collaboration, under a new Polish-Israeli program promoting cooperation between big companies and fledgling firms. The program is sponsored by Poland’s national development bank, Poland’s ARP industrial development agency, and two Tel Aviv-based entities, CREATORS IDEAtion Lab and Start-Up Nation Central.

Sports Broadcasting

Pixellot, based in Petah Tikva just outside Tel Aviv, has developed artificial intelligence-based production and broadcasting technology that provides live, multi-angled, panoramic HD broadcast of sporting events. It employs a system of cameras covering the entire field to monitor and broadcast the flow of the game without the need to deploy personnel on site. Founded in 2013, the company has about 60 employees.

TAU Ranked High

Tel Aviv University has again ranked in the top 10 in Pitchbook’s annual ranking of institutions producing successful entrepreneurs. It was the fifth consecutive year that TAU, which ranked 8th, has been the only university outside the U.S. in the Pitchbook top 10 of the list, headed, in order, by Stanford, University of California at Berkeley, MIT and Harvard. In all, 640 TAU graduates have founded 531 companies and raised $7.9B in company funding.

Broadridge R&D Center

Broadridge Financial Solutions Inc. has established a new research and development center in Tel Aviv, focused on digital innovation. The center will draw on Broadridge’s March acquisition of Tel Aviv-based enterprise communication startup ActivePath.

Broadridge, based in Lake Success, New York, provides finance industry clients with client engagement, risk management, communication and data, and analytics services. With a market capitalization that exceeds $16B, Broadridge says that it processes more than $5 trillion in fixed income and equity trades daily.

JFrog To Double Workforce

JFrog, the DevOps developer based in Netanya north of Tel Aviv, plans to double its workforce after raising $165M in a financing round led by Insight Venture Partners. Investors Spark Capital and Geodesic Capital joined in the round, together with existing investors including Battery Ventures, Sapphire Ventures, Scale Venture Partners, Dell Technologies Capital and Vintage Investment Partners. JFrog’s technology transforms the way software is updated by offering an end-to-end, universal, highly-available software release platform for storing, securing, monitoring and distributing binaries for all technologies, enabling a continuous software release flow from code to production with zero downtime.

Techstars Eyes New Accelerator

Techstars, the world’s largest technology accelerator developer, is eyeing the prospect of opening a second accelerator in Israel in addition to the one in Tel Aviv it already operates in partnership with Barclays, Techstars founder and CEO David Cohen told Calcalist during a recent Israeli visit. Founded in 2006 in Boulder, Colorado, Techstars invests relatively small sums and provides extensive monitoring services to early-stage companies. Over more than a decade of operation, it says it has worked with a total of 1,500 companies, 90% of which are still active. According to Calcalist, it is involved in 44 accelerator projects around the world, and in 150 projects for start-ups in 13 countries.

Health Executive Network

A group of Israeli businesspeople and entrepreneurs have launched 8400, a network of health care professionals whose goal is to leverage the country’s intellectual, digital and human assets into a powerful growth engine for the industry in general and Israel in particular. Named 8400, in a reference to the IDF technology unit that served as one of the foundations of Israeli high-tech, the endeavor is supported by a range of professional and entrepreneurs from other fields, including Marius Nacht, one of the founders of Check Point Software, social and business entrepreneur Yitzhak Devash, Israel Biotech Fund founder Yuval Cabilly and businessman-philanthropist Sami Sagol, the former owner of Keter Plastics. Participants will participate in a special program at the Harvard Business School. The goal: Recruiting top industry professionals to establish the framework for an ecosystem that will turn health care into a national growth engine.

Aerospace & Defense

Huge India Contract

Government-owned Israel Aerospace Industries has signed a $777M deal with Bharat Electronics (BEL) to provide LRSAM Air and Missile Defense (AMD) systems, the marine version of the AMD system Barak 8, for seven ships of the Indian Navy. Sales of Barak 8 in the past few years now amount to over $6B.

Barak 8 was developed as a joint venture between IAI and the Indian weapons development authority DRDO. Other partners in the project were Rafael Advanced Defense Systems Ltd., IAI subsidiary Elta, and Indian companies BEL, BDL, and L&T.

Amos-8 to be Israeli

The Amos-8 communications satellite will be built in Israel after all by Israel Aerospace Industries. In early September, the government’s security committee approved funding for the project, enabling Israeli satellite operator SpaceCom to withdraw from its contract with Space Systems/Loral of Palo Alto, California.

