CIJR GALA-CONFERENCE 2015! MAJOR INVESTMENTS BY INTEL & TEVA ILLUSTRATE ISRAEL’S HIGH-TECH AND START-UP LEADERSHIP

We welcome your comments to this and any other CIJR publication. Please address your response to:  Rob Coles, Publications Chairman, Canadian Institute for Jewish Research, PO Box 175, Station  H, Montreal QC H3G 2K7 –

Contents:

How Intel Came to be Israel’s Best Tech Friend: David Shamah, Times of Israel, Apr. 23, 2015 — For Intel, the country’s largest single tech employer, a strong relationship with Israel was always in the cards – or rather, in the chips.

Teva’s Deal for Mylan Shows Corporate Israel’s M&A Hunger: Nicholas Casey & Orr Hirschauge, Wall Street Journal, Apr. 21, 2015 — Teva Pharmaceutical Industries Ltd. ’s $40 billion offer for Mylan NV marks corporate Israel’s biggest foreign foray and caps years of hand-wringing about the inability of the country to nurture big multinationals, analysts say.

Obama’s Nixon Doctrine: Anointing Iran: Charles Krauthammer, Washington Post, Apr. 23, 2015— In December, President Obama said that he wished to see Iran ultimately become a “very successful regional power.”

The Democrats Own Iran: Daniel Henninger, Wall Street Journal, Apr. 22, 2015— The Democrats now own Iran—lock, stock and smoking centrifuges.

On Topic Links

Are You Serious?! Bill Gates Said That About Israel?: Israel Video Network, 2015

Seven Start-Ups From Israel That You May Want To Watch: Giovanni Rodriguez, Forbes, Apr. 14, 2015

Israel’s Drip Irrigation Pioneer Says His Tech Feeds a Billion People: David Shamah, Times of Israel, Apr. 21, 2015

Inside Obama’s Meeting With Jewish Leaders: Lee Smith, Tablet, Apr . 16, 2015

HOW INTEL CAME TO BE ISRAEL’S BEST TECH FRIEND                                                            

David Shamah                                                                                                                                        

Times of Israel, Apr. 23, 2015

For Intel, the country’s largest single tech employer, a strong relationship with Israel was always in the cards – or rather, in the chips. Although few remember now, nearly fifty years on, it was an Israeli engineer working for Intel in California, Dov Frohman, who in 1972 paved the way for computing as we know it when he invented the EPROM, the ultra-violet light, erasable, read-only memory chip that eventually led to the creation of flash memory.

Frohman’s accomplishment, as well as other important Intel Israel milestones, now live again, with the collation of a large number of photographs that lay out the history of the company – from its first Israeli office, opened in 1974 (with Intel hoping to find more Frohmans), until today, when the company has nearly 10,000 workers in half a dozen development centers and fabrication plants around the country. The photos were collated by Intel Israel’s public relations department in honor of Independence Day.

Intel’s presence in Israel is set to get even bigger than ever, with the signing of a deal between the company and the Finance Ministry last September. Under the deal, Intel committed to refurbishing its Kiryat Gat chip fabrication plant to produce the company’s newest generation of chips, in return for substantial tax breaks. What would Israeli tech look like without Intel? It’s impossible to know, of course, but chances are the picture would be dramatically different.

Speaking at a recent Intel Israel event marking the company’s 40th year in Israel, outgoing Intel Vice-President Mooly Eden cited research conducted by Intel that shows the impact of the company on the Israeli economy. “If Israel is the Start-Up Nation, it’s Intel that had a major role in getting it there,” said Eden, citing a list of a list of hundreds of companies, large and small, that were led by entrepreneurs and developers who got their start at Intel. The study shows that some 10,000 former Intel workers have gone on to help establish 30 new high-tech companies every year – creating 250 new jobs.

Intel Israel is also a prolific exporter. “One billion chips can’t be wrong,” Eden said, citing the estimated number of microprocessors and processor components Intel Israel has manufactured at its chip fabrication plants – mostly at its two Kiryat Gat facilities – over the past 40 years. “Intel is Israel’s ‘smart chip.’ We have had 40 great years together and are looking forward to the next 40. For four decades, Intel has spearheaded Israeli high tech, conceiving and developing novel technologies which have placed Israel on the global high tech map and enhancing the strategic leadership of Intel Corporation. The combination of Israel’s capabilities, Intel’s global innovation and ongoing investment in human capital resulted in an unprecedented success story which will continue to unfold in coming years,” said Eden.

