Israel at 60

Tonight we celebrate Israel’s 60th birthday, Yom Haatzmaut. And there certainly is a lot to celebrate. Israel today is stronger and better positioned than it ever has been – security-wise, culturally, and certainly economically.

Focusing on the latter – Israel’s stock market has been one of the world’s best performing markets of this decade, up double-digit percent in each of the last five calendar years. One shekel invested in the TASE 25 index on January 1, 2003 would be worth 3.25 shekels today. Israel’s “new” tech economy keeps growing and growing, attracting each year more and more of the world’s leading VCs and global tech companies (Microsoft didn’t close on Yahoo, but it has closed on two acquisitions of Israeli tech companies so far this year – topped only by IBM’s three acquisitions in just the first four months of 2008 totaling more than $500 million).

Israel is on its way to OECD membership, with a strong currency, low inflation, healthy growth rates, falling debt, rising credit ratings (now A1/A after recent upgrades by Moody’s and S&P), and an educated and motivated workforce. When we arrived in Israel just a month after Israel’s 50th birthday, per-capita income was about $16,000 – in developing country territory. It is now above $30,000, placing Israel among the 30 richest countries in the world.

The Mishna (Ethics of Our Fathers 5:25) teaches us that “At 60, you attain seniority (literally, Zikna)”. There are a few political commentators out there (as very correctly pointed out by Caroline Glick of the Jerusalem Post yesterday) who have apparently misinterpreted Zikna as Zaken, or old age, feeling that Israel is on some sort of economic or demographic downslope. I highly doubt that any of those commentators have spent much time in Israel lately, have any Israel business interests, or have seriously vetted the (incorrect) data on which their assumptions are made, as Ms. Glick points out.

Certainly there remain challenges and a lot of work to do – in the security realm there always will be, as some of our wonderful neighbors remain focused on destroying what we have rather than building what they could have. (In my view, peace will indeed come to our region if and when that fact ceases to be correct). And economically, while Israel has established a wonderful and diversified economic base in just 60 short years, there remain serious issues of economic and geographic inequality, religious divide, infrastructure, and environment (among others) to deal with. But we’re now dealing with them from a position of strength. And like most mature and successful countries, our main problems and issues are increasingly internal ones. The proper use of our Zikna, or intellectual maturity, at this stage of Israel’s development will determine our direction in the next decade, and beyond.

In the next decade – as we say in the business – go “long” Israel! I don’t think you’ll be disappointed.