(COMTEX) B: BusinessWeek: Israel could deteriorate into charity case
B: BusinessWeek: Israel could deteriorate into charity case
Apr 21, 2002 (TheStreet.com via COMTEX) -- The Israeli economy could escalate
into a charity case supported by American and world Jewry, like it was in the
80s, BusinessWeek predicts.
Israel is a long way from the three-digit inflation or collapsing banking system
of then, and there aren't any signs of panic despite the 12% devaluation of the
shekel against the dollar, notes the magazine. But, BusinessWeek notes that it
is becoming increasingly evident that the pillars of the economy are under
threat.
Israel's image in the media is blackened, and this hurts prospects for
attracting technology investments. In addition, the huge security costs and the
drop in government revenue are undermining the country's fiscal and economic
reputation. The Bank of Israel is concerned about its standing being eroded.
Analyst Tobias Fischbein of investment bank Lehman Brothers (NYSE:LEH) estimates
that venture capital investments will drop this year to $1 billion, after a
record $4.1 billion in 2000.
Analysts estimate that another 100 local startups will vanish in 2002 after 500
of 3,000 startups closed in 2001.
Not only the security situation is to blame, but given the security situation,
even if the global economy recovers, the upswing may pass Israel by.
To date, the crisis in the local technology sector was attributed to the Nasdaq
crash, but today it is Israeli firms that are marked as under crisis. Three
leading technology firms, Check Point Software Technologies (Nasdaq:CHKP),
Amdocs (NYSE:DOX), Comverse Technology (Nasdaq:CMVT), have each lost 30% of
their value.
It isn't only foreign observers who have a gloomy view of Israel. "We are back
to square minus one. We are back to 1948," Benny Gaon, former chief executive of
Koor Industries (NYSE:KOR), who today heads B. Gaon Holdings, told BusinessWeek.
He said he is disappointed by the escalation in the Israeli-Palestinian
conflict. Gaon said that all the economic achievements in the wake of the peace
process between Israel and the Palestinians that had been achieved up to four
years ago have vanished.
Aladdin Knowledge Systems (Nasdaq:ALDN) CEO Yanki Margalit said that last year
the firm had signed an agreement with a big Japanese company, which cancelled
the deal after the terror attack at the Dolphinarium disco in Tel Aviv. The
Japanese said the cancellation was due to "price issues", Margalit said.
Twenty people died in the attack last June, mostly teenagers, and 120 people
were injured.
"Were not going to see any foreign money in the venture-capital industry this
year," Giza Venture Capital Chairman and CEO Zeev Holtzman told the weekly.
By TheMarker.com Staff
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