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Israel’s Vital Tech Sector to Gain From Return of Army Reservists

Employees of StoreDot, an Israeli company that has developed extreme fast charging electric vehicle batteries, work in a laboratory in Herzliya, Israel, Oct. 2, 2023. Photo: REUTERS/Amir Cohen

Israel‘s wartime economy will get a much-awaited boost as the military gradually releases reservists fighting in the Gaza Strip so they can return to their jobs and jump-start softening growth.

Since the Oct. 7 attacks by the Palestinian terrorist group Hamas, more than 300,000 Israelis were drafted to reserve duty — many coming from the globally-important high-tech sector — leading to labor shortages and a gloomy national mood that hurt consumer spending and is expected to dent economic growth.

After nearly three months of intense air bombardment and a massive ground incursion, Israeli leaders have hinted that the war is entering a new phase, with a shift towards more targeted operations aimed at eliminating the Islamist group that rules Gaza and rescuing Israeli hostages.

The military accordingly is adjusting deployment plans for its forces in Gaza and other hot spots, first and foremost by starting to send reservists home — at least for a while.

It declined to share specifics about its number of forces, but said the move will “significantly alleviate economic burdens and enable them to gather strength for upcoming activities in the next year, as the fighting will persist, and their services will still be needed.”

Prior to the war, Israel was headed for solid economic growth of 3.4 percent in 2023 and 3 percent in 2024, according to the central bank. Now, the economy is headed for a fourth-quarter contraction and the Bank of Israel sees 2 percent growth this year and next, or zero growth per capita given Israel‘s fast-growing population.

Erel Margalit, who heads one of Israel‘s most active venture capital firms, Jerusalem Venture Partners (JVP), said the military made a calculated decision.

“They understand you need to go release people to go back to work because going back to work makes Israel stronger,” Margalit said. “Israel is not only strong militarily.”

START-UPS

With inflation easing, the Bank of Israel cut short-term borrowing rates by 25 basis points to 4.5 percent on Monday, its first reduction in nearly four years. The central bank’s policy makers are keeping an eye on the military’s strategy.

The release of reservists will benefit consumer spending, said deputy central bank chief Andrew Abir, which accounts for more than 50 percent of total economic activity.

“People were called up with no warning. In the first month, there was a real mess, because they were in the middle of projects,” Abir told Reuters, referring mainly to high-tech firms.

Spouses who may have been caring for their families alone since October will also be able to return fully to their employment, he said. This is good news for the high-tech sector, which accounts for 12 percent of employment, more than half of Israel‘s exports, 25 percent of income taxes, and nearly a fifth of its overall economic output.

Other signs of economic recovery in real-time data are emerging. Credit card purchases have returned to pre-war levels, Abir said, in “a sign the economy is functioning again.”

Foreign investment, while it has slowed, has not dried up. Startups raised $1.5 billion in the final three months of 2023 in 75 deals, according to data published last week. In 2023, funding fell to $7 billion from $16 billion in 2022.

Geopolitical risks may be off-putting, but they also offer a bigger potential upside, said JVP’s Margalit.

“There are some very good deals to be had,” he said.

Larger, well-funded tech firms have mostly weathered the war, and some have even thrived. Smaller companies, especially those that were hoping to close early financing rounds when the war broke out, have had a harder time.

In some cases, Margalit said, JVP and partner investors have had to inject more funds into these firms in order to “extend the runway.”

STATE SUPPORT

Pini Yakuel, CEO of marketing data firm Optimove, said they saw strong growth in the fourth-quarter despite having 41 of 240 workers in Tel Aviv drafted for reserve duty.

“We’ve adapted. It’s a new reality,” he said. “We just kind of, like, pressed on. Focused on what’s most important. Some things were paused, some things were delayed, but you continue to execute.”

His company put non-critical projects on hold and relied on offices abroad to help cover the load. And things will get easier as the absent employees slowly return.

“I notice in the office: ‘Oh hey, you’re back.’ ‘Yeah, I’m back.’ ‘Is it for good?’ ‘No, for the next month. Then they’re gonna tell us if we need to go back [to the reserves] or not’.”

The government took steps to protect the sector. State-funded Israel Innovation Authority set up a $100 million fund to help early stage startups.

In its recent survey, half of young companies only had sufficient funding for six months, said Dror Bin, the authority’s CEO. His fund has invested about $41 million so far.

