The young Palestinian city of Rawabi, which is not far from the Israeli city of Modi’in and is surrounded by settlements, is not a vibrant city like Ramallah, its neighbor. Not yet, anyway. The tidy streets of the first planned city for Palestinians in the West Bank, some of which are still under construction, are empty. Only in one part of the business district is the sense of solitude interrupted by the relative bustle of cafes during the afternoon.
That’s not accidental: Every day, over 100 software developers converge on the area’s principal office building, which also houses on its upper floors the city’s entrepreneurial center, featuring a large shared working space that resembles that at similar facilities in Israel. After Arabic, English is the main language spoken in the new facility, the Rawabi Tech Hub, which opened last year.
Many people are unaware of the fertile cooperation taking place between Palestinian software engineers from Gaza City, Ramallah and Rawabi, in the West Bank, and Israeli high-tech companies, which are beginning to benefit from the experienced and inexpensive workforce of their neighbors. Such Israeli companies employ 20,000 people from India and Ukraine at present, while just over the border, an hour by car from Tel Aviv, is a substantial pool of skilled workers who can help ease the labor shortage in Israel’s high-tech industry.
Certain security arrangements must be made to enable this, of course, but with a little faith and a bit of vision, the industry in Israel can both extend a hand to the country’s Palestinian neighbors and offer innovation and hope for a better future in the region.
Mellanox Technologies is among the Israeli tech companies that has discovered this hidden potential. “A number of years ago I said we have to do something with the Palestinian community,” says Eyal Waldman, who founded the company in 1999 and is currently the CEO and president. “I saw the potential in smart people with a relatively low employment cost — here, just around the corner.”
Waldman decided to build an independent bridge to cooperation, and in 2010 set up a software development team in Ramallah.
“We started with 10 employees and gradually expanded,” he recalls. “We began with subcontractors because we feared that one terror attack or gunfire incident might stop the work. Everyone there knows we’re an Israeli company.”
Around two years ago, Mellanox moved its Palestinian developers’ center to Rawabi.
“In 2014, I was invited to a dinner with then-U.S. Secretary of State John Kerry. Palestinian entrepreneur and businessman Bashar Masri was there too, and we decided then that we do things together,” says Waldman, referring to the man who has founded and developed Rawabi. “Since then we have become friends outside of work as well. The move to Rawabi was a very important accomplishment for the city, for the Palestinians and for us.”
Today Mellanox employs over 100 Palestinians, more than 20 in the Gaza Strip. The average age of the company’s Palestinian workforce is 25. Most employees – 79 percent – are male; the are involved in developing software, hardware and user-interfaces, among other areas. The fact that the Israel Defense Forces is a major client of the company, explain employees, allows some of them to travel to and from Israel.
Are the Israeli and Palestinian employees suspicious of each other?
Waldman: “When we began the joint activity, [the Palestinians] were afraid to come to Israel. Their only previous contact with Israelis was with soldiers at a checkpoint or in their villages. We told them that nothing would happen to them if they came. Today everyone is satisfied and relations between workers are good – and that’s one of the most important things.
"Moreover, the Palestinian Authority and Hamas know there are people working for Israeli companies, and it’s not a problem. So what if there’s a risk – I think it has to be done. We’ll continue to grow and to hire more people in the PA, as well as developing information technology and cloud-computing infrastructure there.”
Waldman is considered a pioneer in the local high-tech industry when it comes to developing a presence in the areas under PA control, but other figures in high-tech on both sides of the Green Line, under the auspices of the U.S. government – acting as a broker – helped to pave the way.
Supply and demand
One of the key players from the start was Yossi Vardi, a well-known investor and entrepreneur who has been called the “godfather” of Israeli high-tech. A few years ago, together with a number of Israeli and Palestinian businesspeople, Vardi launched Breaking the Impasse – a forum whose goals include promoting a two-state solution for the Palestinian-Israeli conflict and employing Palestinians in Israeli high-tech.
Vardi: “I think what’s being done in high-tech is fantastic. It shows that it’s possible to create coexistence while each side sees to its own interests. The potential is great. Most computer science graduates in the PA don’t have work, and anyone without a job can grow into an angry person. Those who do work have been highly motivated so far, and [our projects have] been working for a decade despite the missiles and the wars in the background.”
To understand the differences between the Israeli and Palestinian economies and the potential benefits of cooperation for both sides, you need to look at the numbers. The unemployment rate today is about 18 percent in the West Bank and 44 percent in the Gaza Strip, and the average monthly salary in the PA is around $700.
According to a study by the Texas-based research and consulting firm Everest Group, based in part on data from the Palestinian Central Bureau of Statistics, there are thousands of Palestinians with degrees in information and communications technology who are available for work. Unemployment among the ICT graduates is 34 percent (including the Strip), and some 3,000 young people complete their studies in ICT at Palestinian universities each year.
High-tech accounts for just 2 percent of employees in the PA. Salaries are around $1,500 to $2,000 a month; the total cost of employing an individual at an Israeli company is about twice that. An estimated 400 Palestinians currently work for Israeli high-tech companies.
