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Mideast Violence Casts Shadow on Israeli Tech
Sector October 11, 2000
[Tel Aviv, ISRAEL] As violence throughout Israel has escalated
over the last week, Israelis involved in the technology sector are
growing concerned over the future.
In Israel's leading newspaper, Ha'aretz, the financial commentary
went so far as to spin out a scenario in which technology companies
would relocate divisions, subsidiaries and even entire organizations
away from Israel. The Tel Aviv Stock Exchange (TASE) demonstrated
the unrest of foreign investors, with the market's Tel-Tech index
of technology companies plummeting as much as 9 percent, even worse
than analysts had forecasted.
However, Israeli companies listed on Nasdaq did not appear to have
been affected as severely by the civil unrest in Israel.
Michael Eisenberg, a venture capitalist at Israel Seed Partners
in Jerusalem, says he does not believe the political reality is
having a serious impact on global businesses.
"One of our companies is on a (pre-IPO) road show, and the primary
concern among investors is NASDAQ, not Nablus," says Eisenberg,
referring to one of the many Palestinian cities where violence erupted.
"I'm very optimistic about the situation. Some people are canceling
trips [to Israel] from abroad, but that's the worst of it."
Fearing investors might jump to the kinds of conclusions that affected
the TASE, Israeli companies like Vineto went so far as to issue
calming press releases.
"We can understand the anxiety that many people and companies overseas
feel as they are being fed negative, disturbing images and television
soundbites from the Middle East," says Vineto chief executive Alon
Fishman. "What people abroad do not realize is that if a tropical
storm hits Florida or a mild earthquake rattles California, it has
no affect on Wall Street."
Still, violent disturbances on the scale witnessed this past week
are highly irregular, and if nothing else, have demonstrated how
volatile the Middle East can get. When asked about their opinions,
Israelis are eager to comment.
"Personally it doesn't bother me," says Rami, a software engineer
at one of Israel's many technology companies. "However, doing business
with clients who perceive this region to be war struck could get
problematic, and a presence outside the country is unavoidable."
If the clashes continue, it obviously does not bode well for Israel
and its economy, new and old. However, if opposing parties succeed
in calming their respective constituencies, Wall Street investors
might conveniently forget politics and concentrate on profitable
technologies.
"Over the last seven years, we've seen ups and downs in the peace
process," says Eisenberg, "but the technology always remains - it's
about intellectual property, which by nature is very mobile."
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