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Feb. 19, 2026 12:59-14:01 - CSPAN
01:01:56
Israeli Official Discusses U.S.-Israel Economic Partnership
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Prosperity And Strength 00:15:07
We should necessarily fear AI.
We're using AI every day, and I don't know that people actually consider it to be AI, whether it be using your computer or using GPS when you drive from one place to the other.
These are all forms of AI that we've been using for years, if not decades now, that I think we just need to take a step back and say, what exactly is happening?
And from what I'm looking at this as an economist and someone looking into AI, I think this is going to be a pro-growth, pro-people sort of situation that's going to allow us to flourish and prosper even more into the future.
So, yes, we need to understand the causes and effects and other things that are going to happen, but I don't think it's something that we should fear at the end of the day.
So, Vance, I want to read to you a portion of an article written by Matt Schumer.
He's an AI influencer.
He posted this on X, and it's gotten a lot of attention lately.
And then I'll have you respond to it.
He says, This: Here's the thing nobody outside the tech quite understands: We're not making predictions, we're telling you what already occurred in our own jobs and warning you that you're next.
The experience that tech workers have had over the past year of watching AI go from helpful tool to does my job better than I do, is the experience everyone else is about to have: law, finance, medicine, accounting, consulting, writing, design, analysis, customer service.
I hope you're not lying for me.
I'll be very disappointed if you get out of the screen.
Hi, I'm Mike Duran.
I am a senior fellow here at the Hudson Institute, where I also run the Middle East Center.
And joining me today is Noah Hacker from the Israeli Embassy.
He's the economy minister there.
And he's a friend of Hudson.
And this is now the third, fourth visit.
Fourth, even though fourth visit.
I look at these, thank you very much for coming again.
I look at these talks with you as a kind of tutorial on economics and the Israeli economy.
I have learned an enormous amount from you.
I have to say, I don't know if I admitted this to you the last time you were here.
When you first came, you were giving a message of the resilience of the Israeli economy and its strength.
And I had a, because I don't really know that much about economics, I had a little voice in the back of my head saying, Can I really believe this?
Can I really believe this?
Because it just seemed to me that there was enormous pressure on you to keep investors from panicking over the war.
And it just seemed to me that it couldn't be possible that the Israeli economy was as resilient as you were saying it was.
But I have to say, everything that you said has been proven 100% correct, so I really appreciate that.
And I'm sorry I ever doubted you.
So thank you very much for having me.
It's a pleasure being here.
You know, I always start our conversations with telling you how well Israeli stock market did since the last time we met, and what would happen if you would invest in the Israeli stock market while I was here.
So I'm just saying, from the last time I was here, right?
Yeah.
A couple months ago, I think, the Israeli stock market rose about 35%.
35%.
I'm just saying, if you would invest, the first time we met, I think we met even a little before October 7th, you'll be up about 145%.
You know what?
So we're only getting better.
I hate to hear this.
I hate it.
Whenever anyone starts a sentence with, if you would invest, it already causes me pain because with what?
With what?
I have.
You put a dollar, you would have two and a half dollars now.
That's a lot.
So, no, but I mean, we're really the actual economic data of Israel, when you look at it, it's good problems for me because people, as you said, it's like too good to be true, but it is.
It is very good.
And we're now in a state that growth in 2025, we're in the top three of the OECD.
With the 12-day war happening in 2025, right, with Iran, we are at the stage of inflation, 1.8%.
Can I stop you?
Yeah, sure.
You said the top three.
Who are the other two?
We have Ireland, which grew very fast.
And I don't have in my head the number of years.
Not because of their BDS sentiments, right?
No, no.
But it's really impressive to see 3.1% growth in a year when we had an all-front war and a war, direct war with Iran.
The projections for the Israeli economy for 2026 are well over 5% growth, which also is great numbers.
And I think, as I said, inflation is going down.
The shekel is 25% stronger than it was before the war.
Which also, the risk premiums went back to pre-war levels.
So I think we're in a very stable place.
And I think the most significant thing is our financial stability in Israel, which is measured by our foreign exchange reserves as other things.
But, you know, against foreign debt, you keep foreign exchange reserves.
And we're at an all-time high of $233 billion, which is about five times our external debt.
How do you explain that?
Last time I was here, I explained how the Israeli economy works and how we keep our fiscal stability because we prepare for extreme situations.
That's why we were able to contain this all-front war without creating a crisis.
We raised about 250 billion shekels for Israel.
It's a lot of money.
And we're still less than 70% debt to GDP.
The average OECD is above 100.
So we're keeping very stable, very strong in order to prepare for extreme situations.
I'm thinking back to our last conversation.
Let's review a little bit, though.
The debt-to-GDP ratio did increase during the war because you had to...
Yeah, we had to raise more money.
Yeah, so how much did it go up?
It went up, let's say, from around 60% to 68, 69.
Huh.
And so, and was that the major reason why you were downgraded by some of the...
