General News Summary

The government has come under domestic criticism for its refusal to cooperate with the South-African Judge Richard Goldstone's UN commission investigating possible "war crimes" during last winter's Operation Cast Lead in Gaza. Working with the commission, the critics say, might have given Goldstone possible information that would have produced a potential balanced report. Defense Minister Ehud Barak, who opposed cooperation with Goldstone, has also succeeded so far to block the establishment of a domestic inquiry, saying that the IDF can carry out its investigations.

Goldstone's report accused Israel as committing war crimes during the Gaza war in its attempt to stop the Hamas daily barrage of rockets on Israel's southern civilian population. The one-sided report outraged Israeli officials across the political and military spectrum, who accused the South African judge of bias and failure to sufficiently recognize Hamas's rocket fire as was crimes.

In mid-October, President Shimon Peres expressed the prevailing view among public officials, when he told U.S. Ambassador to the UN Susan Rice, "It is outrageous that a respected institution like the UN provides a platform to spread lies and stories about Israel." He added: "The UN provides a stage for Ahmadinejad, who threatens to annihilate Israel, and lets him stand judge. This is nothing short of ridiculous."

The controversial report was endorsed in mid-October by UN's Human Rights Council, which has a long history of focusing on Israel while ignoring real violations of human rights elsewhere in the world, compounded by failing to even mention in it the daily rockets fired at Israeli citizens from Gaza, the trigger for the offensive. According to press reports, the U.S., Russia and China oppose a Security Council debate.

Israel maintained a low profile in the wake of Iran's apparent delayed answer, in late October, to the proposed plan to ship outside most of the enriched uranium in its possession for additional enrichment. Speaking on the arrival of U.S. Mideast peace envoy George Mitchell to Jerusalem, Prime Minister Benjamin Netanyahu expressed appreciation for U.S. President Barack Obama's s "ongoing efforts to stop Iran from acquiring nuclear military capability." He called the U.S. leader's proposal "a positive first step."

After stalling for some time, Iran proposed that it would enrich its uranium at higher levels inside Iran, but under UN supervision. The European Union almost immediately rejected Teheran's counter-offer, saying that the West should stick by its demands that the uranium be handled outside the borders of Iran.

Israeli experts pointed out that Iran was following its usual procedure of apparently agreeing with the West, then attaching conditions to empty any deal of real significance. In this case, the experts added, Iran is playing a delay game to avoid the imposition of sanctions against it for as long as possible.

If the Iranians are playing for time, the Americans may be doing something similar, if for very different reasons. Failure of international efforts to stop the Iranian nuclear arms program could trigger an attack by Israel and the consequent regional conflagration. A negotiating process with Iran, even if no deal is struck, would push the h-hour for such an attack back a year, or possibly even more.

After assuming some semblance of possible motion earlier in the year, Israel-Palestinian peace talks seem to be back in the doldrums. Though U.S. Middle East envoy George Mitchell continues to meet with the two sides, most recently during a late-October trip to the region, the Palestinians did not seem interested in moving ahead. As a result of the doldrums, the U.S. has practically withdrawn from its initial unilateral full freeze of Israeli settlement activity, within the existing settlements and now is concentrating on an even handed goal of getting the talks started with no preconditions.

Israeli sources suggest that PA President Mahmoud Abbas has no desire to push ahead with peace talks right now. There are two reasons, according to this theory: First, because Abbas believes that pressure on Israel is increasing in the wake of the Goldstone report and second, because he feels that "standing firm" against Israel will improve his side's chances in the Palestinian elections called by him for January. Whether they are actually held if Egyptian efforts at reconciliation between Abbas's Fatah and the Hamas rulers of Gaza fail is an open question.

Abbas, in fact, hasn't budged and is still presenting his preconditions: demanding a total settlement freeze, including Jerusalem, before talks are restarted. Israel believes that the Americans have accepted Netanyahu's suggestion for a temporary halt to starts of new housing, excluding both building in Jerusalem and progress on about 3,000 housing units already in various stages of construction – an opinion that was reinforced by Secretary of State Hillary Clinton, who called the concessions "unprecedented." But Abbas doesn't: On October 31, he categorically rejected Clinton's suggestion that negotiations be renewed on the bases of understandings reached between Mitchell and Netanyahu.

