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073 STC 14 E

Original: English

NATO Parliamentary Assembly

science and technology committee


israel and the palestinian territories
3 – 7 november 2013

www.nato-pa.int February 2014

This Mission Report is presented for information only and does not represent the official view of the Assembly. This report was prepared by Henrik Bliddal, Director of the Science and Technology Committee.

  1. introduction

1. Technological innovation is the key to economic development, peace, and security, the NATO Parliamentary Assembly’s Science and Technology Committee (STC) learned during its visit to Israel and the Palestinian Territories from 4 to 7 November 2013. The delegation consisted of 15 lawmakers from 11 NATO member states and was led by the Committee Chair, Baroness Ramsay of Cartvale (United Kingdom).
2. In Israel, the Committee visited several institutions and facilities to study the strength of Israeli research and development efforts in the civilian and military domain, and in the West Bank, the delegation met with key players in the Palestinian information, communication, and technology (ICT) sector. The visit also covered other topics of interest to the STC, including the Iranian nuclear programme, the dismantlement of Syrian chemical weapons, and the development of natural gas fields in the Eastern Mediterranean Sea.


3. A particular focus of the STC visit was to learn how Israel has become one of the premier states in terms of science and technology innovation.


4. Yoav Chelouche, co-chairman of Israel Advanced Technology Industries, which is the largest umbrella organisation representing over 400 members in the high tech and life science industries, gave the committee members an overview over how Israel leap-frogged from an agricultural society to a post-industrial society. Today, 10 per cent of the workforce creates 50 per cent of its exports. Technology start-ups are the key, Mr Chelouche said, pointing out that, in total, there are 4,800 start-ups in Israel. It is not only a successful business model, but also a social phenomenon and, indeed, an honourable profession. Since Israel is a small state where the market for technology is too small to support a large technology sector, except in the defence sector, these companies care aim for the export market. International companies have long recognized Israel’s strength in technology, which means that Israel has attracted a lot of international companies and their Research and Development (R&D) departments, for example Intel and HP. Often these multinational companies buy small Israeli R&D companies and then turn them into their R&D centres. Furthermore, there are more than twenty binational R&D funds that finance technology incubators. Today, however, Israel can no longer compete on cost, which earlier played a large role in attracting outside investments. As a successful hybrid between a US and European business environment, Israel can, however, still compete in attracting companies from both North America and Europe. Mr Chelouche pointed to one negative trend that could undermine Israel’s position in his eyes: the country is not doing well on attracting international specialised workers, as it is extremely difficult to get work permits for foreigners.

5. Orna Berry, corporate vice president and general manager for the Israel center of excellence called EMC, gave the delegation a good impression on how the country created its science and technology ecosystem since its foundation, what role start-ups have played, and what the future held for Israel’s science and technology sector. The percentage of Israelis engaged in scientific and technological inquiry, and the amount spent on R&D in relation to gross domestic product (GDP), is the highest in the world, with 4.3 per cent. Israel boasts the highest number of scientists, technicians, and engineers per capita in the world with 140 per 10,000 employees (In comparison, the number is 85 per 10,000 in the United States and 83 per 10,000 in Japan). Israel is also cited as the country with the highest density of start-ups in the world. One of the key factors in the development of this ecosystem is the tight connection between compulsory military service, where many young soldiers acquire advanced technology skills that they very often turn into commercial advantage after they leave the service. Tight connections between the army, industry, and the academia lead to a constant cycle of innovation. Furthermore, in the late 1960s, the Israeli government established the Office of the Chief Scientist, which fosters the sector through matching grants. In the early 1990s, novel programmes that established technological incubators, jump started the venture capital sector, and created consortia of industry and academia. The reasons behind the strong start-up culture, according to Ms Berry, was the culture of innovation, the multiplicity of avenues of funding for entrepreneurs, strong community support, Israel’s great location as a beta-testing site, and the state-wide enthusiasm for start-ups.

