Aramco CEO calls for ‘international standards’ on AI

RIYADH, Saudi Arabia – The head of Saudi Aramco called for an international set of rules to govern artificial intelligence and protect businesses from security breaches.

CEO Amin Nasser told a packed hall today at the Global Cybersecurity Forum in Riyadh he believes in “international standards that can keep pace with the rapid development of AI.”

The stakes are high. Aramco was the victim of one of the biggest cyber attacks in the internet era in 2012 that threatened to shut off 10% of global oil supply. 

On Wednesday, Aramco’s venture capital arm, Wa’ed Ventures, invested in SpiderSilk, a UAE startup that offers AI-powered cybersecurity services. The $500 million fund led the $9 million round and signed a collaborative agreement as the state-oil business – and world’s No. 3 most valuable company – pushes to ramp up its cybersecurity offerings.

The Riyadh forum is being held against a backdrop of massive global interest in how the development of artificial intelligence will be governed and the direction of AI regulation starting to take shape. 

Technology leaders are reacting to an executive order from the Biden administration earlier this week, one of the farthest-reaching policies on the use of artificial intelligence ever set out. Meanwhile, G7 leaders also agreed on the same day to a voluntary code of conduct on AI, providing a broader coalition of supporters including the US and Japan for the legally binding rules that the EU is now finalizing under the EU AI Act. And a summit on AI safety is underway in the U.K. today, organized by Prime Minister Rishi Sunak.

In a decisive week for the future of online safety, the forum in Riyadh is the Arab world’s part of the conversation. 

Saudi Arabia has convened Gulf leaders including Yousef Al-Benyan, Saudi Arabia’s minister of education; Abdulrahman Al-Malki, president of the national cyber security agency in Qatar; and Ali Bin Salim Al Balushi, chief of the electronic defense center in Oman, alongside executives from Chinese telecom Huawei and U.S. cybersecurity firm Palo Alto Networks in the gilded halls of The Ritz-Carlton. 

The kingdom positioned some of its most prominent national entities – Saudi Aramco, telecom STC and mega-project NEOM – as security leaders in the energy, communications and urban planning industries. 

In the opening session, former Portuguese president José Manuel Barroso, who was also president of the European Commission, warned against what he sees as a decline in global cooperation on cybersecurity. 

UAE, Israel battle computer hackers together with ‘Crystal Ball’ platform

TEL AVIV, Israel – Fighting computer crime together has helped reinforce ties between the United Arab Emirates and Israel since they signed a normalization agreement almost three years ago, the UAE’s head of cybersecurity, Mohamed Al Kuwaiti said.

Visiting Tel Aviv last week for the annual Cyber Week conference, Al Kuwait introduced the “Crystal Ball” project, a digital platform for detecting and repelling computer attacks. Microsoft, Israel’s Rafael Advanced Defense Systems and Abu Dhabi-based CPX are providing the technological backbone, and an unspecified number of countries will also participate.

“Cyberthreats do not distinguish between nations, do not distinguish between entities or people,” Al Kuwaiti said on Tuesday at Tel Aviv University gathering. “That is why we need to unite against those threats, and the Crystal Ball, that we are aiming for the whole community, will be the first step toward that.”

Al Kuwaiti, who met with Israeli Prime Minister Benjamin Netanyahu on Monday as part of a group of national cyber directors attending the conference, said the platform will enable partner countries to “easily and seamlessly share information.” The collaborative international effort will be strengthened by the combination of abilities, processing power and volume of data, he said.

The mission is to “design, deploy and enable regional intelligence enhancement” through collaboration and knowledge-sharing to combat national-level cyberthreats, according to a slide Al Kuwaiti showed during his presentation. He said the value of cooperation between the two countries was demonstrated recently when they worked together to ward off a DDOS (distributed denial of service) attack on their networks.

The UAE and Israel normalized diplomatic relations as part of the September 2020 Abraham Accords, leading to the bolstering of both commercial and strategic ties between the countries. Al Kuwaiti said the connection with Israeli tech companies has been especially helpful in his country’s transition to a digital economy.

Amid the high-level meetings, two networking organizations for information security  professionals in the UAE and Israel signed a memorandum of understanding to promote collaboration. UAE-based EliteCISOs and Israel’s Cyber Together said in a statement that they would cooperate on knowledge-sharing, professional training and cybersecurity workshops to help confront emerging threats to both countries.

The meeting with Netanyahu was held at the headquarters of the Israel Security Agency, or Shin Bet, whose director, Ronen Bar, spoke at the Cyber Week conference about the agency’s increasing use of artificial intelligence.