President Shimon Peres, Prime Minister Benjamin Netanyahu and Foreign Minister Avigdor Lieberman did not attend Turkey's national day reception at the home of the Turkish ambassador to Israel on October 29, and Industry, Trade & Labor Minister Binyamin Ben-Eliezer was the only cabinet member to attend. Despite Ben-Eliezer's assurances of the strong bond between the two countries, the absence of senior government officials was not officially heralded as a protest, but seemed to be a clear indication of the deteriorated state of Israeli-Turkish relations.

Turkey's veto of Israeli participation in Anatolian Eagle, a joint Israeli-Turkish-US air defense exercise that had been going on for most of the decade, and its refusal to stop airing of a TV show that portrays Israeli soldiers in as cold-blooded killers of civilians, are but the latest episodes in a gradual deterioration of relations between the two states. The erosion, in fact, has been going on ever since now-president Recep Tayyip Erdogan's Islamist party took over in Ankara in 2002. Under Erdogan, Turkey, unsuccessful in its efforts to obtain EU membership, has sought to improve its relations with the Muslim world, particularly its near neighbors Syria and Iran.

In public, Israel has declined to wage a war of words over the changed atmosphere with its ostensible friend and strong ally. Israeli officials still talk about the bond between the two nations, forged during the Cold War and nurtured during the years.

On the unofficial front, things are different: After the exclusion from Anatolian Eagle, which the Americans subsequently called off as a result of the snub of Israel, and the TV show, thousands of Israelis began thinking twice about vacationing, as they have for years, in the resorts and hotels along the Turkish Antalya coast.

Prof. Ada Yonath of the Weizmann Institute of Science in Rehovot, south of Tel Aviv, has been awarded the 2009 Nobel Prize in Chemistry for her four decades of research on protein "factories" in cells. Her dedicated work has led to the current struggle against antibiotic-resistant bacteria and many other applications. Yonath is the first woman to become a chemistry laureate since 1964, and only the fourth in history. Her prize is Israel's ninth Nobel and its second in chemistry, and the Rehovot institute's first.

Israel's cancer survival rate is one of the highest in the West, a Health Ministry official reported in mid-October. The official, Dr. Micha Barhana, said that the survival rates after five years were 61% for Jewish males, 67% for Jewish females, 50.7% for Arab males and 64.9% for Arab females. The high rates, Barhana said, were due to advances in technology, and particularly to early detection in such area as breast cancer.

More than 1,000 troops from Israel and a similar number from the U.S. armed forces took part in Operation Juniper Cobra, the two nations' biggest-ever missile defense maneuvers, in late October. The two militaries tested the Israeli-made, largely-U.S. funded Arrow 2 Theater Ballistic Missile System and the U.S. Navy's AEGIS Ballistic Missile System, as well as improved U.S.-made Patriot missiles. The U.S. X-Band forward tactical radar, based in the Negev desert with an American crew, 17 U.S. naval vessels, Israel Air Force planes and Israel's Green Pine and Super Green Pine missile detection systems also took part in the exercise, which was the largest of its kind ever held by the two allies. Planning for Juniper Cobra began more than two years ago.

New York University economist Prof. Nouriel Roubini, dubbed "Dr. Doom" by the New York Times for being one of the first to predict the 2008 world economic crisis, has praised Israel, according to Yisrael Today, a Hebrew-language daily distributed free in Israel. "I monitor Israel's economic figures, which clearly show that there is no doubt that Israel is one of the first countries to recover from the global economic crisis. Israel is leading the way out of the crisis," the Turkish-born Roubini told Israeli President Shimon Peres at an economic conference held in northern Italy in early September.

