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OECD Sees Israel Economy Grow 2.3% In 2021, Below Global Average
Times of Israel, Dec. 1, 2020
The OECD is projecting Israel’s economy will grow a mere 2.3% in 2021, below the global average, after contracting 4.2% this year, as increased unemployment and a likely rise in insolvencies after a second national lockdown “will weigh” on economic recovery.
“The projections assume a more gradual exit from the second lockdown compared to the first one,” the OECD said in its December 2020 Economic Outlook report published Tuesday. “GDP will recover only modestly by 2.3% in 2021 before expanding by 4.2% in 2022 as an effective vaccine is rolled out. High uncertainty, increasing unemployment in the near term, and a likely rise in insolvencies once government support is withdrawn will weigh on consumer demand and investment.”
The OECD forecasts world GDP to contract by 4.2% this year, with a 7.2 percent drop for the Euro area and a 3.8% decline for G20 nations. GDP in the US is expected to contract by 3.7% and in the UK by 11.2%.
World GDP will grow by 4.2% in 2021, and by 3.7% in 2022. The US economy will grow 3.2% and the Euro area’s 3.6% in 2021.
As infection rates surged in the summer after Israel exited a first economic lockdown imposed in the spring to curb the coronavirus spread, the government imposed a second national lockdown from mid-September to mid-October over the Jewish holiday period. A gradual reopening of the economy has begun, even as there are signs that infections are once again on the rise.
Demand from Israel’s main trading partners will pick up only gradually, the report said, and unemployment levels will start to fall slowly in 2021 but continue to remain above pre-crisis levels at the end of 2022. The broadly defined unemployment rate, which includes temporarily laid-off workers and people who left the labor force due to the pandemic, increased again to around 20% in October.
“A deterioration of the health situation requiring new nationwide lockdowns would delay the recovery further until immunization becomes general,” the report said in its Israel section. “Growth could be weaker if there are “heightened geopolitical tensions or renewed internal political uncertainty.”
Macroeconomic policies should continue to be “supportive” and adapt to the changing circumstances, the report said.
“Approving a budget for 2021 as soon as possible would reduce uncertainty and improve fiscal transparency,” the report said.
The 2020 and 2021 state budgets have not been passed, amid a standoff between Prime Minister Benjamin Netanyahu and his coalition partner Benny Gantz.
The extension of some “exceptional support measures until mid-2021 is welcome,” but these should be accompanied by more training and job-search assistance to help the unemployed transition to new jobs. … [To read the full article, click the following LINK – Ed.]
Strengthen the Alliance with Israel to Contain China
Mark Dubowitz and Jonathan Schanzer
FDD, Dec. 15, 2020
Forward-deployed U.S. military forces will be effective only if they are wielding world class military technology and capability. To win the intense military-technology competition of the 21st century, Washington must strengthen and secure its economic and military cooperative research and development (R&D) relationships with America’s key tech-savvy democratic allies, such as Israel
In recent decades, Beijing has staked out investments in Israel in high-tech and critical infrastructure. Beijing’s goal has been to extract from the Jewish State, as well as from other tech-savvy countries, including the United States, expertise in machine learning, artificial intelligence, quantum computing, edge computing, and other cutting-edge technologies – all in an effort to accelerate China’s aggressive efforts to modernize its military.1 Increasingly, Israeli leaders understand the importance of decoupling from Beijing, and they are taking steps to do so. But the United States must work with Jerusalem to arrive at the desired outcome: constraining CCP influence in the Levant and maintaining Israel as America’s tech partner and strategically located land-based aircraft carrier.
