ISRAELINNOVATION NATION

IsraelINNOVATION NATION

SECTION IReport in Foreign Affairs magazine, September-October 2014...................................... pages 1-3

SECTION IIExtended report available online at www.countrystrategic.com............................................. pages 5-21

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In the past twenty-years, Israel has earned the nickname “start-up nation” exporting solutions to global human challenges in the field of water and food technologies, healthcare and life sciences, ICT, cybersecurity and en-ergy. Since the state was established in 1948, kibbutz and moshav (communal and cooperative agricultural commu-nities), then state companies and start-ups have led the way.

Dan Senor and Saul Singer, in their eponymous book, explained it is all about creating the right innovation eco-system, which drives the remarkable economic performances of the country. Growth projection for 2014 is pegged at 3.4—Israeli performance will exceed that of OECD’s other members.High tech products account for half of industrial exports from Israel. Investing the highest ratio of GDP into R&D Isra-el is the world’s second most educated country after Canada. The engrained quest for perfection and the local sense of chutzpah—audacity—create a partic-ularly competitive business culture.

“In Israel, we have our own DNA of policy innovation” explains the Ministry of Economy’s Chief Scientist, Avi Hasson. His office supervises twenty incubators for early stage projects. Along-side private venture capital, Israel provides its entrepreneurs with the necessary backing to turn their innovative ideas into profitable businesses. The country has the highest density of start-ups per capita, which aim high and global with more Is-raeli companies listed on the NASDAQ than the entire European continent.Harel Locker, Director General of the Prime Minister’s Office, wants Israel to further open to the world. In Locker’s words: “We help foreign inves-tors and companies that come to Israel remove any barriers”. Supported by these regulations, almost half of the world’s top technology companies have bought start-ups or opened R&D centers in the coun-try—200 of them from the U.S., such as IBM, Cisco and Intel, and more recently Apple and Facebook.

Read more ¾ Shimon Peres: Extended interview of Shimon Peres ¾Oil & Gas: How the new discoveries will benefit Israel ¾ Cybersecurity: Be’er Sheva, the world’s cybersecurity hub ¾ Start-Up Region: Thinking regional

www.countrystrategic.com/Israel2014

ISRAELSTRAuSS’ mISSION

TurNINg ISrAEl INTO ThE fOOdTECh

NATION Started in 1936 with two cows in Northern Israel, the Strauss Group has grown to become a significant global player. Ofra Strauss, third generation to lead the company, and the head of the Israel-US Chamber of Commerce, explains the recipe for her group’s national and international success: carefully selected partners and an insatiable quest for better products.“The encounter of several companies into one mission creates innovation, creativity and an added value to consumers,” she notes. Today, the Group is in numerous international partnerships with agro-industry and appliance giants such as PepsiCo, Danone and Haier, in products ranging from candies to fresh food, dairies and water appliances. Thanks to these alliances, Strauss Group has become the world’s first hummus producer together with PepsiCo through their brand Sabra. It is also the fourth largest producer of coffee at the global scale. A leading company at home, Strauss Group wants to take its mission further. It recently launched Alpha Strauss, an open platform to register Israel-developed food technology, in an effort to turn the country into the foodtech nation. Strauss, bank-ing on the country’s innovative po-tential, explains: “The world doesn’t have enough food or enough water. We want investors and multina-tional companies to look to Israeli technology in the food sector.” Strauss Group has sufficient le-verage to take game-changing innovations to the global stage. Thanks to the Group’s interna-tional network, they will have im-mediate access to global markets, thus tackling a pressing 21st cen-tury issue challenge.

INNOVATION NATION

Kibbutz Sdot Yam’s engineered stone surface company, Caesarstone, is an ex-ample of kibbutz perpetually renewing their range of activity. Here: Calacatta Nuvo, latest design from Caesarstone

Israel, a world leader in life sciences technology, has the world’s highest number of patents per capita in the medical device area, as illustrated by pioneer Insightec, leading the therapeutic use of ultrasound technology.Here: Physician and patient during ExAblate Neuro treatment

Company Highlight

Israel’s founder and first Prime Minister, David Ben Gurion, cherished the dream of a blossoming Negev desert. Ever since, water technology has been top priority in a land that is 60 percent arid. Watec Israel 2013 Chairman and former Wa-ter Commissioner, Shimon Tal, refers to Israel as the “water solutions hub.” Technologies such as the desalination of sea-water, reclamation of treated sewage for agriculture, early-warning meth-ods to detect leaks and computerized drip irrigation, allow 80 percent of all water used in Israel to be recycled and reused. Spain, the second biggest recycler of water by comparison, only reuses about one quarter of its water.

Avshalom Felber, CEO of IDE Technologies, stresses that the water scarcity problem revolves around three angles: wa-ter conservation, water re-use and water desalination. IDE is currently building the largest seawater desalination plant in the Western Hemisphere, located north of San Diego in Carlsbad. This US$1 billion dollar project has been developed with local partners to deliver 50 million gallons of water a day by early

2016. Felber explains that when it comes to water solutions the US is lagging behind: “U.S. companies can learn from us in the fields of desalination, water treatment, and sophisticated water treatment solutions for complex projects”.

Israeli technologies are also providing top-quality drink-ing tap water in the home. Strauss Group, Israel’s second-

largest food group, is develop-ing patents for unique point of use water purification solutions available globally, and distributed through joint ventures with Virgin

and appliance producer Haier, with products delivered in the Israeli, European and Chinese markets. Ofra Strauss, Chairwoman of the Group, reveals that the purification technology is based on gravity, enabling its use in develop-ing countries with unreliable electricity sources. She guar-antees, “safety is inherent within this machine”. Thanks to this technology, “even if there is no electricity, and no water pressure, one can get purified water,” thus suiting both developed and developing markets.

wATER TEchNOLOgy ISRAEL SETTINg ThE gLObAL pAcE

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pREpARINg FOR TOmORROwAN INTERVIEw wITh ShImON pERES

A Country Strategic feature (countrystrategic.com). Publisher: Stephen de Vasconcellos-Sharpe; Global Director: Taylor E. Russell; Art Director: Anastasia Caramanis. Israel team: Country Director: Carolina Nuñez; Editorial Coordinator: Julie Mandoyan; Editorial Assistant: Stanislas Albert.

The history of Israel coincides to a great degree with Shimon Peres’ own biography. Ever since Israel was born, the country’s immediate former president, 91, has pushed the country along the path of innovation.

How has Israel become one of the world’s most in-novative and entrepreneurial economies? When Israel was started, the land we got was unfertile. We thus had to use technology. The need for weapons brought us to ‘real’ high tech, of which Ben Gurion put me in charge. My friend Al Schwimmer, came from the US to help with this work. In spite of the failure the experts predicted then, our chutzpah helped us. What will be the impact of scientific innovation on tomorrow’s world?Tomorrow is already here but we think as we did yester-day, ignoring reality. We have to adapt ourselves to a new age where competition, not wars, will take over. We have an alternative way to government for governing: global compa-nies. Global companies do not have any force or power. It is a new sort of democracy, without delegation. They will be in charge of the future investing in innovation and research. Everything will evolve around individuals.

How would you like to see Israel in the next few years?We must understand the decision-making processes in our own brains. The brain is the most illustrious instrument that exists. Israel must lead brain research. We live on our brain more than our land.

Israel shall continue to prefer the moral code to any other attraction on earth; values must come before power and wealth. If we overcome the difficulties in negotiations, Arabs

will know Israel is not their problem. If Israel helps without fanfare, we can contribute.

How can scientific development contribute to peace and stability in the region? For fifty years, poverty has been growing in the Middle East. People are overusing natural resources. The only thing we can do it is to improve quality of life. We must also ensure men and women have equal rights. Concretely, we must move from the start-up nation to a start-up region. Israel has 13,000 start-ups involving 60,000 students.

