7 January 2019
Trade between the UK and Israel is
booming. The basic facts are quite
astonishing. Bilateral trade in 2014 was
$6.3 billion; the following year it was pushing $7.5 billion; in 2016 it burst
through the $7.5 billion barrier. In
2017 it achieved $9.1 billion, while the first half of 2018 saw total bilateral
trade between the UK and Israel grow by 8% compared with the first six months
of 2017.
Success on this scale does not
happen by chance. One key component behind
this explosion of business activity is the little known UK Israel Tech Hub.
It was back in October 2011 that
then UK ambassador to Israel, Matthew Gould, officially launched the Hub at the
British embassy in Tel Aviv. Its creation
followed an agreement between then UK prime minister, David Cameron, and
Benjamin Netanyahu to promote business partnerships between Israel and the UK,
and the Hub was a ground-breaking effort to do so in the fields of technology
and cutting-edge innovation. Nothing of
the kind had ever been attempted before between the British government and a
foreign embassy.
The UK-Israel Tech Hub aimed at a
win-win partnership – to provide
Israel with the benefits of a close
working relationship with the UK in developing its rapidly expanding technology
and start-up sectors, but also to ensure that the UK market could benefit from the
breadth and quality of Israeli R&D and innovation. Early on the organization identified six key
areas on which to concentrate: Digital,
Life Sciences, Cleantech, Arab tech, Fintech and government technology.
A vital first step was to fill the
top posts on both sides of the partnership.
Early in 2012 Haim Shani, a former director-general of the Israeli
Ministry of Finance, was appointed Chair of the Hub. From the British side the appointment of the
UK’s first-ever tech envoy to Israel was announced by Cameron in December 2012. It was to be venture capitalist and business
executive Saul Klein, who took up the post with a track record of developing
successful start-ups in both Britain and Israel.
Announcing the appointment
Cameron said: “We want to work much more closely with Israel on innovation and
technology. That’s why a year ago we
launched the UK-Israel Tech Hub at our Embassy to link up with UK Israel
Business, the Israeli Embassy here in London and countless talented young
people in both our countries.”
What followed was years of slog,
determination and entrepreneurship by scores of British and Israeli business
executives and officials, and the result has been the flourishing bilateral
UK-Israeli trade figures that show no sign of having peaked, or how high any
peak might reach.
The outstanding success of the UK-Israel
Tech Hub, and the many organizations in both the UK and Israel working with it,
was recognized on 25 October 2018, when Haim Shani was accorded the rare
distinction for a non-UK citizen of being awarded an honorary OBE (Officer of
the Order of the British Empire). Normally
these honours are awarded in person by a member of the royal family – often the Queen herself – in London or Edinburgh. On this occasion the award was made on the
Queen’s behalf by UK ambassador to Israel, David Quarrey. The Hub has been based in the British embassy
in Tel Aviv from the start, so appropriately enough the ceremony was carried
out there.
The award to Shani marked the fact
that, since it was launched in 2011, this world-first tech partnership between
the UK and Israel has helped to boost the UK economy by nearly a billion pounds
sterling. In doing so it has demonstrated
that the vision behind its creation was no chimera. The Hub has indeed enabled British companies
to access Israel’s world leading innovations, while at the same time helping
Israeli companies go global by partnering with UK firms. So far it has helped
set up 175 Israeli-British tech partnerships in deals worth £85 million.
2017 saw more UK bodies, including
some of Britain’s largest, using Israeli cutting edge technologies in areas unfamiliar
to most people including AI (Artificial Intelligence), chatbots, blockchain, IoT
(Internet of Things) and in projects such as smart cities and smart industries.
What are these strange concepts
that are predicted to revolutionize the world around us?
Artificial Intelligence, which has already made a partial
breakthrough into the everyday world, is essentially a machine-produced method
of mirroring the human mind. Chess-playing
computers, which go back to the mid-1970s, were an early example.
A chatbot is a much advanced system of artificial
intelligence. It is a computer program
which conducts conversations with human beings, convincingly simulating how a
human would behave as a conversational partner.
The blockchain is a continuously upgraded financial and
digital ledger that self-audits itself and is virtually impregnable.