“The ISA and AI have one thing in common,” Bar said. “We both make a living by looking for patterns and anomalies.” He said the agency has also developed its own Generative AI tool that can be used like OpenAI’s ChatGPT.

Another AI innovation being tested by the ISA is an airport security system that he said would “dramatically change” the screening process before flight check-in.

“Maybe one day we will abandon the traditional favorite question for all of you: Did you pack by yourself,” he said.

Bar said the ISA is setting up a technology incubator to help startups develop generative AI products to address security and intelligence needs. He said AI will help the agency in several areas: prioritizing information; boosting intelligence capabilities by identifying patterns and deviations from patterns; becoming a tool in the decision-making process; and helping to forecast trends and the likelihood of their realization.For the agency, he said, generative AI will be a “partner” at the decision-making table, but not a “decision-maker.”

Speaking at the conference on Monday, a former Pentagon official warned that both government and business aren’t paying enough attention to AI’s potential dangers.

“I think that Israel should be very concerned about what algorithms Iran may be trying to develop or acquire overseas,” said Ezra Cohen, the former acting under secretary of defense for intelligence and security who is now vice president for corporate strategy at Oracle Corp.

“Now I’m not saying that we should be treating AI today like a nuclear weapon or anything like that, but there should be certain procedures that are put in place and I think a lot of these companies are really very juicy targets for the adversary,” Cohen said.

The Weekly Circuit: Cyber sleuths gather + Fusion reactors

👋 Good Monday morning in the Middle East!

The head of cybersecurity for the United Arab Emirates, Mohamed Al Kuwaiti, leads an international cast of government officials, corporate executives and investors gathering today on the campus of Tel Aviv University for its annual CyberWeek conference. The early summer event will also feature Christopher Lukas, the chief information security officer for Chevron, which co-owns a Mediterranean gas field off the coast of Israel with Abu Dhabi’s Mubadala sovereign wealth fund.

CyberWeek will kick off with addresses by the director of Israel’s Shin Bet security agency, Ronen Bar, and chief of the Israel National Cyber Directorate, Gaby Portnoy. Coming from overseas are the acting U.S. national cyber director, Kemba Eneas Walden; Taiwan’s digital affairs minister, Audrey Tang; the head of the Canadian Centre for Cyber Security, Sami Khoury; and Interpol’s cybercrime director, Craig Jones.

Also on the roster are the chief information security officer for Microsoft, Bret Arsenault; the NFL’s chief information security officer, Tomás Maldonado; Check Point Software Technologies CEO Gil Shwed; CyberArk Executive Chairman Udi Mokady; and the head of intelligence for Crowdstrike, Adam Myers.

At the Paris Air Show last week, Saudi Arabia emerged with a series of multibillion-dollar aircraft deals and showed off its newest carrier, Riyadh Air. Among the orders placed were 30 Airbus A320neo aircraft by the budget airline Flynas and 30 Boeing jets by its flag carrier Saudia. The kingdom intends to serve as a global logistics hub by doubling its air cargo capacity to 4.5 million tons by 2030, according to a statement by the Saudi General Authority of Civil Aviation.

Israel Aerospace Industries used the French exposition to unveil its new $1 billion Oron stealth jet. The aircraft is designed primarily for intelligence-gathering, with one-third of its weight taken up by dozens of high-performance computers and eight stations for intelligence officers, according to the state-owned aerospace company. Other products drawing crowds were two missile-defense systems: IAI’s Arrow-3 and Rafael’s new SkySonic system, designed to intercept missiles that fly at several times the speed of sound. 

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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PITCHING PLASMA

NT-Tao seeks to generate fusion with reactors the size of shipping containers

Creating a miniature version of the sun in a nondescript office building outside Tel Aviv might be the key to providing cheap, waste-free energy for the entire world. NT-Tao, an Israeli startup led by a former submarine commander, is one of some 30 companies racing to generate energy through nuclear fusion. Its founders are trying to develop fusion reactors small enough to fit in a 40-foot shipping container, but powerful enough that each could provide electricity for 1,000 homes, Melanie Lidman reports for The Circuit.

Honda invests: After raising $22 million in February from Japan’s Honda Motor Co. and other investors, NT-Tao is looking to grab a modest chunk of what some predict could become a $40 trillion fusion industry. Leaders in the field include Cambridge, Mass.-based Commonwealth Fusion Systems, which is backed by billionaire Bill Gates, and Seattle-based Helion Energy, which counts Sam Altman, CEO of artificial intelligence pioneer OpenAI, as an investor.