It's a good question because no.
That's not the answer.
This is the strength of Israel.
As I said, compared to other countries, we're in a very strong position.
The downgrade happened because of geopolitical risks, which are now way less than they were before the war, right?
Hezbollah is less of a threat.
Hamas is less of a threat on Israel.
We can even see Iran in a different situation than it was before.
So that's why you see the risk premium going down, even though the debt to GDP went up, risk premium going down.
You'd start to hear the rating companies starting to project optimistic things for the Israeli economy and for Israeli rating because of that because of that change, the geopolitical change.
Okay, are the things that you just covered?
Are those the main top-line changes?
If I ask you what's changed since we last spoke, is that so?
A couple of things have changed.
First of all, I think you just issued out a report about the economic relationship between Israel and the U.S., which I think it's a great report.
I was going to hold it and plug it.
It was Zeneb Rebua.
Where is she?
Where is she?
Oh, she's, you know, she's not here.
That's terrible.
Okay.
But no, it's a very, very, very important thing to read, I think.
So let me tell you something about that, because in those areas, a lot has happened in the last year and a couple of months, even.
First of all, PAC Silica.
It's a very big change that the U.S. has created a group of countries that are going to join on supply chain and AI and chips.
And I think that's a very good path to go with many countries, but also Israel is a part of that.
And that gives us a lot of strength into our joint economic cooperations.
And the second thing I wanted to talk to you about is that 2025 ended as a record-breaking year in MAs in Israel.
And the MAs in Israel are American companies, mostly American companies buying Israeli startups.
And I want to say a word about that.
Sorry to interrupt you, but that just for everyone out there who needs to go read Zeneb's report, that's the beauty of what she showed there is that Israel is this development engine for the American economy.
And it's really, we should think of it as almost an integral part of the American economy.
Exactly.
When you look at the Israeli-U.S. economic relationship, let's say if the 80s was a time when the U.S. actually aided Israel out of a very severe economic crisis, we see the change now.
MNA is just a word about MAs.
It's like when a company realizes that they're missing some kind of technology or some kind of thing that is important for them to compete or to create the global position, right?
And their competitors are running forward and they don't have the time to try to figure out solutions by themselves.
Maybe it takes years, maybe more, and the market's not waiting.
And even then, you have no guarantees that you'll succeed.
So the companies go out and look for technologies around the world, just like a sports team, right?
When they want to win championships, are looking for talent around the world and then buying specific players to bring them their achievements.
So we see what the American companies choose, right?
They're looking around the world to see which kind of technologies can bring them to the global leadership that they want.
And they choose time and time again Israeli technology.
And you have two very, very significant examples that one of them just got approved a couple of weeks ago is the Google purchase of Wiz, which now means Israeli technology is going to provide cybersecurity for Google products.
That means all of us are going to enjoy Israeli technology security.
And you have NVIDIA, another American giant, right, that announced a couple of months ago that the Israeli technology that they purchased a couple of years back with Mellanox is going to be responsible for more than 50% of the revenues of the NVIDIA revenues.
What does that do to the U.S. economy, U.S. work, working force, U.S. revenues and taxes?
That's amazing.
And we see time and time again, the private sector, it's not driven by governments, by administration.
It even against some political movements to try to disrupt it, they're choosing Israel time and time again.
So Israel actually turned from an economy that needed aid from the U.S. to kind of a special ingredient, special recipe for U.S. companies to drive them into global leadership in tech and in other areas.
Let me bring up something here, something a little distasteful.
And I'm talking about Tucker Carlson, because he, of course, recently said that, look, we have this ally, Qatar, and it offers us so much because it has all of this energy.
And by contrast, Israel is nothing but a liability.
And I mean, I have to say, you know, in very polite language, this is total horseshit.
I mean, it's so ridiculous.
It's laughable when you start looking at all of the ways that Americans benefit from the partnership with Israel.
So I really, in my lifetime, I didn't think I will experience this level of anti-Semitism.
But again, if you look at, we try to fight that with the truth, right?
So look at the numbers.
Look at Google.
Their decision to go to buy Israeli technology is not about politics.
Look at Apple, look at NVIDIA, look at many, many American companies establishing their RD centers in Israel, buying Israeli startups.
NVIDIA.
Yeah, what I said, that alone creates a huge impact on the U.S. economy.
But not only that, FMF money, right?
So that also experienced some kind of transition.
It started off as civilian assistance when we actually needed that in Israel.
But then our economy grew and grew and grew and got stronger.
And it turned into a cooperation, right?
A mutual benefit for both countries.
And you see that now with FMF money, all of it is American jobs, right?
It's all here in the U.S.
And then also what happens is that you get Israeli companies.
For the audience, we have to say what FMF is.
Foreign military funding.
And the way it works is, but basically, the aid to Israel is earmarked for American companies.
So that money doesn't go to Israel.
It ends up going to America.
It's an investment in American jobs and American defense industries.