6. During its meeting with the Science and Technology Committee of the Knesset, the STC members heard the committee’s approach to science and technology, as well as R&D, and discussed various issues with the numerous committee members and representatives from a number of science and technology agencies. The tie between military R&D and the civilian technology sector was discussed extensively. The fact that Israel needs to stay at the forefront of defence and security technologies means that there are very significant spill-over effects into Israel’s civilian economy. Delegates also discussed Israel’s position on the negotiations on the signing of the Horizons 2020 scientific cooperation agreement. (Several weeks after the visit, the EU and Israel signed a compromise agreement.) Moshe Gafni, chairman of the Knesset’s Science and Technology Committee, pointed out that he thinks the government was not allocating enough funds for R&D, especially on sustainable energy.

7. When visiting Tel Aviv University, the committee members heard from Shlomo Nimrodi, the CEO of Ramot. Ramot, founded in 1956, is the university’s technology transfer company and its liaison to industry. Ramot helps nurture cutting-edge research by securing financial support, identifies innovations with market potential, patents them, and later, crafts licensing agreements with industry partners. One of the recent success stories of Ramot is, for example, a revolutionary flash memory technology developed for SanDisk. Also, a new stem cell therapy to combat Lou Gehrig’s disease is on the fast track for service, Mr Nimrodi told the delegation. Of the 30,000 students at Tel Aviv University, 15,000 are involved in R&D, and a constant dialogue between them and Ramot exists. Indeed, Tel Aviv University ranks as the number two university worldwide when it comes to start-up technology. Good ties to industry are extremely important, Mr Nimrodi underlined, as it provides the necessary reality check for the researchers.

8. The delegates also learnt about Israel Aerospace Indutries’ (IAI) significant civilian technology operations, when it visited the company’s headquarters. As a world leading aerospace company, IAI has 15,000 employees, sales of USD 3.5 billion, and an R&D budget of USD 180 million. Eighty per cent of its products are sold abroad. IAI is Israel’s national space house. It has put eight satellites into orbit, with a 100 percent success rate, and has further satellite launches in the pipeline for the next several years. All of the satellites are still active today. Another important business branch for IAI is the conversion of passenger aircraft to freighter and combined aircraft configurations. Furthermore, IAI develops, certifies, produces, assembles and services executive jets, in co-operation with Gulfstream, the world-leading executive jet company. It also develops, produces, and assembles specialised aerostructures, for example air inlets and landing gear noses. A new undertaking is the development of so-called ‘taxibots’ - robotic taxis for passenger planes – which would save fuel, reduce pollution, and prevent accidents by taxiing aircraft to take-off positions. The robotic tow vehicle would be controlled by the aircraft pilot. Certification programmes are in progress and a beta site has taken place at Frankfurt airport in 2013.


9. Israel is one of the leading countries in terms of defence and security technology. The delegation thus took the opportunity to meet with several experts and visits sites in the defence and security sector.
10. Yoav Zacks, a senior research fellow at INSS, and Liran Antebi, a research associate at the INSS, discussed the fundamental issues of technological forecasting with the delegation, focusing on how policymakers and practitioners could stay ahead of the technological curve. Technological tools need a concept of use, which is not always evident from the technology itself. One prime example were unmanned aerial vehicles, where the technology existed for decades, but the concept of use has only been refined over the last decade and is indeed still being fine-tuned.

11. Daniel Cohen, a Research Fellow at INSS, discussed with the delegation the offensive use of weapons in cyberspace by diverse groups. The groups that were currently using cyber-attack tools includes states, criminal and terrorist organizations, as well as anarchist groups. He argued that one needed to distinguish between strategic and tactical cyber weapons. Indeed, the designation “cyber weapon” spread over a wide array of tools, from more benign to very destructive: denial of service and psychological warfare; cyber weapons used for espionage; cyber weapons that attack in cyberspace; and cyber weapons that attack physical equipment. There were some basic problems with cyber weapons, Mr Cohen pointed out. First, the problem of reusability: once an adversary unleashes a cyber weapon, it can be picked up by other actors and be used for their purposes, including against the original adversary. Second, cyber weapons are very hard to control: once set free these weapons could spread into systems that were not originally a target, including into the attacker’s systems. Third, the proliferation of cyber weapons is rapid, with new tools seeing the light of day on a continuous basis. Last, there is a clear lack of international regulation of cyber weapons.

