Israel Update Week Ending October 15
Merkel Visits Israel, Lapid in Washington,Blue Flag Drill, Record Investments and Exits in Israeli Hi Tech
FOREIGN AFFAIRS
This was a busy week for Israeli diplomacy starting off with a visit by German Chancellor Angela Merkel. The visit, initially scheduled to take place in August, (but delayed due to events in Afghanistan), was Merkel’s official farewell visit. Merkel, who has been a true friend to Israel throughout her tenure as Chancellor, was thrilled to visit here now that Netanyahu is no longer Prime Minister.
Merkel did not meet with Netanyahu, but did attend a special cabinet meeting held in her honor. The Chancellor expressed concern about Iran's nuclear program. She also brought up the Palestinian issue, asserting that the creation of two states is the only way to assure Israel remains both Jewish and Democratic. Prime Minister Bennett responded by saying he is a pragmatist, and he knows that the Palestinians are not going anywhere. Still, Bennett restated his view that any Palestinian State would soon become a failed state that supports terror.
For three days this week Foreign Minister Yair Lapid visited Washington. Lapid met with Speaker of the House Nancy Pelosi, and Vice President Kamala Harris.
In addition, Lapid took part in a bilateral meeting with Blinken, and a three-way conversation with the UAE Minister of Foreign Affairs, and International Cooperation Sheikh Abdullah bin Zayed Al Nahyan. The triad discussed the deepening relations blossoming between their countries, as a result of the Abraham Accords. The US administration, which initially appeared somewhat reluctant to embrace the accords, has decided to welcome the one clear foreign affairs accomplishment of the Trump Administration, and attempt to build on it.
At the press conference that followed the trilateral meeting, Blinken expressed US frustration with the Iranian regime, and stressed, “Despite the fact that we've made abundantly clear over the last 9 months that we are prepared to return to full compliance with the #JCPOA, what we are seeing, or more accurately not seeing, from Tehran now suggests that they're not. Time is running short.” The United States and Israel have been discussing various contingency plans, to prepare for the possibility they will be unable to resurrect the JCOPA.
In Israel, a growing number of former officials have stated publicly what many have said privately for some time, i.e., that Netanyahu’s pushing Trump to withdraw from the JCOPA will go down as one of the most significant foreign policy disasters in Israel's history. The latest to speak up against Netanyahu’s anti-JCPOA campaign is Efraim Levy, former Mossad head. Levy leveled his criticism at Netanyahu’s policy on Iran. Today, Iran is close to having a nuclear bomb because Trump withdrew from the JCOPA — and it looks like it may be too late to put that genie back in the bottle.
Next week, Prime Minister Bennett travels to Russia to meet with President Putin, after Putin extended an invitation. Iran will be high on their agenda. Russia does not want Iran to have the bomb, but it's not clear what, or if, Putin is willing to do to help stop Iran.
DEFENSE
This upcoming week, the Israeli Air Force will host the Blue Flag Drills, the largest multi-national air drill ever held in Israel. The United States, United Kingdom, Germany, Italy, France, Greece and India are all scheduled to participate with aircraft never seen before landed in the country, including: the Eurofighter, Dassault Rafale and the Dassault Mirage 2000.
The Israeli Defense Ministry selected Israel Aircraft Industries to integrate the various electronic systems in the new multi-purpose ground vehicle, the Carmel. The Carmel will include the latest AI technologies that will allow its two-person crew to be much more lethal than the four-man crew of today's tanks.
On Wednesday night, settlers attacked two IDF soldiers dispatched to investigate the reports that settlers had destroyed Palestinian olive trees. Both Defense Minister Benny Gantz and Chief of Staff Aviv Kohavi condemned the attack. The pair declared the attackers had crossed a red line, and ordered a crackdown on the settlers who perpetrated the attack. We will have to wait and see. This is not the first time settler youth have crossed red lines, and generally, they have gotten away with it. So far there have been no arrests.
