from the March 2011 issue

Global Linkage

Some 60 years ago it took weeks and sometimes longer for events taking place at one of the world to reach the other. There was no CNN or Sky News to provide instant information. In the 18th century the Rothschild used messengers to bring news to London from a military victory that took place in Europe. The advantage of having the news ahead of others allowed the Rothschilds to make a financial coup.

However, things have changed drastically. We watch hundred thousand of Egyptians demonstrating in Tahir Square while the TV network flashes that the King of Jordan has appointed a new Prime Minister.

The rapid transfer of news has an instant knock-on effect in the world's financial markets. Though the unrest in Cairo does not have any immediate effect to what happens on Wall Street or Ahad Haam Street in Tel-Aviv, those markets experienced sell offs. Only two days later analysts began to speculate what were to happen if the Suez Capital was closed for traffic. It meant that an additional thousands of miles would be required to move sea traffic.

Israel and Egypt signed a Peace Treaty in 1979. Professor Gerald Steinberg of Bar Ilan University correctly termed it as a "cold peace" Israelis, over the years travel to Egypt for vacations. We once stayed in Eilat within seeing distance of the Egyptian-Israeli border and it was all one-way traffic to Egypt. Israel quietly trades with Egypt. Its main import is natural gas.

Unlike other countries, Egypt has not shown any interest in Israeli high-tech.

We don't believe that the changes in the Egyptian government will have any major effect on agreements previously made between the two countries.

Reprinted from the Israel High-Tech & Investment Report March 2011

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