Prof. Stanley Fischer, the Governor of the Bank of Israel, said that his personal prediction for Israeli GDP growth is more optimistic than that of the central bank that he heads. Fischer explained that the Bank of Israel projection for GDP stability this year and 2.5% growth in 2010, is based on pessimistic scenarios about the recovery of world markets, while he anticipates more positive developments that would bring positive growth this year and growth in excess of 2.5% in 2010. (It should be noted that since Israel's population grows by 1.8-2.0% annually, zero economic growth in '09 represents a substantial fall in per capita GDP).

On a similar note, Israel's GDP will contract by only 0.1% in 2009, a performance second only to Australia, according to an International Monetary Fund projection released in early October. The IMF predicted 2.4% GDP growth in 2010.

Israel's Central Bureau of Statistics predicted zero growth in GDP for 2009, in estimates published on Oct 18. The CBS said that per capita, GDP would fall by 1.8% for the year.

The estimates, which also include a drop of 0.9% in business product, a decline of 7.9% in industrial product, 1.9% in construction, and 4.6% in transportation, logistics and communications, represent some improvement over the first half of the year, when GDP fell by an annualized 1.9%.

According to the CBS, private consumption growth will slow to 0.6% in 2009, after rising 3.8% in 2008 and 6.3% in 2007, while the standard of living is projected to fall by 1.2% this year, after rising 1.8% in 2008 and 4.4% in 2007.

Defense spending will rise by 3.6% in 2009; investment in housing will rise by 4.7% in 2009, after rising 3.6% in 2008 and 2.8% in 2007.

Exports by most sectors will drop this year; industrial exports (excluding diamonds), will fall by 11.4%, exports of tourism services will fall by 15.7%, exports of other services will fall by 6.3%, agricultural exports will fall 11.7%, and diamond exports will plummet 36.9%.

Imports of goods and services, in fixed prices, will fall 10.4% in 2009, after rising 2.4% in 2008 and 11.9% in 2007.

The Central Bureau of Statistics also predicts 2.6% inflation this year, after 0.4% last year.

Despite exporters' complaints that their profitability has been damaged by the weakened exchange rate of the dollar vs. the shekel, exports rose by 26% in June-August after falling by 0.4% in March-May, Ma'ariv reported in mid-September.

Preliminary trend data released by the Central Bureau of Statistics in mid-October shows that August unemployment declined for the first time since the rate of jobless began rising in September 2008. According to the CBS, 228,000 people, or 7.6 % of the civilian labor force, were classified as unemployed in August, the last month for which any kind of figures are available. According to the CBS, the rapid rise in joblessness began in August 2008, when the rate was 6%. It soared to a peak of 7.9% in April-May, and then stabilized.

Even at current levels, though, Israeli unemployment is lower than that of the OECD, which is 8.5%, the 9% of the European Union, or the 9.8% in the U.S. According to figures published in Ma'ariv, unemployment is lowest in Thailand, at 1.2%, Norway (3%), Singapore (3.3%), South Korea (3.6%), Switzerland (4.1%) and Pakistan (5.2%), and highest in South Africa (26.3%), Spain (18.9%), Turkey (12.8%), Ireland (12.4%) and France (9.9%).

Ma'agan Michael, on the coast between Tel Aviv and Haifa, is Israel's richest kibbutz, according to a survey of Israel's once-pioneering collective settlements published by Calcalist, the economic supplement of Yediot Aharonot. Calcalist, noting that almost all kibbutzim have shifted from pure agriculture to a reliance on industry, says that Ma'agan Michael, whose main business is the very successful Plasson plastics factory, had a turnover of NIS 919M (over $240M) last year, putting it in the front rank of Israeli businesses. In second place in the rankings, which seem to be based not only on industrial income but on the living conditions, including pension and housing of kibbutz members, is Kibbutz Sasa, on the northern border. Sasa's main industry is Plasan Sasa, a maker of armor solutions for military and defense vehicles, with an estimated income last year of NIS 2.4B (over $600M). They are followed, in third place, by Kvutzat Yavne, about 10 km. east of the port city of Ashdod, which earned about NIS 200M from its food products business. The kibbutz also gets all of its electricity, and its hot water, from a pilot solar electricity-generating station installed this year by Israel's Zenith Solar. Fourth is Kibbutz Shamir, in the northeastern part of the country near the town of Kiryat Shmona, with 793M shekels from its Shamir optical industry, while fifth is Mishmar Haemek, in the Jezreel Valley, whose main business is Tama, another plastics factory. In all, Calcalist said, there are about 124,000 people living in Israel's 267 kibbutzim.