And what actually happens is that cooperation between the Israeli defense industry and the American defense industry creates amazing things like laser projects and things like that, but it also creates a lot of activity.
What I mean?
You get Israeli companies establishing their factories here that the FMF actually is used in those factories here, creating American jobs.
But then when the Israeli IDF wants to expand the contract, they don't expand it at Israel.
They expand it in the U.S. with Israeli money.
It's not FMF money.
So you have that increasement.
The other thing is that I just had a conversation this week with IAI, one of the biggest Israeli defense companies.
Cooperation Creates Jobs 00:14:58
And they told me that last year alone they purchased in the U.S. over a billion dollars.
IAI money, purchasing in the U.S. over a billion dollars.
And I think the most significant thing that I heard in the last couple of weeks is the record-breaking deal we had Israeli and Germany on missile defense, billions of dollars in deals, And about a third of it is going to be spent right here in the United States.
An Israeli company.
That means German money coming into the United States.
Through Israel.
Because of the partnership that Israel has established with the Americans.
So that the FMF, I'm just repeating what you said, but just it's very interesting.
FMF creates a baseline partnership.
And then when that's successful, then that brings in a lot of extra money from Israel, from partners of Israel like Germany that are buying Israeli tech.
And that ends up being American jobs.
Exactly, and you don't have that with any other country.
No.
Any other country that deals with a different country?
Some two countries get an agreement on some project and then the money is spent in the U.S. You don't have that.
And I think that's what makes the Israeli economy and the U.S. economy's relationship very unique.
And you have that in your report, but also we have many, many examples of how it actually affects U.S. jobs, U.S. citizens, U.S. revenues.
And I think that's what's very different about the Israeli economy than any other economy cooperating with the U.S.
No, you know, running through the whole Tucker-Carlson argument is, or the people who are latching onto it, there's a jealousy, I think, of the success of Israel and the success of Jews.
And it's a small, very talented population, and the talent really stands out.
And so they start to fantasize about all kinds of conspiracies rather than just talented people being successful.
But from my view, that small, very talented people is one of the reasons why Israel is America's best ally, because Israel is small and vulnerable and then married to the United States, which means that you're more responsive to our national interest than any other ally.
What I'm trying to say is it's the exact opposite of the anti-Semitic claims.
It's not the small power controlling the big power.
It's the small power is remarkably deferential to the needs of the big power.
And both overtly and in ways that are just structural, like all of these mergers and acquisitions you're talking about.
Israel can come up with new technologies, but it can't market them at scale.
But it's only the big American companies that are going to do that.
And Israel is playing at a league, because it's very talented, it's playing at a league that is, you know, it's punching way above its weight.
So it's one of the five, it's one of the five top cyber powers in the world.
And who are the others?
They're Russia, China, and Britain.
And between them, the question is, are Israeli innovations going to be taken global by the United States or by China?
To me, that's the choice.
There's no inclination in Israel to hand their products to China.
So it all comes to the United States to our benefit.
If you were to, I know you know all this, but I want to tell the Tucker Carlson.
If you were to try to calculate the value of Israel to the U.S. economy, could you do that?
Is it even possible to do?
Because they're so intertwined, and there are so many sort of direct and indirect ways in which they're influencing each other.
Is there a kind of rational way?
Have you tried to do that at all, to come up with a figure?
So that's a very hypothetical question, right?
But the way I see it, first of all, there's no question who's the bigger, more stronger economy or country, right?
But still, Israel, you're saying punching over its weight, we're very strong.
Okay, in many ways, we're not the Israel we were 40 years ago or 50 years ago.
But I think when you take a look about the benefits that actually happens from... I'm just making sure these are not the code pink protesters.
They don't look like it.
The benefits for the U.S. economy, I think the first way to measure it is by seeing what American companies, which are very careful with their money, are willing to invest in Israel, right?
Are willing to put into this partnership.
That's one way to look at it, and that's tens of billions of dollars a year.
The other way to, I don't know if you know this number, but you know an average Israeli invests in the U.S. eight times more than an average American invests in Israel.
No, I didn't know that.
Yeah.
So our economies or in the stock market, you know, you have that in your report, that we're the second biggest foreign country in the NASDAQ, right?
The Israeli companies.
And the cooperation in Israeli finance.
And in the report, there's a comparison.
More than, I forgot the country, but one of them was India.
There were a couple of more than India and two other countries.
Yeah, yeah.
So I'm saying the connection is super strong.
And that's, for me, that's the feedback.
Because private sector, the most important thing is business, right?
It's the bottom line.
And we bring that to the table.
We bring the results.
And that's what you see.
It's not that you need to incentivize Google to go to Israel and get technology.
They do that by their own and other companies as well.
So I think that's the biggest report card that we can get.
The connection between the U.S. and Israel, we're talking about economy here, but there's whole different levels of connections.
There's values.
There are many, many different things.
But on the economy side, I think we're in the best place we've ever been.
