Gideon Patt Interview on the 50th Anniversary of Israel Bonds: Fueling a High-Tech Renaissance
Israel Bonds' President and CEO Gideon Patt is fond of pointing out that while Israel may be the land of milk and honey, it is not exactly the Promised Land when it comes to natural resources and raw materials.
"I do not know whether it was the Almighty's plan," he says, "but when all the countries around us dug for water they found oil. When Israel dug for oil it wasn't enough that we didn't find it, we didn't find water either. We had to do something to compensate for our lack of resources."
There was one resource Israel had in abundance: Jewish brainpower, and it became "the something" of maximum utilization that, combined with the economic infrastructure and Israel bonds investment funds, made it possible to realize its greatest potential.
"The results were astonishing. They transformed Israel into an innovative high-tech superpower. No less a personage than Microsoft's Bill Gates paid homage to Israel's prowess when, at a recent economic conference in Davos, Switzerland, he declared that Israel had developed the best high-tech industry outside the United States. At the same conference, America Online's Steve Case dubbed Israel "the Silicon Valley of the Middle East."
AOL and Microsoft are not the only ones taking notice. Today, almost every high-tech powerhouse has opened a major facility in Israel, representing billions of dollars in investments. Patt was instrumental in smoothing the way for Intel's initial entry into Israel when he served as Minister of Trade and Industry. Intel has invested more than $2 billion in Israel, having there three facilities by now. It has also acquired an Israeli high-tech company for $1.6 billion.
Being a noted economist, Patt is gratified by Israel's economic resurgence. He originally gravitated to economics because the first political party he joined, the Liberal Party, advocated free enterprise. Although at the time Israel was still adhering to the socialist principles upon which it was founded, Patt felt that ultimately, socialism "would ruin the country."
Patt's orientation toward free enterprise enabled him to execute what he considered to be his finest accomplishment - the Free Trade Agreement (FTA) - he negotiated with the United States while service as Minister of Trade and Industry in the cabinet of Menachem Begin. Today, as a result of the FTA, the U.S. has become Israel's largest export market, amounting to $10 billion annually. Patt notes that the FTA has worked the other way as well, with Israel purchasing more U.S. products than any other Middle East country.
In addition, foreign investors have greatly increased their investments in Israel's high-tech industry, and have taken advantage of the nation's creative abilities to introduce innovative new products to world markets.
Patt is proud of his latest economic achievement on behalf of Israel: the securing of more than $920 million in Israel bond sales in 1999. Since becoming the organization's president and CEO in 1997, Patt has helped generate nearly $3 billion in new development capital for Israel through the sale of bonds. As a whole, the Bonds organization has produced in excess of $21 billion since its establishment in 1951, with Israel redeeming more than $16 billion up to date. "In economic terms," says Patt, "the Bonds organization has helped make Israel what it is today. Israel is a global high-tech player because Israel Bonds helped to build the kind of infrastructure needed to sustain that kind of industry. One shall find Israel Bonds' money in every road, in every port, in every school, university, telecommunication network and housing community for new immigrants."
He points out that these are the essential components that have enabled Israel to build a state-of-the-art high-tech sector that exports its products around the world. Currently, high-tech accounts with approximately two-thirds of Israel's industrial output and 80 percent of its industrial exports.
Patt is particularly proud of the role Israel Bonds played, and continues to play, in absorbing new immigrants, many of whom have figured prominently in the development of cutting-edge technologies. In fact, thanks in a large measure to immigration from the former Soviet Republics, Israel now has the highest per capita number of engineers in the world, nearly double that of the United States.
Today, Israel's high-tech renaissance has garnered more NASDAQ listings than any other country outside North America, and both Newsweek and Business Week have named Tel Aviv one of the world's 10 leading centers of high-technology. Moreover, venture capital funds are pouring money into Israeli companies at a furious rate.
Gideon Patt likes what he sees, and he hopes others will as well. "What we want to do," he says, "is to promote the State of Israel so that an individual who invests in Israel bonds will do it again and again. We want them to be happy with their investment in the State of Israel."
Patt is particularly gratified that over the years a considerable number of Bonds supporters have become direct investors in Israeli companies, ranging from manufacturing enterprises to large scale construction concerns and high-tech exporters.
"Israel," Patt says, "must have a strong economy if it is to remain secure and meet the ongoing challenges of absorbing immigrants, providing secular and Jewish education, preserving democratic values and institutions, and strengthening the nation's social fabric. Israel Bonds is an important means of ensuring that these goals continue to be met."
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