Sunday, 11 December 2016

Ambassador ret. Yoram Ettinger: Israel’s economy defies BDS



1. In December, 2016, Israel is unprecedentedly integrated into the global economy, highlighting the successful battle against BDS (boycott, divestment and sanctions), while rejecting pessimism and fatalism.
 
2. According to a Bloomberg study: "An examination of foreign capital flow into Israel shows a near tripling from 2005 when the so-called BDS was started…. Israel's economy is expected to grow 2.8% in 2016, compared with 1.8% for the US and the EU.  In 2015, Israel's industrial high-tech exports rose 13%, from 2014, to $23.7BN….”

3. 
2016 is already a record year for total (mostly foreign) investments in Israel’s young high tech companies, exceeding the $4.4BN invested in 2015. For instance, Israel’s NeuroDerm, which develops drugs for central nervous system diseases, is expected to raise $75MN, on NASDAQ, by December 12, 2016.  Some of the recent investments were made by the US-based Johnson & Johnson’s Development Corporation, the Australian Stock Exchange, the German medical equipment giant B. Braun Melsungen AGChina’s Internet giant Alibaba and Japan’s Sun Corporation.

4.
trilateral cooperation agreement has been concluded between Israel’s Mobileye – a collision avoidance sensor developer – Delphi Automotive, the UK-based global automotive parts manufacturer and the Silicon Valley-based Intel, aiming to manufacture a self-driving car by 2019.  A similar partnership was struck between Mobileye, Intel and the German car giant, BMW. 

5. A wave of acquisitions of Israeli companies by global giants persists, as evidenced by the November, 2016 acquisition of Israel’s valve repair device company, Valtech Cardio Ltd., by the 
Irvine, California-based Edwards Lifesciences Corp., for $340MN in stock and cash, in addition to $350MN in milestone payments over ten years and $300MN for Valtech’s research and development program.  Just like 200-250 other (mostly US) major global hightech companies, Edwards has leveraged Israel’s brain-power by operating a research and development center in Israel, since the 2004 acquisition of Israel’s PVT for $90MN and milestone payments.  

6. The London-based mega-billion-dollar 
Chinese/European XIO Group has acquired Israel’s Meitav-Dash Investment House for $400MN.  In 2015, XIO acquired Israel’s medical device company, Lumenis, for $510MN. China’s telecommunications giant, Xinwei, is negotiating the acquisition of Israel’s Spacecom Satellite Communicationsfor $190MN, reflecting the surging Chinese interest in the Israeli market and the significantly expanding Israel-China trade balance from $50MN in 1990 to $11BN in 2015, in addition to $15BN in acquisition of Israeli companies.  The Hong Kong-based Rightleder Holding Group aims to acquire Israel’s sewage recycling (water purification) company, Advanced Membrane Separation.  Also two Chinese capital funds, CDH and ZZ explore the acquisition of ironSource, Israel’s largest Internet company, for $1BN.

7. The 
Israel-India trade balance surged from $200MN in 1992 – when diplomatic relations were normalized - to $3BN in 2009 and $5BN in 2015, accompanied by a rise in two-way-tourism, paving the road to a negotiated free-trade-agreement, and highlighting India as one of Israel’s fastest growing trade partners in the commercial and defense areas. New Delhi has become the top customer for Israel’s defense industries, in addition to a series of co-development and co-production initiatives with Israel – in the face of joint economic and national security challenges – while Israel has become the number two/three exporter of military systems to India, following Russia and the USA.

8. On November 16, 2016, 
India signed $1.4BN contracts with the Israel Aerospace Industries (IAI),purchasing two additional Phalcon/IL-76 Airborne Early Warning and Control Systems and ten Heron unmanned aerial vehicles. IAI has submitted a proposal for the co-development, in India, of an advanced version of the Heron. The growing Israel-India defense ties are demonstrated by the recent Indian procurement of Rafael’s Gil anti-tank missiles, upgrades of Indian tanks by Elbit Systems and a joint development of the Barak-8 surface-to-air missile.

9. 
Russian SberBank has extended a $100MN venture-loan to Israel’s taxi hailing and delivery service Gett (GetTaxi), which operates in over 100 cities word-wide, including New York, London and Moscow. In May, 2016, Volkswagen invested $300MN in Gett

10. On December 1, 2016, Bloomberg assessed the state of Israel’s economy as follows: “We expect real GDP to rise by an annual average of 3.5% in 2017-21…. We expect the shekel to strengthen considerably against both the euro and the British pound…. The trade deficit will narrow steadily, reaching near-balance in 2021….The opening of new production facilities by Intel will further boost technology goods exports….  We expect the current accounts to remain in surplus in 2017-21, by an annual average of 4% of GDP.”

11. Against the backdrop of the aforementioned, documented track record of Israel’s economy, one may define the claim that Israel is isolated as either dramatically mistaken, or outrageously misleading. 




Yoram Ettinger,: "Second Thought: US-Israel Initiative,"