12. At IAI, its experts are working to develop cyber defence solutions, as the threat from advanced cyber threats grows steadily. Already, “bank robberies” in cyber space are 20 times more numerous than in the physical world. Today, 70 per cent of threats are not detected by standard antiviral software, and the vectors of attack on networks are growing rapidly. IAI does not believe that one-layer solutions to cyber threats are realistic anymore. Therefore, the company is working on comprehensive, layered cyber protection for its customers, which includes early warning and protection, providing the intellectual competence, advanced detection of attack software and of anomalies. These could point to future threats, management and control of systems, as well as damage repair and system recovery. In support of these efforts, IAI has established its TAME cyber range where a “red team” tries to attack systems, exposing their weaknesses.

13. The delegation also received a briefing from an innovative Israeli cyber security company called Cyvera. Cyvera provides cyber defence solutions that protect organizations from sophisticated targeted cyber-attacks – so-called Advanced Persistent Threats (APTs) – and mass attacks. The impetus behind Cyvera’s Targeted Remote Attack Prevention System (TRAPS) is that threats which are unknown at the time of the attack, exploiting so-called zero-day exploits, are getting more numerous than attacks that are already known. So instead of adding threats to a database that can then be identified when they happen and defended against, Cyvera’s solutions obstruct the attack’s core techniques, interrupt its critical path, and obviates the attacker’s toolbox. This is based on the fact that only around 15 exploitation techniques are found in 99 per cent of the attacks today. Moreover, while vulnerabilities and exploits grow rapidly, few new techniques are being developed by hackers. The company explained to the delegates that, in the most recent high-profile cases, the attack was initiated by exploiting software vulnerability. Cyvera claim that they would have successfully stopped all high-profile attacks since 2012. The company is currently becoming very successful with its products and expanding into additional markets, such as Europe.

14. Uzi Rubin, a researcher at the Begin-Sadat Center for Strategic Studies and founder and former director of the Arrow defence programme against long-range missiles, talked to the delegation on a technological innovation developed in Israel with the help of the United States: the small area missile defence system called Iron Dome. Since the early 1970s, there has been a persistent threat of short-range missile against Israel from Syria, Lebanon, Gaza, and the Sinai. The debate about active defence against missile first started in the 1980s. Active defence was for a long time vehemently opposed by the Israel Defense Force (IDF), since it was a challenge to traditional doctrines of deterrence and offensive responses against attacks. Especially after the 2006 Lebanon War, where about 4,000 rockets killed 53 persons in Israel and severely wounded about 350 persons, the development of Iron Dome was prioritised. The politico-military objectives of the system are to mitigate the consequences of rocket attacks in casualties and damages, to provide the political leadership with non-escalatory options, and to allow the IDF sufficient time to mobilise for escalation, if necessary.
15. Iron Dome batteries can defend predetermined zones with a typical size of about 100 square kilometres. Interestingly, the batteries only intercept those targets deemed threatening, leaving those that fall into empty fields untouched. Today, it can defend from rockets that are fired 70 kilometres from the defended zone. During its operational debut in 2011/2012, it knocked out 75-85 per cent of the threatening rockets, according to estimates. During the 2012 Operation Pillar of Defense in Gaza, this meant that no civilians needed to be evacuated, compared to a quarter million which needed to be evacuated in the 2006 Lebanon War.

16. Mr Rubin argued that, while it is too early to draw definite conclusions, the impression was that the deployment of Iron Dome had had a stabilising effect on the ongoing confrontation with the Gaza factions. It creates a sense of security in the involved civilian communities, enhances resilience and mitigates public pressure for retribution and escalation. Before active defences were installed, Israel had limited measures for mitigation of consequence, and its response has invariably been escalatory, from the 1982 Lebanon War to the 2009 assault on Gaza. Indeed, Mr Rubin said, Pillar of Defense was the first ever case where a massive rocket attack was not met by an Israeli ground incursion. However, militants have continued their attacks and have acquired more and better rockets that could more easily break through Iron Dome. Therefore, Mr Rubin argued that Iron Dome had provided crisis stability, but it had not halted the rocket arms race.