Reported Halt to IAI IPO Plans

Moves toward a public offering of shares in Israel Aerospace Industries reportedly have been halted on orders of Defense Minister Avigdor Lieberman. The usually authoritative Globes economic daily says Lieberman ordered a stop to privatization moves, which are being pushed by the Government Corporations Authority and IAI itself, out of concern that sale of even a minority interest in the government-owned defense contractor could endanger state security. Lieberman reportedly acted after consultations with Nir Ben Moshe, the Defense Ministry deputy director-general responsible for state security. According to Globes, Ben Moshe and other ministry officials note that IAI is responsible for some of the most sensitive defense systems, including spy satellites, sensitive missiles, interception systems, unmanned aerial vehicles (UAVs), and powerful radar defenses.

Rada Radar Sale

Rada Electronic Industries has received an initial $3.5M order for its eCHR radar system from what it says is an existing customer “which is a leading U.S. military force.” Rada says that the eCHR introduces dramatically increased detection and tracking ranges, advanced beam forming and additional technological enhancements for active protection systems.

Lightweight Trophy

Rafael Advanced Defense Systems has unveiled a new, lighter version of Trophy, its active protection system for armored vehicles. The original Trophy (called Windbreaker, or Me’il Ruah in Hebrew), released in 2010 based on lessons learned in the Second Lebanon War, is in service on IDF Merkava tanks and APCs. In a recent trial conducted in Israel’s Negev desert, the lighter version installed on a U.S.-made Bradley fighting vehicle successfully intercepted and destroyed 95% of missile attacks. According to a report in Israel Today, American Stryker UAVs will be fitted with the system early next year.

Rafael this summer sold Trophy/Windbreaker systems to the U.S. Army for $193M. That order is expected to be increased to about $500M, according to a report on the Israel Defense website.

Israel Aerospace Industries said that its Elta Systems subsidiary has been awarded a contract by Leonardo DRS to provide the U.S Army with WindGuard (ELM-2133) Active Protection Radar as part of the Rafael Trophy system for Abrams main battle tanks.

Elbit Asian Contract

Israeli private defense contractor Elbit Systems has been awarded a $173M contract to provide naval remote-controlled weapons stations for an unnamed East Asian country. The system includes a 12.7mm machine gun, Elbit’s advanced fire control systems and a modular electro-optic suite. Globes said that the buyer might be for South Korea’s new T-50 aircraft, which is being produced by Korea Aerospace Industries in cooperation with Lockheed Martin.

In a separate development, Jane’s reported that Elta‘s EL/M-2022 radar is part of a package the Philippines is receiving from the U.S. to upgrade C-130 aircraft for intelligence-gathering and patrol missions.

Elbit’s British Deal

Elbit Systems has been awarded British Ministry of Defense contract to provide its MORPHEUs Battlefield Management Application. the three-year contract has an initial value of $13M and potential to expand to $52M. Elbit has provided command and control platforms to clients worldwide.

According to a report in Jane’s, Elbit is also prime contractor, with QuantaDyn as its partner, in providing a mobile Joint Terminal Attack Controller (JTAC) training facility as a service to the British Army’s 1st Artillery Brigade. The system, stationed in a 20 ft trailer, provides training for Type 1, 2, and 3 close air support control by day and night; laser designation; use of a video downlink; and conventional artillery call for fire training. It is based on a version of QuantaDyn’s QFires Desktop Trainer.

IAI, Tech Mahindra Partner

Elta Systems, a subsidiary of Israel Aerospace Industries, and Indian IT giant Tech Mahindra are collaborating to combine IAI cybersecurity technologies and Tech Mahindra’s digital expertise to provide cyber solutions and services to government and enterprise customers in India and globally.

IAI Hires Privatization Adviser

Israel Aerospace Industries has hired Dr. Avi Licht, former deputy attorney general, as a special adviser on structural changes in advance of privatization.

Mobilicom’s Airbus Deal

Airbus, the European aerospace firm, has chosen the solution of Israel’s Mobilicom for its commercial drone program. Mobilicom, headquartered in Azur just outside Tel Aviv, provides infrastructure-less communication solutions for governments and for private industry.

Fire Control Radar Sale

Elta Systems has won a $55M contract for fire-control radar airborne systems from an unnamed Asian client. The radar offers a broad range of operational modes, including high-resolution mapping in SAR mode, detection, tracking, and imaging of aircraft, moving ground and sea targets.

