from the December 2006 issue

"Believe in Israel - Fortify the Ties"

Presentation By British Ambassador Tom Phillips at the Prime Minister's Conference on Export and International Co-operation, Tel-Aviv.

"I should like to cover both the nature of the business and economic links between my country and Israel, as an illustration of a healthy partnership between two countries with a similar view of the opportunities provided by globalization, and some thoughts on the interplay between political processes and trading links in this part of the world.

And our two countries have done so. In a difficult year, two-way trade has increased by 6%, two-way investment is increasing, with over 200 local companies having a base in Britain, and major British companies such as HSBC, APAX, British Airways and British Gas having significant interests in Israel. A4e/Amin are making a notable difference through their involvement in the ambitious Wisconsin Project, which aims to integrate welfare recipients into the work force.

Britain has over one trillion pounds of investment stock, making it second only to the USA in terms of FDI. The reason for its success in attracting investment is because of our macro-economic stability, a skilled workforce, our rates of enterprise and the light nature of the UK regulatory framework.

Israeli companies continue to raise capital on the LSE/AIM markets: 25% of all international listings on AIM last year were from Israel. London now has a 26.4% share of the global IPO market compared to just 6.5% in New York. Britain is a natural choice for Israeli companies: the English language, Britain's physical and political position in Europe, excellent transportation links, the fact that Britain is less than 5 hours away by plane and just a two hour time difference - all mean that it is easy to do business with Britain and from Britain.

The news about the investment climate in Israel is also good. A recent survey in The Economist magazine predicted record high foreign direct investment in Israel in 2006 - upwards ofΚ $9 billion. This would put Israel in 10th place for FDI among 27 emerging markets. People invest here because Israel has a market-based economy, lots of entrepreneurial spirit, a legal system based I'm proud to say on British law, and good international connections.

I find it interesting that our two economies, and our two business communities, have developed such similar enterprise climates, and indeed I see the business link between our two countries as an example of how even in a globalized economy a strong bilateral relationship between countries and business people in those two countries can work to mutual advantage.

In the high-tech arena growth has been astronomical: output has trebled in pharmaceuticals and doubled in aerospace. Some manufacturing jobs have been lost, but 2.3 million more jobs have been created in the British economy as a whole since 1997.

This parallels what has happened here. I note that the recent World Economic Forum report ranked Israel in 15th place on competitiveness (a terrific improvement over last year's 23 rd place, although I am patriotically glad that Britain came in a little bit higher, at Number 10).

Israel 's particular strengths were noted as:
ΚΚΚΚ * technological readiness (3rd in the world)
ΚΚΚΚ * improvements in macro-economic management,ΚΚΚΚ and
Κ * improvements in market efficiency and infrastructure.

But I would also like to end by noting how much brighter the picture could be were Israel's place in the region to be secured by further peace agreements, taking the country out of as much as possible of the 'shadow of confrontation' mentioned in the title to this session.

Although Israel's businessmen rightly look further afield than the region, history nevertheless suggests that there can be very real gains for Israel in finding peace with its neighbors. Israel's relations with her neighbors have delivered real benefits. Annual trade between Israel and Jordan rose ten-fold to $130 million between 1996 and 2003. Israeli exports to Jordan rose to over $100m in 2004. 150,000 Israeli tourists visit Jordan each year. And nearly 400,000 Israelis visited Egypt in 2004.

This may pale in comparison to Israel's commercial relations with the EU and US. But the potential is there. By working with her neighbors, Israel can find joint solutions to the economic, environmental and security problems, which she faces in the region".

Reprinted from the Israel High-Tech & Investment Report December 2006

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