Israel has a GDP of $164 billion, per capita GDP of $22,835, its top 10% earns 28.8% of the total income and the bottom 10% earns 2.1%, according to the 2009 UN Development Program's Human Development Report, released in October. Privatization, steadily worsening salary terms and a dubious payment ethic, combined with the fact that a large part of the population does not participate in the labor force and salary gaps, perpetuate both the country's levels of poverty and wealth, the report said.

Finance & Investment

VC Funding Down. Q3 Up.

For the first nine months of 2009, funds raised by Israeli start-ups from venture capital funds fell by about half, according to a mid-October report by the IVC Research Center. The report said that 108 start-ups raised $303M in the third quarter and $847M in January-September, compared to $600M and $847M in the corresponding periods of 2008. On a more positive sign, QIII/09 was up 9% from the preceding quarter, and the 2008 9-month figure, against which 2009 was compared, set a record at $1.6B.

Africa Israel Investments Ltd., the real estate company controlled by diamond mogul Lev Leviev, in late October reached an agreement with its bondholders for restructuring NIS 7.5B ($2B) of debt. Under the deal, Africa Israel will exchange its existing bonds with new notes, shares, or a combination of the two. Leviev will also inject NIS 750M of his own money into the company and cut his stake from 75% to 52.8%.

GE Energy Financial Services, a unit of General Electric, has joined a $23M funding round for SolarEdge, based in Herzilya in the tech belt north of Tel Aviv. It is GE Financial Services first investment in Israel. Other SolarEdge investors include Opus Capital and Walden International of the U.S., the Israeli Genesis Partners and Vertex Venture Capital Funds, and Singapore-based JP Capital Asia.

SolarEdge power harvesting and monitoring technology for photovoltaic systems is designed to maximize the energy output and cost efficiency of solar PV units. Its technology is embedded in the solar panels of industry-leaders such as BP Solar and Schott Solar, Isofoton and Gehrlicher Solar, where it increases electrical power output by up to 25%.

George Horesh, the owner of Israeli Toyota importer Union Motors Ltd., has scored a major financial coup in purchases of shares of Inchcape, a British importer of motor vehicles, according to a mid-September analysis in Globes. The paper says that Horesh purchased an estimated 9% of the British firm in the spring of this year, at the peak of the world financial crisis, for prices it estimates at an average of 8 pence a share, at a total cost of $50-70M. After the price on the London Stock Exchange rose sharply over the summer (by 384% in August, for example) to 30 pence in September (and 33 pence in mid-October), the value of Horesh's holdings rose, in Globes estimate, to around $220M, creating a paper profit of $150M or so. In addition, Globes wonders whether Horesh will act to realize that substantial profit, or use Inchcape, which was founded in 1857 as a general import firm, as a means of moving into other countries, including Israel, as an importer of motor vehicles.

Israeli billionaire Shaul Shani has sold GVT Holding, a Brazilian communications provider, to Vivendi of France for a reported $580M. Shani, whose Swarth Group holdings also include Israeli infrastructure specialist ECI Telecom, acquired part of his stake in GVT in 2008 from Israel's IDB Holding Corp., controlled by Nochi Dankner, another Israeli businessman.

GVT has 2.3 million fixed-line telephone lines in 81 cities in Brazil. The company posted an operating profit of $300M on $800M revenue in 2008.

Israel's IDB Group is purchasing the HSBC building in New York for $350M. The purchase will be made via two IDB companies, Koor Industries and Buildings and Properties. As part of the sale agreement, HSBC will take a 10-year lease on 51,000 sq. meters on 11 floors of the building.

Mobileye, the Jerusalem-based developer of computerized collision-prevention systems for motor vehicles, plans to raise about $50M in a second round of private financing, mostly from existing investors in the Israeli automotive field. Company valuation for what is expected to be the final round of private financing is in the $700-$800M range.