LEBANON
On Thursday, armed violence continued to push the country ever closer to civil war. The immediate cause of the ramped up violence is the attempt of Hezbollah, and its supporters, to stop the inquiry into the deadly explosion that took place a year ago in the Beirut Port. Aside from killing 218 deaths and causing 7,000 injuries the explosion was the final incident that caused Lebanon to become a failed state, with its economy shattered and its buildings dark. There has been no electricity in Beirut for four days. Hezbollah is primarily believed to be responsible — either directly or indirectly — for the explosion. Therefore, Hezbollah is not interested in the truth becoming known. However, the judge in charge of this investigation seems fearless, and is taking the inquiry to wherever the facts lead.
RELIGION AND STATE
The Ministry of Housing and the Interior Ministry have nixed one of former Minister Aryeh Deri’s signature projects, i.e., the building of an ultra-Orthodox neighborhood with 16,000 apartments in Kiryat Gat. Instead, these apartments will be offered to the general public. Prime Minister Bennett stated this past week that the ultra-Orthodox parties have too much power, and he intends to reign that in. Meanwhile, Minister of Religious Affairs Matan Kahane is moving forward with his reform of the Kashrut system, currently a source of patronage for the ultra-Orthodox Parties.
COVID-19
We may be close to ending this newsletter section. The number of new daily Covid-19 infections in Israel keep dropping. Yesterday, we saw the daily numbers drop to 1,375. For the first time since the new wave hit, the number of patients suffering from serious illness has dropped below 400, and stands at 375 today. The positive rate of Covid tests is currently 1.7%. It's too soon to say the pandemic is over. We have been here before. However, it's clear that the gamble to rely on widespread vaccination and extensive booster shot adoption has worked. I still think that all the 70-80 year-olds I see going to the Opera and Cameri theater are being reckless, but…
ECONOMY
It's been a crazy nine months. Over the first nine months of the year, Israeli tech companies raised $17.78 billion in 575 rounds of financing; an 71% increase over the amount amassed throughout 2020. In Q3 alone, Israeli companies raised $5.9 billion in 177 deals — an apparent increase from the quarterly $2.3 billion average raised in the two previous years.
It was not only investments, but exits that reached new highs. Israeli high-tech exits grew to $18.92 billion during the first three quarters of 2021 – up 92% from the annual 2020 results, primarily due to a surge of IPOs, with 65 deals (36% of all exits), totaling $9.78 billion (52% of total proceeds).
While part of the surge in venture capital is worldwide, due to low interest rates and people looking for investments, as Gil Dibner, founder of Angular Ventures (a seed VC firm), told me that some companies might be over-valued, but, software is now transforming the world. These companies are creating real value, and many of them are doubling and tripling their revenues in a year.
Israel based Vintage Investment Partners has raised $812 million, across two funds, to back startups and investors in Israel, Europe, Canada, and the US.
Israeli cybersecurity startup Wiz raised $250 million, giving it a valuation of $6 billion. This funding round was led by Insight Partners and Greenoaks Capital, with participation from Sequoia Capital, Salesforce, and others. According to the company, the round was oversubscribed.
ION Labs, a first-of-its-kind innovation lab, spearheading the adoption of AI technologies and computational science to solve therapeutic challenges, announced its official launch and the opening of its international headquarters.
The alliance of four leading pharmaceutical companies — AstraZeneca, Merck, Pfizer, and Teva – along with two leaders in the hi-tech and biotech investment sphere, respectively, Amazon Web Services Inc. (AWS) and Israel Biotech Fund (IBF), have come together to build groundbreaking AI and computational ventures that will leverage the cloud to transform how new therapies are discovered and developed. The launch of this consortium of global leaders follows the winning of a government tender to establish an Innovation Lab in December 2020, after the Israel Innovation Authority identified life sciences as a vital area for growth potential and investment.
AION Labs will create and invest in early stage startup teams, focused on AI and computational biology, in drug discovery and development. Each of these teams will be offered top-notch resources and mentorship, while working closely with AION to develop new technologies that meet the most acute and significant challenges in the pharmaceutical industry. Each startup will harness the power of artificial intelligence, together with the scale and security of the cloud, to find new treatments faster and more efficiently, avoid animal experiments, and advance healthcare towards patient-centric precision medicine.