I suggest we open initiatives encouraging entrepreneurial ventures to Arab universities. Sixty percent of the 350 million Arabs living in this region are below the age of 26. One hun-dred million of them are connected to the Internet. Israel can contribute indirectly to have all the youngsters connected. Having completed your term, and as a “dissatisfied optimist,” what is next?My dream is to help the region to escape poverty and terror. I will do this working with multinational compa-nies. I want to create a sort of matchmaking bringing companies and people together.This interview has been edited and condensed.

“Concretely, we must move from the start-up nation to a start-up region.”

© Ouria Tadmor

“We have to adapt ourselves to a new age where competition, not wars, will take over.”

“U.S. companies can learn from us in the fields of desalination, water treatment, and sophisticated water treatment solutions for complex projects”. Avshalom Felber, CEO, IdE Technologies

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Tourism is a booming sector in Israel. In February 2014, while visiting the U.S., Prime Minister Benjamin Netanyahu declared it was a priority sector for the Israel economy to preserve its growth rate. “Tourism is an economic growth engine that we need to cultivate. It is important to show, to the world, Israel as a progressive and enlightened country with scenic vistas and vibrant nightlife, and as a state that respects all religions.”With over a billion NIS (US$300 million) in revenue in 2013, Isrotel has established itself as the leading hotel chain in Israel. Known for its ability to provide amazing added value, Isrotel is able to turn each of Israel’s scenic landscapes into modern and unique tourism destinations. Isrotel’s story begins in 1983 when David Lewis, a London-based Jewish businessman, realized the potential for tourism in Israel—especially in Eilat, Israel’s premier resort town located at its

southern tip by the Red Sea. Since then, the Isrotel Hotel Chain has grown to 17 hotels, including the Beresheet Hotel on the edge of the Ramon Crater, and its newest luxurious Spa Hotel, Cramim, in the Jerusalem hills. Isrotel pioneered the Spa & Resort concept in Israel.

Isrotel, traded on the Tel Aviv Stock Exchange, mixes sound management practices with innovative thinking. Yet, contrary to international hotel chains, Isrotel confined its ambition to Israel, turning its knowledge of the country into an unbeatable asset. The General Manager, Lior Raviv, explains “Israel is a small country that has everything”. For perfectionist Raviv, this innovative quest is Isrotel’s DNA: “We have always

been ahead of the market and we will continue being like that.” Effectively, the company’s services and facilities have turned it into the go-to brand for international and local visitors. Urban centers, Tel Aviv and Jerusalem, are new development priorities, where Isrotel can truly leave a mark in redefining high-end travel options for business and leisure visitors. The results are already visible: the chain’s newest facility in Tel Aviv, Royal Beach Tel Aviv by Isrotel Exclusive Collection, open since June 2013, benefits from the city’s highest occupancy rates for the first months of 2014. Raviv anticipates: “I believe this will continue until the end of the year.”

Company Highlight

TOuRISm IN ISRAELISrOTEl rEdEfINES ThE ESSENCE Of ISrAEl’S hOSpITAlITy

“Israel is a small country that has everything”Lior Raviv, general ManagerIsrotel hotel Chain

With a population of only 7.8 million, Israel ranks among the world’s wealthiest nations. Growth

projections for 2014 are pegged at 3.4—Israeli perfor-mance will exceed that of the OECD’s other members. The Bank of Israel calculated that foreign direct investment (FDI) in the first three quarters of 2013 of $10.5 billion, was already above the $9.5 billion seen for 2012.

Immediate former President Shimon Peres, who has been standing behind the development of high tech industries in the country since 1948, is categorical: “The Israeli high tech industry started because we did not have a choice. We did not have land to live on, and we did not have arms to defend ourselves.” Diversification of Israel’s activities were led by the kibbutz and the moshav, communal and cooperative agricultural communities, recognized as Israel’s “first laboratories”. Today, kibbutzim exemplify Israel’s entrepreneurial spirit, having reinvented themselves into innovative enterprises.

Numbers are revealing. High tech products account for nearly half of industrial exports from Israel. Prime Minister Benjamin Netanyahu at the 2014 World Economic Forum in Davos invited the world to Israel “the epicenter of world innovation”. In addition to fa-voring innovation, Israel invests the highest ratio of GDP into R&D and is the world’s most educated country after Canada. It is no wonder it is home to ten Nobel prize-

winners for sciences and economics and two for Chem-istry from the last decade alone. The engrained quest for perfection and the local sense of chutzpah—audacity—create a particularly competitive business culture.

For Minister of Economy Naftali Bennett, the ex-planation is simple: “We, as a country, can help cre-ate an environment where people can innovate.” In fact, an entire institutional structure has been set up to support Israeli talent. “In Israel, we have our own DNA of policy innovation” explains the Ministry of Economy’s Chief Scientist, Avi Hasson. His office supervises a network of technological incubators for early stage projects: alongside a private venture capital system, Israel provides its entrepreneurs with the nec-essary backing to turn their innovative ideas into prof-itable businesses. The country has the highest density of start-ups per capita, which aim high and globally and

more Israeli companies are listed on the NASDAQ than from the entire European continent.

Harel Locker, Director General of the Prime Minis-ter’s Office, maintains Israeli innovations can go beyond the country’s borders. In his words, the goal is set: “We help foreign investors and companies that come to Israel remove any barriers”. Supported by these regulations, almost half the world’s top technology companies have bought start-ups or opened R&D centers in Israel—200 of them from the U.S., such as IBM, Cisco and Intel, and more recently Apple and Facebook.

>> UNDERSTANDING ThE ISRAElI ECONOmIC WONDER

“The Israeli high tech industry started because we did not have a choice. We did not have land to live on, and we did not have arms to defend ourselves.” Shimon peres, president of Israel, 2007-2014

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IsraelThroughout the past 20 years, Israel has earned the nickname “start-up nation” by exporting solutions to global human challenges in the field of water and food technologies, healthcare and life sciences, information and communications technology, cybersecurity and energy.

Dan Senor and Saul Singer, in their eponymous book, Start-up Nation: The Story of Israel’s Economic Miracle, explained it is all about creating the right innovation ecosystem, which drives the remarkable economic performances of the country.

“In Israel, we have our own DNA of policy innovation.” Avi hasson, Chief Scientist, Ministry of Economy

Tel Aviv at sunset

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How has Israel become one of the world’s most innovative and entrepreneurial economies?

I have been part of this country’s history since its first day. For me, history is my biography: it is per-sonal. We had two major ambitions: to gather Jewish people and bring them back to work and to cultivate the land with our own hands. Until then, the Jews had not been living on their own land—they were re-lying on others. Israel is one thou-sandth of the Middle East. Then, we were 600,000 people. The land we got was infertile: swamps in the North, desert in the South. We thus had to use technology. Every

kibbutz and every moshav became a laboratory. Before the State was created, we founded the Volcani re-search institute.

After that, we had to defend ourselves. The United Nations ap-proved the creation of Israel but they put an arms embargo on us. The need for weapons brought us to ‘real’ high tech, of which Ben-Gurion put me in charge. I was 24. I had the greatest qual-ity: ignorance. I did not know any rules. Had I known about the chal-lenges, I would have probably said “It is impossible.” When we started building an aeronautic industry, the only other industry we had was to build bicycles. And the bicycle in-dustry went bankrupt! My friend Al Schwimmer, came from the U.S. to help with this work. In spite of the failure the experts predicted, our chutzpah helped us.