The U.S.-Israel alliance is already deep and broad, based on shared values, common interests, and a mutual desire to preserve the U.S.-led world order. As the Senior Director of FDD’s Center on Military and Political Power, Bradley Bowman, has noted, “Israel uses billions in annual U.S. military aid to purchase American weapons—strengthening America’s defense innovation base, creating U.S. jobs, and building vital U.S.-Israel military interoperability. U.S. and Israeli service members train together, conduct combined exercises, and share best practices.”2 There is also valuable U.S.-Israel cooperation on tunnel detection,3 countering unmanned aerial systems,4 armored vehicle and tank protection,5 and missile defense.6 These technologies save American lives.7
This relationship still has room to grow. Following the introduction of bipartisan bills in both the Senate and House of Representatives, the Senate Armed Services Committee voted 27-0 to require the establishment of a U.S.-Israel Operations-Technology Working Group.8 A similar provision was included in the National Defense Authorization Act for Fiscal Year 2021 Conference Report.9 The initiative should strengthen systematic early military R&D cooperation10 between the United States and Israel to prevent dangerous capability gaps – rather than addressing them belatedly. The working group would help ensure, as the sponsoring senators wrote, that U.S. “warfighters never encounter a more technologically advanced foe.”11 This working group could also serve as a forum to address concerns related to China that might impact U.S.-Israel military research and development.
In his book The Kill Chain, former staff director for the Senate Armed Services Committee Chris Brose highlights the stakes of the competition with China. Over the last decade, the United States has lost war games against China “almost every single time.” The lesson: The Pentagon must urgently field modern military technologies, capabilities, and networks to reduce the time required to detect threats, determine the best course of action, and deliver the necessary military effect. … [To read the full article, click the following LINK – Ed.]
UAE Poised To Become A Hub For India-Israeli Innovation
India Global Business, Dec. 19, 2020
Last week, the virtual world was host to a start-up networking that brought together entrepreneurs from the newly-minted friendship of the UAE and Israel – as well as dozens of participants from India.
More than 100 participants from these countries joined others from the US and elsewhere around the world in a first-of-its-kind joint event hosted by the Dubai and Israel chapters of Start-up Grind, a community made up of over 3.5 million global members.
On the agenda: how to accelerate the cooperation among start-ups and SMEs to leverage the full potential of the recently signed Abraham Accord between the UAE and Israel, that normalizes the relations between the two countries and opens up a plethora of opportunities for investors.
“The Israel-UAE normalisation can create a network that will connect the world’s two hemispheres. This will benefit the economies of both countries, and the region. But if we think about the global markets that each party can help open for the other, this becomes a partnership that will benefit the entire world,” said Dr Sabah al-Binali, the Emirati head of Gulf Region at OurCrowd, the Jerusalem-based global investment platform.
Commercial response to the Abraham Accord
Since the landmark Israel-UAE deal was announced on August 13, the average number of UAE users on the Start-Up Nation Central platform in Israel has increased by 122 per cent.
If the interest from entrepreneurs and business groups is any barometer to go by, then the commercial response to the peace accord has been phenomenal – and not only from Emiratis and Israelis. The dozens of free zones around the UAE, for instance, have grown into bustling hubs of research and innovation for several Indian companies – and with the enticing prospect of Israeli start-ups sharing the same space, everyone is excited.
“Israel is one of the top 10 start-up ecosystems in the world; this normalisation [of bilateral ties] will bring opportunities for everyone,” Dr Saeed Al Dhaheri, chairman of the board of Dubai’s Smartworld and a leading member of UAE academia, told Al Bawaba. “We need to strengthen our relationship in the R&D space; we need to capitalise on it and link it to the industry,” said Dr Al Dhaheri, one of the speakers at the Start-up Grind event.
Dr Erel Margalit, another speaker at the event, is one of Israel’s most high-profile start-up entrepreneurs, and recently led a high-level delegation of Israeli tech CEOs to Dubai in which they met with ministers, investors, customers and business leaders based in the UAE – including a host of expat entrepreneurs. … [To read the full article, click the following LINK – Ed.]
The Pitfalls of Doing Business in the Gulf
The Media Line, Dec. 8, 2020Israelis rushing to ink business deals in the newly available Arab Gulf market would do well to take precautions before signing on the dotted line, an expert in international economic law warns.