17. At IAI, the delegation learned of the different military solutions the company can provide. A key area for IAI are air and missile defence systems, such as the Arrow 2 and 3 systems which defend against long range ballistic ground-to-ground missiles and which was the first of its kind to become operational (in 2000). However, the company also manufactures Barak 8 long-range defences for all three branches of the IDF.
18. Advanced attack missiles and loitering weapons are another area of core business, where IAI produces, inter alia, laser-guided bombs and missiles and so-called loitering weapons that can wait before striking. For Airborne Warning and Control Systems (AWACS) and special mission aircraft, IAI provides advanced operational concepts and tailors the aircraft to the user’s needs. Furthermore, integrated intelligence centres and C4I and situation command centres are another area of expertise. Other auxiliary systems, such as radar, Electronic Warfare and Communication Intelligence (EW & COMINT) systems, military aircraft as well as multi mission transport tanker aircraft are also supplied by IAI. Another sector where IAI has been extremely successful is robotics, manufacturing unmanned aerial vehicles (UAV), chief among them the medium-altitude, long-endurance Heron series. The delegation had the opportunity to see the hangar of the UAV section in IAI. However, unmanned ground vehicles are also a growing sector, where IAI wants to capture market shares, for example with REX, a logistics carrier.

19. An example of a successful recent Israeli security start-up is Briefcam, whose Vice-President for Marketing and Business Development, Rafi Philosoph, spoke to the committee about its innovative product. The company evolved from video synopsis technology developed at Hebrew University and began operations in 2008. Briefcam has developed software that allows security personnel to review hours of CCTV videos in minutes or less. The challenge this software is designed to overcome is that evermore CCTVs are put into place, but that the human resources to review all this data is simply not there. Indeed, it is estimated that about 99 per cent of CCTV videos are deleted before anyone takes a look at them. By setting certain parameters, Briefcam’s software compresses these videos, taking cue from the fact that most of a CCTV picture does not change much – it is the objects that move through the picture that matter. Once compressed, personnel can apply a wide range of filters. This new technology could potentially revolutionize CCTV surveillance, Mr Philosoph argued. It also keeps the human in the loop, instead of having the computer make all decisions. With subsidiaries established in the United States and China, Briefcam is set to grow from its current base of 35 employees, as it targets public security and private enterprise security markets.


20. In Ramallah, the STC learned that Palestinian high technology companies are becoming an important driver of development, laying the economic groundwork for a future Palestinian state. The delegation met with about a dozen businessmen in the information, communication, and technology (ICT) sector.

21. Hassan Kassem, Chairman of the Palestinian Information Technology Sector, told the Committee that the ICT sector most of all represented hope for the Palestinians. Fifty per cent of the nation was born only 25 years ago, he told the delegates. This generation has grown up with the internet and all its potential, thus creating a vast pool of talent for the high-tech sector. Indeed, Palestinian ICT companies have already penetrated foreign markets, and large venture capital funds have been investing in recent years, spurred by a large investment made by United States based Cisco Systems, which design, manufactures, and sells networking equipment.

22. The business men explained why the Palestinian Territories had great potential as an ICT hub in the region. Fluent in Arabic and often Hebrew, many of the ICT professionals also speak English, French, and German, broadening the potential customer base. Reliable and advanced infrastructure exists, the human capital pool is talented, innovative, fresh, and skilled, and low costs mean that there is a locational advantage. About 7,000 people work in the Palestinian ICT sector, with roughly 4,000 in private companies. The political problems of the region affect the ICT sector only peripherally. For example, during the Israeli military operations over the last decade, the sector was not affected at all. Palestinian companies are also settling outside the Middle East, including in Silicon Valley. However, one difficulty raised was the building up of ICT infrastructure: it is very hard to get the relevant permits from the Israeli authorities to lay fibre optic cables, for example. Most were hopeful, however, that the Palestinian ICT sector could leapfrog directly into purely wireless technology. Overall, the main message conveyed by the ICT professionals present was: “We’re open to the world and ready for business.”

23. Safaa Nasir Addin, Minister of Communication and High Technology, laid out the challenges faced by the ICT sector, due to the unresolved relationship between Israelis and Palestinians. Due to the restrictions imposed, Gaza and the West Bank did not have access to the full network spectrum, most importantly the 3G mobile network. Long waiting times for importing technical equipment and even denial of some technologies existed as well, she pointed out. Nevertheless, she was hopeful that the current dynamic developments would bear fruit in the long run. Close co operation with academic institutions and governments in Europe and the United States was a great boon in this regard, citing a project on e-government in conjunction with the Estonian government as a recent success story.