In January 2014, you declared: “the new goal and spirit of sci-ence is to be more humane, to make people richer in hu-man capacity, not just to make money.” How?Tomorrow is already here but we think as we did yesterday, ignoring re-ality. For example, in today’s world, is war necessary? To answer this ques-

tion, one must understand why there were wars in the past. In the past, people were living from the land. To-day, we make our living from science. Slowly, armies are declining. One of the ways of war is already on the way out: the ground war. There are

still planes in the sky, but I do not be-lieve they will remain forever. We do not need men in the planes. Every-thing is changing. Yet, wars shaped the administrations, namely hierarchies, discipline, government, on which we still rely today. Government admin-istration is heavy, expensive and bu-reaucratic. Governments always have to justify themselves: they create their own ‘raison d’être’. This is why politics is at a low, all over the world. People say “we don’t have great lead-ers.” There are no great leaders be-cause no one needs them. We have to adapt ourselves to a new age where competition, not wars, will take over. Science cannot be conquered nor defended. We have an alternative way of governing: global companies. Global companies do not have any

>> ISRAEl AND INNOvATION IN TOmORROW’S WORlD

ShImON pERES

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The history of Israel is his biography. Ever since the country was born, Shimon Peres, 91, until July the world’s oldest head of state, has been involved in all the steps that have led it to become a renowned innovative nation, anticipating research in promising sectors. Israel’s immediate former president gives us an account on what’s next for the start-up nation.

“We have to adapt ourselves to a new age where competition, not wars, will take over.” Shimon perespresident of Israel, 2007-2014

©Ouria Tadmor

Kibbutz Sdot Yam’s engineered stone surface company, Caesarstone, is an ex-ample of a kibbutz perpetually renewing their range of activity. Here: The latest design from Caesarstone, Calacatta Nuvo

force or power. It is a new sort of democracy, without delegation. Every buyer decides the fate of the company. The national governments will remain. They will only deal with domestic matters. Their influence on global develop-ments will be increasingly smaller. Global companies will be in charge of the future: they will invest in innovation and research. Everything will evolve around individuals. I think we must understand the decision-making processes in our own brains. The brain is the most illustrious in-strument that exists. It enables you to build an artificial brain, but does not permit you to understand your own brain. Today, the major effort in science is the research of the brain. After politicians and might, after multinational companies, we may then have a third government: the government of self-governed individuals because we shall be able to track our own brain. With these paradigmatic changes in mind, how would you like to see Israel in the next few years?The greatest contribution of the Jewish people to the world is dissatisfaction. Dissatisfaction generates cre-ation. Deep in our heart, we know there is no perfection. However, the search for perfection is the closest thing to perfection. What I called dissatisfaction, I can also call learning. There is no end to it. I say jokingly to young peo-ple: “why do you eat three times a day? If you eat three times a day, you become fat. Read three times a day you’ll become wise. Better to be wise than fat.” Israel shall con-tinue to prefer the moral code to any other attraction on earth; values must come before power and wealth. If Israel helps without fanfare, we can contribute. Then, Is-rael will not be a country that needs contributions. Israel must lead brain research. We must do it because we rely on it. We live on our brain more than our land.

How will scientific development contribute to peace and stability in the region? For fifty years, poverty has been growing in the Middle East. People are overusing natural resources: the water, the land. The only thing we can do it is to improve the quality of life; today’s currency is knowledge, ignorance is poverty. We must also ensure men and women have equal rights otherwise you only get half a nation. Concretely, we must move from the start-up nation to a start-up region. Israel has 13,000 start-ups involving 60,000 students. I suggest we open initiatives encouraging entrepreneurial ventures to Arab universities. Sixty percent of the 350 million Ar-abs living in this region are below the age of 26. One

hundred million of them are connected to the Internet. Israel can contribute indirectly to have all the youngsters connected. There are companies that will be glad to take care of this. Internet can be in Hebrew or Arabic.

In March 2013, President Obama said Israel had “no greater friend” than the United States. Is-rael and the U.S. mark their partnership in the technological field through bi-national agencies, such as the BIRD Foundation, enhancing coop-eration and innovation benefiting both coun-tries. Additionally, Israel is home to many R&D centers and outsourced business units of several U.S. high tech companies. What is it that the U.S. and Israel find with each other that they cannot find with any other countries?The Mayflower brought to the U.S. people who wanted to go back to Zion. This is our first connection. Israel has the U.S.’ pioneering and democratic spirit, in a non-democrat-ic Middle East. Israel is a winning democracy, in spite of all the odds being against it. America has respect for this sort of success. Israel and the U.S. also share dreams. America became great by giving, not ruling. No other country in the world welcomes new ideas more than America. It cre-ated the equal right to be different. Like Israel, America is a gathering of excellence with many languages and many origins. We share the same understanding of the future: national governments serving the state, global companies for research and development and understanding of the brain for self-control.July 27, 2014 marked the end of your term. As a “dissatisfied optimist” what is next for you?My dream is to help the region to escape poverty and terror. I will do this by working with multinational com-panies. I want to create a sort of matchmaking sevice bringing companies and people together. Whoever wants to be a great leader does not stand a chance; whoever wants to be a devoted servant has a chance. For me, helping people is more meaningful than ruling them.

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“Concretely, we must move from the start-up nation to a start-up region.” Shimon peres, president of Israel, 2007-2014

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ISRAEL LEAdINg wATER TEchIsrael’s founder and first Prime Minister, David Ben-Gurion, cherished the dream of a blossoming Negev desert. Ever since, water technology has been at the top of the national agenda, in a country covered by 60 percent arid land.

The Israeli water market is internationally recog-nized as being highly developed, having benefited

from many years of experience in managing scarce wa-ter resources. Thanks to the smart use of technology, in 2014, Israel no longer has to rely on rainwater to secure its water resources—it is a world first.

This impressive result provides hope to the world and could reverse current trends. Otherwise, ac-cording to the OECD’s latest Water Outlook to 2050 report, 40 percent of the world’s population will be lacking water by 2050.

In a global market estimated at USD 700 billion, and growing, Israel is likely to gain a top position. The country’s water industry is widely regarded as a nexus of world-class expertise in the field. Every year, Israel brings hundreds of experts, solution-providers and potential clients to its WATEC (Water Technology and Environment Control) conference, attracting an increasing number of international participants.

In 2013, Governors of Texas and Nevada made a noted appearance, both praising the impact Israeli technologies could have on their drought-affected states. For former Water Commissioner Shimon Tal, Chairman of the 2013 edition of the event, there is no doubt his country is the world’s “water solutions hub”.

Concretely, the employment of Israeli technologies including the desalination of seawater, reclamation of treated sewage for agriculture, early-warning methods to detect leaks and computerized drip irrigation, allow 80 percent of all water used in the country to be re-cycled and reused. What Israel has achieved is unprec-edented: Spain, the second biggest recycler of water by comparison, only reuses about one quarter of its

water. Seed-stage start-ups to national giants are pro-viding innovative solutions alike. Avshalom Felber, the CEO of IDE Technologies, one of the country’s leading water technology companies that contributes a great deal to these revealing numbers, summarizes solutions which must be implemented to solve the se-rious problem of water scarcity: water conservation, water re-use and water desalination. IDE Technolo-gies have for years been providing the country with its most efficient methods of desalination. In 2013,

they opened the largest sea-water reverse-osmosis desalination facility worldwide, Sorek, which uniquely employs green technology developed by the company. Sorek sets significant new industry benchmarks in desalination technology, capacity and water cost. Lo-cated 15 km south of Tel Aviv, the plant provides clean, potable water for over 1.5 million people, comprising 20 percent of the municipal water demand in Israel, thus alleviating the country’s potable water shortage while minimizing the impact on terrestrial and marine environments. Felber summarizes solutions to the se-rious problem of water scarcity: water conservation, water re-use and water desalination. In all these areas, he indicates that the U.S. is lagging behind in imple-menting solutions. He explains: “U.S. companies can learn from us in the fields of desalination, water treat-ment, and sophisticated water treatment solutions for complex projects”. Offering their expertise to North America, a new priority area for development, IDE is currently building a huge desalination facility located north of San Diego in Carlsbad. This $1 billion project has been in development with local partners for ten years to deliver 50 million gallons of water a day by

“U.S. companies can learn from us in the fields of desalination, water treatment, and sophisticated water treatment solutions for complex projects.” Avshalom Felber, CEO, IdE Technologies

8 Sorek desalination plant. Image courtesy of IDE Technologies.

In a global market estimated to USD 700 billion, and growing, Israeli technologies are likely to gain a top position. In the Global Cleantech

Index 2014, Israel is ranked number one.

early 2016 to 300,000 people. For Felber, the American adventure is likely to continue for IDE. The next challenge? Provide IDE Technolo-gies’ solutions for industrial water treatment, notably for the oil and gas industries.