The Internet of Things is a network of home appliances,
vehicles, and other devices embedded with software and electronics which enable
these objects to connect, collect and exchange data.
A smart city is an urban
area that uses electronic data collection to manage assets and resources
efficiently. This includes monitoring and managing schools, libraries,
hospitals, and other community services as well as traffic and transportation
systems, power plants, water supply networks, waste management and law
enforcement.
Smart industry, sometimes also
called smart manufacturing, uses fully-integrated, collaborative manufacturing
systems that respond in real time to meet changing demands and conditions in
the factory, the supply network, and customer needs. Computer controls,
modelling, data and other automation devices enable all information to be
available when and where it is needed across entire manufacturing and supply
processes.
These are the sort of front-line
areas in which British and Israeli businessmen are working in productive
collaborations. As Ambassador Quarrey has
remarked: “These new partnerships mean the UK is now a major destination for
Israeli innovation, and Israeli innovation is now part of many areas of life in
the UK.”
A major collaborator and
facilitator on the Israeli side has been the Israel Innovation Authority (IIA),
previously known as the Office of the Chief Scientist, a government department
originally established in 1974. An
independent public entity, the IIA is responsible for Israel’s innovation
policy and is proactive in fostering and supporting it. The IIA provides most of the grants awarded to
Israeli companies involved in research and development (R&D). These grants
are paid back to the state in the form of royalties, calculated according to
the amount of sales related to the research and development performed with the
state’s funding.
In line with the innovative
thinking that it supports, the IIA has become ever more forward-looking in how
it offers its financial aid. Originally,
the authority simply made immediate cash payments. Now approved companies can negotiate a
payment plan which allows the IIA to continue to share in the risk of the
company’s research phase right through to the commercialization of a product.
The IIA has gone even further. Until quite recently companies that licensed knowledge
to entities outside Israel were considered to have transferred intellectual property,
and were obliged immediately to return all grants received from the
authority. In a move designed to ease
the grant-giving process, the IIA decided that companies that offer licenses
for the use of intellectual property, but leave ownership in-house, could continue
to receive financial support for continuing R&D.
Healthy UK-Israel business
collaboration is unlikely to be adversely affected when Britain leaves the
European Union on March 29, 2019.
Britain has long been seeking trading partnerships for the post-Brexit
period, and Israel has been high on the list.
In fact a new UK-Israel free trade agreement has been in negotiation
since March 2017, although it cannot be finalized until after December 31, 2020,
the end of the so-called “transition period” during which EU law will more or less continue to
apply to the UK.
Meanwhile blue-sky thinking about a possible post-Brexit
golden age continues to occupy some of Britain’s best minds. One freshly minted concept is the
“Anglosphere”.
The argument is that these days, in the light of inexpensive modern freight
and refrigeration costs, cheap flights and the internet, cultural proximity
trumps geography. Australia, for
example, may be on the other side of the world, but it is hard to think of a
country closer to Britain in every other sense. Moreover, the Commonwealth as a
whole has surged economically: its combined economy surpassed that of the
eurozone in 2012, and is predicted to overtake the EU as a whole in 2019.
In September 2018, at simultaneous
events in London and Washington, 11 British and American institutes
published a draft treaty setting out in detail how mutual recognition of goods,
services and professional qualifications, as well as free movement of labor,
could be achieved outside the EU. The
terms of the treaty were not confined to the UK-US situation. It was drafted to be not bilateral, but multilateral
– that is, open to other
countries from the start.
On November 4, 2018, an article in
the London Daily Telegraph considered which countries might first
participate in a multilateral treaty of this sort. In doing so, the concept of
an “Anglosphere” was extended beyond English as a common language, to encompass
countries that share a legal system and have compatible levels of income. In addition to the UK, the list included the
US, Australia, Canada, New Zealand, Singapore and Hong Kong. To these, was added Israel which, as the
article points out, “shares the others’ legal, commercial and regulatory
approaches.” Together these eight
countries would constitute a third of the world’s GDP.
An “Anglosphere” trade nexus
including Israel – there’s a prospect worth considering.
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