Five years after it gambled on an Israeli operation, Intel’s investment paid off – big-time – as the team developed the 8088 processor, which was the heart of the IBM PC, the first computer to use Microsoft DOS (Disk Operating System) for an operating system. Because so many were sold, all three parties to the PC – Intel, Microsoft, and IBM – made huge sums of money, but it also cemented at least two of those companies to the future success of what would eventually become Windows-based computing. Only IBM fell behind, as commodity computer manufacturers in the Far East built computers mostly based on the 8088, using a generic copy of DOS instead of PC-DOS, which only the more expensive IBM computers needed. From the 8088 it was a short developmental leap to the creation of the MMX chip (which powered the Pentium II computers), and the MMX’s modern descendants – Banias, Marom, Yonah, Centrino, and Sandy Bridge and Ivy Bridge, the processors used in most desktop and laptop computers today.

After signing a new deal with the government last year, Intel is set to produce its latest generation of chips and processors in Israel. Under the deal, Intel will be making the biggest-ever one-time investment in Israel, spending $6 billion to upgrade its Kiryat Gat plant for the production of next-generation computer chips. In return, Intel will get grants of up to $600 million over the next five years, as well as a major tax break through 2023. More valuable for Intel is likely to be the fact that it will have to pay a corporate tax of only 5% through 2023 (the standard rate of company tax in Israel in 2014 was 26.5%). In return, Intel committed to hiring at least 1,000 new employees, at least half of whom will be residents of communities in southern Israel. In addition, the company promised to spend a total of at least $550 million over the period.

While some might point out that Intel is basically committing to spend what it is getting from the government in direct grants, Economics Ministry officials were enthusiastic about the benefits of the deal to the Israeli economy. “This arrangement will have a very positive effect on hundreds of small businesses and suppliers,” said Ziva Eiger, director of investments at the Industrial Cooperation Authority. “Offset agreements such as this are platforms for leveraging public expenditures for the benefit of the Israeli economy, both for training and encouraging further expansion of small suppliers for the local and world market, and to enhance Israel’s brand as an attractive place for foreign investment,” Eiger added. As a result of this agreement, Israelis can look forward to thousands of more jobs being available. It is a model for offset agreements that can provide benefits to all sides.”

Besides, said Eden, such deals are very common among countries – like Israel and Ireland, which competed for the new Intel upgrade. “The government here, like governments everywhere, knows how the game is played,” and the jobs that are generated by investments in development centers are well worth it for Israel – especially when it comes to Intel, Eden said in a recent interview. “Over the years Intel has invested $10.8 billion in Israel. Last year, Intel Israel was responsible for more than 9% of Israel’s tech exports, which account for half of overall exports, except for diamonds.”

Regardless, the deal is done, said Maxine Fassberg, General Manager of Intel Israel, and for Intel – as well as for Israel – it delineates the beginning of a new era of even greater cooperation between the company and the country. She called it “a clear expression of Intel’s further contribution to Israel’s economy, and to the development of new technology products in Israel, many of which Intel has assisted in.”       

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TEVA’S DEAL FOR MYLAN SHOWS CORPORATE ISRAEL’S M&A HUNGER                                              

Nicholas Casey & Orr Hirschauge                                                                                 

Wall Street Journal, Apr. 21, 2015

Teva Pharmaceutical Industries Ltd. ’s $40 billion offer for Mylan NV marks corporate Israel’s biggest foreign foray and caps years of hand-wringing about the inability of the country to nurture big multinationals, analysts say. Israel, the self-proclaimed “Start-up Nation,” has built a reputation as a hub of tech and biotech companies, quickly assembled and sold to foreign firms looking to grow. Recent success stories have included Annapurna Labs Ltd., sold to Amazon.com Inc., and CyActive Ltd., sold to eBay Inc. ’s PayPal, this year.

