Saturday, March 04, 2017

Putting the U.S.-Israel Relationship to Work

From The American Interest, 28 Feb 2017, by STEVEN L. SPIEGEL:

Americans think of Israel in terms of ideology or geopolitics, when they should be thinking about business, technology, and job creation.

With more than six decades of strong ties, the United States and Israel are now reaching a new stage in their relationship: one in which they are bound by common interests in economic and technological innovation. However, the United States has still not developed an effective mechanism for taking advantage of this partnership, which must be nurtured with carefully designed institutional bonds.

There are several ways these bonds might be forged, some more ambitious than others, and some involving other innovative economies in addition to Israel’s. To seize the moment, the Trump Administration needs to act now.

Historically, there have been three dimensions to the U.S.-Israeli relationship. At its inception, Israel was seen as a fulfillment of biblical prophecies, and a haven for Jews escaping from anti-Semitism and persecution in the aftermath of the Holocaust. Many Americans came to view Israel as a paradigm of the Judeo-Christian tradition, as well as the only functioning democracy in the Middle East. Finally, as the Cold War threw the Middle East into turmoil, Israel emerged as a strategic asset for U.S. security and intelligence. As was often said, it was like having a stationary aircraft carrier in the region.

Since 1967, the U.S. government has had no genuine competition from any other country for Israel’s friendship. Today, however, that is no longer true. Many countries, especially in Asia, now compete with the United States to secure the benefits of Israel’s technological prowess. Indeed, China is expected to surpass the United States in the near future as Israel’s most significant collaborator in joint government-backed development projects, according to one Israeli analyst quoted in the Wall Street Journal. China and Israel have officially begun negotiating a free trade agreement, and Israel now joins the United States and Canada in the select group of countries whose citizens receive Chinese visas that are valid for ten years. For now, Israelis—however much they may be flattered by Chinese attention—still feel more comfortable dealing with American interlocutors. But what happens when they get used to China and the United States remains aloof?

There are certainly ample opportunities for the United States to partner with Israel on business and technology. The wide range of fields in which the two countries can cooperate include such areas as water management, medicine, pharmaceuticals, green technology, nanotechnology, cyber security, military instruments, and communications. Israelis were involved in developing the cellphone, Amazon’s Kindle, the navigational app Waze, numerous medical breakthroughs such as devices that help paraplegics walk, advances in stem cell research, and much more. Indeed, a June 2014 Forbes analysis listed five Israeli companies among the top ten that are changing the world of healthcare. In 2016, the Mayo Clinic announced a new collaboration with Israeli start-ups to increase the availability of Israeli medical innovations in the United States.1

It’s no surprise that U.S. companies such as Intel, Facebook, Google, Apple, GM, Lockheed Martin, IBM, and GE have all set up major R&D centers in Israel. Yet most U.S. companies and state and local governments have not yet taken advantage of the enormous potential for U.S.-Israel cooperation.

In particular, the United States and Israel need to boost the development of new security products, just as the U.S. Department of Defense is doing in partnership with Silicon Valley. As outgoing Deputy Secretary of Defense Robert Work put it, “The department is trying to deepen our cooperation with our close allies and partners. We’re collaborating—collaboratively planning now on our roles, missions, and investments in future capabilities.” Due to its record innovation, Israel should be at or near the top of that list of partners.

Such increased cooperation would improve Washington’s ability to manage shifting economic and political forces around the globe. Technology is transforming our world; major powers are scrambling to adjust, and one means of securing an advantage is working with other countries, especially smaller states with particular skills. Partnering with Israel on the development of new technologies would reinforce the U.S. position at the top of the international economic pecking order.