And if you take a look at what the U.S. benefits, I can't imagine any other time in history when this relationship brought so much as it's bringing now to U.S. leadership and U.S. tech.
But it's not only the money, as you said, because when Israeli companies work with American companies, American investors, American customers, then they get in line with U.S. regulations as well.
And that's more important in the U.S. sometimes than a lot of money.
So I'm saying we have so many levels.
Wait, we should talk about this a little bit.
Let me make sure I understood you.
You said you get in line with U.S. regulations.
So in other words, you're an important actor as an ally of the United States that is gearing your tech sector, with a major tech sector, that is gearing it toward American regulation.
That has advantages for us economically, but it also has advantages for us in terms of shaping a global tech sector because everyone that's going to work with you is then going to be, every other external partner that works with you is going to be adjusting to the American standards rather than the Chinese standards.
That's what I heard you say.
Is that what you said?
Yeah, and even more is that I don't think people realize.
They think of Israel maybe as another European country or something.
No.
81% of multinational companies in Israel working in Israel are American companies.
Over 50% of foreign companies are RD centers in Israel are American RD centers.
So these companies already.
And there are some 250 RD centers, is that right?
Yeah.
That was in Zeneb's report.
Yeah.
So you see all this ecosystem that's all working with the U.S. markets, right?
They're all in line with U.S. regulations, CIFIS regulations or whatever regulations.
Israel now is one of the leading.
CIFIUS is the investment screening process of the United States with U.S. companies to make sure that the national security requirements of the U.S. are met with MAs and other investments.
And when you have an American partner, you're complying to those kinds of regulations.
But not only that, is that you get Israeli technology in so many different things here in the U.S. that provides actually for U.S. citizens and improves their way of life.
They're day-to-day things.
So I think it's the regulation, the actual implications of the technologies here, and the global leadership it creates while joining forces with, as you said, the American giant company and the Israel special ingredient that will push that giant towards the global leadership it wants.
Do you know how to say thumb drive in Hebrew?
Thumb drive?
No.
Discon key?
Discon key?
Yeah.
We say discon key.
Yeah, which is English.
Yeah.
But the only people in the world who say that are Israelis.
I believe probably we have other sentences that it was created by Israelis.
Yeah.
And they wanted to sell it internationally to Americans.
So they called it disconquer.
But here, the only people who say discon key are Israelis.
Israel is an exponent.
It's Hebrew and English.
Yeah.
Israel is an export economy, right?
So most of our products are not only to our 10 million people in Israel, but most of it is produced for exports.
And our biggest partner, our biggest country that we partner with, not only in tech, in all goods, is the U.S.
So, and as you know, if you go to Israel, you don't need to learn Hebrew.
You can talk English.
Everybody will understand.
Yeah, I know.
Every time they hear my accent, they switch to English.
I hate it.
There was a time when there were more people that didn't speak English.
The, um, uh, the, uh, uh, uh, I lost my train of thought.
Give me two seconds.
Okay.
Oh, yeah.
If you'd have asked me before I started these conversations with you where the U.S.-Israeli high-tech cooperation was strongest, I would have told you that it was either in military affairs, in military technology, or stuff that's adjacent to military technology.
And I'm sure that that was the original driver, but I think what you're saying now is it's gone way beyond that.
If we took the military element out, would the cooperation would still be very strong, wouldn't it?
Yeah, so in Israel, a lot of the tech is driven by military service and special units and things like that.
So when you experience that kind of cooperation at your learning level, right, with the US, because we cooperate deeply and very good with the US and security matters, then when you go out and build your company, build your startups, it's very natural to continue it.
Now there's actually such a strong ecosystem through US and Israeli tech, especially in cyber and fintech, and now in AI.
So I think that's probably already set, like that environment.
You have US investors in Israel, like more than 70% of foreign direct investments in Israel are U.S. investments.
That wasn't this big as 10 or 15 years ago.
So you do see a change in that that I believe is very stable.
And I don't think that it's such an easy thing to do to separate our defense systems because the mutual benefits that the U.S. defense company sees by joining up with the Israeli defense companies, you saw that now.
Ask the American companies if they got more demand now for F-35s after the 12-day war.
So it's not something that they would want to separate.
And I think our jobs as governments is to allow those things to happen.
And it's something that we in Israel, as you said, we chose the side.
We're with the U.S.
So we're trying to make sure that everything the private sector or our industries need to have for that kind of connection, they get.
Let's go over again.
I know we did this last time, but I think it's worth looking at again and see if any of your views have changed about the negative and positive effects economically that the war has had on the Israeli economy.
For me, one of the most interesting things about our conversations, as I was saying to you before we sat down, was just how resilient the Israeli economy was.
I would never have predicted, not that I'm a great expert on economies, but I would never have predicted that you would have a war of the kind, a long war with reservists called up for very, very long periods without having really a severe impact on the economy.
And yet it was surprisingly resilient.