On May 30, a seminar titled “Doing Business in the Palestinian Authority” was held in Tel Aviv, sponsored by the Herzog Fox & Neeman law firm, together with ACC Israel – the Association of Corporate Counsel and the Israel-America Chamber of Commerce.
“The Palestinian market and the Israeli market are synergetic and in effect captive,” explained Daniel Reisner, a partner in the firm and head of its defense and homeland security practice. Reisner previously served as a legal counsel and member of the Israeli peace team involved in negotiations with the Palestinians and Jordan.
“Despite the fact that the figures are not published, we know that the scope of Israeli-Palestinian trade is enormous,” he said. “Nevertheless, most of the trade and the economic relationship consists of Israel selling and the Palestinians providing manpower. The joint ventures between the sides are less visible.”
An important component of the nascent Palestinian tech industry is entrepreneurship. Innovation incubators have been established in major Palestinian cities by venture capital firms such as Sadara Ventures, which was founded to target the local tech sector. The Rawabi Tech Hub innovation and entrepreneurship center operates under the auspices of the city’s economic development body.
Palestinian tech envoys
The director of Rawabi Tech Hub is Sari Taha, 30, who has a bachelor’s in mechanical engineering from Bir Zeit University in the West Bank and an MBA from Haifa’s Technion – Israel Institute of Technology. He previously worked as an analyst at Takwin Labs, a venture capital fund that invests in early-stage enterprises in the Israeli Arab community.
“The first mission of the Tech Hub is for Rawabi to become the home of local and multinational companies,” Taha tells Haaretz. “In addition, it’s a place of learning and of education in new technologies. The third mission is developing entrepreneurship. Since we launched in October, the place has become the first ‘address’ for young entrepreneurs. We help them develop their ideas and we match them with investors.”
Taha, who is clearly plugged into the entrepreneurship scenes in Israel and the PA, believes that beyond employing Palestinians in local development centers, there’s an opportunity for creating startups that will appeal to the wider Arab world – a market that he estimates to be around 400 million people.
“Many Israelis think they can conduct business with the Arab world without the mediation of the Palestinian side. That doesn’t make sense,” he observes. “Direct communication is possible in some areas, perhaps with certain Arab governments over big projects in the realms of agriculture and infrastructure, but Israel cannot reach the Arab consumer market. Of course a political solution is necessary, but in the meantime the Palestinians can be ambassadors of Israeli technology to the Arab world.”
Adds Taha, “If I know that today there’s a problem in some Arab country and there’s an Israeli startup that can solve it, it’s possible to create a technology partnership in which I, the Palestinian side, obtain permits, for example.”
He explains that he receives “a lot of phone calls and emails from high-ranking Israeli officials wanting to help. When I’m asked, ‘Why are Israelis so eager to help?’ – I say it’s only logical to help a neighbor. It will contribute to the entire region.”
Naturally, the picture is not entirely rosy. On the Palestinian side, say a number of people who involved in joint cooperation efforts, there are sometimes accusations that such ventures constitute normalization of ties, which is one reason why international bodies are sometimes needed to mediate between the sides.
The first stop for most Israeli companies that are interested in hiring in the PA is Palestinian outsourcing companies, some 20 of which operate in Ramallah, Rawabi, Hebron and Nablus. Haaretz meets with the founder and managing director of ASAL Technologies, Murad Tahboub, in his office in the Rawabi Tech Hub – but only after he shows us the busy cafeteria, the ping-pong room and the employee lounges, outfitted with colorful beanbag chairs. ASAL employs 250 tech engineers in Rawabi, Nablus, Hebron and the Gaza Strip.
“It’s a win-win situation,” Tahboub says. “You [Israelis] need workers and we can supply the demand at an attractive price. That momentum could lead us to establish a genuine Palestinian high-tech industry.”
So why isn’t that happening?
“Psychology and lack of awareness. Because of the situation, the Palestinians don’t properly publicize themselves in the Israeli market, and the Israeli media doesn’t emphasize this opportunity the way it emphasizes the political situation. As a result, it’s harder for us than it is for outsourcing companies in Ukraine or in Poland. Give us the opportunity to demonstrate our capabilities and the value of our businesses to you. It’s excellent,” Taha says.
While many Israeli companies rely on global outsourcing today, some of them, such as Freightos, which develops automated logistics and shipping systems, decided from the day it was founded to hire employees from Ramallah directly.
“My connection with Ramallah began 12 years ago, with my previous startup, G.ho.s.t,” says Freightos CEO and founder Zvi Schreiber. “There were two reasons for my decision: I believe it’s important to empower the Palestinian economy and forge ties between Palestinians and Israelis, and from a business perspective there is such a great shortage of workers in Israel, so it’s important for us to have an additional source of talent.”
Freightos employs 160 people, more than 60 of whom work in Ramallah in development, customer support and as product managers. Schreiber says the Palestinian employees receive the same stock options offered to their colleagues in Israel.
“It’s a joy to see the Israeli and Palestinian employees working together," he says. "Even if at first there’s a little wariness on both sides, after a few hours of working together they forget the conflict."