Israel Update Week Ending November 5
Budgets Passed, Bennett Meets Global Leader,Shekel Strengthens,Israeli Companies Raise $3.45 Billion in October
THE KNESSET
This was an important week in Israel. For the first time in three years, Israel finally has a national budget. The last budget was passed back in 2018. In the interim, Israel had a series of four elections — in two years — most of which did not lead to the successful formation of a government. When a coalition was ultimately achieved, Former Prime Minister Netanyahu chose not to pass a budget, as that was his one way of getting out of implementing the rotation arrangement he agreed to with Defense Minister Gantz.
Passage of a national budget is important in several different ways. 1) For the first time in years, there is a new budget that reflects Israel’s changing needs, and as a result, money can be allocated accordingly. 2) Passage of budgets for 2021 and 2022 ensures there will be no need for a new election during the next 18 months. 3) Thanks to Netanyahu's reforms, it is nearly impossible to topple a government in Israel. So, all the talk about Netanyahu returning to power soon is just that — talk. It will not happen.
Lastly, and in some ways most importantly, the budget’s passage included enacting the “arrangements bill,” which provides for 40 different reforms and changes. These reforms are ambitious and will have a significant impact. Among the most important changes is a reform in the Kashrut supervision law. The Rabbinate has lost its monopoly on issuing Kosher certificates. Under the new law, private organizations can now issue certificates of Kashrut. This will create competition, lower the prices, and probably weaken some of the ultra-Orthodox parties, accustomed to granting Kosher supervision jobs as patronage.
Other reforms include:
• Opening free import to agricultural products (except for eggs);
• Ending the requirement for the Israeli Standards Bureau to approve imported products, relying on EU standards, instead;
• Placing a tax on disposable cutlery;
• Placing a tax on sweetened beverages;
• Gradually raising the retirement age of women to age 65;
• Further limiting the use of cash in the economy;
Instituting a tax on entering Tel Aviv by car during the peak hours — to be implemented in 2025 (when it is hoped Tel Aviv's light rail will be operational).
One can argue over the merits of the individual reforms, but, their very existence and passage is a significant accomplishment of the new government.
THE OPPOSITION
Netanyahu and the Likud tried to entice defectors from the coalition to vote down the budget. However, their efforts bore no fruit. Earlier in the week, the Likud held a rally in Tel Aviv. Their central line of attack was a claim the new government was giving money to Hamas. The origin of this fake news story was a report on the Israel Channel 13 by veteran reporter and anchor, Ayala Hasson. In what Hasson touted as a “significant revelation,” she reported that number 20 on the Ra’am party list (who was involved with coalition negotiations during the period Netanyahu was PM), received permission to enter Gaza and met with the member of Hamas, who served as their liaison to negotiate with Israel, for the release of Gilat Shalit. On that show, panelist Liat Shemesh, a strong Netanyahu supporter (at least publicly, not quite as much privately), insisted Ra’am sends money to Hamas. Moreover, since the government agreed to Ra’am’s demand to allocate more money in the Arab sector, Shemesh further alleged the Israeli government was now giving money to Hamas. This charge was repeated ad nauseam, at the Likud rally, and on TV. Of course, this allegation is false.
PM Bennett accused Netanyahu of being behind the fake news campaign. Sadly, there remain at least some people with whom this line of incitement still works. I had a long discussion with one individual who attended the rally. He did not understand why I remained unconcerned with the (allegedly) terrible things now happening in the country.
“What things?” I asked, and was told “the problem is the fact Israel is giving money to Hamas.” That is the line the Likud and Bibi are broadcasting. However, as veteran reporter Raviv Drucker astutely asserted on the Thursday night evening news, Bibi has been willing to sacrifice the future, in order to garner the most power possible in the present. Meaning, Netanyahu believes disparaging Ra’am is what his base wants; and maintaining unequivocal support from his base is vital for him at this moment. By leveling endless attacks on Ra’am, Netanyahu has returned to the Bibi of the past — the Bibi who exclaimed: “The Arabs are rushing to the polls” to mobilize his base before second of the four consecutive elections. As a result, Ra’am and the other Arab parties understand that a partnership with Netanyahu was never possible, and their current partnership with the coalition is their only choice to enhance their participation in the system.
CLIMATE
Earlier this week, Prime Minister Bennett and a large entourage, attended the Glasgow Climate Summit. Bennett spoke, and his main pronouncement at the summit was a promise to work to harness Israel’s high-tech sector to help find solutions to address the climate challenge. Bennett’s words were well-received.
As one observer noted, climate had never previously been an area of interest for Bennett, but that appears to have changed. Indeed, after a meeting of the two, the Chairman of the Gates Foundation was impressed with Bennett and Israel’s potential to positively impact the war on climate change.
While in Glasgow, Bennett met with a long list of other leaders, including British PM Johnson and French PM Macron — with whom he had to mend some fences, due to NSO’s software targeting French politicians. Bennett also met with Modi of India, and Salman bin Hamad Al Khalifa, crown prince of Bahrain. Leaders seemed most interested in knowing more about Israel’s successful Covid-19 Booster shot campaign.
