How The Small State Of Israel Is Becoming A High-Tech Superpower

The horrific Iran nuclear deal is, these days, overshadowing the miracle of the Israeli economy, particularly in the area of high technology. With the exception of the U.S., Israel–a country of a mere 8 million people–leads the world in high tech, an astonishing feat. In this interview Prime Minister Benjamin Netanyahu talks about the big, exciting things that are happening in the high-tech powerhouse center emerging in Beersheba–and much else, including why Israeli milk cows are the world’s most productive and how this desert nation solved its water crisis (California, take note).

Steve Forbes interviews PM Netanyahu

Steve Forbes: Thank you very much, Prime Minister. We’re meeting here in Beersheba. By all accounts Israel is now one of the top two or three high-tech powers in the world–ahead of the European Union, with its 500 million people. You’ve done this with 8 million people. How? And how do you maintain your leadership with only 8 million?

Benjamin Netanyahu: Well, you have to have deep roots. We’re in Beersheba. It’s a new town. Abraham came here 3,800 years ago, and we sort of rebuilt it with the founding of the state. But the new thing is this: We decided here, in the middle of the Negev Desert, to bring in our special information units of the Israeli Army and put them right next to Ben-Gurion University. And right next to that—all within 100 yards–to build a cyber industrial park to bring in the leading companies of the world. And they’re here. We have this interaction between our finest military and cyber-security minds and the finest at the university and the nearby businesses.

This is a hub, and it’s exploding. You’ve been here for just a few hours, but you can see this; I mean, it’s literally going through the roof. And I’m delighted with this. It’s–I hate this word, but I’ll use it anyway—it’s this “synergy,” you know? It’s this, this…

SF: Brainstorm.

BN: It’s the brainstorming, the culture, the minds. It’s these fantastic minds that bring a lot of experience from military intelligence and our other special units joining with natural entrepreneurs. Many become entrepreneurs. Foreign companies, international companies realize that it’s all in the brains, in the ability to solve problems, foresee future problems and address the questions that will determine a lot of the world’s future. How do we protect the Internet? How do we protect cyber security? How do we protect our bank accounts? How do we protect our privacy? How do we protect our electric grids? How do we protect our traffic systems? How do we protect our airline safety? How do we protect anything? Water flows? Everything is governed by digital motors, digital transport. And cyber can be either the traffic cop or the robber. We want to be on the good side, and we want to help others be on the good side.

SF: You should also mention personnel records, as Washington, D.C. has recently discovered.

BN: I’ll tell you, Steve, nothing, absolutely nothing will escape the Internet–not people, information, words, numbers or things. Everything is in this gathering cloud, and it’s just growing and growing. And it’s all open to sabotage and to infiltration by hostile governments, terrorist groups, organized crime and/or individual hackers. We need security here. This is the South of Israel, the wild South. But the Internet is like the Wild West. It’s growing at a geometric pace, and for it to continue its growth with safety, security and stability, we need cyber security. And Israel is right up there. I took it as a goal to be among the top three cyber-security powers of the world. And I think we’re definitely there, but we’re shooting even higher.

SF: There’s been a lot of pessimism about cyber security, that not much can really be done about it–just as in the old days it was said there was no defense against suicide bombers. What have you seen that makes you feel that we can not only defend but also go on the offensive and anticipate what these guys are going to do?

BN: There’s no question you can defend, but that doesn’t mean that you can be hermetically protected. It does mean that you can do a lot more. First of all, you can protect very well against the neighborhood thief. There have been plenty of developments that allow you to protect both against the neighborhood thief and the gang–and even governments. It doesn’t mean you can protect yourself against everything, but you can protect yourself against a lot of things. And that’s useful. And this is evolving all the time.

I think the hardest thing about cyber—which is different from other forms of attack, offense and defense–is the difficulty in setting rules. In normal competition, or even in warfare, you can set rules. Most of the time you know who’s attacking and who’s defending. You can use protection, you can use deterrents, you can use punishment. But in the world of cyber it’s not always clear. Cooperation is necessary yet also dangerous, because your partners can be infiltrated. The cyber world is complex and evolving, but if we sit back and say, “Okay, because I have these problems I’m not going to do anything, because I can’t solve everything,” we won’t solve anything. No, that’s not the way we work.
We said, let’s just plunge ahead. Let’s learn as we go along and build defenses as we progress. And that’s something that we’re doing: The companies are doing it; the military’s doing it; our special intelligence units are doing it; and foreign companies that join us are doing it. We profit from them; they profit from us. I’ve decided to give tax breaks to cyber companies that come here because I want their business and because I think they really have an exciting opportunity here.

This is where young minds–some of them very young–are. And they think outside the box, which is an understatement. This kind of talent–academic, military, security and entrepreneurial–has converged in one place and is producing a lot of startup companies and a lot of innovations that will give the Net a measure of security it just doesn’t have today.

SF: So, how did Israel, a small country, become a giant in the area of high technology, in certain key areas?