Less noticed, however, are the public companies in Israel that have been hungry for foreign acquisitions. Teva alone has made more than a dozen deals in recent years, including a $3.5 billion pending deal for U.S.-based Auspex Pharmaceuticals Inc. announced on March 30. “I would say there’s been quite a trend over here in Israel for companies to acquire,” said Jonathan Kreizman, a pharmaceuticals analyst at Clal Finance a nonbank financial group in Israel. Just as Israel’s small size has made it a good incubator for small firms, it means mature companies must go looking abroad for sources of growth, Mr. Kreizman said.

Teva’s precursor, a drug wholesaler called Salomon, Levin and Elstein, was founded in Jerusalem in 1901.

It became known as Teva—a Hebrew name meaning “Nature”—in the 1930s not long before the modern state of Israel was established. Teva is a source of pride in Israel today, now the largest company by market capitalization on the Tel Aviv Stock Exchange and a big employer domestically, with 7,000 employees in Israel and more than 40,000 employees world-wide. “By all parameters Teva is the biggest Israel-based commercial company. It also has a symbolic importance showing that a company that has its headquarters in Israel and most of its research and development done in the country can become a dominant global player in its field,” said Israeli economist Manuel Trajtenberg, a former head of the Israeli National Economic Council, and a current member of the Israeli parliament.

Ronny Gal, an analyst at Sanford Bernstein, said recent public offerings could mean that more Israeli companies may follow in Teva’s footsteps. “The fact that many Israeli companies have gone public in the last two years does suggest that more Israeli companies will become acquirers,” he said. Mr. Gal said one problem in the past was that Israel was thin on seasoned managers needed to shepherd acquisitions. But that is changing, he said, “Now you see serious managers in Israel that are much more confident and have much more international experience.”                 

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OBAMA’S NIXON DOCTRINE: ANOINTING IRAN                                                                                 

Charles Krauthammer                                                                                       

Washington Post, Apr. 23, 2015

In December, President Obama said that he wished to see Iran ultimately become a “very successful regional power.” His wish — a nightmare for the Western-oriented Arab states — is becoming a reality. Consider:

Gulf of Aden: Iran sends a flotilla of warships and weapons-carrying freighters to reinforce the rebels in Yemen — a noncontiguous, non-Persian, nonthreatening (to Iran) Arabian state — asserting its new status as regional bully and arbiter. The Obama administration sends an aircraft carrier group, apparently to prevent this gross breach of the U.N. weapons embargo on Yemen. Instead, the administration announces that it has no intention of doing anything. Meanwhile, it exerts pressure on Saudi Arabia to halt its air war over Yemen and agree to negotiate a political settlement involving Iran.

Russia: After a five-year suspension, Russia announces the sale of advanced surface-to-air missiles to Iran, which will render its nuclear facilities nearly invulnerable to attack. Obama’s reaction? Criticism, threats, sanctions? No. A pat on the back for Vladimir Putin: “I’m, frankly, surprised that [the embargo] held this long.” Iran: Last week, Obama preemptively caved on the long-standing U.S. condition that there be no immediate sanctions relief in any Iranian nuclear deal. He casually dismissed this red line, declaring that what is really important is whether sanctions can be reimposed if Iran cheats. And it doesn’t stop there. The Wall Street Journal reports that Obama is offering Tehran a $30 billion to $50 billion signing bonus (drawn from frozen Iranian assets) — around 10 percent of Iranian GDP.

Syria: After insisting for years that President Bashar al-Assad of Syria “step aside,” the U.S. has adopted a hands-off policy toward a regime described by our own secretary of state as an Iranian puppet. Iraq: Iran’s Quds Force Commander Qasem Soleimani, director of Shiite militias that killed hundreds of Americans during the Iraq War and were ultimately defeated by the 2007-2008 U.S. surge, operates freely throughout Iraq flaunting his country’s dominance. In March, he was directing the same Iraqi militias, this time against the Islamic State — with the help of U.S. air cover.