Mobileye, founded in 1999 by Prof. Amnon Shashua, head of the department of engineering at the Hebrew University of Jerusalem, uses image recognition technology developed by Shashua to, among other things, recognize when a vehicle is getting too close to the car in front of it, to spot pedestrians about to step into the path of the vehicle, and warn the driver when it is dangerous to change lanes because of oncoming vehicles in his or her "blind spots." The firm markets its products on the "after-market," for vehicles already on the road, and to automakers including Volvo, General Motors and BMW.

Mergers & Acquisitions

Bezeq Sold to ElovichIsraeli businessman Shaul Elovitch has purchased control of Bezeq, Israel's largest telecommunication company, for NIS 6.5B ($1.75B). Pending approval from anti-monopoly authorities because of his holdings in other telecom-related companies, Elovitch will acquire a 30.7% stake and control of the company from Ap-Sab-Ar Holdings, a partnership of Britain's Apax Partners, the Saban Capital Group headed by Israeli-American media mogul Haim Saban, and Israeli businessman Mori Arkin. Ap-Sab-Ar bought its stake in Bezeq from the government of Israel in a 2005 privatization sale, for $932M.

Siemens AG of Germany in mid-October acquired Solel Solar Systems Ltd., a world leader in solar-thermal systems for the generation of electricity. Siemens will pay $418M for Solel, based in Beit Shemesh, whose name, incidentally, translates as House of the Sun, about halfway between Tel Aviv and Jerusalem. Solel produces parabolic receivers, mirrors that focus the sun to heat a liquid that provides stem to run electricity-generating turbines. The technology used by Solel is based on developments by the now-closed Luz firm of Jerusalem. Luz-built plants, operating for almost 30 years in the California desert between Los Angeles and Las Vegas, have been producing about 354 MW of electricity powering 300,000 homes. Solel has been active in Spain since 2006, supplying key components for 15 solar thermal power plants with a combined capacity of 750 MW. For some time prior to the sale, Solel sought a buyer to gain more exposure to the international market and more capital for new initiatives.

CopperGate Communications, an Israeli start-up based in Tel Aviv with offices in Newark, California and three Asian locations, was sold in mid-October to Sigma Designs of Milpitas, California, for $200M. CopperGate, founded nine years ago, produces chipsets that enable the transmission of broadband communications over power, phone and coax cables to enable multimedia networking in homes and residential buildings; Sigma is a fabless provider of highly integrated delivery solutions for multimedia entertainment throughout the home, including set-top boxes, Blu-ray players, HDTVs, entertainment connectivity devices and RF-based home control devices.

The two companies, which have worked together over the years, plan to combine the capabilities of the two semiconductors into a unified chip that can provide Internet communications with video processing abilities, like those in cable television converters and video players. About 8 million converters already in service incorporate CopperGate and Sigma chip.

Mentor Graphics of Wilsonville, Oregon will acquire Valor Computerized Systems of Yavne, south of Tel Aviv, for $105M. The merger deal, announced in mid-October, represents a 21% premium over Valor's value on the Frankfurter Wertpapierbörse, the Frankfurt Stock Exchange, at the close of business on the previous day. Valor makes productivity improvement software solutions for the printed circuit board, or PCB, manufacturing supply chain, the principal electronic interconnect technology used in most electronic products.

Oracle said in late September that it will purchase Hyperroll, a Mountain View, California-based maker of software which accelerates financial reporting which has an Israeli development center in Omer, near Beersheba. Purchase price was undisclosed, but estimated in the tens of millions of dollars. Oracle purchased another Israeli software company, Dementra, in 2006, for $41M.

High Technology

Ophir Optronics, based in the Mt. Hotzvim high-tech park in northern Jerusalem, said in mid-October that it has won a three-year agreement with an unnamed U.S. defense systems maker, which could result in revenues of $60M. The company, which develops electro-optical systems including measuring equipment using lasers and infrared technology, and infrared night vision equipment, reported revenues of $73.7M in 2007 and $101.1M in 2008. Revenue in the first half of 2009 was well above revenue in the corresponding half of last year. The company also makes non-contact 2D and 3D measuring equipment through subsidiary Optical Metrology Ltd. and is developing dental equipment.