Meanwhile, U.S. companies and governments (Federal, state, and local) should use Israel as an incubator of innovations that could improve U.S. industries and job markets. Of course, there are other countries that hold some advantages for the United States, such as South Korea, Finland, Sweden, and Singapore. But while these and most other countries develop innovation to solve local or regional problems, Israel develops its technology from day one for the global market (since its domestic market is so small). Indeed, Israel was ranked the second-best place in the world to invest after Silicon Valley, according to the 2015 Global Venture Capital Confidence Survey.2

While the numbers are still relatively small, more and more U.S. companies and governments, such as those of New York and Texas, are increasing their ties to Israel’s technology sector. Israeli water experts and companies have become central to California’s efforts to overcome its drought.3 Massachusetts has significantly benefited from projects with Israeli companies, which generated almost 4 percent of the state’s GDP in 2015.4 A possible model for other states can be found in Texas, where minimizing the barriers to entry for Israeli innovators has proven to be financially attractive.5 In addition, cities of all sizes, including Los Angeles, Beverly Hills, San Antonio, and New York City, have begun to discover that their needs can be addressed by Israeli innovation.

The nation’s leading universities, such as MIT and Harvard, have also capitalized on this growing relationship by encouraging the enrollment of more Israeli students, in the hope that these students will create bridges between the Israeli and U.S. technology sectors.6 In February 2017, the President of the ten-campus University of California system signed an MOU with Israel’s National Technological Innovation Authority to develop new technologies.7 Texas A&M and the University of Haifa are establishing an oceanographic observatory, the first of its kind in the eastern Mediterranean Sea.8 Cornell University and Israel’s Technion have partnered to establish an “innovation university”—a project that, in the words of Governor Andrew M. Cuomo, “will help foster technological innovation within New York State, while creating jobs and spurring business investment.”9

The potential for creating U.S. and Israeli jobs, and many beneficial collaborations, is so great that it is unfortunate that U.S. leaders are not making the most of these opportunities. U.S. party politics, ideological divides, and geopolitical concerns have prevented Americans from viewing Israel as a business partner. It seems somehow easier for China to establish such a relationship with Israel, because there is no relevant history of disagreement over issues such as the Palestinian question. Ironically, the Chinese continue to give lip service to the Palestinian cause and, unlike the United States (most of the time), vote at the UN accordingly. To the Chinese, the connection to Israel is strictly business, not an emotional, religious, or even strategic attachment. The first three dimensions of the U.S.-Israel relationship mentioned above do not exist in China’s relationship with Israel.

The United States must develop a realistic and integrated approach to its changing association with Israel in a new era. It is possible that the Trump Administration, with its business orientation, will find it easier to move in a new direction.

Exactly how do we move beyond the current patchwork of partnerships to a broader, more centralized undertaking? There are a variety of alternatives to choose from, each having advantages and deficiencies.

One alternative would be to establish a U.S.-Israel office in the White House. This office would provide a master plan for achieving the kind of cooperation with Israel throughout the United States that we are now beginning to see in California, New York, Texas, and Massachusetts. The U.S. Chamber of Commerce, in collaboration with the Manufacturers’ Association of Israel, recently produced a document that provides a great number of ideas, which the White House office could implement and expand.10

Yet the attraction of locating an office in the White House is undermined by the likelihood that the program would rapidly be politicized or have its personnel decisions used for patronage purposes. The Executive Office of the President is already overcrowded, and inserting a critical U.S.-Israeli program into it might doom that initiative to failure.

A second possibility is the expansion of the U.S.-Israel Science and Technology Commission, created in 1993 by President Bill Clinton and Prime Minister Yitzhak Rabin. Yet while the Commerce Department-based Commission has steadily done “good things,” it has not played a major role in the U.S.-Israeli relationship. There does not seem to be any way of successfully “growing” it, especially in its Commerce Department home.

These alternatives lead us to consider a third, more ambitious option: the creation of an Office for Global Science and Technology Innovation (OGSTI), whose purpose would be to adapt U.S.-based science and technology to partner nations’ needs and non-U.S.-based science and technology to our needs. There is a surplus of national labs, one of which could be used as the site of such an interagency office. This arrangement would be particularly well suited to rectifying the imbalance between brain-power and market size in Israel, by opening many American doors to Israeli innovation at once—an inviting prospect for both countries.