BN: Well, you know, we’re surrounded by enemies. So to survive we needed a big army, relative to our size. But the most important thing in our army is the head, the brain. It’s a very large brain compared with those of other powers. We invest heavily in military intelligence. And developments in military intelligence, especially in IT, were a great unrealized potential until we created a more business-friendly environment. You can have the most brilliant minds, the most brilliant mathematicians and physicists–as you had with those who came from the former Soviet Union. But, as you know, that didn’t go anywhere [until] you [took] those scientists on a plane to Paolo Alto. Then they were producing added value within two weeks.

Okay, in Israel we had these top brains, including those with military experience, cruising the Net. But the most important thing [we did] was to create a pro-business environment, a pro-entrepreneurial environment and to introduce the idea of venture capital. The minute we fused intelligence capabilities with business capabilities, the Israeli high-tech economy just took off. And that’s something to which I’ve devoted a good part of my time as prime minister. Now I’m especially concentrating on the enormous growth area of cyber security, which, I believe, will be a growth engine for the next 50 years. The problems aren’t going to go away, and the need for solutions is going to grow. And we intend to be there with the solutions.

SF: So, Israel’s a global leader in high tech and, certainly, in technology and agriculture. Water? You made miracles. What are you going to do to get the rest of the economy up to speed with what you’ve been doing in these three areas?

BN: Well, the first thing is you’ve got to have products that actually give added value–and we do. Cyber is an enormous growth area. But in all areas of technology Israel is, in many ways, a world leader.

I spoke to Mr. Modi, the prime minister of India. And he told me, “Look, in all my four color revolutions–in water, dairy, clean air [and the other things he wants, such as agriculture]–I need Israeli technology.” So the second thing you want to do is not only develop the technology but also develop it for new markets.

The great economies of Asia are coming to Israel. And we’re going to them, because we realize that the kind of developments we have can better their lives. We can, you know, produce more milk for them. The [breed of] cow that produces the most milk per cow is not a French cow or a Dutch cow; it’s an Israeli cow. Every moo is computerized. And it produces an enormous amount of milk. Now, if you have to feed over a billion people in China, that makes a difference. The same is true in India and in other countries. They want that technology. Water? We recycle–87% of our waste water is recycled. The next runner-up is Spain, with about 20%.

SF: And the U.S. is about 1%.

BN: Well, yes. We’ve solved our water problem. Water is a big issue–it’s even a big issue in the United States. Now, you know, when Israel was founded 67 years ago, we had twice the rainwater that we have today. Our population’s grown more than tenfold; our GDP per capita has grown almost 40 times. We should have a water problem, but we don’t. Because we recycle more than any other country in the world. We’ve desalinated. We’ve got drip irrigation. We’ve got controls on our waste and spillage, electronic controls. We don’t have a water problem.

In the middle of the desert, you went out there; you came out here, to Beersheba, in the middle of the desert, and the water’s flowing. Abraham would have liked that, believe me. He had seven wells here. You know, we’ve got the wells of water and the wells of ingenuity and, I think, innovation. And the future belongs to those who innovate. Israel innovates.

SF: How do you get the bureaucracy to be more cooperative?

BN: Oh, that’s one of my big pleasures in public life, slashing the bureaucracy. We had to fight big bureaucratic battles to get this cyber park and to get our military to move all their key units here. But eventually, you know, we got it done. It’s a continual battle–and it’s an opportunity.

You asked me about our growth areas. One is technology, especially cyber. Two is new markets, especially in Asia. Third is bureaucracy. Bureaucracy is a great growth opportunity. Because if we’ve grown an average of 5% a year with the amount of bureaucracy we have, that tells you how much more we could grow if we removed that bureaucracy. So this is one of our missions: to constantly trim the bureaucracy. It’s like weeding; it never ends. You just have to keep weeding it out. But the trees grow, you know? And give fruit; you just have to keep weeding out the bureaucracy. It’s a great growth area.

SF: How do you tap Israel’s extraordinary potential in natural gas, which will be a global geopolitical game-changer if you do?

BN: Well, we got a great gift. For most of modern Israel’s existence we didn’t have any natural resources–except for our brains. We were fortunate–as, I think, you once said–to be the only Middle Eastern country with practically no energy. We had to use our mental energy. But then, in roughly the sixth decade of our life, we found gas.

We always thought that Moses was a great leader but a lousy navigator. It turns out he wasn’t such a lousy navigator. He brought us to a country not with flowing milk and honey, but with a lot of gas–not manna from heaven, but manna from under the ocean bed, under the sea bed. So, we now have to take it out. Private companies, once they started looking for it, were able to do what our government companies could not do: They found gas. They’ve taken some of it, and now we have a big political battle to get the rest out and enable the companies to make money and the Israeli government to get its share.

Obviously, we have a lot of populism to fight. Where do you not? But I think we’ve struck the right balance between the needs of competition and the needs of securing our energy supplies for the future–and exporting a lot of it. And I’m confident that I’ll be able to pass [legislation] within a short time. And then get the gas out.