Expect the Good News about Israel’s Economy to Keep Coming

Aug. 17 2018

For the first time in seven years, S&P Global—a firm known for its credit ratings—upgraded Israel’s rating to a higher-than-ever AA-. Moody’s also recently gave Israel a similarly positive upgrade. Predictably, opponents of the Netanyahu government pointed to the Israeli economy’s problems, such as inequality, the high cost of living, and so forth. Zev Chafets comments:

[The critics are] right about the extremely high cost of living, the scarcity of affordable housing, and the rate of poverty, which exceed those of most [advanced] countries. The Economist just named Tel Aviv the world’s ninth most expensive city. Currency appreciation has played a role in this. It also reflects the transformation that has made Tel Aviv an economic engine for the economy. Still, soaring housing prices . . . are a real issue for many Israelis. . . .

A credit rating is a judgment on a limited set of issues; Israel’s challenges are more complex than just the factors that impact its ability to borrow on international markets. Still, it shows that the terror problems that caused its credit rating to drop at the start of the century are no longer an overriding concern from that perspective. . . .

Israel is a world leader in everything from medical cannabis research to unmanned aircraft, from integrated circuits to water desalinization. It exports agricultural technology to poor countries, cut diamonds to the rich ones, pharmaceuticals, and, lately, entertainment to American networks. Israel has also managed to become a destination for both gay tourists and Christian pilgrims. . . .

Israel could be complacent, but it isn’t. Last week, Professor Isaac Ben-Israel unveiled a new national project. As an IDF general, he was the father of Israel’s widely admired anti-missile program. As a civilian, in 2010, he conceived and developed a cybersecurity ecosystem. Now, with government support and private investment, he intends to do the same for artificial intelligence. Ben-Israel’s plan, which has Netanyahu’s support, includes making AI and data science mandatory in high schools and universities, leveraging government investment to foster startups, cooperating with Intel and other foreign high-tech companies that already have Israeli research-and-development centers, and concentrating on areas in which Israel has a competitive advantage, including financial technology, healthcare, robotics, and the [so-called] “Internet of Things.”

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More about: Artifical Intelligence, Israel & Zionism, Israeli economy, Israeli technology

Syria’s Downing of a Russian Plane Put Israel in the Crosshairs

Sept. 21 2018

On Monday, Israeli jets fired missiles at an Iranian munitions storehouse in the northwestern Syrian city of Latakia. Shortly thereafter, Syrian personnel shot down a Russian surveillance plane with surface-to-air missiles, in what seems to be a botched and highly incompetent response to the Israeli attack. Moscow first responded by blaming Jerusalem for the incident, but President Putin then offered more conciliatory statements. Yesterday, Russian diplomats again stated that Israel was at fault. Yoav Limor comments:

What was unusual [about the Israeli] strike was the location: Latakia [is] close to Russian forces, in an area where the IDF hasn’t been active for some time. The strike itself was routine; the IDF notified the Russian military about it in advance, the missiles were fired remotely, the Israeli F-16s returned to base unharmed, and as usual, Syrian antiaircraft missiles were fired indiscriminately in every direction, long after the strike itself was over. . . .

Theoretically, this is a matter between Russia and Syria. Russia supplied Syria with the SA-5 [missile] batteries that wound up shooting down its plane, and now it must demand explanations from Syria’s President Bashar al-Assad. That won’t happen; Russia was quick to blame Israel for knocking over the first domino, and as usual, sent conflicting messages that make it hard to parse its future strategy. . . .

From now on, Russia will [almost certainly] demand a higher level of coordination with Israel and limits on the areas in which Israel can attack, and possibly a commitment to refrain from certain actions. Syria, Iran, and Hizballah will try to drag Russia into “handling” Israel and keeping it from continuing to carry out strikes in the region. Israel . . . will blame Iran, Hizballah, and Syria for the incident, and say they are responsible for the mess.

But Israel needs to take rapid action to minimize damage. It is in Israel’s strategic interest to keep up its offensive actions to the north, mainly in Syria. If that action is curtailed, Israel’s national security will be compromised. . . . No one in Israel, and certainly not in the IDF or the Israel Air Force, wants Russia—which until now hasn’t cared much about Israel’s actions—to turn hostile, and Israel needs to do everything to prevent that from happening. Even if that means limiting its actions for the time being. . . . Still, make no mistake: Russia is angry and has to explain its actions to its people. Israel will need to walk a thin line between protecting its own security interests and avoiding a very unwanted clash with Russia.

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More about: Hizballah, Israel & Zionism, Israeli Security, Russia, Syrian civil war