Modu, a mobile phone developer founded by Dov Moran, the Israeli technology entrepreneur, who invented the flash drive, has created a new interchangeable "jacket" compatible with Android, Google's mobile-phone operating system. Moran, whose company is based in Kfar Saba northeast of Tel Aviv with offices in South Korea and Croatia, seemed to suggest that his company was developing handsets with the capability of switching between other cellphone operating systems and dedicated applications, including Apple's iPhone, Nokia's Symbian, RIM OS of Blackberry and Microsoft's Windows.

Boston Scientific has integrated the technologies of Israel's Rimon Medical Technologies into its own product line, and will continue to make milestone payments to Rimon shareholders more than a year after it closes the Israeli company, according to Hezi Himmelfarb, Rimon's former CEO. Himmelfarb said that integration was always the plan for Boston Scientific, which acquired Rimon in late 2007 and closed the Israeli operation in April 2008. Rimon developed and commercialized non-invasive smart, miniature implants which enable physicians to assess and treat a variety of medical conditions.

Protalix BioTherapeutics, based in Karmiel in northern Israel, seemed well on track to produce a billion-dollar-revenue "blockbuster drug" in late October, after it announced that Ulypso, its treatment for the genetic disorder Gaucher Disease, had successfully passed its late-stage Phase III clinical study on human patients. According to the Protalix announcement, Gaucher patients in the 9-month worldwide study were able to safely break down a certain type of fat molecule. Protalix hopes to submit a marketing application to the U.S. Food and Drug Administration by the end of the year; according to Globes. The potential market for the Gaucher remedy amounts to about $1.3B.

EMEA (European Medicines Agency), the EU regulatory body, has informed Israel's MediWound that it is forgoing third-stage clinical testing of Debrase Gel Dressing, an enzyme-based burn-wound treatment. The decision means that MediWound, based in Yavne, can immediately submit an application for EMEA approval, a move which considerably shortens the treatment's time to market. Debrase effectively removes, or "debrides," burned skin tissue and allows for more effective treatment, including surgery.

Israeli scientists at the university center in Ariel and at a Russian technology institute in St. Petersburg have developed a prototype mini-turbine that can make homeowners independent of national electricity grids, according to a report in Calcalist. The thimble-sized gas-powered turbine is said to be capable of producing 48 KW of electricity over a 24-hour period, in addition to providing heat for an average home. The technology has been licensed to CMT, an Israeli start-up based in the L.N. Technologies incubator in Haifa, for commercial development. LG CEO Mike Sasson estimates that the unit, when available, will be priced in the $5,000-$7,000 range.

Innowatech, a company based in Haifa and using technology developed at the Technion Institute of Technology, claims to have developed a system that harvests mechanical energy imparted to roadways, railways and runways from passing vehicles, trains and pedestrian traffic and turns it into electricity. The system, which uses the weight and vibrations of vehicles on the road to generate electric power, was recently tested on a major Israeli highway.

Meanwhile Ashdod-based Ormat Industries, a long-time developer of geothermic and other renewable energy projects, has signed a joint venture agreement with Israeli solar energy firm Sunday to develop, build and operate photovoltaic solar energy systems in Israel. Investment in the project, with an envisioned 36 MW total generating capacity, is $195M.

Motti Kahane, a 41-year-old Israeli living in the U.S., has sold automoti.com, a website for selling cars from rental or lease, to car-rental giant Hertz for an undisclosed sum thought to be in the tens of millions of dollars, according to the economic supplement of Yediot Aharonot. Kahane, who started out working in a car wash for Shlomo Meltzer, founder of the Shlomo Sixt rental firm, moved to the U.S. after completing his army service and founded a car-rental firm in Tuscon, Arizona. He founded automoti.com, which now lists as its clients major rental firms including Alamo, Avis, Budget, National and Thrifty – in 1997. Over the years, it has sold more than 10,000 used cars for the rental firms.

