The writer of the excerpts below has tried to turn it into a "Hate-Israel" piece but the facts marshalled are in fact another wonderful Gideon story -- of how high human quality can grab triumph from a much more numerous enemy. SCA has a fisking of the pathetic anti-Israel component in the article, mostly not reproduced below

Gaza in the hands of Hamas, with masked militants sitting in the president's chair; the West Bank on the edge; Israeli army camps hastily assembled in the Golan Heights; a spy satellite over Iran and Syria; war with Hizbullah a hair trigger away; a scandal-plagued political class facing a total loss of public faith. At a glance, things aren't going well for Israel. But here's a puzzle: why, in the midst of such chaos and carnage, is the Israeli economy booming like it's 1999, with a roaring stock market and growth rates nearing China's?

Israel's economy isn't booming despite the political chaos that devours the headlines but because of it. This phase of development dates back to the mid-90s, when the country was in the vanguard of the information revolution - the most tech-dependent economy in the world. After the dotcom bubble burst in 2000, Israel's economy was devastated, facing its worst year since 1953. Then came 9/11, and suddenly new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack, and extract confessions from closed-mouthed prisoners.

Within three years, large parts of Israel's tech economy had been radically repurposed. Put in Friedmanesque terms, Israel went from inventing the networking tools of the "flat world" to selling fences to an apartheid planet. Many of the country's most successful entrepreneurs are using Israel's status as a fortressed state, surrounded by furious enemies, as a kind of 24-hour-a-day showroom, a living example of how to enjoy relative safety amid constant war. And the reason Israel is now enjoying supergrowth is that those companies are busily exporting that model to the world.

Discussions of Israel's military trade usually focus on the flow of weapons into the country - US-made Caterpillar bulldozers used to destroy homes in the West Bank, and British companies supplying parts for F-16s. Overlooked is Israel's huge and expanding export business. Israel now sends $1.2bn in "defence" products to the United States - up dramatically from $270m in 1999. In 2006, Israel exported $3.4bn in defence products - well over a billion more than it received in American military aid. That makes Israel the fourth largest arms dealer in the world, overtaking Britain.

Much of this growth has been in the so-called homeland security sector. Before 9/11 homeland security barely existed as an industry. By the end of this year, Israeli exports in the sector will reach $1.2bn, an increase of 20%. The key products and services are hi-tech fences, unmanned drones, biometric IDs, video and audio surveillance gear, air passenger profiling and prisoner interrogation systems - precisely the tools and technologies Israel has used to lock in the occupied territories.

Next week, the most established of these companies will travel to Europe for the Paris Air Show, the arms industry's equivalent of Fashion Week. One of the Israeli companies exhibiting is Suspect Detection Systems (SDS), which will be showcasing its Cogito1002, a white, sci-fi-looking security kiosk that asks air travellers to answer a series of computer-generated questions, tailored to their country of origin, while they hold their hand on a "biofeedback" sensor. The device reads the body's reactions to the questions, and certain responses flag the passenger as "suspect". Like hundreds of other Israeli security start-ups, SDS boasts that it was founded by veterans of Israel's secret police and that its products were road-tested on Palestinians. Not only has the company tried out the biofeedback terminals at a West Bank checkpoint, it claims the "concept is supported and enhanced by knowledge acquired and assimilated from the analysis of thousands of case studies related to suicide bombers in Israel".

Another star of the Paris Air Show will be Israeli defence giant Elbit, which plans to showcase its Hermes 450 and 900 unmanned air vehicles. As recently as last month, according to press reports, Israel used the drones on bombing missions in Gaza. Once tested in the territories, they are exported abroad: the Hermes has already been used at the Arizona-Mexico border; Cogito1002 terminals are being auditioned at an unnamed American airport; and Elbit - also one of the companies behind Israel's "security barrier" - has set up a deal with Boeing to construct the Department of Homeland Security's $2.5bn "virtual" border fence around the US.



Vast Israeli inventivesness in the civil sector too

Sat-nav and voicemail are just two of the technologies born in a country approximately the size of Wales

Think of technological innovators and you think of Japan, Korea, the United States. Possibly Germany. You probably don't think of Israel. But you should - Israel produces more innovative ideas and new start-up companies than almost any other country in the world. Every time you send a text, or power up your sat-nav system to plan your route, you're using a piece of kit that has its roots in Israel. Not bad going for somewhere roughly the size of Wales, with a population of seven million, and which didn't even exist as a nation state 60 years ago.

In 2005, venture capital investment in Israel was US$1.34 billion - Britain, by comparison, has almost ten times the population but less than twice the venture-capital investment. This is due in part to the Israeli government, which contributes heavily towards funding start-up companies, and which has, for the past 10 years, run a venture-capital fund through the office of the chief scientist. It believed that if it kick-started funding domestically, foreign capital would follow.

The risk paid off: a Morgan Stanley report published in January showed that foreign capital flows to Israel rose from $3.2 billion in 2002 to $11.6 billion in 2005, and then to a massive $23.4 billion just a year later. There are 75 Israeli companies on the Nasdaq, more than from any other country except the US.

The reasons for Israel's success in the technology arena are complex [Rubbish! It's just another example of the power of IQ]. Cultural, social and political factors all play a role, as does the investment ploughed into the country's military, and the training and expertise acquired by Israelis through compulsory national service.

Ronen Saffer, chief technology officer at Telmap, a digital navigation company founded in Israel, blames fruit. "There's only so much you can do with oranges," he says. "We produced all we could out of those in the 1960s and 1970s, then we had to come up with something else in order to make a living." Telmap is the epitome of this new approach - it provides mapping software for the likes of AOL, Ericsson, Palm, Nokia and BlackBerry. Helen Davis, author of Israel in the World: Changing Lives Through Innovation, agrees. "There's no alternative. There are no natural resources at all, except what is between the ears of the country's people. That is Israel's only raw resource." .....

Many of the technologies used all over the world today were either invented or developed further in Israel, or by Israeli companies. From voice components developed for combat systems, an Israeli company called Efrat Systems created voicemail; eventually it became Comverse, one of the largest voicemail companies in the world today.

Instant messaging, an application used by millions today, came from a small Israeli business called Mirabilis, which developed a project called ICQ ("I seek you"). Vardi was the founder investor of Mirabilis, while his son was one of the three jobless youngsters who started the company. Less than two years after its formation, it was bought by AOL, which wanted ICQ. The instant-messaging craze was largely born out of this deal.

Unsurprisingly, much of this technology has its roots in the military, which focuses on developing cutting-edge hardware and software. Israel operates a system of compulsory military service, and students are cherry-picked by the military from high schools across the country in order to match conscripts to the roles that best utilise their talents.

Roy Timor-Rousso, vice president for product marketing at Fring, a VOIP company (VOIP allows you to make phone calls over the internet via services such as Skype) that has its roots in Israel, says: "The military can pick who it wants. A lot of young, very talented Israelis go through special units where they are exposed to a lot of responsibility, trained and given the top military technologies early on in their careers, while they are still creative."

Telmap's Ronen Saffer says that the military research and development budget has been responsible for developing things such as GPS, maps and communications technology. The people involved in creating these tools of war have had the foresight to understand their potential as everyday applications, and have gone about tweaking the technology for the mass consumer market upon being demobbed from the services.

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