One of the results of Bennett’s broad, well-received reception by fellow leaders is that Israelis no longer believe that Israel’s positive standing in much of the world is solely thanks to Netanyahu. In a new survey by the Israeli Democracy Institute, 37% of Israelis believe Israel’s international standing has remained the same under the new government; while 28% believe Israel’s standing in the world has improved, thanks to the new government.
Meanwhile, Emirates Airlines announced it will begin daily non-stop service between Dubai and Tel Aviv, starting December 6th.
DEFENSE
According to foreign reports this week, Israel launched two separate attacks on Iranian targets in Syria. This comes one week after Bennett met with Russian President Vladimir Putin. Meanwhile, both the Northern command and the homeland command held large-scale exercises to be ready, in case of retaliation.
This week, the IDF announced “Tal Shamayim,” a new defense system is now operational. It is a giant balloon filled with electronic gear, tasked with flying over the skies of Northern Israel, to serve as a warning beacon. This balloon beacon is the product of a joint project between Israel Aircraft Industries and the US Defense Department.
COVID–19
The daily Covid infection rates continue to trend slowly downward. The number of seriously ill patients has dropped below 200, and the number of new daily cases has been averaging in the low 600s, with yesterday’s figure at 513, with a positive rate under 1%. Next week, a decision will be made regarding the vaccination of children, ages 5-11.
ECONOMY
The Shekel continued to strengthen, reaching 3.1 to the dollar. To put that rate in perspective, it was 4.1 Shekel = $1 ten years ago when we returned. The high value of the Shekel is both an indication of the perceived strength of the Israeli economy, and more importantly, a manifestation of the fact Israel has been running a current account surplus for many years, which also strengthens the currency. While a robust Shekel rate makes it less expensive for Israeli to travel abroad, and cheaper to buy from Amazon (it should result in all imported goods being less expensive, but importers often pocket the savings), it makes Israeli exports and incoming tourism even more costly. Even more problematic is that hiring an Israeli software engineer who gets paid in Shekels is now as expensive as, or more expensive than, hiring an engineer in San Francisco. So far, that has not negatively impacted the Israeli high-tech sector, but at some point, it will. For those of us who have significant income in dollars — our money now buys less.
NSO
NSO was a high-flying Israeli tech company specializing in the sale of software that uses vulnerabilities to allow security personal to eavesdrop on people with iPhones and other supposedly secure phones. NSO promoted itself as a tool to fight crime and terror. Initially, the company attracted some of the most talented software engineers, from amongst those who completed their IDF service. However, NSO’s shine has diminished over time, i.e., since it was established that some of their clients were unscrupulous regimes. This revelation gained momentum when it became clear that the Saudi Regime had used their software to track Jamal Khashoggi, the Saudi journalist they assassinated in Turkey.
Recently, a list of the many regimes and those targeted utilizing NSO cyber weapons was released; a list which includes leading French politicians, being stalked by Morocco. The result was a diplomatic crisis between Israel and France (partially resolved at the meeting between Bennet and Macron). This week, the US government added NSO to the Entity List, for engaging in activities contrary to the national security or foreign policy interests of the United States. This will make it difficult for NSO to buy US goods, or operate in the US. Recent events have made it extremely challenging for the company to recruit new talent; some even question the continued viability of the company.
FUNDS RAISED
October was another record month for Israeli start-ups seeking funds, with $3.45 billion raised over the course of the month. In addition, five new Israeli unicorns were crowned this month.
The following is a listing of October funds raised/in millions:
Deel $425
Celsius $400
Orca Security $340
TripActions $275
Wiz $250
Immunai $210
Cato Networks $200
Fabric $200
Augury $180
Hibob $150
Hailo $136
NeuroBlade $83
Aquant $70
Cyberreason $50
Dustphotonics $33
BackBox $32
It Central Station $30
Adaptive Shield $30
SeaLights $30
Duality $30
Tactile Mobile $27
Karma $25
Metrolink.ai $22
Insurights $22
Deci $21
Autofleet $20
At-Bay $20
Wematch $19.5
Voom $15
BeeHero $15
Navina $15
Better Health $10
Genetika Plus $10
Piiano $9
Quris $9
Moodify $8
Valence $7
Futora $6
Cyabra $5.5
Bites $5
echoD $4
Staircase Ai $4
CoreBone $3.7
Nokku $3
Lets Tok $1.5
Illumigyn, developer of a remote gynecological imaging platform, garnered new funding, bringing their total raised to $33 million, to date. The current investment round includes the Yozma Group of Korea and Ubicom Holdings of Japan.
The additional new funding will enable the company to accelerate its plans to bring cutting-edge gynecological imaging to women across the globe, starting this month with deployments in the United States, United Arab Emirates, India, Singapore, and South Korea.
As part of its vision to expand access to vital care for women worldwide, Illumigyn developed a complete platform featuring the Gynescope™ System, a revolutionary “gynecology endoscope,” and cloud platform service, with an accompanying mobile application.
The first FDA-cleared remote gynecological platform, Gynescope™, digitally documents the cervix, vagina, and external genitalia. High-quality resolution and superior magnification enhance details beyond the capabilities of traditional cervix exams, enabling more accurate pap smears.