Weekly Circuit: Drone deal + Desert-grown wine

👋 Good Monday morning in the Middle East!

Elon Musk and a blockbuster exhibition featuring the works of Andy Warhol will be headlining this week in the Gulf. Musk, owner of Twitter and the world’s second-wealthiest person, will be speaking on Wednesday at the World Government Summit in Dubai, where he will be interviewed onstage by Mohammed Al Gergawi, the UAE minister for cabinet affairs and chairman of the conference. Others expected at the Dubai event are António Guterres, secretary-general of the United Nations; David Malpass, president of the World Bank; Egyptian President Abdel Fattah El Sisi; and Turkish President Recep Tayyip Erdoğan.

Warhol, the Pop artist, movie director and icon of ‘60s counterculture, will be the subject of an exhibition in Saudi Arabia more than 30 years after his death. Staged inside the glimmering Al Maraya Concert Hall, “FAME: Andy Warhol” will open on Friday as one of the most anticipated events of the 12-day AlUla Arts Festival, Rebecca Ann Proctor reports for The Circuit. The show will feature 70 works, including portraits of Elizabeth Taylor, Dolly Parton, Muhammad Ali, Salvador Dali and Bob Dylan. One highlight promises to be Warhol’s “Silver Clouds” – a room filled with metallic balloons that float hypnotically in the air.

The Abraham Accords Peace Institute published its second annual report last week and issued grades for each of Israel’s partners in the U.S.-brokered normalization agreements. Leading the cohort of nations was the UAE, whose ties with Israel were rated “strong,” highlighted by the free-trade agreement signed by the two countries in May that is eventually expected to yield $10 billion a year in economic activity. Bahrain and Morocco were graded “adequate” in their Israel ties while Sudan’s relationship with the Jewish state was described as “tenuous.”

Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].

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CROWDED SKIES

Air traffic challenge draws Emiratis to Israeli drone firm

High Lander Aviation CEO Alon Abelson with drones

From intelligence gathering to pizza delivery, drone aircraft are increasingly performing new tasks that saturate the skies with the buzz of quadcopters and raise the risks of mid-air collisions. The threat to passenger flights is especially alarming to aviation experts, with 2.2 million unmanned aerial vehicles registered in the U.S. and the number swiftly growing everywhere else. As the world addresses the technological and regulatory challenges, Abu Dhabi-based Edge Group, the largest Arab weapons manufacturer, announced last month a $14 million investment in Israel’s High Lander Aviation to help develop its traffic management software, Yaakov Lapin reports for The Circuit.

Like a control tower: “When flown by our system, the drone will monitor its environment, avoid collisions… and be guided by our algorithm, which is like a control tower,” High Lander CEO Alon Abelson told The Circuit. High Lander is among some 50 Israeli companies that will be exhibiting in the United Arab Emirates next week at IDEX, the biggest security conference in the Middle East. Others at the show, which runs from Feb. 20-24 in Abu Dhabi, include state-owned Israel Aerospace Industries; Elbit Systems, the largest Israeli defense contractor selling shares on the Nasdaq exchange; Heven Drones, which specializes in delivering heavy equipment by UAV; and Plasan, which makes armored vehicles.

Urgent need: Edge was founded four years ago in a consolidation of 25 military and technology companies owned by the emirate of Abu Dhabi. In the initial burst of activity following the normalization agreements between Israel, the UAE and Bahrain known as the Abraham Accords — Morocco and Sudan would join later that year — Edge signed a memorandum of understanding with Israel Aerospace in 2021 to develop defensive systems that can use electronic warfare equipment against enemy drones. The new deal with High Lander gives Edge a “strategic opportunity” to develop drone technology further in both the military and civilian domains, according to the Emirati company. Edge Chairman Faisal Al Bannai said in a statement after the High Lander deal was announced that developing a traffic-management platform for drones “could not be more urgent” because of the rapid proliferation of the unmanned vehicles.

Replace human operators: Abelson, a reserve major in the Israel Air Force, co-founded High Lander after serving as a flight supervisor in northern Israel in his last military role. The experience led him to develop technology that focuses on command-and-control functions, rather than building drones themselves. “We wanted to empower the platforms,” he said. Now High Lander is promoting its product as a drone traffic controller at the national level. “This is the goal,” he said. “Taking an algorithm that managed 20, 30 or 40 drones, and using it to protect against collisions in the entire country.” In recent months, the company has begun testing its software in southern Israel’s Ilan Ramon Airport on large-scale drones. High Lander’s universal traffic management system (UTM) can also be supplemented with a range of digital maps to guide the drones autonomously. If satellite signals are lost, that enables the drone to employ on-board cameras and adjust its route. “The best solution is to replace the human operators — take technology and use it to bypass issues caused by pressure, personal calculations and tiredness,” Abelson said.

