February 20, 2005

Our region has the intellect to take on India, China and any other high tech power. The Messiah hasn’t arrived, yet an excellent opportunity has arisen to improve Israel’s relations with the Palestinians. Improve, if not more – one must not get carried away by euphoria. The peace process and establishment of a Palestinian state will be a protracted, tortuous process, with ups and downs, including dreadful new situations engineered by fanatic opposition groups on both sides. Yet there is an opportunity for greater things, which must not be missed.

It is also an opportunity to promote new, revolutionary economic initiatives, that could be key to the success of any political arrangement. Many countries, including the US and European ones, support economic arrangements for the Middle East, and it is clear that unless the Palestinian standard of living is improved, the area will remain a powder keg, receptive to the machinations of the Hamas and Hizbullah. Some 60% of them live on $2 a day.

It is therefore a shame that the prime minister is not acting to create a local version of the Marshall Plan, designed to resolve the Palestinians’ economic distress.

We present one idea: to build a Silicon Wadi in Israel, Palestine and Jordan.

Specifically, we propose the creation of a second Bangalore, but here, in a five-year plan that would cost $5-7 billion. It would be financed by those same nations: the US, the EU countries, Japan, and others, as part of the peace arrangement.

The plan calls for establishing and broadening academic institutions that can create 5,000 software engineers a year. It would also support the establishment of special limited partnerships, such as the original Yozma initiative, that would invest in startups operating in the West Bank, Gaza and Jordan. The special limited partnerships would be managed by Israeli venture capital funds.

The central concept is to exploit existing human resources. The region – in the Palestinian areas and in the neighboring countries – have the intellectual prowess to take on India, China and any other high tech power. There is no reason not to establish a second Bangalore right here in the Middle East, leveraging Israeli high tech that already exists.

Thus multiple goals would be achieved in one go. One would be the foundation of technological infrastructure and education, another would be to improve the standard of living. Also, Israeli high tech would become a leading economic sector not only for the country but for the region, resulting in tremendous growth.

The Palestinians might buck at the idea of Israeli control. But to raise their standard of living and try to break the vicious circle of poverty, while achieving world-class hi-tech, they need to swallow some bitter medicine. They cannot do it alone. Europe and the United States are too far away to control it themselves.

We propose that Ministry of Industry and Trade minister Ehud Olmert and the prime minister establish a team to consolidate a program of collaboration between Israel and the Palestinians and present it for debate, and approval, before the countries that profess to want to promote peace.

I would not involve the Finance Ministry. The program must be an external one, as the treasury does not view hi-tech as a factor anyway, either in Israeli economic growth or as a means to promote good relations with the Palestinians, based on long-term economic interests.

What is there in India, that can’t be had here? The Middle East is full of industrious, intelligent people. There is a shortage of capital but the plan could address that. Educational institutions would require substantial budget increases.

Israeli high tech has the connections and the entrepreneurial spirit, as well as the knowledge of the international markets. The fruit could be forthcoming within the space of five years.

There is no reason for an Israeli hi-tech company not to open an R&D center in Ramallah, Gaza or Amman in a matter of a few years. Why globe-trot to Bulgaria, India, Belarus or Cyprus to set up shop, when you can do it right here at home, at even lower cost?

(Originally appeared in The Marker)

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Jason Harris

Jason Harris

Executive Director

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