So let's just go and talk about the sectors that were hit.
What were the sectors that were hit the hardest by the war?
I mean, tourism would be the number one, right?
Sectors Hit Hard 00:07:17
Let's say it's two main sectors.
Tourism, for sure.
And then you have places when they were dependent mostly on, let's say, Palestinian workers from Gaza.
Construction.
Construction and agriculture and those kinds of things.
They rebounded by bringing in other foreign workers to help or bring in more Israeli workers to those areas.
Tourism hasn't rebounded yet, for example, for the way it was before October 7th.
I have to say that in the Israeli economy, that's not a big sector.
So the damage it did at the macro level, it's not that big.
It's about 2% of the world.
Is that it?
Yeah, that's it.
I would have thought it was much higher.
We're not that good at it.
If we were better, it would have been more.
We have lots of sites that are attractive there.
Yeah, we have a lot to offer.
But the other sectors that actually had very good years, some of them the war had affected, but some of them were not affected at all by war, is the high-tech sector and the defense sector.
The defense sector, what actually happened, and that's the amazing story, right?
You get reserves into the army.
Those reserves, the day-to-day jobs are in high-tech.
And then they come into the army, they see the challenges.
They either solve things within the army, and we have so many examples of how people brought technologies from their companies and provided solutions.
I have a great story about it.
I don't know if I told it last time on how it created a very different process of getting injured soldiers from the field to the operating table.
No, I don't think you did.
If you did, I've forgotten.
I remember you brought up this subject.
I think you talked to me about a drone last time.
So it's amazing.
We had the chief doctor of the army, right?
He came to speak to us and then he told us about a process, how they managed to create that an injured soldier from Gaza gets to the operating table at less than an hour, which is amazing.
Like if something happens to us here, to get to an operating table, it will take more.
But in the war, they were able to do that achievement.
And one of the reasons they were able to do it is that some, he had three soldiers, reserve surgeons, that worked in high-tech.
They took a look at the process and they said, look, we can solve this specific issue of transferring data that will save you about half an hour.
And just like that, they saved it because those reserves were in high-tech and now they were in the field with the soldiers.
So we have a lot of that going on.
But also, when people go back to their high-tech companies, they bring a lot of ideas from what they saw, from the technologies in the war and needs that happened, that we'll use not only for defense, but other issues as well.
And that also drives our economy.
And now we have, I think, a record year after a record year after a record year in the defense industry, not only because of what's happening in Israel, but also Europe.
The demand has gone up.
We have record deals with European companies, with European countries that want to increase their defense spending because of President Trump's new policies.
So we see a lot of demand for Israeli defense tech.
I mean, it's one of the great ironies of Israeli-European relations is that at the same moment when you have this wave of anti-Israeli, anti-Semitic protest in Europe and political pressures on European countries to distance themselves from Israel, there's a military imperative.
When it comes to air and missile defense, the number of addresses that the European countries can go to to get high-quality products that are compatible with American systems or with Western systems is very small.
And your products are the best.
Let me say it in a different place.
Yeah.
To get the best, you want your defense missile to be the best defense missile, right?
So you go the place that showed that it's the best.
And you had that proven ability in Israel in the last couple of years.
And European countries, some of them that actually embargoed Israel in several incidents, now purchasing Israeli technology either directly or through other channels.
But people want the best for their citizens.
That's what they get.
It's an amusing irony.
I think it's the real world.
There are some good stories you can tell us about this.
But that's the real world.
You're not going to tell us some good stories.
I'm a diplomat.
Maybe after.
But what I mean is that when that's what I told you about those voices That try to say that Israel is not important enough, or you see how important we are for the defense system in the world.
It's not only Israeli technology saves lives.
It saves American lives, it saves European lives.
And I think that's what's driving a lot of countries, a lot of companies, to join up with Israel and to have those kinds of cooperations.
And I think our most significant partner, of course, is the United States, and the benefits there are totally mutual between Israel and the U.S.
And so if Tucker Carlson were to get his way and we were to end all aid to Israel and we were to distance ourselves from Israel, this is really going to harm the United States more than it's going to harm Israel.
Israel is going to find partners and outlets for its products, and they'll either benefit American businesses or they won't.
I don't want to.
I know, it's not your job.
As a diplomat, it's not a problem.
It's not my job to say that.
It's not my job to say that.
But let me say it in a different way.
I think that when we look at the future of the FMF, the assistant, it probably should reflect more the fact that it's a cooperation more than an assistant that it was years ago.
But still, the importance of that cooperation between the U.S. and Israel, especially in defense, it's not something that I think anybody's willing to give up or to replace.
And I hope that it will stay that way for many, many years to come.
Yeah, no, of course, so do I.
So do I.
But we have to, they're making claims that they're making claims and they're developing, you know, there's a political current that's pushing in a certain direction.
And I think it's our job to say: look, if you move in that direction, it will have the following consequences.
And they're not the ones you think it will be.
