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.

UAE-Israel cyber intelligence firm grows with its perch in the Gulf

Years before the Abraham Accords enabled Emiratis and Israelis to openly run businesses together, Abdulla Baqer operated a back-channel in Dubai that brought Israel’s cybersecurity expertise to the Arab world. Working with intelligence veterans in the Middle East, Asia and elsewhere, the charismatic entrepreneur helped facilitate the growing commercial ties that were poking through the longtime Arab-Israeli divide.

Those were days when Israel’s computer startups were becoming competitive with Silicon Valley for government contracts around the world. Check Point Software Technologies and CyberArk were sensations on Wall Street and virtually every country in the world sought access to the smartphone-penetrating software made by Israel’s NSO Group. Former Prime Minister Benjamin Netanyahu, who made a groundbreaking public visit to the Sultanate of Oman in 2018, often described cyber know-how as the linchpin of Israeli diplomacy. Today, Israel is using a similar formula to strengthen ties with Saudi Arabia, the region’s biggest economy.

After the Accords were signed at the White House two years ago, Baqer and his partners unveiled Black Wall Global, a firm that finds little need these days to obscure its mission of marketing Israeli technology to nations that have been reluctant to deal directly with the Jewish state. Baqer, 45, is also co-president of the UAE-Israel Business Council, through which he coaches Israelis on using the United Arab Emirates as a platform for dealing with Arab markets.

“There are a lot of countries that don’t allow Israeli companies to set up shop,” Baqer told The Circuit. “They can always come to the UAE, partner with a UAE company and basically go out and be sold as an Emirati company.”

With Baqer in Dubai, Black Wall is led by a collection of Israeli intelligence veterans and computer scientists. Chairman Asher Ben Artzi worked for 34 years in Israel’s Shin Bet internal security agency and its National Police force, becoming director of the Israeli branch of Interpol, the International Criminal Police Organization. Khoo Boon Hui, who was president of Interpol after retiring as Singapore’s police commissioner, is Black Wall’s honorary president. Others include CEO Anri Amir David, a consultant to Israeli defense contractors and fellow at Russia’s International Academy of Technological Sciences; and Arik Barbing, former director of the Shin Bet’s cyber division.

“We cover it all, from intelligence to cyber defense, border control and protection of critical infrastructure facilities and big data,” Black Wall says on its website. “We provide governments, law enforcement, security forces, and global enterprises with the highest level of safety and security.”

Black Wall is one of the smaller Israeli-led companies that have prospered in the new atmosphere of normalized relations with the Gulf states. Israel and the UAE signed a free-trade agreement in May that eliminates most tariffs and is projected to bring annual trade between the two countries over the next five years to more than $10 billion.

The biggest deal between the Emirates and Israel has been Delek Drilling’s $1 billion sale last year of its stake in an offshore Mediterranean gas field to the UAE’s Mubadala Petroleum. State-owned Israel Aerospace Industries has signed drone-development deals with Edge Group, a government-owned defense company in the UAE. And OurCrowd, a Jerusalem-based venture capital investment platform, set up a subsidiary in the UAE and last November became the first Israeli VC registered by the Abu Dhabi Global Market to operate in the emirate

Baqer points out that the path to Gulf-Israel joint ventures was paved by the Israeli companies that he said operated for decades “under the radar.” The practice, he explained, was to register affiliated corporate entities in third countries and operate through Israeli dual citizens with separate passports who could travel to Arab countries that didn’t have diplomatic relations with Israel.

In the lore of secret dealmaking, the experience of AGT International stands out. The company, led by Israeli entrepreneur Moti Kochavi, won a contract from the Abu Dhabi government in 2008 to create a “smart city” network of surveillance cameras, electronic fences and sensors that paid about $6 billion over seven years. During that period, AGT’s Israeli affiliate, Logic Industries, ferried dozens of engineers each week on an unmarked charter plane between its headquarters in Israel and the UAE capital, according to some of the employees involved who lived in a secure compound under made-up names.

Another example is Israeli defense contractor Elbit Industries, whose American subsidiary had a contract with the Saudi government to sell and service TOW anti-tank missile systems. The relationship came under strain when an employee of Elbit’s American unit died under mysterious circumstances while working in the northwestern Saudi city of Tabuk and the company required Israeli and U.S. diplomatic intervention to retrieve the body.

Now, as president of the new business council, Baqer helps Israelis develop their frontal approach, explaining the nuances of Emirati business culture and guiding them not to expect quick results.

“So many companies came to the UAE at the beginning of [the Abraham Accords] and then they disappeared,” Baqer said. “We decided that we need to help educate Israelis about how Emiratis think and Emiratis about how Israelis think so that they can avoid making mistakes.”

Baqer’s knack for navigating the sensitive realm of Arab-Israeli relations impressed the Israeli founders of the UAE-Israel Business Council. He’s become instrumental in the council’s efforts to promote building further contacts in the Gulf.

“The most interesting thing about trade with the UAE [and Israeli companies] is not so much what trade they’re going to do with the UAE but what trade they’re going to do through the UAE,” Fleur Hassan-Nahoum, a co-founder of the business council and a deputy mayor of Jerusalem, told The Circuit. “For any Israeli companies that see themselves trading with the East, Dubai and Abu Dhabi are very interesting hubs for them to do it through.”

Israeli Prime Minister Yair Lapid has sought to expand Israel’s relations with Arab countries and enlisted U.S. help during President Joe Biden’s Middle East trip in July. Biden wrote in The Washington Post that he flew directly from Israel to Saudi Arabia for a summit meeting with Gulf Cooperation Council leaders in Jeddah as a “small symbol of the budding relations and steps toward normalization between Israel and the Arab world, which my administration is working to deepen and expand.”

Affinity Partners, a private equity firm founded by Jared Kushner, the former White House adviser and son-in-law of former President Donald Trump, plans to invest millions of dollars in Israeli startups from the $2 billion it raised from Saudi Arabia’s sovereign wealth fund, according to The Wall Street Journal.

Israelis with experience in trade with Saudi Arabia said much has changed in recent years. “It used to be, OK, pretend to be American, pretend to be British, pretend to be this or that,” Shmuel Bar, chief executive of Herzliya, Israel-based IntuView, told The Circuit before Biden’s trip. “That’s no longer the case. When you talk to them, it’s not, ‘let’s play make-believe.’”

Saudi Minister of State for Foreign Affairs Adel al-Jubeir said during Biden’s visit that normalization with Israel was a “strategic option,” but only if Israel agrees first to a two-state solution with the Palestinians.

Hassan-Nahoum, 48, who grew up in Gibraltar, where her father was mayor and chief minister of the British territory, said Israel’s commercial relations with Saudi Arabia are following a “similar pathway” to the business links with the UAE before the Abraham Accords, when an estimated 200 companies were engaged with the tiny Gulf state. She said many Israeli companies in fields ranging from food-tech to renewable energy are now operating discreetly in the Saudi kingdom.

“We may not get a big shiny ceremony on the White House lawn, but I think Saudi Arabia is in the process of normalizing quietly with Israel,” Hassan-Nahoum said.