Coop's Corner: What Israeli tech dilemma?
With the situation in the Middle East going from bad to worse, Barkat, who runs a venture capital firm in Israel, was visibly shaken by the recent news out of the region.
"This is a bad situation," he said, reacting to news of last week's mob lynching of a couple of Israeli reservists. "This is a very bad situation."
Barkat and other Israel's entrepreneurs are now waiting to see whether the current political turmoil will sour the amazing success story that is the country's powerful high-tech industry.
In the aftermath of the 1993 Oslo Accords, Israel's then-nascent high-tech industry took off and today boasts the most Nasdaq-listed tech companies after the United States and Canada.
That prowess was on display during an international conference of CEOs in Prague last week where the Israelis were seemingly everywhere -- more so than the French, more so than the English, more so than any other national grouping than the Americans.
It was an impressive grouping. Over here were Gil Shwed, the brains behind Check Point Software Technologies Ltd., and Yoav Chelouche, the boss at Scitex Corp.; over there were venture capitalists such as Jonathan Medved of Israel Seed Limited Partners and Chemi Peres, a venture capitalist in his own right (who coincidentally happens to be the son of former Israeli Prime Minister Shimon Peres).
But though meeting in Prague, their thoughts remained a continent away as techie stuff took a back seat to the news out of Ramallah. After the latest spasm of violence, Israeli tech stocks got whacked -- in some cases harder than others on the Nasdaq.
Now there are concerns that these same stocks will continue to come under pressure. Investors driven by the trends of the moment are biting their nails, waiting to see whether President Clinton can create a lasting truce, let alone jump-start a virtually moribund peace process.
If you're one of those investors, keep some semblance of perspective about the reality on the ground.
To be sure, the success of Israel's high-tech boom owes a lot to the influence of a heralded peace process that many people once believed irreversible. Foreign companies that were previously worried about an Arab boycott, shed their reluctance to do business with the Jewish state. That opened the door to investments by outsiders in Israel proper.
Still, the ability of Israel's high-tech community to survive and thrive owes less to foreign policy considerations than it does to the advent of more liberal tax and investment policies which freed up a bumper crop of rich entrepreneurial talent.
Many Israeli companies have long located their operational and marketing arms in Europe and the United States, not because of existential fears about the future of the state. The Arab market is small and despite peace treaties with Jordan and Egypt, Israel's high-tech companies sell relatively little to customers in the region.
Judging from what I've seen, Israel's expertise in software design is in no danger of going into hibernation, let alone drying up due to renewed frictions with the Arabs. That risk might have existed five years ago, but not today.
Besides, if you're concerned about risks, the most dangerous thing you can do in Israel is drive on the highways.