This is the new Middle East. Its strategic reality is clear to everyone: Iran rising, assisted, astonishingly, by the United States. Obama’s initial Middle East strategy was simply withdrawal. He would enter history as the ultimate peace president, ushering in a new era in which “the tide of war is receding.” The subsequent vacuum having been filled, unfortunately and predictably, by various enemies, adversaries and irredeemables, Obama lighted upon a new idea: We don’t just withdraw, we hand the baton. To Iran. Obama may not even be aware that he is recapitulating the Nixon doctrine, but with a fatal twist. Nixon’s main focus was to get the Vietnamese to take over that war from us. But the doctrine evolved and was generalized to deputize various smaller powers to police their regions on our behalf. In the Persian Gulf, our principal proxy was Iran.

The only problem with Obama’s version of the Nixon doctrine is that Iran today is not the Westernized, secular, pro-American regional power it was under the shah. It is radical, clerical, rabidly anti-imperialist, deeply anti-Western. The regime’s ultimate — and openly declared — strategic purpose is to drive the American infidel from the region and either subordinate or annihilate America’s Middle Eastern allies. Which has those allies in an understandable panic. Can an American president really believe that appeasing Iran — territorially, economically, militarily and by conferring nuclear legitimacy — will moderate its behavior and ideology, adherence to which despite all odds is now yielding undreamed of success?

Iran went into the nuclear negotiations heavily sanctioned, isolated internationally, hemorrhaging financially — and this was even before the collapse of oil prices. The premise of these talks was that the mullahs would have six months to give up their nuclear program or they would be additionally squeezed with even more devastating sanctions. After 17 months of serial American concessions, the Iranian economy is growing again, its forces and proxies are on the march through the Arab Middle East and it is on the verge of having its nuclear defiance rewarded and legitimized.

The Saudis are resisting being broken to Iranian dominance. They have resumed their war in Yemen. They are resisting being forced into Yemen negotiations with Iran, a country that is, in the words of the Saudi ambassador to the U.S., “part of the problem, not part of the solution.” Obama appears undeterred. He’s determined to make his Iran-first inverted Nixon doctrine a reality. Our friends in the region, who for decades have relied on us to protect them from Iran, look on astonished.                                   

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THE DEMOCRATS OWN IRAN                                                                                        

Daniel Henninger                                                                                                

Wall Street Journal, Apr. 22, 2015

The Democrats now own Iran—lock, stock and smoking centrifuges. It isn’t just the Senate compromise on the Corker bill that made the Iran nuclear deal the party’s exclusive political property. The Democrats own Iran’s entire penetration in the region—Yemen, the Gulf of Aden, Iraq, Syria, Lebanon—pretty much anywhere Ayatollah Ali Khamenei wants to take them. Senate Democrats, attempting a magical illusion on American voters, say the Iran nuclear threat and the Iran terror threat are separate realities. Before the Senate’s recent “compromise” vote on Sen. Bob Corker’s Iran review bill, Delaware Sen. Chris Coons and other Senate Democrats, at the White House’s insistence, said while they abhorred Iran’s support for terrorism, it had to be separated from the historic arms deal.

Meanwhile Ayatollah Khamenei, a more unitary thinker, has been surging Iran’s military across the Middle East. With the U.S. on the doorstep of a presidential election, Iran is beginning to look like the Democrats’ Bermuda Triangle. The last time the party’s fortunes went missing in Iran was during what history generally describes as “Jimmy Carter’s hostage crisis.” After the Iranian hostage crisis had ground through the news for nearly a year, with 52 Americans held in Tehran, Mr. Carter’s competence as president became a campaign issue, which naturally Ronald Reagan exploited. Reagan won 489 electoral votes to President Carter’s 49 in 1980. A Who’s Who of famous Senate Democrats got wiped out: George McGovern, Frank Church, Herman Talmadge, Mike Gravel, Birch Bayh, Gaylord Nelson, Warren Magnuson. Let it be noted that the Iran hostage analogy is unfair to Jimmy Carter. Back then, the Iranians grabbed the Americans. This time, the U.S., or at least its president, has grabbed the Iranians and won’t let them go.