Chinese Airline Contract

The Bedek Aviation Group of Israel Aerospace Industries has signed an official supplier agreement with HNA Group to maintain and overhaul the V2500 engines for Chinese group’s airlines. The contract’s value is estimated at dozens of millions of dollars.

IAI Expanding Robotics

Israel Aerospace Industries is expanding its robotics activity into new areas of automated battlefield technology, developing new technologies for the detection of roadside bombs and other munitions. Based on IAI’s Sahar platform, RoBattle is equipped with a modular “robotic kit” comprised of vehicle control, navigation, RT mapping and autonomy, sensors and mission payloads. The system can be operated autonomously in several levels and configured with wheels or tracks, to address the relevant operational needs.

Sheffer Moves in at IAI

Nimrod Sheffer has begun work as Israel Aerospace Industries new CEO, the government-owned defense contractor announced in late September. Sheffer, a reserve brigadier general, previously served as IAI’s vice president of strategy and R&D and before leaving the IDF, as head of the General Staff’s planning division. A former combat pilot, Sheffer succeeds Joseph Weiss, who is retiring at the end of the year after six years as CEO.

Katz Gets IAI Workers Post

Yair Katz has been elected permanent head of the Israel Aerospace Industries workers committee, a post he has held on a temporary basis since May. Katz’s father, Haim Katz, is a former head of the workers committee who currently is minister of Welfare and Social Services in the Netanyahu government. The younger Katz was questioned by police last year as part of an investigation into possible corruption at government-owned IAI.

WOW to Resume Flights

WOW, the Icelandic low-cost airline, has resumed selling flight tickets for flights to and from Israel beginning June. The company will stop its Israeli service in November, and resume operations on the route to Reykjavik with international connections for the summer season.

Spike Offer

Rafael Advanced Defense Systems and Lockheed Martin, its American partner, are seeking to sell Spike NLOS (Non-Line of Sight) missiles to the U.S. military. The latest in Rafael’s Spike family of missiles, the electro-optically guided NLOS, which recently was demonstrated in the Negev desert, has a range of 25 km, four times the range of the standard Hellfire missiles in service with U.S. Apache helicopter squadrons.

In a separate development, Defense News reported that the Indian Army plans to test Spike missiles next summer under extreme conditions in the Rajasthan desert, prior to deciding whether to procure the system. According to various press reports, Spike did not meet the Indian Army’s operational requirements in previous trials held in hot summer temperatures in the desert where a large proportion of the systems would eventually be deployed.

Naval Systems Unveiled

Rafael Advanced Defense Systems unveiled its 360° multi-layered suite of maritime defense solutions at Euronaval 2018 in late October. The suite enhances naval forces defense against modern naval threats, such as naval area defense, swarm attack defense, and torpedo defense. Rafael also introduced its new Active Advanced Torpedo Defense capability for surface vessels. Based on Rafael’s Torbuster underwater active decoy, ATDS provides an effective defense against all types of acoustic homing torpedoes.

India’s Adani and Elbit UAVs

A new factory opened by India’s Adani Group will start operations with the manufacture of fuselages for Elbit‘s Hermes 900 unmanned aerial vehicles. The fuselages, part of a joint venture with Elbit’s subsidiary in India, will be shipped to Israel to be fitted with avionics and other systems. According to one report, Adani has discussed joint ventures with other non-Indian bodies as part of its effort to expand into the defense field.

Proposed Acquisitions Law

MK Ofer Shelah, chairman of the Knesset’s Foreign Affairs and Defense Committee, has proposed a new law designed to reduce the dominance of large contractors in military purchasing. According to Haaretz, Shelah’s proposal includes not allowing the “big three” defense contractors, Israel Aerospace Industries, Elbit Systems and Rafael Advanced Defense Systems, from participating in defense tenders valued at less than NIS 10M, requiring that contracts of over NIS 100M require more than 40% of the work be performed by small contractors, and forbidding large contractors to present bids more than 25% lower than the Defense Ministry’s estimated cost.

AUSA Exhibitors

Thirteen Israel companies exhibited at AUSA, the annual convention and exhibition of the Association of the U.S. Army held in Washington, D.C. in early October. Exhibitors at the pavilion of Sibat, the Defense Ministry’s International Cooperation Directorate, included Ortech’s Y-Fort Bunkers and Shielded Walls, quickly assembled to protect soldiers gathered in briefing areas, Mifram‘s easy-to-install barrier against ramming attacks by heavy vehicles, MS-Tech’s portable explosive detection systems, Safe Shoot’s two-sided fire prevention system, Reshet Graf‘s IFF (Identify Friend or Foe) solutions for personnel and vehicles, made from a passive infrared-reflective material, and Magam’s self-sealing fuel tank protecting against the impact of bullets up to 20mm.