“We all got our act together,” Bin said. “CEOs and employees realized that if they want to sustain the company’s success and their jobs they needed to refocus themselves on work.

“Despite all the empathy we get from the tech industry globally, at the end of the day when customers abroad need to get deliveries they can’t say that they didn’t get the deliveries because of the war in Israel,” he said.

($1 = 3.6437 shekels)

The post Israel’s Vital Tech Sector to Gain From Return of Army Reservists first appeared on Algemeiner.com.

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Rights Group Files Lawsuit to Block Trump Deportations of Anti-Israel Protesters

Marco Rubio speaks after he is sworn in as Secretary of State by US Vice President JD Vance at the Eisenhower Executive Office Building in Washington, DC, Jan. 21, 2025. Photo: REUTERS/Kevin Lamarque

The American-Arab Anti-Discrimination Committee (ADC) filed a lawsuit challenging as unconstitutional the Trump administration’s actions to deport international students and scholars who protest or express support for Palestinian rights.

The lawsuit, filed on Saturday in the US District Court for the Northern District of New York, seeks a nationwide temporary restraining order to block enforcement of two executive orders signed by US President Donald Trump in the first month of his term.

The lawsuit comes after the detention of a Columbia University student, Mahmoud Khalil, a 30-year-old permanent US resident of Palestinian descent, whose arrest sparked protests this month.

Justice Department lawyers have argued that the US government is seeking Khalil’s removal because Secretary of State Marco Rubio has reasonable grounds to believe his activities or presence in the country could have “serious adverse foreign policy consequences.” Rubio on Friday said the United States will likely revoke visas of more students in the coming days.

Trump vowed to deport activists who took part in protests on US college campuses against Israel’s war on Hamas in Gaza following the October 2023 attack by the Palestinian terrorists.

The ADC lawsuit was filed on behalf of two graduate students and a professor at Cornell University in Ithaca, New York, who say their activism and support of the Palestinian people “has put them at serious risk of political persecution.”

“This lawsuit is a necessary step to preserve our most fundamental constitutional protections. The First Amendment guarantees the freedom of speech and expression to all persons within the United States, without exception,” said Abed Ayoub, national executive director of the ADC.

Chris Godshall-Bennett, the group’s legal director, said the litigation seeks immediate and long-term relief “to protect international students from any unconstitutional overreach that stifles free expression and deters them from fully engaging in academic and public discourse.”

The lawsuit centers on three Cornell University plaintiffs: a British-Gambian national and PhD student with a student visa; a US citizen PhD student working on plant science; and a US citizen novelist, poet, and professor in the Department of Literatures in English.

The post Rights Group Files Lawsuit to Block Trump Deportations of Anti-Israel Protesters first appeared on Algemeiner.com.

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Netanyahu Informs Shin Bet Chief to Vote on His Dismissal Next Week

Israel’s Shin Bet chief Ronen Bar speaks at Reichman University in Herzliya on Sunday, September 11, 2022. Photo: Screenshot

i24 NewsPrime Minister Benjamin Netanyahu told Ronen Bar, the head of the Shin Bet security agency, that he will bring a vote before his government to dismiss him next week.

The post Netanyahu Informs Shin Bet Chief to Vote on His Dismissal Next Week first appeared on Algemeiner.com.

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Houthis Claim to Attack US Aircraft Carrier, Retaliating for Strikes

Newly recruited fighters who joined a Houthi military force intended to be sent to fight in support of the Palestinians in the Gaza Strip, march during a parade in Sanaa, Yemen, Dec. 2, 2023. Photo: REUTERS/Khaled Abdullah

i24 NewsThe Houthis claimed on Sunday that they targeted the aircraft carrier USS Harry Truman and other vessels in the northern Red Sea with 18 ballistic and cruise missiles and a drone. Military spokesperson Yahya Saree said that the US-led attacks against the Houthis on Saturday comprised of more than 47 airstrikes on seven governorates, with the death toll expected to rise.

“The Yemeni Armed Forces will not hesitate to target all American warships in the Red Sea and in the Arabian Sea in retaliation to the aggression against our country,” Saree said, vowing the Houthis “will continue to impose a naval blockade on the Israeli enemy and ban its ships in the declared zone of ​​operations until aid and basic needs are delivered to the Gaza Strip.”

The post Houthis Claim to Attack US Aircraft Carrier, Retaliating for Strikes first appeared on Algemeiner.com.

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