Abundant and clean: “Fusion energy is really the only abundant source of energy that is clean, and you can get as much as you need,” said CEO Oded Gour-Lavie, who co-founded NT-Tao in 2016 after serving 30 years in the Israeli navy. “There’s nothing coming close to it.” One problem: the technology doesn’t quite exist yet. 

Hotter than the sun: When hydrogen gets heated under pressure to around 100 million degrees Celsius, about six times hotter than the sun – even for a fraction of a second – it becomes so hot that the electrons are sheared from the atoms and the nuclei collide with one another. When two nuclei meet and fuse together, an enormous amount of energy is released. Finding a way to capture the energy generated by that fusion could go a long way towards solving the current energy crisis.

COP28 agenda: Fusion will be one of the prominent topics at COP28, the United Nations Climate Change Conference, which starts Nov. 30 and will be hosted by the United Arab Emirates. The conference’s president-designate, Sultan Al Jaber, who is also CEO of the Abu Dhabi National Oil Company, spoke at a climate conference in the UAE last month about the “need to keep pushing for breakthroughs in battery storage, expand nuclear, and invest in new energies like fusion.”

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MOVING MONEY

Airwallex sets sights on Arab Gulf states as it opens first Middle East office in Tel Aviv

Airwallex, a digital payment platform that aims to disrupt the way businesses move money around the world, is building up its new office in Israel and aiming to expand its reach to the Arab Gulf states. Founded in 2015 in Melbourne, Australia, Airwallex opened a branch in Tel Aviv in May, hiring Or Liban, a former Google executive, to run operations and expand in the region, Pranav Sood, general manager for Europe, the Middle East and Africa, told The Circuit’s Jonathan Ferziger.

Disposable income: “Across the Middle East, you see young, growing populations – populations that have lots of disposable income and people who are looking to spend online for e-commerce – also to travel and to buy and sell things around the world,” Sood said in an interview from London. “All of those factors mean that the Middle East is a region that we’re very excited about and looking to invest in.”

$50 billion: Airwallex, which processes more than $50 billion in transactions a year, is one of the fastest growing financial technology companies and carries a market value of $5.5 billion. The company raised $902 million from investors that include Salesforce Ventures, Sequoia, MasterCard, Tencent and Lone Pine Capital. Sood was in Israel last week to attend the Calcalist conference on financial innovation, which was co-sponsored by Airwallex. Liban spoke on a panel about the relationship between banks and fintech companies.

Global offices: In Israel, the company’s customers include Papaya Global, which helps businesses manage payroll and payments, and OurCrowd, a Jerusalem-based venture capital investing platform. Airwallex has about 1,300 employees in 20 offices, including San Francisco, London, Amsterdam, Singapore, Hong Kong, Shanghai and Tokyo. The company is currently recruiting a staff of about 10 employees for its new office in Tel Aviv and is looking at potential acquisitions in Israel in the field of cybersecurity.

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Circuit Chatter

Carbon Credits: ADNOC is setting up a desk to trade carbon credits as the UAE prepares to host the COP28 climate conference in November.

Leap for Lazard: Abu Dhabi’s ADQ sovereign wealth fund held discussions to acquire New York’s Lazard investment bank and take it private, but the talks eventually fell apart.

Gas Deals: China National Petroleum Corporation signed a 27-year agreement to purchase 4 million tons of liquefied natural gas a year from QatarEnergy.

Cash Cows: Saudi Arabia’s VMS venture studio acquired a minority stake in Egyptian start-up accelerator Cash Cows to invest in startups in the MENA region.

Flying Taxi: Germany’s Volocopter conducted test flights of its prototype air taxi at Saudi Arabia’s Neom for possible use in the $500 billion city of the future.

Tech Offering: ADNOC and Abu Dhabi-owned G42 are in early talks about a possible public offering for their joint venture technology firm AIQ, Reuters reported.

Qatari VC: Rasmal Ventures, the first independent Qatari venture capital firm, began operations at the Qatar Financial Centre, looking to invest in MENA startups.

Sea Battles: UAE defense conglomerate Edge agreed to work with the Brazilian Navy on developing long-range anti-ship missiles.

Hajj Buses: Saudi Arabia said it will test self-driving electric buses in Mecca to transport pilgrims coming from around the world to perform the hajj.

Green Construction: The Abu Dhabi Investment Authority co-chaired a group with the French Development Agency to promote sustainable infrastructure in emerging markets.

Gaming Jobs: Abu Dhabi’s Department of Culture and Tourism said it expects more than 300 jobs to be created in the e-gaming industry, spread across 20 new companies.

Christian Tourism: Evangelical Christians have become some of the most enthusiastic visitors to Saudi Arabia since the Islamic kingdom opened its doors to leisure tourists.