The lead agency in the OGSTI would be the Office of the Science Advisor to the President. This underutilized office would need to be refashioned for the purpose, but its bench of scientific and technological talent is unique within the government. Other participants could include: Department of Defense/Defense Advanced Research Projects Agency (DARPA); the Departments of Commerce, Energy, and Agriculture; the Centers for Disease Control and Prevention; the National Aeronautics and Space Administration; the National Oceanic and Atmospheric Administration; the National Institute of Standards and Technology; and the Environmental Protection Agency, as well as special advisers from the Justice Department to handle patent law and intellectual property rights issues. The State Department might also participate to a certain extent. The office would need to establish close relationships with universities and with private-sector actors who are likely to test and market the outcomes. (Existing or planned units such as the Binational Industrial Research and Development Foundation, and the Binational Agricultural Research and Development Fund, the U.S.-Israel Science and Technology Commission, and the Department of Energy’s potential U.S.-Israel joint energy research center would be incorporated into the Israeli branch of the OGSTI.)

The interagency group would have subcommittees, called “fusion groups,” involving other nations as well as Israel. Other fusion groups should be focused on Japan, Singapore, South Korea, and perhaps Finland or Sweden. The list of fusion groups would have to be open-ended but small, especially at the outset. This approach could also have important implications for the Middle East, as a low-profile group could be established for building discreet relationships between Israel and some Arab countries under U.S. auspices.

As exciting, innovative, and unique as this approach would be, there are caveats here, too. Congress would have to fund the office generously during the initial stages, though some programs are already underway. The coordination required is complex and would demand a degree of cooperation between various agencies that is rarely achieved. As a consequence, there would have to be strong support at the highest levels of the U.S. government, and even that might not be enough.

Perhaps it would be easier and preferable to “go private.” This would involve the establishment of an American-Israeli Commercial Exchange (AICE), a hub in the private sphere that could connect Americans and Israelis with mutual business interests.11 AICE would be a matchmaker organized in three parts: a clearinghouse, a website, and referral groups. The “brick and mortar” office would be a matchmaking service that connected potential partners in specific fields such as cyber security and agriculture. It would thus bring potential investors together with innovators to enable projects that might not have proceeded without this connection. In addition, a website would both provide relevant news updates and advertise opportunities in various areas. “Referral groups” would be networks of entrepreneurs in both countries, which would apprise members of the opportunities offered by new innovations and companies.

This organization would expose many more Americans to the benefits of working with Israeli start-ups and inventions. As with the government office, AICE could be expanded to include a limited number of other fairly small but highly innovative countries as well. Of course, the organization would eventually have to change its name as the number of countries expanded.

But there are problems here, too. AICE would not be in the government and would have to be built from scratch. That would not be easy, and it could be expensive. The possibility of uniting various groups and businesses already involved in Israeli innovations seems slim indeed.

If it would be difficult to create a new operation, then perhaps the answer is to utilize previously existing organizations. The U.S. Chamber of Commerce is already actively participating in U.S.-Israel economic interchange. AIPAC, although not primarily devoted to strengthening U.S. business ties with Israel, might well be interested in expanding its efforts. Some other Jewish organizations might be similarly prepared to generate more activities. The problem here is that each of these enterprises has pre-existing activities, foci, and baggage, and to suggest that one could emerge as the leader of an American effort seems unrealistic indeed.

It might also be possible to create both a governmental and a private mechanism for expanding U.S.-Israeli economic ties. That would be an ideal approach, but given the difficulties in both sectors, it could result in over-reach and failure.

Despite the drawbacks involved in each option, we must give them serious consideration. If one of these approaches is not adopted, other powers will likely step in to reap the economic benefits that the United States will miss. We must do more to develop our common economic, security, and diplomatic interests with Israel, because the stakes are getting higher and the opportunities more lucrative. The United States is the best positioned of all countries to take advantage of the Israeli technological revolution. It’s time to act.

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