Israel Update Week Ending May 13th

Politics, The Death of Journalist,Tech Stock Drop Affecting Israeli Companies.

POLITICS

This was expected to be a suspenseful week in Israeli politics, as the Knesset finally resumed after its long Passover break. Adding to the usual drama, this was the first time the Knesset was in session since the coalition lost its majority (after Idit Silman abruptly left the coalition). 

Tension in the Knesset was exceptionally high because the Raam party announced during the break that it would not participate in the coalition, due to the violence on the Temple Mount — at least over the course of the Knesset recess. However, some of the distress dissipated on Tuesday, during the first day of the new session, when the Joint Arab List declared it would not support a No-Confidence vote. Joint List leaders logically stated, that while they vigorously opposed the current government, they would not do anything to help create a government that would include Betzalel Smotritch and Itamar Ben Gvir.

 

The second crisis appeared on Tuesday when the Likud scheduled an initial reading on a vote to disperse the Knesset. Mansour Abbas claimed the Shura Council, (religious leadership council to the Raam party), would swiftly decide their party's position on the matter. The night before,  a friend said to me: “See, now the Shura Council is deciding Israeli politics.” I laughed and said: “It’s just like the Moetzet Gedolai HaTorah [ultra-Orthodox Rabbinic Council] deciding for the Shas party. The council is merely a cover for Raam’s political decisions.” 

Then, lo and behold, after creating a dose of drama, the very next day (on Wednesday), Abbas announced that Raam would remain in the coalition and give it another chance. The reality is Abbas understood that all of the assistance he had negotiated to receive for the Israeli Arab communities in the new budget would not be fully felt for another several months. If new elections were to take place now, it would be perceived he had accomplished nothing.

It should be noted that Netanyahu did not do himself any favors by continuously attacking Abbas. By doing so, Netanyahu just made any other coalition deal unlikely, to say the least. The Likud immediately withdrew its resolution to dissolve the Knesset, and the threat of new elections was, for the moment, overcome. While the government will have a hard time passing any new legislation, the coalition will likely stay together for the immediate future.

The government has approved two significant pieces of legislation — the first gave fathers two weeks of paternity leave after the mothers’ maternity leave ends; the second approved laws that codify Israel’s commitment to reducing carbon emissions and transitioning to clean energy. Each of these laws need to pass the Knesset, but both have some level of bipartisan support.

THE DEATH OF ABU AKLEH

Wednesday morning we all awoke to the news of the tragic shooting of veteran journalist Shireen Abu Akleh during an IDF raid in Jenin. We, (my family members), knew that whatever the facts of the case turned out to be, Israel would be blamed. As of now, we still do not know who fired the fatal shot that killed her, and it’s not clear we will ever know the whole truth. 

Yet, what followed was predictable … Israel was blamed by Abu Akleh's employer, Al Jazeera, and their narrative became the main story. Israel initially released a video that contradicted the Al Jazeera narrative and implied that Abu Akleh was killed by Palestinian gunfire. Pro-Israel activists immediately jumped on the Israeli version of events, attacking all who blamed Israel. 

By the end of the day, the IDF announced it did not definitively know who shot Abu Akleh and opened an investigation on the matter. The Israeli government tried to get the Palestinian Authority to agree to a joint investigation. However, the PA was enjoying its PR bonanza too much to agree. 

With no inside knowledge, and no idea who is responsible, my only speculation is that this journalist’s death was not entirely an accident. It was not a stray bullet that killed Abu Akleh, but gunfire aimed at her.

By Thursday evening, the discussion in Israel focused on why our country continually loses the PR battle. Long ago (40 plus years), I argued that Israel did not spend enough money on Hasbara (PR). That no doubt remains true today. However, no amount of Hasbara will overcome the fact that even though I do not think it’s our fault, we have been occupying the Palestinians for a very long time. 

Our story is complex. Understanding our story requires a knowledge of history and an acceptance of the actual narrative of the conflict — i.e. that there have been many times when the Palestinians could have had a state, if they had been willing to agree to some compromise. Still, when that fact competes with photos of heavily armed Israeli soldiers in Palestinian towns, no amount of Hasbara can compete with that reality. Occupation is a terrible thing, but we haveo’t found a way to end the occupation and still protect our security. Unfortunately, until we do, terrible things will keep happening.

BUSINESS & FINANCE

The large sell-off on Wall Street is impacting Israeli companies. There are ten Israeli companies that went public during the last two years whose value is close to the value of cash and cash equivalents the company possesses. For example, Lemonade, the insurance innovator, is trading at a value of $1.1 billion; and it has $1 billion in cash. While investment money is still flowing in, the volume has noticeably decreased, and many companies have been forced to scale back. The days of unlimited growth without income are over.

This entrenchment has not yet been felt on the governmental level. Israel has reported a budget surplus for four months in a row. Such a surplus has only happened twice in Israel's history — and if Israel continues to run a surplus for May, that will be the first time in Israel's history that the country has had a surplus for five consecutive months. Tax revenue is up 27.3% from a year ago, and so far this year, the government has had an accumulated surplus of NIS 32 billion. 

Fiverr, one of the world’s leading freelance platforms, reported Q1 revenue of $86.7 million, up over 27% year-over-year. The company now has 4.2 million active buyers. Ofer Katz, Fiverr’s President and CFO, added, “Our solid results in the first quarter demonstrate the resilience of our business and ability to execute amid volatile macro conditions. We are very pleased with the ongoing momentum in Fiverr Business and the exciting upmarket opportunities ahead of us. Our strong balance sheet and disciplined financial strategy provides a solid foundation for us to continue investing for growth and long-term shareholder value.”

INNOVATION

Hello Heart, which developed a complete system for managing patients with heart problems, has raised an additional $70 million. Leading the round was Stripes, the private equity fund.

ImageneAI has raised $21.5 million in a round led by Oracle founder Larry Ellision. ImageneAI has developed a system to assist cancer patients to receive the optimal treatment medicine can offer, by leveraging AI to detect, a broad range of cancerous biomarkers and genomic insights directly from the biopsy image — in real-time.

Linear has raised $50 million in a B-round of financing. The round was led by Tribe Capital. The company developed a system to help manage engineering divisions in companies. 

Gadfin, a drone manufacturer has raised $7 million, in a round led by SIBF. The company has developed a high-speed drone that can take off vertically and travels at high speeds to deliver freight.