With over 280 water technol-ogy companies, 150 of which are exporters, Israeli technology in the field of water is also a profitable business, in full and rapid expan-sion. The Global Cleantech Innova-tion Index, released by Cleantech Group and WWF, measures a coun-try’s potential to produce innova-tive private cleantech companies. In its 2014 ranking, Israel occupies the top position. Ofer Sachs, CEO of Israel’s Export and International Cooperation Institute, forecasts the water industry is one of the future key growth engines of Is-raeli exports. With growing global demand caused by global warming and rising urbanization, the Insti-tute estimated that in 2013 water technology exports had tripled to $2.2 billion over a six-year period. Israel Cleantech Ventures (ICV) saw this opportunity arise. A ven-ture capital fund dedicated to clean technologies, it is one of the first funds to have identified the sector as an investment opportunity in Israel. Jack Levy, an ICV Partner leading the fund’s activities in wa-ter-related technologies, explains his motivation: “water is a critical resource and it needs to be treated as such.” The country’s awareness and strength in cleantech niches is why ICV invests principally in Isra-el-based and Israeli-related compa-nies. He cites the examples of two promising start-ups: AqWise and Emefcy, on the board of which he sits. Emefcy focuses on wastewater treatment. The concept is simple, the idea brilliant: even after treat-ment, wastewater residues cause

environmental harm. Emefcy decid-ed to reverse the process, turning wastewater into fueling energy, cre-ating a bio-electro-chemical pro-cess for electricity and hydrogen production by developing fuel cells that use bacteria to break down waste in water.

Sound water management prac-tices are also part of the Israeli success formula in preserving wa-ter. Using data analytics for this purpose shows the way of future management practices. An innova-tive Israeli start-up, TaKaDu is a ma-jor contributor to our water loss reduction plans. Its founder, serial entrepreneur Amir Peleg, devel-oped an algorithm applied to me-tering systems in order to detect leaks. The solution requires little in-vestment. Cloud-based and rapidly implemented, it requires no physi-cal changes to the water utilities’ network. The company has clients in Israel as well as abroad in Latin America, Europe and Oceania.

Last but not least, Israeli technol-ogies are also entering the home to enable top-quality drinking water from the tap. The Strauss Group, Israel’s second largest food prod-uct group, is developing patents for unique point-of-use water purifica-tion solutions which are available on a globally. They are distributed through joint ventures with the likes of Virgin and appliance pro-ducer Haier, with products deliv-ered in the Israeli, European and Chinese markets. Ofra Strauss, Chairwoman of the Group, reveals that the purification technology is based on gravity, enabling its use in developing countries with unreli-able electricity sources. She guaran-tees: “safety is inherent within this machine”. Thanks to the technolo-gies used, “even if there is no elec-tricity and no water pressure, one can get purified water.”

STRAuSS’ mISSION TurNINg ISrAEl

INTO ThE fOOdTECh

NATION

Rooted in 1936 with two cows in Northern Israel, the Strauss Group has grown to become a global player in food technolo-gies. Ofra Strauss, the third gen-eration to lead the company, and the head of the Israel-US Cham-ber of Commerce, states part-nerships as crucial. “The encoun-ter of several companies into one mission creates innovation, creativity and an added value to consumers” says Strauss. Today, Strauss Group has numerous international partnerships in the agro-industry. With appliance gi-ants including PepsiCo, Danone and Haier and products ranging from candies to fresh food and dairies, Strauss has become the world’s #1 hummus producer together with PepsiCo, and the world’s fourth largest producer of coffee. Recently, Strauss Group created Alpha Strauss, an open platform to register new food technolo-gies developed in Israel, in an ef-fort to turn the country into the food-tech nation. She explains: “The world doesn’t have enough food or enough water. We want investors and multinational com-panies to look to Israeli technol-ogy in the food sector.” Thanks to the Group’s international net-work, these innovations will have immediate access to global mar-kets, thus tackling an increasing issue affecting humankind: the safe access to food.

Company Highlight

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IDE Technologies is present-ed as a global leader in de-salination and industrial wa-ter treatment projects. What differentiates IDE from its competitors?

Our main difference resides in the ability to implement ad-vanced technology or thoughts into projects. IDE, through de-cades of development of prod-ucts and ideas, has managed to develop a sense of managing the risk of innovation. This means both the ability to have innova-tion inside of the company and to have the technology leaders inside of the company that think along those lines; plus the ability to manage the risks and actually implement them into projects even at preliminary stages based on our analysis of the chances of failures and successes.

The world’s largest seawater reverse osmosis desalination plant, Sorek, using IDE’s ad-vanced membrane desalina-tion technology, was opened in 2013. Can you tell us more about the technology used for it?

This plant brings all of our cutting-edge technologies together. We offer a reliable standard of water at the best water price, which is what the government wants. For this, we employ all of our new technologies to offer Israeli cus-tomers the cheapest water-price plant, but also the most environ-ment-friendly project. For us, it is nice to have a flagship project like Sorek in our home country

Desalination technologies are energy hungry and of-ten require intense use of chemicals. Recently, IDE launched the program IDE PROGREENTM, to promote environment-friendly tech-nologies to desalinate water.

IDE PROGREENTM’s goal is to ultimately have chemical-free de-salination. The goal for IDE PRO-GREENTM technology is to have the entire desalination process chemical free, except for the post-treatment element - the part where you re-harden the water after you clean it through the desalination process to make it potable. We hope to achieve this by the end of 2014 in order to have a full-scale plant end-to-end with no chemical use. We also work on the reduction of energy consumption. Being more environment-friendly also helps towards having cheaper or more cost-effective products.

IDE has much interest in the U.S. What do you bring to the U.S. markets?

Desalination, water treatment, or sophisticated water treatment solutions for complex projects are not that well developed by U.S. companies. We have a great success story to show in the U.S.: the Carlsbad project, near San Diego. We are also target-ing Texas as a region to expand our activities. Texas is now in its tenth year of drought. We can offer them both brackish and seawater desalination. There, we try to see if at the level of small

townships we can provide small-scale project solutions. We be-lieve that this market represents a constant growth for desalina-tion for the next 10 years.

In 2015, IDE Technologies will be celebrating its 50th anniversary. What would you like to be celebrating? We have a few things that we want to see growing and to fo-cus on. First of all, industry water treatment. It is a huge challenge, probably even more urgent than desalination because every day industry causes a lot of damage around it. We want to deal with it. We need to see how we can recycle most of the water used by industry for it not to become a burden on the water balance of the places where industries are operating and in order to protect the environment. The tariff base has to be pushed fur-ther on, for damage to be taken into account in the price of wa-ter, and then more and more industries will feel the need to treat and recycle. Business-wise, it is challenging and exciting be-cause it requires sophisticated technology. We believe that the more complicated it is, the bet-ter chance IDE has, because of our innovative nature, our abil-ity to give a variety of solutions from the thermal side, from the membrane side, from various elements. An achievement for 2015 would be to have a few major clients buying our solu-tions for industrial water treat-ment, specifically in the oil and gas industry.