Autonomous flight: Edge, which had 2021 sales exceeding $5 billion, is well-positioned as a business partner to help High Lander develop its traffic-management software for greater volume and new directions, said Eden Avraham Attias, a retired IAF brigadier general and combat pilot who is managing partner of Impactive Capital in Tel Aviv. Among Edge’s greatest interests is autonomous flight, which can be significantly advanced by High Lander’s technology, he told The Circuit. “Autonomous air vehicles will be part of our day-to-day lives,” Attias said. “Whether you’re doing security, sensing hazardous materials, monitoring natural gas or doing deliveries, to implement all of this, you need a management system.”

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DUSTY VINTAGE

Turning Israel’s barren desert land into boutique wine country

Assaf Galai stands at the end of a row of cabernet sauvignon vines that are hibernating during Israel’s short winter. He remembers what it looked like when he moved to this Negev desert village more than 20 years ago. When we bought this land there was nothing here – no pavements, no roads, no sewage,” the 58-year-old vintner told reporter Linda Gradstein for The Circuit. “It was a ruined territory with villages that were bankrupt. People here said this is not an area for growing wine and it won’t succeed. For me it was like a natural casino, and I thought I had a 50-50 chance of winning.”

Desert flavor: Galai’s is an estate winery, meaning that he grows all of the grapes he uses to make his 10,000 bottles of prize-winning wines in Nir Akiva, 60 miles (100 km) south of Tel Aviv. His flagship wine, Casa Negev, a blend of 70% merlot and 30% cabernet sauvignon, won gold medals last year at Israel’s Terravino Mediterranean International Wine & Spirit Challenge. Another best-seller is the blanc de noirs, a white wine made with black grapes, in this case cabernet sauvignon. What makes his wines unique, said Galai, is the “terroir,” that amalgam of soil, climate and weather conditions that make each wine-growing area in the world different. Roughly 60% of Israel’s territory is desert. “It’s poor land but it gives the wine a nice quality. You can actually taste the dusty desert flavors in the wine.” Galai said his winery’s terroir is “loess,” a geological term that means it’s made up of windblown dust and silt – in this case about 17% limestone.

New pioneers: The great difference in temperature between night and day in the desert is good for the grapes, and the lack of rainfall means that fungus, which can be a problem in other wine-growing areas, is not a problem here. The Galai estate is part of a group of almost 40 wineries and vineyards that is working together to expand wine tourism in the Negev, which houses only 10% percent of Israel’s population. Others include the Midbar, Pinto, Nana Estate, Neot Semadar and Sde Boker wineries. The effort is being spearheaded by the Merage Foundation Israel, a family fund that has been involved in developing the Negev since 2005. The Negev winemakers represent “a new wave of pioneers,” Nicole Hod, Merage’s executive director, told The Circuit. “There is a powerful story here of archaeology, sociology and tourism. The Nabateans grew wine here 2,000 years ago.”

Rather elegant: In the eastern part of the Negev near the city of Arad, the Yatir winery is also making prize-winning wines. Yatir is owned by one of Israel’s largest wineries, Carmel, and was established in 2000. Today it produces 150,000 bottles, a third of which are exported. Among the Yatir wines, Har Amasa is a well-reviewed blend of petit Verdot, cabernet sauvignon, syrah, malbec and tannat that is aged for a year in small oak barrels. The 2014 Har Amasa was “surprisingly fresh and rather elegant,” international critic Mark Squires said in his tasting notes for Wine Advocate.

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Circuit Chatter

Cairo Sell-Off: Egypt will try to sell stakes in 32 state-run companies, including Banque du Caire and Misr Life Insurance, as it seeks private investment to help stabilize its debt-saddled economy.

Haifa Blues: Israeli lenders that helped finance Indian billionaire Gautam Adani’s purchase of the Haifa Port said they’re confident he will be able to pay off the loans despite his company losing half its value when its stock plunged.

Tell the Robot: The Dubai Electricity and Water Authority will use Microsoft’s ChatGPT technology to make its customer-service operations more efficient.