Closing Circuit

Petrochemical Producer: Saudi Aramco signed an $11 billion contract with France’s TotalEnergies to build a new petrochemical complex in Saudi Arabia.

Electric Cars: An Abu Dhabi-controlled investment firm agreed to buy a 7% stake in Chinese electric carmaker Nio, paying about $739 million.

Water Network: The Abu Dhabi National Energy Company plans to acquire wastewater processor Sustainable Water Solutions for $463 million.

Racing Cars: Mumtalakat, Bahrain’s state investment fund, agreed to buy a $509 million stake in U.K. racing carmaker McLaren Group from Saudi Arabia’s Public Investment Fund and Ares Management, Sky News reported.

Plastics Offer: ADNOC approached Covestro AG, the German maker of plastics and chemicals, with an $11 billion takeover proposal, Reuters reported.

Metals Acquisition: Saudi Arabia’s Public Investment Fund appears to be the leading bidder to acquire a $2.5 billion stake in Vale SA’s nickel and copper operations, Bloomberg reported.

Going Up: Trade between the UAE and Israel increased 42% to $1.3 billion during the first five months of 2023, compared to the same period last year.

Islamic Fintech: Egypt’s Agel, a Sharia-compliant fintech startup, raised more than $1 million in a pre-seed funding round, led by Plus Venture Capital and Seedstars.

Water Tech: N-Drip, an Israeli developer of new irrigation technologies, raised $44 million in a funding round led by the Granot investment company.

AI Hub: The Dubai International Financial Center will create a $300 million hub for artificial intelligence and Web 3.0 companies, seeking 500 companies to operate there by 2028.

IPO Ahead: Bahrain-based asset manager Investcorp will seek to raise as much as $600 million with the public share sale of an investment vehicle in Abu Dhabi, Reuters reported.

Port Lease: Pakistan agreed to lease its Karachi seaports for 50 years to the UAE’s AD Ports, which will invest $220 million to upgrade the facilities.

Starting Fresh: Saudi Arabia’s Alfanar Global Development said it will invest $2.7 billion to establish five residential communities in the new city of Neom. 

On the Circuit

Talal Al Zain, the former CEO of Bahrain’s sovereign wealth fund, was named chief investment officer of Israel’s Exigent Capital Group and will run the firm’s new office in Manama.

Trifon Natsis, co-founder of  Brevan Howard Asset Management, has relocated to Abu Dhabi as the investment firm expands its hedge fund business  in the UAE. 

Geoff Morrell, a former Disney spokesman, has been retained by Saudi Arabia’s Public Investment Fund to help explain the deal to merge its LIV Golf circuit with the PGA Tour.

Boaz Peer will replace Merav Weinryb as Qualcomm Ventures’ vice president and managing director for Europe and Israel, Calcalist reported.

Ebru Pakcan, Citigroup’s head of the Middle East and Africa cluster, told The National in an interview that the region is the bank’s fastest growing in the world, especially the six Gulf states.

Ahead on the Circuit

July 26-29, Tel Aviv, Israel: CyberWeek. Investors, corporate executives, government leaders speak at international conference on cybersecurity. Tel Aviv University campus.

June 27-29, Tel Aviv, Israel: Food Sec & Tech Israel. International conference on strategies and technological innovations in food security. Rabin Conference Center and Tel Hai College.

June 29, Dubai, UAE: Emirati Women Tech & Innovation Conference. Gathering of female business leaders from across the Middle East. Palm Jumeirah.

July 4-5, Tel Aviv, Israel: Future of AI. Conference bringing together investors, corporate executives and government officials on advances in artificial intelligence. Expo Tel Aviv.

July 20, Dubai, UAE: Blockchain Banking Fest​​​​​​​. Entrepreneurs discuss impact of blockchain on banking and payments. DIFC Innovation Hub.

Culture Circuit

Qatar’s Entry: Qatar’s sovereign wealth fund struck a deal to buy a 5% stake in the parent company of the NBA’s Washington Wizards, the NHL’s Washington Capitals and the WNBA’s Washington Mystics as part of a $4 billion deal. It’s the Gulf state’s first foray into U.S. professional sports.

Golf Probe: PGA Tour Commissioner Jay Monahan, Saudi Arabian Public Investment Fund Governor Yasir Al-Rumayyan and LIV Golf CEO Greg Norman were invited to testify before the U.S. Senate Permanent Subcommittee on Investigations next month.

Saudi Cycling: Saudi Arabia’s city-in-the-making Neom is exploring the possibility of taking over the naming rights for the Dutch cycling team Jumbo-Visma next year.