Aerospace & Defense

Israel is the world's third largest defense exporter, after the U.S. and Russia, according to a report in Defense News in early October. Citing Israel Ministry of Defense figures, Defense News said that Israeli defense companies signed $6.3B worth of new export contracts for weapons, munitions, technologies, services and equipment during 2008, and $20.3B in 2005-08. The figures are rather different from figures cited in a report by the U.S. Congressional Research Service, a unit of the Library of Congress, which ranked Israel as the world's eighth largest exporter in 2008 and the ninth largest in 2005-08.

The worldwide economic decline has not affected Israel's main defense contractors, which continue to show increases in sales and orders. Jointly, Israeli defense firms brought in $9.8B in 2008 sales, up from $8.1B in 2007. The joint backlog of orders at the end of 2008 amounted to $16B, up $1B from the previous year. But, says Ora Coren, writing in Globes, increased competition between them, including the practice of putting in deliberately low bids in order to pre-empt the other firms, has prompted the Defense Ministry to set up a committee tasked with regulating the conflicting sales efforts of the three main companies – government-owned IAI - Israel Aerospace Industries, Rafael Advanced Defense Systems, IMI – Israel Military Industries and the privately-owned Elbit Systems.

The Israel Air Force may cut its outstanding non-signed order of U.S.-made F-35 Joint Strike Fighters from the original 25 down to 20 or lower if the price of the stealth warplane significantly exceeds $100 million per plane. The Jerusalem Post quoted unnamed defense officials in its report, which said that it was unlikely that a contract for the new state-of-the-art fighter would be signed by the target date of early 2010. According to the Post, Israel is asking that 50% of the electronics in the planes delivered to it will be made locally. These are said to include made-in-Israel electronic warfare and communications equipment.

New Artillery Rocket System

IAI in early September unveiled JUMPER, a package of eight canistered missiles in a vertical launcher able to strike targets precisely at ranges of up to 50 km. JUMPER, designed to be suited for asymmetrical warfare, includes an integrated command-and-control unit that requires no special crew or launching platform. According to the manufacturer, the system can be used regardless of visibility conditions. Each of the eight 63-kg. laser-guided missiles is equipped with a GPS system and four steering tail fins.

Israeli ground troops are likely to be better protected from the anti-tank missiles, which did so much damage to IDF forces during the Second Lebanon War, by a new system developed by IMI Israel Military Industries. The system, called Shock Absorber, intercepts incoming missiles shortly after launch and deflects their flight away from their intended targets. A man-portable system, Shock Absorber can be deployed within minutes, according to IMI.

Israel's Finance Ministry has provided IMI with about NIS 137M (about $37M) since August to help keep the company running smoothly and pay salaries, according to a mid-October report in Calcalist. The paper said that the money would be passed to IMI via the Defense Ministry, in the form of advanced payment on orders for arms, in order to insure "industrial peace" at the company. IMI has been in financial difficulty for some years, despite a 30% rise in sales, to about $600M, in 2008.

Speaking to Globes during AUSA, the Washington defense show, IMI officials predicted a bright future for the company after privatization. They said that planned acquisition of a U.S. subsidiary by its Ashot Ashkelon subsidiary would allow the company to get a bigger share of Israeli purchases with U.S. defense aid funds, 75% of which must be used in deals with U.S. companies, and said that IMI's sales could reach $1B by 2015, compared to $670M in 2008.

A U.S. subsidiary of Israel's Plasan Sasa said in mid-October that it had won another U.S. Army contract for 923 armor kits for the Army's MRAP All-Terrain Vehicle. The order, as a subcontractor for U.S. firm Oshkosh Defense, is valued at $408M; delivery is due by March 2010. In all, Plasan and Oshkosh have received orders from the U.S. military for over 5,000 armored vehicles, at total value of $2.76B. Plasan's share of the combined contracts amounts to 25%.

India has purchased Harop UAVs from IAI in a deal valued at about $100M, sources on the subcontinent reported in early October. The Harop, a version of IAI's Harpy, has a range of mover 1,000 km., carrying a 51-lb. warhead. It has the capability of honing in on a target and diving into it, destroying the target in the explosion concurrent with its crash.