IMI Systems showcased its Oshkosh Defense Joint Light Tactical Vehicle equipped with Iron Fist Light Decoupled (IF-LD) active defense system, its Dokran precision 120-mm. mortar projectile, a Super High-Explosive 155-mm. artillery shell with new technologies improving the angle of impact and the effectiveness of the munition with controlled fragmentation, and advanced precision rocket systems.

Winter Takes Over

Brig. Gen. Ofer Winter assumed his new post as military secretary to Defense Minister Avigdor Lieberman in mid-October. Winter, the former commander of the Givati combat brigade, had previously been passed over for division commander.

Arrow Production Moved to U.S.

Israel Aerospace Industries has moved production of canisters for its Arrow 3 ballistic missile defense system to the U.S., the government-owned defense contractor said in early September. The canisters, which incorporate systems for transmitting commands to the missiles themselves, will be manufactured at Stark Aerospace, an IAI subsidiary in Columbus, Mississippi. The move apparently anticipates the provisions of a memorandum signed in 2016 mandating a shift in spending of Washington’s annual $3.8B in military aid be spent on weapons systems made in the U.S. Much of the funding for Israel’s Arrow systems, jointly developed by IAI and the U.S. Missile Defense Agency, comes from the U.S.

Kochav Named

Brig-Gen. Ran Kochav is the new head of the IDF’s Air Defense Command. He replaces Brig-Gen. Zvi Haimovich, who held the post for three years.

Iron Fist in Black Knight

Iron Fist, the active protection system developed by IMI Systems is a key component in Black Knight, the BAE Systems technology demonstrator of methods to extend the life of armored vehicles. In addition to Iron Fist, developed by IMI, the former Israel Military Industries, London-based defense contractor BAE’s demonstration project includes thermal imaging technology and night sights by Leonardo and Safran Paseo‘s commander’s independent sight.

Small Satellite Pact

Israel Aerospace Industries has signed an agreement with London-based Effective Space for development of the British company’s Space Drone, a small spacecraft designed to extend the life of satellites in orbit and provide logistics services in the rapidly growing space economy. Effective Space has developed patented technology for rendezvous and docking to satellites in space with its Space Drone, a small spacecraft. Two Space Drones are scheduled to be launched in 2020, generating anticipated revenues of around $100M.

British Buy Drone Dome

The UK is acquiring Drone Dome, the defense against unmanned aerial vehicles developed by Israel’s Rafael Advanced Defense Systems. Value of the deal was not disclosed. According to Jane’s, Drone Dome was demonstrated to the UK government in January.

Rafael describes Drone Dome as an “end-to-end system designed to provide effective airspace defense against hostile drones used by terrorists to perform aerial attacks, collect intelligence, and other intimidating activities.” The system incorporates RADA Innovative Defense Electronics RPS-42 pMHR S-band multi-mission 90° hemispheric radar (four radars to give full 360° coverage), the Controp MEOS electro-optical/infrared (EO/IR) surveillance suite, and the NetSense Wideband detection sensor developed by Netline.

Big Rocket Purchase

Israel’s Defense Ministry has ordered rockets worth hundreds of millions of shekels from IMI Systems. Defense Minister Avigdor Lieberman called the order the first step in building “a missile system that within a few years will be capable of covering any point at short and medium range.” According to previous reports, the ministry plans to develop and IDF missile command and spend up to NIS 8B in procuring rockets to arm it, mainly from IMI.

Green Rocket Propulsion

New Rocket, based in Beersheba, says it is developing proprietary gel technology that can serve as a safer, non-toxic propellant with little or no sacrifice in performance and control. Few details are available about New Rocket, but the company says that it is associated with Israel’s Technion Institute of Technology and supported by a seed investment of Incubit Technology Ventures, a subsidiary of defense contractor Elbit Systems.

Sea Heron Test Flights

Israel Aerospace Industries and Europe’s Airbus have successfully completed 200 hours of flight tests for the Maritime Heron UAV. The tests, in civilian European airspace, were made as part of a trial for Frontex, the European Border and Coast Guard agency to explore possible uses of unmanned aircraft to patrol European Union borders in a variety of operational situations, including surveillance of the sea, support of search and rescue operations, and detection of suspicious vessels.

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