Eating Well: Dubai’s Orfali Bros Bistro, led by three brothers from Syria, was named the best restaurant in the Middle East and North Africa region by the gastronomic bible, “World’s 50 Best Restaurants.” Six of the top 10 MENA restaurants were in the UAE. Others included Fusions by Tala in Manama, Bahrain, at No. 3; George & John in Tel Aviv, Israel, at No. 6; Fakhreldin in Amman, Jordan, at No. 8; and Zooba in Cairo,  at No. 9. Opa, a vegan restaurant in Tel Aviv, was spotlighted as “one to watch.”

Cybersecurity threats highlight need for Mideast cooperation

Concern about cybersecurity is bringing together states in the Middle East and North Africa to develop a regional approach to repelling digital threats.

Representatives from the United Arab Emirates, Bahrain, Israel and the U.S. participated last week in a forum at the Atlantic Council in Washington, D.C., to discuss making cybersecurity a new field for cooperation under the Abraham Accords.

“What we are doing here is seizing upon a geopolitical opening,” Robert Silvers, the U.S. Homeland Security undersecretary for strategy, policy and plans, said during the May 23 panel discussion, which was webcast from the Washington think tank. “We can work together as partners to harden up our defenses.”

Citing statistics that showed Israeli companies receiving 40% of global private capital invested in cybersecurity in 2021, generating $8.8 billion in exports, Israel’s ambassador to the U.S., Michael Herzog, said his country wants to share its expertise with regional partners.

“We live in the same region. We are targeted by the same actors: state actors, non-state actors and cybercriminals,” Herzog said. ‘It’s only natural that we cooperate in the field of cybersecurity since we have so much going between us in so many fields [under the normalization agreements signed in 2020].”

The forum was organized by the Atlantic Council’s N7 Initiative, which is supported by the Jeffrey M. Talpins Foundation in New York. The program aims to generate ideas for policymakers to strengthen and expand the Abraham Accords for greater cooperation between Arab countries and Israel.

Cooperation between the U.S. Navy and Bahrain, where the U.S. 5th Fleet is based, could serve as a model for protection against computer threats, said Bahrain’s ambassador to the U.S., Abdullah bin Rashed Al Khalifa.

“It’s about time that we do the same in the cyber realm,” he said. “The time is now, and I think that there is an appetite with the Abraham Accords. It has really opened up the opportunity to work together.”

Among other participants in the forum were Mohamed Al-Kuwaiti, the UAE government’s head of cybersecurity; Jeanette Manfra, global director of security and compliance at Google; Rep. Elissa Slotkin (D-MI), co-chair of the House Cybersecurity Caucus; and Sen. James Lankford (R-OK), co-chair of the Senate Abraham Accords Caucus.

Weekly Circuit: Mideast cyber partners + Linking libraries

👋 Good Monday morning in the Middle East!

Cybersecurity and space exploration are emerging as fruitful areas for joint research and investment between Arabs and Israelis. That was the message that rang out from one conference hall to another in Tel Aviv last week, where cabinet ministers, scientists and investors hailed the prospects for Middle East cooperation made possible by the 2020 Abraham Accords.

At the Cybertech 2023 conference, top government officials responsible for cybersecurity in the UAE, Bahrain, Morocco, Israel and the U.S. appeared together onstage to talk about the benefits of regional partnership. “The first word needed for success is trust, and what you see in front of you today is trust,” said Salman bin Mohammed bin Abdullah al-Khalifa, CEO of Bahrain’s National Cybersecurity Centre. “We’ve all been working together behind the scenes but now we’re past that stage, and I think we now want to see this trust in action.” Read The Circuit’s interview with Israeli tech patriarch Yossi Vardi, who hosted both Cybertech and the subsequent DLD Tel Aviv Innovation Festival last week.

Across town at the 18th Ilan Ramon International Space Conference – named for the Israeli astronaut who died with six American crewmates in the 2003 Columbia space shuttle disaster – discussion of Arab-Israeli cooperation generated headlines. “Today we are witnessing a new era of space exploration, one that is marked by cooperation between countries, private companies and research institutions,” said Sarah bint Yousef Al Amiri, the UAE minister of state for advanced technology and chairwoman of the UAE Space Agency. “Let us continue to work together and make the impossible possible.”