NVIDIA's Investment in Israel 00:10:36
Ask the U.S. companies.
That's my advice.
Ask the U.S. companies.
Ask them what they think.
They can decide, right?
They can decide to go other places.
They can decide to pick whichever technology they want.
They're choosing Israel time and time again.
And I think that has a reason.
It's not by mistake.
And I think that's the best answer.
The truth.
The truth is that the contribution for the U.S. security and U.S. economy is way, way higher than any other alternative.
Now, let's go back to this question of the relative detriments and benefits of the war economically.
Are those sectors that were very resilient and less resilient?
Last time you were here, I think you explained to us why the high-tech sector was particularly resilient.
And I wonder if you could just very briefly remind us of why that was.
Because I thought that all these reservists going into long, you know, long tours of duty would be taken away from the high-tech companies and they would suffer as a result.
But apparently, obviously, that didn't happen.
So, first of all, most of reserves are students.
They're not working yet.
Most of the reserves.
There are some people that do go out from the workforce for reserves, but most of them are students.
So that's one reason.
The second reason is that COVID brought us the abilities to work remotely or to create the atmosphere or the environment that allows that to happen.
And we saw the Army reacting.
We saw WeWork tents established in reserve bases so people can connect and join their meetings at work and join their meetings with investors and customers.
And that really mitigated some of the effect.
And again, we saw the demand.
The demand is way stronger.
So the actual companies got bigger, and we see that in the M&As, which we talked about, which is every year has been a record since the war started.
And that's not specifically related to the war, but it's related to a lot of other things.
And I think that's why the high-tech sector is so resilient.
First of all, their customers are overseas.
They're not in Israel.
They're not affected with what's happening in Israel.
And the second thing is that their technology can be provided through war or not.
It doesn't really matter.
Disruptions in physical infrastructure don't disrupt what you can do on the cloud.
Exactly.
The explosion in the stock exchange in the last, the opening weeks of this year.
How do you explain that?
I think that's one of the easiest things to explain.
Because if you take a look at a country that has a very big risk, geopolitical risk on its shoulders, and then you start to lift that away from them, like we did with Hezbollah, with Hamas, then people see that as a better alternative to invest your money, right?
And if you're investing in companies that are really in the best place at the right time, like cyber companies, Israeli cyber companies, and we'll see that now with AI companies and others, you understand that Israel is one of the best place to invest your money.
And we see that with companies wanting to join.
You know, Palo Alto just announced they're going to register in the Israeli stock market.
It's a huge deal for us.
We think it's going to increase trade in the stock market by about 10, 15%, which is huge for us.
And we saw that with a lot of Israeli companies.
I didn't actually understand that.
You know, the stock market companies need to list in your stock market and be traded in the stock market.
And Palo Alto, which is a huge company, just announced they're going to enlist in the Israeli stock, Tel Aviv Stock Exchange.
Oh, so then that will bring others then.
That will bring others for sure.
It will create a huge cyber hub in Israel, financial cyber hub, because the leading companies are in Israel.
And we know that they're the leading companies because U.S. giants are buying those unique companies, those cyber companies that work in the Israeli stock exchange.
So I think we're starting to see that the real reason, the real question is not why it's booming now.
It's kind of unbelievable to say, why wasn't it booming before?
And we can try to explain that by geopolitical risk.
But when you see what actually happens to Israeli companies now, to Israeli technology, it's very easy to understand that people want to invest.
So looking forward to this year, what are the big things that you're concerned about and that you're looking forward to?
First of all, we have, as I said, the AI change that I think all of us are looking and trying to understand what it actually means.
I'm sure for Israeli tech, it's going to be a good year.
For Israeli defense industries, going to be another record year.
Again, we see the demand in Europe and other places around the world, which will bring a lot of economic activity to Israel.
Before you move on, can you just talk a little bit about Israel and AI?
What's the problem?
What exactly, when we're thinking about Israel and AI, What is distinctive about Israel's place in that system?
So first of all, Israel is the leading country in the world in RD expenditure related to GDP.
We spend more than 6% of our GDP in RD.
And I think that creates a lot of RD power.
When you say we spend 6%, we as a country or we as a state?
We as a country.
So this is private sector money.
Mostly private sector money.
We try, our philosophy is not to get involved when we don't contribute what we need.
We don't try to steer the economy.
The private sector does that, especially in high-tech.
So when we see the big investment in RD and how it's going to relate to AI, that's a good question.
But I think it's going to be, if we look at past experience, Israel has always been in the front of these kinds of solutions.
So I believe that our ecosystem is, it's not only me, NVIDIA believes that too, by investing in new R ⁇ D centers in Israel, Intel, and a lot of many other American companies that decided to build now in the last couple of months or to expand their operations in Israel and R D in those kind of sectors.
So that's one.
On the government side, we kind of reorganized our government in AI.
We understood that it's a big deal and we need to prepare for it.