24. The delegation also had the unique opportunity to visit the Rawabi project between Ramallah and Nablus. Rawabi, which means “the hills”, is the first Palestinian planned city and the largest private sector project ever carried out in the Palestinian territories. The city integrates international planning principles, sustainable environmental practices, regionally-suited architecture, state of the-art infrastructure and ease of access for both residents and visitors. The investment in Rawabi will ultimately exceed more than $1 billion USD. Rawabi will provide more than 5,000 housing units, spread across 23 neighbourhoods. Initially about 25,000 residents will find a home in Rawabi, with a subsequent goal of 40,000 residents. The city also includes public and private schools, arts and medical facilities, mosques and a church, and extensive green recreation space. Its commercial centre offers a business district, a hotel, cinemas, and convention centre. A large investor in Rawabi is a Qatari government owned company. The companies involved strongly believe that they will make a profit on the project and underline that it is a commercial project for the Palestinian middle class, not a loss-making development project.


25. The current security challenges naturally played a big role during the discussions in Israel. Ambassador Dr. Oded Eran, senior research fellow at the INSS, gave the delegates a broad overview of these challenges. The Arab revolutions in the Middle East and North Africa, the ongoing civil war in Syria, the Iranian nuclear question, the US withdrawal from the region – perceived or real – and the unsolved Palestinian question frame the security politics in the region, Ambassador Eran said. Unfortunately, he argued, the Middle East was heading towards more instability in the short and medium term, and it was unclear which solutions could be found to cope with this instability.

26. The Iranian nuclear programme, the questions regarding its purpose, and the ensuing regional security challenges were addressed by Israeli officials and politicians as well as independent experts at numerous occasions throughout the visit. All of the Israeli counterparts laid out what they see as a severe regional challenge. Many were concerned that the ongoing talks with the new Iranian regime would not lead anywhere, seeing it as a diversionary tactic. However, some argued that the negotiation track needed to be pursued, in order to see if there is a small chance that the Iranian regime would accept the necessary conditions to respond to international concerns.

27. Dr David Friedman, a senior research fellow at INSS, presented the delegation with an overview of the agreement between Syria and the Organization for the Prohibition of Chemical Weapons (OPCW), concluded in September 2013 when the United States threatened to strike the country in response to its use of chemical weapons. Syria joined the Chemical Weapons Convention (CWC) and is set to destroy its chemical arsenal, including R&D facilities, production facilities and stockpiles no later than mid-2014. Dr Friedman was pleasantly surprised by the attitude of co-operation by the Syrian regime on this matter. However, he also pointed out that the international community could not yet be sure that all relevant sites were declared. There were also a number of difficult questions on how to destroy the chemical agents. However, he argued that the agreement had potentially positive implications for the Middle East and Israel in particular, strengthening international non-proliferation regimes.

28. Dr Eitan Barak, a researcher at the Truman Institute, also provided an assessment of the recent joining of the CWC by Syria. In particular, he examined the hope that Israel could join the CWC in its wake. The reason why Israel has not joined the CWC is due to its unique geopolitical environment. Nevertheless, the government has always maintained that its current refusal to ratify “must not necessary be constructed as prejudging the outcome of a future Israeli decision on the matter of ratification […] [F]avorable changes in the security climate will, of course, favorably affect Israel’s attitude toward the ratification issue.” However, when examining the pros and cons of ratification at this point, it appears that the Israeli government still believes that the heavy costs in the short and medium term are greater than the costs of continued non-ratification. Ratification would expose its capabilities, could lead to a slippery slope insofar as it would put pressure Israel to join other arms control regimes like the Non-Proliferation Treaty, and could put a heavy burden on the country’s pharmacy industry due to the heavy inspection regime of the OPCW. The positive arguments, such as taking away a traditional criticism by Arab states and possible benefits from the United States, do not weigh as heavily in the mind of Israeli policymakers, Dr Barak argued.