Debate continued to rage in Israel over the prospects of a credit downgrade because of Prime Minister Benjamin Netanyahu’s proposals to limit the power of the judiciary, which opponents have branded undemocratic. Thousands marched for the fifth week in a row at protest demonstrations in Tel Aviv, Jerusalem and Haifa. Jacob Frenkel, former governor of the Bank of Israel and ex-chairman of JP Morgan Chase International, criticized the prime minister for dismissing warnings about investor risk. “When JPMorgan makes a recommendation, take it very seriously,” he said in a television interview. Netanyahu, who flew to Paris last week for a meeting with French President Emmanuel Macron, also met with business leaders there and said he heard no concern about dangers of investing in Israel.

The UAE’s envoy to Israel, Ambassador Mohammed Al Khaja, met with the current governor of the Bank of Israel, Amir Yaron, who has also cautioned about the impact of the judicial reform package on Israeli markets. Al Khaja tweeted his appreciation to Yaron “for sharing your insights & prospects of Israel’s economy & the growth potential by engaging all sectors of society. We look forward to continue working together to realize the full potential of our countries’ thriving economies.”

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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OFF THE SHELVES

Missing pieces to cultural puzzles appear in UAE-Israel library ties

Nearly 120 years ago, Hermann Burchardt, a German Jewish explorer, was traveling in the Middle East, talking to Arab leaders and taking photographs, Jenni Frazer reports for The Circuit. Among the iconic pictures was what is thought to be the first image of the founding father of Abu Dhabi, Sheikh Zayed bin Khalifa Al Nahyan, known as Zayed the First. He was the great-great-grandfather of the current president of the United Arab Emirates, Sheikh Mohamed bin Zayed Al Nahyan.

Murder mystery: Although the pictures Burchardt took in Abu Dhabi became famous in the region and reproduced many times, his personal impressions of the people and places he photographed remained a mystery. He and his fellow travelers were murdered in Yemen in 1909 and his journals were assumed to have been lost. Eventually, via the estate of Eugen Mittwoch, a German scholar of Islamic and Judaic studies, Burchardt’s missing diary — and hundreds of pages of correspondence, notes and official documents, together with numerous photos — all found their way to the National Library of Israel in Jerusalem.

Filling in the blanks: It was this material that delighted Hamad Al-Mutairi, director of the archives department of the Emirates National Library and Archives (NLA), based in Abu Dhabi, when he and other colleagues visited Israel last summer. For Al-Mutairi, seeing the Burchardt collection in Jerusalem was thrilling, and filled in the blanks for his researchers. “We were able to see details about the kind of food he ate, and the type of traditional hospitality given to him at that time as a traveler in the region.” The Emirati visit — and a memorandum of understanding between the two libraries — is a direct and tangible result of the Abraham Accords, signed initially between Israel and three partners — the UAE, Bahrain and Morocco — in 2020. 

Joint exhibit: The Burchardt material is essential to drawing a fuller picture of the first years of the individual emirates that now make up the UAE. The Israelis have provided Abu Dhabi with digital copies of Burchardt’s diary and the accompanying papers, which will become part of the NLA collection. “We didn’t stop there,” said Al-Mutairi. “We’re now trying to find the right time to put together some sort of exhibition about Burchardt, charting his journeys across the region. It might be online or it might be physical.” The formal agreement between the two libraries will ensure that the material will marry the holdings that each has; and in the meantime, experts from the two institutions will work together to enrich and expand background information and metadata related to the archive’s contents, including translations, greatly increasing its value to scholars across the globe as a rare reflection of Gulf history.

Oral history: The UAE has built up an enviable body of material based on oral history, while the Israeli library has tended to focus more on physical collections — its Islam and Middle East collection, for example, includes priceless documents and manuscripts not even found in much of the Arab world. Samuel Thrope, curator of the Islam and Middle East collection in Jerusalem, said he has been talking with colleagues at the NLA about oral history connected to a project on Clinton Bailey, an American-Israeli researcher who spent 50 years documenting Bedouin culture and society. The Bailey recordings — all 350 hours of them — are “super-interesting,” said Thrope, and chronicle Bedouin life in the Negev and Sinai between the late 1960s and 2009. “They have all been cataloged and digitized — and now we are in the process of transcribing them.”

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CIRCUIT Q&A

Catching up with Yossi Vardi, wisecracking patriarch of Israel’s startup culture

Leaning back on a big white couch in the lobby at Tel Aviv’s Habima national theater, where he was hosting one of Israel’s most influential annual technology conferences, Yossi Vardi gets ready to shmooze. At 80 years old, he’s dressed in a scruffy black winter jacket and positions himself at the foot of Habima’s grand curving staircase, The Circuit’s Jonathan Ferziger reports. Inevitably the investors, CEOs and government ministers rushing to lead panel discussions at last week’s DLD Tel Aviv Innovation Festival catch his eye and pause to say hello. In Hebrew, English and Yiddish, Vardi trades quips with them – many of whom consider him their mentor – basking in his reputation as the adorably ornery grandpa of Israel’s startup culture. He doesn’t always remember people’s names so he asks them to draw close and examines their conference badge. One budding entrepreneur wouldn’t leave after a two-minute pitch, and Vardi told him his idea wasn’t worth listening to.