FOcuS: INTERvIEW WITh AVShALOm FELbER, CEO OF IdE TEchNOLOgIES

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Tourism is a booming sector in Israel. In February 2014, while visiting the U.S., Prime Minister Benjamin Netanyahu declared it was a priority sector for the Israel economy to preserve its growth rate. “Tourism is an economic growth engine that we need to cultivate. It is important to show, to the world, Israel as a progressive and enlightened country with scenic vistas and vibrant nightlife, and as a state that respects all religions.”With over a billion NIS (US$300 million) in revenue in 2013, Isrotel has established itself as the leading hotel chain in Israel. Known for its ability to provide amazing added value, Isrotel is able to turn each of Israel’s scenic landscapes into modern and unique tourism destinations. Isrotel’s story begins in 1983 when David Lewis, a London-based Jewish businessman, realized the potential for tourism in Israel—especially in Eilat, Israel’s premier resort town located at its

southern tip by the Red Sea. Since then, the Isrotel Hotel Chain has grown to 17 hotels, including the Beresheet Hotel on the edge of the Ramon Crater, and its newest luxurious Spa Hotel, Cramim, in the Jerusalem hills. Isrotel pioneered the Spa & Resort concept in Israel.

Isrotel, traded on the Tel Aviv Stock Exchange, mixes sound management practices with innovative thinking. Yet, contrary to international hotel chains, Isrotel confined its ambition to Israel, turning its knowledge of the country into an unbeatable asset. The General Manager, Lior Raviv, explains “Israel is a small country that has everything”. For perfectionist Raviv, this innovative quest is Isrotel’s DNA: “We have always

been ahead of the market and we will continue being like that.” Effectively, the company’s services and facilities have turned it into the go-to brand for international and local visitors. Urban centers, Tel Aviv and Jerusalem, are new development priorities, where Isrotel can truly leave a mark in redefining high-end travel options for business and leisure visitors. The results are already visible: the chain’s newest facility in Tel Aviv, Royal Beach Tel Aviv by Isrotel Exclusive Collection, open since June 2013, benefits from the city’s highest occupancy rates for the first months of 2014. Raviv anticipates: “I believe this will continue until the end of the year.”

Company Highlight

TOuRISm IN ISRAELISrOTEl rEdEfINES ThE ESSENCE Of ISrAEl’S hOSpITAlITy

“Israel is a small country that has everything”Lior Raviv, general ManagerIsrotel hotel Chain

until a few years ago, Israel was the exception in a fos-

sil-energy rich Middle East. With humor, Israel developed a na-tional joke about this geological misfortune: Moses led the Jewish people across the Middle East for forty years to end up in the only land with no oil. But the recent gas discoveries are shaking the country’s reality. In the words of Naftali Bennett, Israel’s Min-ister of Economy, the uncover-ing of vast reserves of natural gas equates to “history knocking at Israel’s door.” And the recent discovery of huge offshore natu-ral gas reserves could very well mean a profound transformation for its economy and create new regional dynamics.

The gas adventure started in 1999 for Israel, when a maritime drill struck gas in commercial quantities near the port of Ash-dod, at what is now called the Mari-B. The discovery came after decades of drilling for oil with lit-tle success. The energetic Gide-on Tadmor, Chairman of Delek Drilling and CEO of Avner Oil, both subsidiaries of the Delek Group, recalls his unshakable belief in the presence of gas and oil in Israel was initially met with much skepticism. At the cost of

personal sacrifice, he was one of the few who persisted in the sec-tor throughout the 1990s, a de-cade marked by the privatization

of Israel’s exploration companies and great uncertainty.

In 1999, he initiated a partnership with the U.S. company Noble Energy. The Texas-based group agreed to form a consortium to pursue exploration based on what they considered to be convincing geological assessments. Over the years, this became an incredibly successful joint-venture—Tadmor refers to it as a “magic partnership”—combining expertise, brought by Noble’s presence in the Gulf of

Mexico, and innovative thinking, provided by the Israelis and their chutzpah. Equally praiseful is his counterpart Lawson Freeman, in charge of Noble’s operations in the Eastern Mediterranean, who describes it as a “fascinating mix.” The Tamar and Leviathan fields, discovered in 2009 and 2010 respectively, represent the two main natural gas reserves in the Eastern Mediterranean. Tamar has proven reserves of 10 trillion cubic feet (tcf); Leviathan’s estimated reserves are nearly double that amount (18-19 tcf).

For Israel, these discoveries will drastically change its status from energy-dependent to energy-sufficient with the potential to become a supplier. These known gas reserves correspond roughly to Israel’s energy needs for 30 to 50 years. New discoveries may not be over yet. In an assessment of undiscovered fields in the Levant Basin Province, the United States Geological Survey documented twice that amount could be still discovered in Israeli waters. For the two aforementioned members of the consortium, oil could well be next.

The discoveries will also have an impact on the Israeli economy. It is estimated that they will boost

OIL ANd gAS>> A NEW SEA OF OppORTUNITIES

“Businesses which could not exist before now will be created around the gas industry. [Noble] could help create these businesses in industries like desalination and glass. It will create jobs and generate many more social benefits.” Lawson FreemanNoble Energy

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GDP by one percent and the additional revenue will feed a sovereign fund promised to finance social and education programs. Around this industry, it is also expected that full new sectors of the economy will be created. Freeman offers Noble’s global expertise to assist the country: “businesses which could not exist before now will be created around the gas industry. [Noble] could help create these businesses in industries like desalination and glass. It will create jobs and generate many more social benefits.”

At the Prime Minister’s Office (PMO), while re-joicing about what the potential new discoveries could bring for the country, it is stressed that Isra-el has yet to adapt enough to fully benefit. Eugene Kandel, Head of the National Economic Council, aims to develop capacity in Israel’s top academic institutions, notably at Technion, Israel Institute for Technology. His office works with the Academy of Sciences to set up research and teaching cen-ters focused on the Mediterranean basin. In the meantime, Harel Locker, Director General of the PMO, aims to capitalize on international partner-

ships, especially with the U.S. “We are relying on foreign technologies and foreign investors to de-velop our gas fields,” he explains. Highlighting that the profits to be made in the sector are “huge”, he joins his colleague: “Since the gas industry is a new one in Israel, there is still room for many kinds of

collaboration—mainly academic and business opportunities.” In addi-tion to an open door to new international col-laborations in explora-tion and exploitation, these discoveries also

create opportunities for Israel’s innovative potential to be applied to a new field.

These discoveries could have major implications in the region. Following the government’s decision in 2013 to make available 40 percent of the proven reserves for export, Israeli companies have discussed deals to supply Palestinian, Jordanian, Turkish and Cy-priot companies with natural gas, a cheaper source of energy. As Tadmor noted: “gas not only brings huge economic benefits to these countries, but also be-comes a bridge between nations and an important stabilizing factor in the region.”

“Since the gas industry is a new one in Israel, there is still room for many kinds of collaboration—mainly academic and business opportunities.” harel Lockerdirector general, prime Minister’s Office

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The success of Noble Energy in Israel is closely associated with its ability to build suc-cessful partnerships with lo-cal industries.

I refer to our partners (Delek, Avner, Isramco, Ratio, Dor) as people who were ‘holders of the flame’. They would not give up before discoveries were made. I think that it is really powerful.

As a firm, what do you pro-vide in these partnerships?

One of the biggest things we bring to the table is our rigor-ous project management – the ability to plan five years down the road and work simultaneous timelines for all the activities that make up a major project. We also know how to bring hu-man resources together to be successful in bringing on a field by a target date.

What makes Noble Energy a partner of choice for com-panies that want to develop new exploration activities?

In addition to what I just men-tioned, we bring transparency - we have this belief that if you consistently say what you mean, and mean what you say, things can work out, even in the face of political obstacles. People have seen our contribution and our commitment to maintain the highest standards of safety, health and environment. The lo-

cal engineering and construc-tion firms that we hire in Israel realize this very quickly. I would like to think that we have a posi-tive influence on their opera-tions in other places too.

Let me add that we have been changed thanks to our presence in Israel. Our Israeli partners con-sistently challenge our structured thinking and bring innovation and creativity to the table. We learn from it and perceive it as a healthy process. This combination creates a fascinating mix and chemistry.