Digital Skills: Amazon launched a training academy in Saudi Arabia to help the country’s citizens develop computer-related job skills, with a goal of training 35,000 people.

Red Line: Tel Aviv’s new light rail system will begin operation of its first route, the Red Line, on April 26, Israel’s Independence Day, two years behind schedule.

Virtual Guidelines: Dubai regulators issued rules for trading virtual assets, aiming to fight money laundering and mitigate risks in the increasingly popular market.

Closing Circuit

Grocery App: Saudi Arabia’s Kingdom Holding Corp. led a $133 million funding round for Nana, a grocery delivery app.

Urgent Sale: Israel’s Otonomo, which collects data from network-connected vehicles, was acquired by U.S.-based mobility company Urgent.ly after losing 94% of its value following a SPAC merger that valued the company at $1.3 billion.

Green Bonds: OPEC’S Arab Petroleum Investments Corp. will spend $335 million this year on clean energy projects that comes from a green bond it raised in 2021.

Japan Pullback: Japanese investment in Israeli tech companies fell 46% last year to $1.6 billion, tracking retreats from the U.S. and Europe after a record year in 2021.

First IPO: Enlight Renewable Energy began trading on Nasdaq last week in the first Wall Street IPO of the year by an Israeli company.

Leap Ahead: Deals worth more than $9 billion were signed last week at Saudi Arabia’s LEAP technology conference, which drew 172,000 attendees in its second year of operation.

Into Orbit: Earth & Beyond Ventures, a new investment fund focused on Israeli startups with commercial activities for outer space, said it has received commitments from investors totaling $125 million.

On the Circuit

Saudi Prince Alwaleed Bin Talal gave 1 million riyals ($266,500) to each of Saudi soccer team Al Hilal’s players after they reached the finals of the FIFA Club World Cup. Al Hilal lost in the finals on Saturday to Real Madrid.

Miri Regev, Israel’s minister of transportation, said Dubai should be a model for expanding the road network in Israel with five- and six-lane highways.

Ghassan Aouad was named the new chancellor of Abu Dhabi University after serving as president of the Applied Science University in Bahrain.

Ahead on the Circuit

Feb. 14, Beersheva, Israel: Israel Climate Change Conference. Gathering of environmentalists, researchers, business executives and government officials. Ben- Gurion University campus.

Feb 14-17, Dubai, UAE: ICA Congress. International gathering of colored gemstone industry. Almas Tower. Dubai Multi Commodities Centre.

Feb. 15, Jerusalem: OurCrowd Global Investor Summit. Thousands of investors and startup executives from around the world are expected at the annual conference. Jerusalem International Convention Center.

Feb. 16, Jerusalem: Investing in Peace. The UAE-Israel Business Council, StandWithUs, the Abraham Accords Peace Institute and OurCrowd host a reception to celebrate the third year of the 2020 Arab-Israeli normalization pacts. Jerusalem International Convention Center.

Feb. 20-24, Abu Dhabi, UAE: IDEX 2023, Middle East’s biggest defense industry conference, which will be presented alongside NAVDEX 2023, featuring naval and maritime security companies. Abu Dhabi National Exhibition Centre.

Feb. 20-24, Dubai, UAE: Gulfood Exhibition. More than 4,000 companies from 120 countries to attend the world’s largest food and beverage industry conference. Dubai World Trade Centre.

Culture Circuit

Crashing the All-Boys Club: Two women who shook up the Kuwaiti stock market in the 1980s are the subject of a new Netflix series, “The Exchange.” At the time, the Kuwaiti market was the third biggest in the world after the U.S. and Japan and was run out of a parking garage. Directed by Karim El Shenawy and Jasem AlMuhanna, the series, which is based on real events, follows the two ambitious women named Farida and Muneera who are cousins, dress glamorously and have challenging family lives, as they push their way into the raucous all-boys club of stock dealing and become Kuwait’s first female traders.

Playing Around: Gamers from around the world will converge on Riyadh, Saudi Arabia, this summer for the world’s largest esports and gaming festival, which will carry a record prize pool of $30 million. The eight-week event, called “Gamers8: The Land of Heroes,” opens July 6 in the Saudi capital’s Riyadh Boulevard City district and will be accompanied by a string of concerts by international music artists. Last year’s tournament, which had a $15 million prize pool, drew 391 top gamers from 61 countries and 113 teams.