AOL deal: Over the arc of Vardi’s career, which took him from procuring crude for the energy-starved nation in the 1970s as chairman of the Israel National Oil Company to selling ICQ, the first widely used instant messaging software that his son Arik created with three friends, to AOL for $407 million, Vardi has been a leader in Israel’s tech world. He has since led, invested in or helped build more than 70 startups, and is in demand as a speaker around the world about how Israel earned its name as the Startup Nation. He was the recipient of the Prime Minister’s Award for Life Achievement. In between Vardi’s brief conversations with roughly two dozen conference participants heading up the stairs, The Circuit interviewed him about the difficulty of raising venture capital, investor concern about Israel’s judicial reforms, normalization with Arab countries, artificial intelligence and what makes a good startup entrepreneur.

The Circuit: How do companies survive this period when investment capital is drying up?

Yossi Vardi: First of all, they need one very important thing, which is luck. The second thing is money. Money has been disappearing very quickly and therefore some companies will perish and some companies will resolve this by being acquired by other people. We saw it in 2000, we saw it in 2008 to a lesser degree and we’re going to see it again now. It’s not a pleasant situation, but this is business, this is the cycle.

Israeli startup executives are marching in the streets against the government’s proposed judicial reforms and some companies are threatening to take their money out of the country. What impact does that have on foreign investors?

We are now in a very, very sensitive situation. Some people say it will be disaster, while the government says everything is wonderful. We have to stare directly at the crisis and figure out how to resolve it, because the question is not who is right and who is not right. Suppose the worst scenario appears and we lose the tech industry. Some people will say we are sorry. But it’s too serious to just say we’re sorry. We are playing here with a nuclear economic situation. I really hope that we get sober and learn how to reduce the risks.

What impact do the normalization agreements with the Gulf states have on investment?

You have to remember that the two fundamental agreements Israel has reached with Arab countries are with Egypt and Jordan, which stopped the killing of people. This is something holy. We must arrive at some kind of arrangement with the Palestinians. I think the Abraham Accords are important. They enhance the legitimacy of Israel in the eyes of other members in the region. So they’re a segue for us to do more things. In this respect the Abraham Accords are important and I hope they will develop further. When the economic situation of the world is good, we get a wonderful flow of funds. I don’t think business with the Gulf states is going to tilt the needle, but it’s very welcome.

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Movie Buyout: AMC Theatres sold its stake for $30 million in a joint venture that brought cinemas to Saudi Arabia in 2018. The international movie theater chain said it was bought out by Saudi Entertainment Ventures, its local partner, which will carry a license for the AMC’s brand and content. The New York-based entertainment company has been trying to manage a high debt load stemming from the Covid-19 pandemic. In Saudi Arabia, AMC said it “will transition from a management and investment role to a pure licensing relationship.”

Wellness Highway: Dubai is considering a plan to build a glass-covered “wellness highway” looping around the city, which would be powered by sustainable energy and contain 93 kilometers (58 miles) of paths for biking and running.

Bedouin Film Festival: Rahat, Israel’s largest Bedouin city, is hosting its first film festival over four weekends this month. Some 40 films, including movies from Saudi Arabia, Iran, Italy, France and Spain, will be screened at the Rahat Center for Fine Arts. The event includes the premiere of “Jirah,” a documentary by Rahat filmmaker Yosef Abu Medigam.

Israeli tech companies headed into another tough year

After a painful year for Israel’s startups, 2023 won’t bring much relief, and salvation is unlikely to come from Gulf investors, Israeli tech industry leader Avi Hasson said.

Israeli technology companies attracted $15.5 billion in investment last year, down 43%  from a record $27 billion in 2021, according to a Jan. 10 report by Start-Up Nation Central, a nonprofit organization based in Tel Aviv that promotes the country’s tech industry. Hardest hit was cybersecurity, a sector closely identified with Israeli expertise, while the report found that startups developing agricultural and food technologies emerged fairly unscathed. The decline in investment was slightly sharper than in the U.S., where funding for startups dropped 40%, the report said.

Even as the United Arab Emirates and Israel begin operating this year under a free-trade agreement that is projected to generate an annual $10 billion in economic activity by 2026, the relationship will be characterized by caution, Hasson, CEO of Start-Up Nation Central, told The Circuit.