Natural gas production from Israel’s first major field Tamar began flowing in March 2013. With gas field Leviathan in development, Israel will be-come energy independent.

The benefits of Tamar gas as an alternate fuel supply along with the resulting increased govern-ment revenues represent ap-proximately 4 billion USD a year. It is a significant number! Now, it is up to the State of Israel to decide how to allocate this money. From an environmental standpoint, the consumption of natural gas reduces CO2 emis-sions by 30 percent or more. Up to this point, our gas deliveries have resulted in emission sav-ings of 17 million metric tons of CO2. The use of gas is also beneficial to reduce the envi-ronmental footprint; you do not have big yards, towers, water use etc. with gas.

The exciting part about this is what is possible in the future. Israel can look now at what the U.S. and other countries have be-gun, like converting fleet vehicles over to natural gas. The savings from carbon monoxide are enor-mous whenever you move to nat-ural gas. New businesses which did not exist before now will be created around the gas industry. It will create jobs and generate many social benefits, and we want to be a part of it.

What are the potential and implications you see in terms of exports to Middle Eastern countries?

The ones that we talk the most about are Jordan, Cyprus, Egypt and Turkey. The challenging and exciting thing is to set up a clear win-win situation from a busi-ness perspective. Switching to gas from liquid fuels to generate power can cut energy costs by two-thirds. It is good for energy companies because they open a new market and it is good for countries because you see great social benefits in cutting their fuel costs. However, major proj-ects like these need government champions. As a company we can show the benefits, share the ex-citement and be the champion from the business side, but the government has to be involved too. And we do hope that good business across borders can have geopolitical benefits.

FOcuS: INTERvIEW WITh LawSON FREEmAN, NObLE ENERgy’S vICE pRESIDENT FOR ThE EASTERN mEDITERRANEAN

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for the past two years, prospects have been vastly changing for the 200,000 inhabitants of Be’er Sheva,

a medium-sized peripheral city dubbed the “Capital of the Negev.” In an interconnected age, increasingly reliant on the cloud and cyber systems for transactions, interac-tions and infrastructure, Be’er Sheva has been chosen to become Israel’s—and one of the world’s—primary cybersecurity hubs. The goal is twofold. Firstly, cybersecurity has increasingly become a national priority for the Israeli government, and its development naturally follows the establishment of Israel’s National Cyber Bureau. The body was put under the aegis of the Prime Minister’s Office (PMO) two years ago to foster Israel’s technology industry and to help the military, universities and businesses collaborate. Sec-ondly, this revitalizes a hitherto peripheral region, the Negev, previously in the shadow of the economic centers of Tel Aviv, Haifa and Jerusalem.

In early 2014, addressing the Cybertech conference in Tel Aviv, Prime Minister Netanyahu unveiled his grand plan for the country and the Negev region to an inter-national audience: “Be’er-Sheva will not only be the cyber capital of Israel but one of the most important places in the cyber security field in the world.” Harel Locker, Director General of the PMO, maintains Israeli innovations in cybersecurity will contribute beyond the country’s borders: “Although we are a small country, we are at the technological forefront of the digital world […] we are willing to cooperate and share that knowl-edge with other countries.”

Considerable investment in infrastructure has been made. Thanks to the government’s cooperation with multinational tech company Cisco, Be’er Sheva will become Israel’s first digital city, following the example set by the likes of Barcelona. Logistically, the north-south Highway 6 is being extended to the outskirts of

the city for an easier and more direct connection to Be’er Sheva. Finally, the municipality and the Israeli gov-ernment are setting up an attractive financial package to encourage the development of business activity. With contagious enthusiasm, the mayor of the city, Ruvik Danilovich says proudly: “We are in the middle of an

historical move. […] This is the future of Israel.”

From a global point, Israel holds sway over five to seven percent of the world’s cy-bersecurity products, a share greatly disproportionate to its size and still likely to grow. These figures are all the more impressive as the cybersecu-rity sector operates under na-tional security-related export restrictions. In fact, over the past three years, Israel’s cyber-security start-ups have raised over USD 400 million, accord-ing to the Tel Aviv-based IVC Research Center.

Nowadays, the ‘opportunity capital’ of Israel boasts the presence of CyberSpark, a unique type of complex located by the Ben-Gurion University of the Negev in the city’s high-tech park, the Advanced Technology Park. Its first building opened in 2013 and its second build-ing will be operational in the fall of 2014. It is already home to industry leaders, security agencies, educa-tional facilities and personnel specializing in cyber secu-rity. Multinationals have swiftly recognized its potential. To date, Fortune 500 companies Lockheed Martin and IBM have confirmed they would invest in CyberSpark R&D facilities. Decisively linked to the government’s effort in Be’er Sheva, IBM will open a center for global excellence in the field of security and defense for infra-structures, assets and information together with the Ben-Gurion University. They will add to the list of com-panies already present in Be’er Sheva: Deutsche Tele-kom, EMC, RSA, venture capital JVP’s cyber security-dedicated incubator and many start-ups.

bE’ER ShEVA: INTROducINg ThE wORLd’S cybER cApITALA peripheral city unknown to the world a few years ago, Be’er Sheva is transforming itself into one of the world’s prime global hubs in cybersecurity technology. A specific ecosystem, initiated by political will, is transforming Israel’s Negev region.

“We are in the middle of an historical move. […] This is the future of Israel.” Ruvik danilovich, Mayor of Be’er Sheva

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After you graduated from the Technion, you worked for defense company Rafael. What are the links between the two parts of your career?

There is much similarity between the customers: performance-focused, complex systems, atten-tion to reliability, to safety. Ad-ditionally, there is also much in common in the science part and in the business part between the two, as weird as it sounds.

InSightec presents itself as the operating room of the fu-ture. How do you change sur-gery as we know it?

Craniotomies (removal of parts of the skull) took place as early as 8,000 years ago. In essence, surgery has not changed dramat-ically since then. Surgeons are still using their a priori knowl-edge, vision, palpation, knives.

We thought that surgery could be replaced by a completely non-invasive therapy. We wanted to give surgeons the possibility of treating a target and only the target, and knowing in real time what they are doing.

Surgery is very unique in medi-cine. It is a highly focal and local therapy. This is very positive be-cause, in essence, what you are trying to do in medicine, if pos-sible, is not to poison the whole body. The problematic part of surgery is that the surgeon is us-ing vision and palpation to treat. Let’s say that we want to remove a tumor: I need to see and feel it to do it. The outcome of this

is that you cut your way to the treatment area while causing sig-nificant collateral damage. On many occasions, when we look at surgery, the level of damage is very significant, and the recovery from these may take weeks.

How does the technology be-hind it work?

Acoustics is a physical wave, like optics. At high frequencies, inau-dible to us, you can focus it very tightly. At this focus the energy density is very high: it can heat and destroy targeted tissues – but only at the focus. It is as if playing with the sun, a piece of paper, and a magnifying glass.

Only at the focus the paper will ignite. The level of energy we use is capable of destroying tis-sue. Magnetic Resonance Imaging (MRI) is capable, in addition to very high quality anatomical im-aging, of measuring temperature deep inside the body to an accu-racy of within one degree. Tem-perature measurement allows you to understand which regions you are treating. We check where we are inside the body and if we are inside the target.

If we have a child with a 41°C temperature we rush to cool him down so no damage oc-curs. In reality, the high tem-perature is not that bad, since you need to keep the tissue for four hours at 43°C to cause sig-nificant damage. However, if you were to raise the temperature to 60°C, it would take only 0.1 second to destroy tissue. This is the whole concept behind In-Sightec: to be capable of using thermometry non-invasively in-side the body, to verify the tar-geted tissue is destroyed. MRI, which provides both anatomi-cal imaging and thermometry in real time, allows you to know where inside the body you are treating and whether you have destroyed the tissue. The fact that you have real time feed-back and monitoring of treat-ment outcomes allows you to change treatment parameters in real time, and lead to whatever result you want.