And we established a new, let's say, authority, AI authority in Israel that not only does all the AI work inside Israeli government to make sure everything is implemented and we're allowing everything to happen, but also a lot of cooperations with different countries.
As I said, we have PAC Silica with the U.S.
We have the Prime Minister of India coming to Israel.
Next week, a lot of cooperations going that there in AI and in other things, but also in AI.
So we're going to see a lot of new, this is like a new tech diplomacy that will bring in the U.S. technology power into strategic achievements that will benefit not only Israel, but also Israeli partners.
And I think that's what we're going to see this year in AI, a lot of cooperations between Israel and other countries on those specific technologies that will drive our economy way further than it was before.
Let's talk a little bit about India.
So what secrets can you tell us about Modi's visit?
I can just tell you that next week we'll have a team.
We already signed in the last couple of months we signed an investment agreement with India that allows investments to go freely between the countries and secure the investments for the private sector in each country.
We have a team working now that will spend next week in India on trade agreement.
That could be huge for our economy.
And also AI cooperation will probably be announced in the next couple of weeks.
And a lot of other great things that we'll see.
And we can talk about them after the Prime Minister visit.
Okay, but what about the IMEC, the India-Middle East corridor and I2U2, the India-Israel, UAE, US trade route?
I think every time I'm here, you can understand better why it's so important to have that project.
And now with the Iranian threats of disrupting trade routes, I think this trade route is very significant, very important.
Everybody understands it.
It's economic need for it.
And I think that's what we're going to see going forward.
In Israel, we're working very strongly to prepare our side of it.
And I'm hoping that with the help of our friends in the U.S. and in India, other places, we're going to make it work.
We believe in it.
We believe it's a good project, and it's worth the investment that we're going to put into.
And you're not going to tell us what the prime minister is going to...
India is very supportive of the project, of course, but I'll leave their announcements to them.
All right.
So let's, is there anything else you're looking forward to in the year to come that you want to highlight?
I hope we're going to see a stable Middle East.
I think one of the best things that can happen.
Government Investment Benefits 00:12:12
That's where your interests and mine don't align?
I think one of the best things that can happen to the global economy is a regime change in Iran that will allow a stable region and create the best economic terms for not only Israel, but for the entire region.
You want to put me out of a job?
Okay.
That's fine.
Do we have any questions?
We have a microphone coming to you.
You've spoken in a lot of different ways about the volume of in dollars, transactions between Israeli companies and the United States.
I'm curious, how much investment did the government of Israel invest in the companies that are participating in that trade?
And I'm also curious if there is any direct benefit to the treasury of the state of Israel from all of this financial activity.
In other words, if you focus on the American financial support, it hasn't diminished while the volume of all of this income-producing effort has ballooned.
And I'm not suggesting that the United States should reduce its support, but how does the government of Israel benefit it directly?
Okay, so something I could say about that.
First of all, as I said, if NVIDIA says that 50% of NVIDIA income is going to come from Israeli technology, the major beneficial of that is the U.S.
It's not Israel.
In revenues, in Treasury, whatever.
And the Israeli side, of course, when a company buys an Israeli company, they pay taxes, right?
In Israel?
Yeah, if an American company buys an Israeli company.
So when, let's say, when NVIDIA purchased Mellanox in Israel, they paid Israeli taxes.
So Israeli benefited, the Treasury benefited.
The Israeli Treasury benefited for that transaction, but it's nothing compared to 50% of NVIDIA revenues, right?
So the size is very, very different.
Even if we made, let's say, I don't remember the numbers, I don't want to say, but even if we made some money of that deal, like some revenues, it's nothing compared to what the U.S. Treasury got from that investment, for example.
And we have that also in defense, right?
As I said.
I don't know what you mean by the Israeli government investing in companies.
Of course, the IDF buys a lot from Israeli defense industries, right?
But then that project, which was, let's say, all its RD investment was Israeli government money, now is purchased by the U.S. Army.
Let's say we have, I don't know how to their name in English, but we have armored vehicles that the U.S. purchased from Israeli industries, which all the R ⁇ D is government money, but that's the nature of defense spending, right?
Because so of course there was some government money invested in that.
And the high-tech sector, we don't have a lot of investment from the government, even not at all.
We're less involved.
We do have investments in the Israeli government in very early stages of R ⁇ D.
But that's not a lot of money we're talking about.
It's insignificant compared to the sums of the companies themselves.
Most of the benefits come, let's say, even a $32 billion deal that was signed between Google and Wiz, the Israeli government will benefit, I think it's, I don't remember if it's a billion and a half, something like that in revenues.
But Google is going to increase their revenues by way more and pay U.S. taxes by way more than the part that Israeli actually benefited from that purchase.
So we do benefit.
I don't think that's the big, that's not what's driving Israeli revenues or the Israeli economy.
The actual ecosystem, the growth of the high-tech companies, that's the most beneficial part of it.
Interesting that you could make the point that all of this activity exceeds the contribution to Israel.