Investors from Arab countries that normalized relations with Israel in 2020 under the U.S.-brokered Abraham Accords are going to be “more cautious, more prudent,” and more demanding of “due diligence” before agreeing to commit funds, Hasson said in an interview. With the 43% drop in venture capital investment and cash-starved firms carrying out successive waves of layoffs, Hasson said the bad news isn’t over. “Expect more of that in 2023,” he said. Israel taps into many of the same venture capital sources as Silicon Valley companies do, but the blow to raising cash from this year’s economic contraction is greater because of the market’s smaller size, he said. “Every shock has a bigger impact here,” Hasson said.

While the advent of normalization raised hopes in Israel that the UAE and Bahrain would be deep sources for investment, Hasson said expectations were inflated. “We did not see an avalanche of investors coming from the Gulf… with open checkbooks,” he said. “We are still in the [phase of] relationship-building and trust-building.”

Much of the Emirati money in Israeli companies has come from Abu Dhabi-based sovereign wealth funds, including Mubadala Investment Co.’s $1.1 billion purchase of a 22% stake in Israel’s offshore Tamar natural gas field and its reported $100 million investment in six Israeli venture capital funds. Another sovereign fund, ADQ, offered last month to buy control of Phoenix Holdings, Israel’s biggest insurance company. Besides the inherent caution when it comes to Israel, Hasson said UAE investors are known for their thoroughness and patience in examining all potential deals.

“These are well-trained, seasoned, sophisticated, globally spread investors,” he said.   “Unlike some of the founders and investors in Israel, they’ve seen multiple economic cycles. They know that what we’re seeing today is exactly that. They know to adjust their investment strategies. They know there are always winners and losers to different cycles, and they will make the adjustments.”

It’s that breadth of experience and professionalism that Hasson believes will lead to sustained growth in investment once the economy improves.

“Gulf people didn’t go crazy last year in terms of their investment in Israel, and I don’t think they will stop answering the phone calls next year,” he said. “I don’t expect the doors to shut down, God forbid, on either side.”

Before joining Start-Up Nation Central, Hasson, 52, was the founding director of the government’s Israel Innovation Authority and served as the Ministry of Economy’s chief scientist. With an MBA from Tel Aviv University earned after serving in army intelligence, Hasson was a general partner for 10 years at Gemini Israel Ventures, one of the early VCs investing in Israeli technology startups.

Israeli business executives poured into Dubai within weeks of the White House signing ceremony for the Abraham Accords on Sept. 15, 2020, making the three-hour flight along with a torrent of tourism that brought 200,000 visitors from the Jewish state. More than two years later, Emiratis and Israelis are still working to deepen the relationship.The Mubadala method of allocating money to the Israeli funds — Entree Capital, Aleph Capital, Mangrove Capital Ventures, Viola Ventures, MizMaa and Pitango — is a model for how to explore new markets, Hasson said.

”It’s the Gulf fashion of building a relationship, forming trust, hiring people, learning the culture and so on,” he said. “That’s a very smart approach. Many times, when you want to be an active investor in a new market, the first thing you do is you invest in the local investors. And through that, you get more acquainted with the local ecosystem, with the deal flow, with the service providers. And many times, the next phase will be, you know, either being a single limited partner, or creating your own fund or making direct investments, sometimes initially co-investing with those funds, and then moving to direct investment.”

While many Israeli companies are trying to raise cash from Gulf investors, Jerusalem-based OurCrowd is one of a few Israeli firms that is making investments in the Gulf. It recently opened a center in Abu Dhabi to cultivate companies working in the field of artificial intelligence.

“We still might see Israeli companies where there’s a very, very clear business value in setting up shop there – I think we’ll see a few,” Hasson said. “But in general, it’s obvious that this is going to be a slower year, where companies are going to take a hard look into their expected cash flows, and therefore rationalize their expenses. The appetite of expanding globally, creating new sites and so on is going to be something that has diminished.”

The decline in funding for startups focused on cybersecurity is partly the product of investor enthusiasm for those areas in previous years, Hasson said.

“In 2021 this was the sector that moved faster than others, that had the majority of the less sophisticated, more generalized – I want to say tourists – coming into it,” he said.

On the other hand, he said the strength of investment in agritech and food security reflected concern about some of the region’s biggest challenges.

“It’s not a coincidence because when this sort of cycle hits in things like crypto or something completely different, the metaverse, all of a sudden, they become less important,” Hasson said. “They’re nice to have, you know, they’re there, we’ll get to them. Whereas food security remains something that is crucial.”