Until recently, the Democrats at least could argue that because Mr. Obama ended George Bush’s war in Iraq, he immunized them from direct political blame for the region’s troubles. That the decision to reduce the U.S.’s postwar presence in Iraq to zero allowed Islamic State to metastasize unimpeded was a morass they could push off into the ethers of the “hopeless” Middle East. Except that the Democratic president erected a steel cable connecting himself directly to Tehran. This being Barack Obama, history had ordained that only he could take on Planet Iran and persuade its population of fanatic Shiite ayatollahs to change their worldview. In the years since Ayatollah Ruhollah Khomeini presided over the American hostages, taking down a U.S. presidency, Iran’s Islamic Republic has had just one other Supreme Leader—today’s Ayatollah Khamenei, the man at the other end of the steel cable tethered to the White House.

It is now generally understood that completing a major nuclear-arms agreement with Iran was an obsession of Mr. Obama’s from early in his presidency. Up to a point, the Democrats’ normal instincts for self-preservation prevailed. Sufficient numbers of Senate Democrats—Mr. Coons, Bob Menendez, Ben Cardin, Tim Kaine, Chuck Schumer—raised enough questions of substance about the deal to credibly put space between them and a president assembling a major arms-control agreement out of his own head. The risks for Democrats were obvious.

But starting about two weeks ago, the Democrats’ Iran hedge collapsed. The compromise on the Corker bill virtually ensures that whatever agreement John Kerry outputs in Switzerland—a deal that increasingly looks built on sand—will pass unimpeded through the Senate. It looks a lot like ObamaCare, with congressional Democrats once again doing a pass-it-to-find-out-what’s-in-it for another Obama legacy. But Saudi Arabia isn’t the American Hospital Association, and Quds Force Commander Qasem Soleimani isn’t Nancy Pelosi. The religious and military forces in motion in the Middle East now are powerful and volatile. Vladimir Putin’s decision amid all this to ship the sophisticated S-300 air-defense system to Iran was a thunderclap event. The ever-omniscient president dismissed it as no surprise.

We assume Barack Obama and John Kerry are telling Senate Democrats that if something blows, they’ll handle it, the way Mr. Obama could command Kathleen Sebelius and HHS to “fix” the ObamaCare glitches. The Iran framework’s fix is the assurance of “snapback” sanctions, a word with no meaning whatsoever. The Senate Democrats’ initial hedge on Iran was smart politics. As was letting New Jersey Democrat Bob Menendez run point for them. Mr. Obama’s implicit charge in January at the Senate’s Maryland retreat that their Jewish donors had too much influence should have convinced them they needed political cover from the president’s overreaching on the nuclear deal.

But now the Holder Justice Department has indicted Sen. Menendez into oblivion. And now the aircraft carrier USS Theodore Roosevelt and the guided missile cruiser USS Normandy are in the Gulf of Aden, cat-and-mousing with an Iranian naval flotilla. The Democrats have no inoculation anymore. The party’s calculation that Hillary Clinton’s candidacy would bring home the presidency and Senate control after defeating vulnerable Republicans has a big fly in the goo: For the next 19 months, Iran is theirs.

Contents

On Topic

Are You Serious?! Bill Gates Said That About Israel?: Israel Video Network, 2015 —What makes Israel a technological superpower?

Seven Start-Ups From Israel That You May Want To Watch: Giovanni Rodriguez, Forbes, Apr. 14, 2015 —If you’ve been following this column over the past two weeks, no doubt you are wondering, “OK, which start-ups from Israel – Start-up Nation – do you actually like?”

Israel’s Drip Irrigation Pioneer Says His Tech Feeds a Billion People: David Shamah, Times of Israel, Apr. 21, 2015—As the world’s population grows, governments around the world are questioning how the billions of new mouths will be fed.

Inside Obama’s Meeting With Jewish Leaders: Lee Smith, Tablet, Apr . 16, 2015 —Imagine if at the height of Apartheid madness in South Africa, the president of the United States had decided to partner with the racist white regime in Pretoria, lift sanctions, and put that country’s illegal nuclear program on a glide path toward obtaining a nuclear bomb.

Rob Coles, Publications Chairman, Canadian Institute for Jewish Research/ L'institut Canadien de recherches sur le Judaïsme, www.isranet.org

Tel: (514) 486-5544 – Fax:(514) 486-8284 ; ber@isranet.wpsitie.com