We call it cutting-edge tech-nology without the cutting!

Israel is already a world leader in life sciences innovations. It has the world’s highest number of patents per capita in the medical device area, as illustrated by the success of pioneer Insightec, leading the therapeutic use of ultrasound technology. Here: Physician and patient during ExAb-late Neuro treatment

FOcuS: INTERvIEW WITh JAckOb “kObI” VORTmAN, CEO, FOUNDER AND ChIEF TEChNOlOGy OFFICER OF INSIghTEc

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After destroying the tissue, how do we get rid of the residue?

Our lymphatic system provides the mechanism to remove dead tissue from the body. When we de-stroy large tissues volumes (fibroids, myomas), it may take up to 12 months until the body removes it, but it all happens naturally.

Fifteen years after the company was cre-ated, what do you consider are InSightec’s achievements?

The biggest achievements of InSightec are, first of all, developing a technology to treat people. This was my main drive in building this company. A woman no longer has to go through a hysterec-tomy and lose her uterus because of a myoma; we can treat her and the next day she can go back to her life and work. Think about the brain; instead of implanting electrodes inside the brain and elec-tronics in your chest, you can undergo a complete-ly non-invasive three-hour procedure and get rid of tremor immediately.

Now, the focus of the company is to drive brain treatment to become a major therapy. We are cur-rently treating functional brain disorders, including essential tremor, Parkinson’s and neuropathic pain. The next steps will be to develop the hardware and software to treat epilepsy and brain tumors. We envision our neuro (or brain) system as po-tentially changing neurosurgery’s landscape, rede-fining neurosurgery. The second area that we hope will significantly benefit is oncology. We have huge potential in oncology for many reasons but the main one is the fact that we can treat and treat again since there is no ionizing radiation, without trauma, morbidity, and recovery. Why is it impor-tant? If we were able to turn malignant (oncology) diseases into chronic diseases, and not give up, we would change the situation completely.

Our technology has huge potential. You could program the acoustic beam not to heat but to vi-brate the tissue hard enough so biological mem-branes will start leaking. In many instances chemo-therapy is very toxic and is provided to the patient at a high level; if you go over this limit, the patient will die. Now, visualize a completely different situ-ation in which we encapsulate the toxic molecules in inert encapsulations: liposomes, polymers… They

could go through the body and wash out without any damages (neutral). If we vibrate the target hard enough, the tissue permeability is completely dif-ferent than in other areas, significantly higher. We inject the encapsulated drugs into the body systemi-cally and allow this drug to accumulate in this area. Then using the acoustic beam you release the drug in this area. With this you get an extremely high lo-cal toxicity at the tumor site, without exposing the body to this huge toxicity; you generate a differen-tiator between the target and the rest of the body. This is still basic research but I believe this could be another tool against cancer. It is not only destruc-tion; it is local and targeted destruction.

In 2013, you were selected by the BIRD Foun-dation together with the University of Vir-ginia to launch a new project on non-invasive brain surgery. What is the importance of such partnerships with U.S.-based institutions?

All our clinical development is being conducted with universities and academic hospitals. Our re-lationships with institutions like the Mayo Clinic, Stanford, UCSF, the University of Virginia, Harvard, Imperial College in London, University of Rome etc., are critical. These connections are what are giving us the ability to move fast and combine IQs. You can never have enough IQs!

Where have you been able to commercial-ize the technology used at the moment and where do you have regulatory approvals?

We have about 110 worldwide installations in the leading hospitals. In the United States, we are in-stalled in the Mayo Clinic, Harvard Medical School, Cornell, Memorial Sloan Kettering Cancer Center, Stanford, UCSF, UCLA, UC San Diego, and Swedish Medical Center in Seattle, MD Anderson Cancer Center, University of Virginia, etc. We are in the leading hospitals in the US and around the world. For fibroids, we now have regulatory approval globally (U.S., Europe, China, Japan and so on). For Metastatic Bone Tumors, we are approved in the U.S. and in Europe; work is underway in Japan and China to get approval. We also are commercially approved in Europe for neurological disorders of the brain and are in the midst of a Phase III clinical trial for FDA approval in the US.

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The name “start-up region” is not trivial. It is a cherished

dream of Israel’s immediate for-mer President and Nobel Peace Prize recipient Shimon Peres. For most of his political career–a long one which can be traced to the country’s inception, he has led Israel along the path of tech-nological innovation. For the past few years, as first described in his book The New Middle East, broad-ening this innovative potential across the entire Middle East is at the top of his agenda.

It is undisputable; for Israel to maintain its position at the top of the world’s most innovative nations, the first step on this region-shaping journey starts at home. Israel’s labor force must become more inclusive. Israeli labor participation, according to the World Bank, is only 57 percent, meaning a huge unexploited human capital. In order to benefit from this untapped resource, Israel must equip its peripheral regions and favor the inclusion of its minorities—namely Israeli Arabs and ultra-orthodox Jews—in the start-up nation, innovative, high tech economy. “Digital Israel”, a public-private

partnership project, is one of the government’s programs to connect the country’s peripheries to its most active centers. Cisco, IBM, Google and Microsoft are some of the players involved in the construction of Israel’s “digital highway”, with predictable effects on more accessible government

services, education and health. Following the example of Be’er

Sheva, other peripheral areas in Israel are turning into tech centers of excellence. Nazareth, the country’s largest Arabic-speaking city, is already home to the Nazareth Business Incubator Center as well as nazTech, an accelerator program for Arabic-speaking entrepreneurs

to access the Israeli and global markets. Increasingly, the city is becoming a life sciences hub. To date, Israeli Arabs form 20 percent of Israel’s population, but they only account for only eight percent of its economy. Nevertheless, the trend is changing. The number of Arab engineers in the Israeli hi-tech sector grew from 300 to 1,500 in the past five years. Again, a proactive attitude from both the private and public players led to these encouraging results. In 2011, Shimon Peres and John Chambers, CEO and Chairman of Cisco Systems, launched the “MaanTech program”. MaanTech works with over twenty multinationals (in addition to Cisco, participants include as IBM, Intel, and Google from the U.S. and CheckPoint and Bezeq from Israel) to provide language and tech training—and jobs—for high-tech workers in the Arab sector.

Venture capital firms are also keen to seize the unique asset Israel’s diverse population offers. Pitango Venture Capital set up the Al Bawader Fund (Arabic for “early signs” or “buds”), the first Israeli Venture Capital and Private Equity fund investing in minorities.

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“We need to offer new ideas to the Israeli public about what we can do with the palestinian Authority and new models to create a win-win situation.” Erel margalitfounder of JVp and Member of the Knesset for the labor party

START-up NATION TO START-up REgION

In recent months, a halt in the peace process and the degradation of the political situation in the region have

made the headlines worldwide. However, a new type of low-key, business-based cooperation between Israel and its

neighbors could be the trigger of a Middle East start-up region, fostering more peaceful relations.

Headquartered in Nazareth, it raised USD 50 million in 2013, and has invested so far in seven portfolio companies. Chemi Peres, Managing General Partner and Co-founder of Pitango, serves as Chairman of the Board of Al Bawader. For him, the move is logical: the Arab private sector has great potential to deliver high value products and services to the expanding markets of the Middle East. Also, it can leverage its access to Israel’s highly developed and export driven economy and infrastructure. Statistics show Arabic is the fastest growing language on the Internet and by 2015, Arabic will be the fourth most-used language on the Internet. Israeli Arabs are the bridge from the start-up nation to the start-up region, and the Internet is its natural channel since, unlike traditional commerce, digital activity, information and transactions can easily cross political lines. For instance, Panet, a leading Israel news portal in Arabic hosted at the URL http://www.panet.co.il gets 46 percent of its 1.4 million daily hits from abroad.