29. Prof Elie Podeh, a researcher at the Truman Institute, presented his analysis of the revolutions in the Middle East and North Africa, in particular in Egypt. In all revolutionary countries, the public discourse has become more liberal and new forces in the civil society have sprung up. The countries are in the process of building new political systems and thus very much looking inward, embroiled in their domestic affairs. Still according to him, it is still too early to tell whether they political systems would become more Islamised or more democratic. All the while the economic situations are dire and instability and chaos the order of the day. Prof Podeh argued that the revolutions were undoubtedly the most dramatic development since the fall of the Ottoman Empire. These revolutions are not singular events, but ongoing processes that contain seeds of positive change, as they brought down totalitarian or authoritarian political systems. Fundamentally, the revolutions revolve around identity issues, including ethnicity, religion, and state. Most likely, the end results would be hybrid regimes. The question of further spill over was not settled yet, Prof. Podeh added. Indeed, the ultimate outcome in Syria would affect all other revolutionary processes. He concluded by arguing that the United States had only limited leverage left in the region and that one consequence for Israel needed to be that the Palestinian question was settled.

30. Dr Noga Efrati, a researcher at the Truman Institute, gave the delegates an overview of recent events in Iraq after the drawdown of US forces. When looking at the Middle East through the lens of Iraq what comes into view is the fragility of the nation state and the tensions between national, sub-national, and transnational identities, Dr Efrati argued. Iraq is edging once again towards levels of violence that characterised the 2006-2007 inter-communal conflict. Dr Efrati discussed conflicting loyalties within both the Arab Sunni and Arab Shi'i communities that are competing with the national identity in Iraq today.

  1. Assorted issues

31. Dr Zohar Kampf addressed an issue that the STC has paid more attention to in recent years, the relationship between violent conflicts and media coverage. Dr Kampf offered a fresh view of contemporary representation of violent conflicts, suggesting an explanation to the dramatic changes in the ways in which war and terror are covered by Western media. He argued that viewers around the globe follow violent events, literally and metaphorically, on "wide" and "flat" screens, in "high-definition". The "wide-screen" means that at present the screen is wide enough to include new actors - terrorists, 'enemy' leaders, ordinary people in a range of roles, and journalists in the field - who have gained status of the kind that in the past was exclusive to editors, army generals and governmental actors. The "high-definition" metaphor means that the eye of the camera closes in on both traditional and new actors, probing their emotions, experiences and beliefs in ways that were irrelevant or illegitimate in past conflicts. The "flat-screen" metaphor stands for the consequences of the two former phenomena, leading to a loss of the hierarchy of the meanings of war. Paradoxically, the better the quality of viewing, the less the understanding of what we see.

32. The delegation also took the opportunity to meet with Noble Energy, the main company that extracts natural gas offshore from Israel. In recent years, great excitement has surrounded the discovery of natural gas in the Eastern Mediterranean Sea. Noble Energy was one of the first companies that entered the market in the late 1990s, when new techniques and high gas prices enabled investment in the Eastern Mediterranean fields. It discovered its field in 1999 (Noa), but it was the discovery of Mari-B in 2000 that created the Israeli gas industry, with first sales beginning in 2004. The real turning point, however, was the discovery of the giant Leviathan field in 2010, which will be online sometime after 2016. The impact of Israeli natural gas has already been enormous, for example greenhouse gas emissions have fallen dramatically over the last number of years, as electricity generating plants switch to gas instead of oil.
33. However, Noble Energy sees many hurdles ahead in Israel. While the government agreed to export 40 per cent of the natural gas, which could create great opportunities for companies, widespread opposition to these plans has not fully subsided. Furthermore, bureaucratic hurdles have held up investments. Anti-trust issues have not yet been fully resolved either. One of the next big questions is where to place large infrastructure projects connected to the gas fields: Israel is a small country where the potential for local opposition to big infrastructure projects is great. Indeed, the company representative argued that it was getting harder and harder to defend spending in Israel, compared to other investment opportunities around the world. However, he was still hopeful that all of these problems would be resolved and that Israel could take full advantage of its natural gas boom.

34. The recent off-shore natural gas finds were also a much discussed issue during the meeting with the Knesset’s Science and Technology Committee. How to use the natural gas and whether and how much to export has been a hot-button issue in Israel. While Israeli courts recently upheld the government’s proposal to export 40 per cent of the gas, this issue was not closed for those who would rather see all gas stay inside Israel, Chairman Gafni explained.


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