Ties between Israel and the United Arab Emirates are blossoming following the signing of the historic Abraham Accords in September, which normalized relations between the two countries. Israeli companies and investors, as well as their counterparts in the Gulf, have since been busy cementing dozens of important deals in a variety of sectors.
But while the new market is rife with opportunities, it also presents potential risks.
Dr. Efraim Chalamish is a senior advisor and global institute fellow at the Duff and Phelps financial consultancy firm and a professor at New York University. “So many people are focused on the excitement but there are definitely risks,” Chalamish told The Media Line. “The first risk that we should keep in mind is that, like every new market, it is very important to identify and work with credible individuals.”
“Politically Exposed Persons (PEPs) or government-sponsored entities maintaining a direct or indirect interest in locally registered companies in addition to acting as an investment partner, customer or supplier, can present regulatory or reputational challenges,” he also said.
Chalamish’s firm, Duff and Phelps, is a global company with a presence in the Gulf. Since the signing of the peace agreement, people have reached out to the firm in order to conduct business intelligence work and background checks on individuals and companies.
So many people are focused on the excitement but there are definitely risks
There are also various types of compliance and anti-money laundering risks associated with doing business in the Gulf, he says, especially in relation to the region’s financial sector and booming fintech industry.
“When you pursue a transaction with a local entity, it is important to confirm — via a specialized due diligence — the source of funding and examine the possible connection to people from countries that are currently sanctioned, have been sanctioned in the past, or where public records are limited,” Chalamish explained. “This also requires an understanding of the sanctions regime.”
In August, the Trump Administration slapped sanctions on two UAE-based companies after they were found to be providing parts and logistics service to Iran’s biggest airline. Parthia Cargo and Delta Parts Supply FZC provided the parts for Iran’s Mahan Air, which is blacklisted by the US under its sanctions regime.
Aside from sanctions, understanding the corporate governance structures of companies in the Gulf could present Israeli businesspeople with an obstacle of a different nature.
“While many entities in the Gulf are small- to medium-sized enterprises and family-owned conglomerates with limited governance structures and transparency, other sovereign funds and state-owned enterprises currently looking into the Israeli and Palestinian markets are world-class institutional investors with a different level of governance structures,” Chalamish said. … [To read the full article, click the following LINK – Ed.]
For Further Reference:
Israel Bans Flights from UK Where Covid-19 Mutation Raised Spread Speed by 70%: David Israel, Jewish Press, Dec. 20, 2020 — Last week, UK Health Secretary Matt Hancock told Parliament that at least 60 municipalities recorded Covid-19 infections that had been caused by a new variant of the virus, the BBC reported.
Israel Economy Strikes Back In Third-Quarter After First Lockdown Lifted: Steven Scheer, Reuters, Nov. 16, 2020 — Israel’s economy put on a blistering burst of growth in the third quarter, expanding an annualised 37.9% as consumer spending, exports and investment took off after being hit hard by the coronavirus pandemic in the first half of the year.
Cost Of Israel’s Gaza Blockade Reaches $17 Billion Says UN, With Economy In Freefall: Dominic Dudley, Forbes, Nov. 25, 2020 — The economic cost of the Israeli blockade of Gaza has reached $16.7 billion, according to the latest analysis by the United Nations.
New Trade Agreement in Asia: China Is in, the United States is Out: Eyal Propper, Dan Catarivas, INSS Insight No. 1408, December 1, 2020 — On November 15, 2020, in an online ceremony, the Regional Comprehensive Economic Partnership (RCEP) was signed by 15 countries that include the ten members of the Association of Southeast Asian Nations (ASEAN) – Vietnam, Singapore, Malaysia, Indonesia, Thailand, the Philippines, Brunei, Cambodia, Myanmar, and Laos – as well as New Zealand, Australia, Japan, South Korea, and China.