A proponent and active player in one start-up region is Erel Margalit. Now a Member of Knesset for the Labor Party, he is the Founder of Jerusalem-based venture capital firm JVP—and was its managing partner until his election in 2011. At that time he set a goal to multiply by five the number of Arab entrepreneurs within five years, through several JVP programs. Nowadays, as a politician, he continues with this goal, and seeks to set the basis for a region-wide, knowledge-based economy, rather than one that is resource based. Its center would be Jerusalem, serving as a place of unity rather than a divisive space. He asserts, “we need to offer new ideas to the Israeli public about what we can do with the Palestinian Authority, and new models to create a win-win situation.” The start-up region will be realized through technology, education and business partnerships between Israel and its neighbors. The start-up region, in his words, “could be a hub of creativity with a multinational and multicultural contribution.”

Such business and education partnerships already

exist, and have proven successful for regional in-tegration, economic growth and social inclusion. Cisco Systems, twice rewarded by the U.S. State Department for its corporate responsibility poli-cies, has engaged Israeli engineers to train Pales-tinian workers while it outsources some of its Is-raeli activities in the West Bank. For Boaz Maoz,

the head of Cisco Israel, engaging in corporate re-sponsibility programs to favor inclusion go beyond giving something back to communities. He explains: “we saw that there was plenty of talent in the West Bank that could

help Cisco. Consequently we launched a collabo-ration project between Israel and the West Bank.” The project was marked by the promise of USD 10 million from John Chambers to President Mah-moud Abbas of the Palestinian Authority to estab-lish a high-tech industry in the West Bank. Judging by Cisco’s involvement in the region, he includes the role of economic players as fundamental for a growing region: “Because we feel this sense of re-sponsibility, and we have the [economic resource] capacity, we believe we can bring economic peace to the region through technology and through our socially responsible activities.” He concludes with an optimistic note: “In the Middle East, Cisco is playing a key role to drive economic peace until we have real peace.”

In Israel, the sentiment Maoz shared is growing in the business community. Although international and local critics highlight the failure of a peace deal, many have seen the need for a resolution backed by strong economic foundations, in which they can be key play-ers. Israel’s high-tech godfather, charismatic and hu-morous Yossi Vardi, together with the Palestinian construction entrepreneur Munib al-Masri, created an initiative under the auspices of the World Eco-nomic Forum in 2012 called “Breaking the Impasse”. Today with over 300 business leaders representing 30 percent of combined Israeli-Palestinan GDPs, this apolitical movement demonstrates the strong sup-port of players from all industries, to a negotiated two-state diplomatic solution.

“We believe we can bring economic peace to the region through technology and through our socially responsible activities.” boaz maozCEO of Cisco Israel

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The Strauss group is first and foremost a family business that was started with two cows in 1936, before the State of Israel was established.

My grandparents moved to Is-rael from Germany, just before the Nazis came to power. I do not think they ever dreamt they would have to leave everything and become farmers. My grand-parents were firm believers that with a good business, you can help create a country. My grand-mother’s recipes were the foun-dation of what was sold.

We were lucky to keep our continuity in ownership. At Strauss group, this means that the company is here to serve more than today’s purposes, that it is part of society.

I believe the foundation of a business takes all these years to really be built. And then every-one adds something to it. Now, we embrace technology, we use it with our infrastructure all the time, to compete with other companies here in Israel, and we are open to the world.

Strauss Group is one of the few global Israeli businesses. How did your international expansion start?

Overall, the partnerships plant-ed the seeds for our interna-tional growth. We started with coffee. While other companies like Nestlé brought what they knew, we actually understood that people drink coffee in dif-ferent ways in different parts of

the world. Today, we are one of the ten big companies in the cof-fee sector worldwide – actually, number four.

The second step of becoming international was to join with a local entrepreneur. Here the partnerships motive repeated itself in a slightly different way. This is what we did with hum-mus in the U.S. with a company named Sabra. Sabra was founded by a Rabbi who wished to manu-facture hummus for the kosher market in the NY area. He asked us to join him and together we developed the business, adding knowledge and implementing technology we used for fresh food. Technology is very impor-tant in the food industry. Several years later, we partnered with PepsiCo, one of the most suc-cessful American companies and today, we are the largest hummus manufacturer in the world.

Basically, we look at categories no one else looks at, we make them our own and develop expertise, and then hopefully lead the category.

What is your idea of an ideal partnership?

The diversity of capabilities is en-riched through successful part-nership, when each party con-tributes its strongest elements to create a joint venture. The joining of several companies into one mission creates innovation, creativity and an added value to consumers. This is grounded in an 80-year-old understanding that working with others, shar-ing your vision and participat-

ing in partnerships just brings in more ideas.

When each party contributes its added value – the outcome serves everyone. This promises top stan-dards for the quality of our prod-ucts, the quality of the manage-ment processes, of successions, of governance in our boards and of course – serves the consumers.

We believe that the combina-tion between our expertise and know-how with our partners that better understand their markets, allows us to build bet-ter businesses together, share the success and share the risks, together. A sustainable business model is what we strive for.

We spoke about the im-portance of values in doing business. What are the fam-ily values you are trying to spread globally?

We are very much in favor of mak-ing the Strauss group companies inclusive businesses. For example, in Nahariya, where the Strauss story started, we have always made sure Arab Israelis and Jews would work together. This in spite of the many attacks the factory has faced during times of conflict. To keep this amazing relationship between all Israelis is really part of our legacy. We have been able to make it part of our HR philoso-phy and business philosophy. Our basic mission is to improve peo-ple’s lives wherever we operate. We think of both the short and the long term Our experience is strengthened with ambition and willingness to take risks.

FOcuS: INTERvIEW WITh OFRA STRAuSS, ChAIRWOmAN ISRAEL-uS chAmbER OF cOmmERcE; ChAIRWOmAN STRAuSS gROup

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A Strauss Group initiative, Alpha-Strauss gathers technology in the food and water in-dustry. What do you think Israeli technology can bring to the food industry worldwide?

We developed open platforms to register the Israeli technology around food. We think we can create a hub in Israel through open communities. Today, at the global level, the world doesn’t have enough food and enough water. We want to bring the world, in-vestors and multinational companies to look at Is-raeli technology in the food sector. Why? We be-lieve that the more they invest in it, the better for the country and of course we will benefit from it. As Israel is the “start-up nation”, we believe it could become the food-tech nation which can provide the solutions for the world’s problems when it comes to what everyone must provide for themselves- food and drink.

Alpha-Strauss is about sharing, about believing in diversity: the more you share - the more you get. Creating a food-tech industry in Israel will have positive impacts on both the short and long terms. I think food technology offers the whole Middle East a great platform for a dialogue.

As the Chairwoman of the Israel-America Chamber of Commerce, overseeing the busi-ness sector in Israel, how do you view the role of the Israeli business community?

The Israeli-American Chamber of Commerce is doing great things here in the Middle East on bring-ing together the business community.

If you look at most of the conflict areas in the world today or in the past - such as Ireland and South Africa - business communities play an amazing role towards peace. We have to start before the politicians: once the peace agreement is signed, it’s all about economy, employment, GDP, infrastructure, tourism etc. As a Chamber, we try to contribute to this process. We assist governments in bridging the existing gaps. We also act through other initiatives, such as Breaking the Impasse, initiated by the World Economic Forum. I think the business community in Israel is ready to be a bridge for peace. And, learning from running a company, I can say for sure - we can do it. There is something about business that makes things simpler. And whether it’s through Alpha-Strauss or all the other initiatives, yes, we can enhance the peace pro-cess, especially with the Palestinians.

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A Country Strategic feature (countrystrategic.com) Publisher: Stephen de Vasconcellos-Sharpe; Global Director: Taylor E. Russell; Art Director: Anastasia Caramanis Israel team: Country Director: Carolina Nuñez; Editorial Coordinator: Julie Mandoyan; Editorial Assistant: Stanislas Albert

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