Elta Systems, a subsidiary of the government-owned IAI - Israel Aerospace Industries, has won two contracts to supply radar systems for military jets and advanced air defense from the Republic of South Korea. Joint value of the two deals is $280M.

Elta's 2031 Fire Control Radar system is to be installed in ROK's FA/TA-50 training jet, being developed by Korean Aerospace Industries. The system has enhanced air-to-air, air-to-ground, and air-to-sea capabilities, enabling long-range target detection and high-resolution mapping. According to some reports, the air defense radar system is Green Pine, used by Israel with its Arrow anti-missile missile.

Israel defense contractor Elbit Systems has won a contract to supply surveillance systems for the Irish armed forces. But according to the Irish Independent newspaper, the deal for surveillance pods and masts for a new fleet of armored vehicles may run into trouble because of the Goldstone report on last winter's campaign in Gaza, Operation Cast Lead. The equipment is to be mounted on a new fleet of RG-32M armored vehicles that are being built in South Africa.

The Irish Independent said that the Irish army has used Israeli-made Orbiter unmanned aerial vehicles for surveillance in Chad, and has in the past purchased helmets from Israel's Rabintex Industries and 5.56mm ammunition from IMI.

G-NIUS Unmanned Ground Systems, a jointly-owned subsidiary of IAI and Elbit Systems, is developing a next-generation USV (unmanned surface vehicle) for the Israel Defense Forces. According to motocar.co.il, a Hebrew-language automotive Internet site, the new vehicle will be called the Nahshon, will be more highly automated and have more mission capabilities than G-NIUS's Guardium, in IDF service since 2008. According to Motocar, the Guardium is capable only of carrying out patrol missions, while the Nahshon is designed for operational support tasks as well.

Both vehicles are based on a platform of the Tomcar, a made-in-Israel all-terrain vehicle. Development of the Nahshon is due to be completed in 2011.

The Israel Navy plans to begin using unmanned naval vehicles (UNVs) to patrol off the Mediterranean coast, according to an early-October report in the Jerusalem Post. It plans to use two systems, one of which it did not identify to the Post. The other is Protector, built by Rafael. Both craft were tested during last winter's Operation Cast Lead.

Elbit Systems and the U.S. Army have completed flight tests of the SWORD obstacle-warning system for helicopters, the Israeli company said in early October. SWORD laser radar (LADAR) provides obstacle detection and real-time alerts to the pilots of helicopters flying at low altitudes and adverse weather conditions. The tests, in collaboration with the U.S. Army Research and Development Command's Aviation Applied Technology Directorate, were conducted on a EH-60L helicopter.

IAI and Gulfstream Aerospace, a subsidiary of General Dynamics, rolled out their new supersize business jet, the G250, at Ben-Gurion Airport in mid-October. The plane, production of which went ahead despite the global economic crisis, will sell for $24-28M, depending on its configuration.

A joint venture of IMI and Ensign-Bickford Aerospace and Defense (EBA&D), a U.S. firm with facilities in Simsburry and Sterling, Connecticut, Graham Kentucky and Tempe, Arizona, will market advanced armor protection solutions for U.S. forces, the two firms said in early October. These include two products: Iron Wall, a passive armor system to protect against small arms fire and improvised explosive devices (IEDs), and Breakwater, a hybrid passive and reactive armor system designed to protect against small arms, anti-tank rockets and missiles.

Haifa-based Steadicopter unveiled its Black Eagle 50 unmanned mini-helicopter at the mid-October Israel Defense International Army and Police Exhibition. The rotary-UAV is just over two meters long, can carry a 3-kg. payload, remain in the air for up to 3 hours at altitudes of up to 9,000 ft. and transmit data to a command center as much as 150 km. away. Its developers say the Black Eagle 50 can collect data from places that are difficult for a standard UAV to reach, and can stay aloft in a fixed location for extended periods of time. It needs no human operator; a two-man team can simply give the UAV, which takes off and lands unassisted by human pilots, GPS coordinates on a digital map, and stand by to man manual back-up controls.