By far.
I think it's not a competition.
The numbers are huge.
Are huge.
Like, imagine, NVIDIA, one of the biggest companies, 50% of the revenues, that alone is more than any investment in the U.S.-Israel relationship since it started.
This will be a subject for later discussion, but the 3.8 billion a year, not only does it go directly, most of it goes directly to American workers, but you also have to ask, once that's ended, what's the effect?
Because one of the things that that money does for the United States is it binds Israel to the United States.
And as the minister was describing, that means that when German companies want the Israeli product, they end up investing in American businesses.
Once you break that tie, then the Israeli products can be built anywhere.
They can be built in Israel, Morocco, wherever.
And all of that other investment will not go to the United States.
And on top of that, the Israeli product that is no longer tied integrally to the American military becomes a competitor for American businesses.
So I don't know how one from an economic point of view would predict that cost to the American economy, but it's significant.
So for what you buy for the American economy and for the American military at 3.8 billion is amazing, actually.
So that's me saying that.
You don't have to say that, but it's amazing.
Do we have another question?
What's the size percentage-wise?
Is the tech sector the largest sector in the Israeli economy?
So it's getting there.
It's not there yet.
I think now it's accountable for about 15% of GDP.
And it's getting bigger.
So what sector is bigger?
That's a good question.
I don't remember the actual sectors now, but because of the other sectors are very, probably industry, but that's a big sector, right?
You want to separate, you're probably asking for a different question, like which part of industry?
But I don't remember that by far.
And are there any interesting developments in gas?
Yes.
We just signed a record-breaking deal.
Again, it's like the biggest deal in Israel with Egypt on gas exports.
But that's a different strategic question.
But it's not only economic, of course.
It has a lot of different implications and advantages.
But it was signed a couple of months ago also.
A very big deal that's going to change also.
I think it's going to impact not only Israel and Israel's economy, but also the stability in the region.
So whenever anyone talks about the economic dimensions of AI, they always talk about these AI parks and how energy intensive they are.
They require land, energy, and low regulation.
So the countries that they say are advantaged are not countries like Israel, where you've got lots of regulation.
You have energy, but you don't have that much and so on.
And yet AI is going to play such a big role in Israel.
Are you planning to build big AI parks or is the kind of work that Israel is doing on AI not dependent on having these?
So the answer is both.
Yes, we are planning a lot of investment in that field.
And that's part of the new reorganization in the Israeli government.
That's one thing.
But also, one of our advantages, and I think we're going to see great things in that in the Israeli tech industry, is how to make AI less energy dependent.
But that's different questions for different specialists.
But I saw many ideas and many new startups building in Israel in that area.
So I think we'll have big news to come.
That's interesting.
A relative of mine works in an adjacent field.
And he was explaining to me, he's quite knowledgeable about all this.
He was explaining to me that there's really a divide on whether these parks are really the future.
And there are people who are putting their money on different solutions.
Again, I'm not an investment consultant, but I can tell you this.
Israel, whenever we're faced with a wall, with something that we don't have the resource for, we have to find a solution, we usually find it through tech.
And you see that with water, what we did with water, what we do with agriculture, and you'll see that in other fields as well.
You know, speaking of agriculture, I was in Morocco recently, and I was in this place, Dakla, in the southern provinces.
It's a city in the desert.
And they have these, they have water in the aquifers.
So a million years of rainfall has created this underground water, but there's not that much rainfall.
I mean, it's total, this is desert like you see in the movies, you know, just nothing grows.
But then they have these huge tents and they grow the cherry tomatoes and other things in the middle of the desert.
And they're, of course, doing it with, they pump, they pump the water out of the aquifer, but then the drip technology is all Israel.
That's Israel, right?
That's what we have near the Dead Sea.
All the agriculture we have there, it's no running water.
It's all based on those kinds of solutions and really amazing things.
I was in charge of the agriculture budget in Israel for several years.
It's amazing.
One of the most interesting things, too.
I think we're near the end here.
Yeah, we got time for one more question if there is one.
And there isn't one.
So we will just, I'll just ask you all to join me in thanking Minister Howard.
Thank you very much.
Oh, yeah.
That was very embarrassing.
I didn't know that was going to come.
Thank you.
Thank you so much.
DHS Subpoenas Targeting Immigrants 00:01:42
And we'll have more live coverage today with remarks by President Trump.
He's traveling to Rome, Georgia to talk about the U.S. economy.
He'll be in the state's 14th district, which currently is unrepresented in the U.S. House after the retirement of Marjorie Taylor Greene.
A special election to fill the seat is scheduled for March 10th.
We could hear the president talk about the race to succeed her at today's event.
You can watch live at 4 p.m. Eastern here on C-SPAN.
And a look at the Capitol on the sixth day of the partial government shutdown.
In the lower right corner of your screen, you can follow the clock as the shutdown continues, with no agreement yet reached.
The White House most recently rejecting the latest proposal from Democrats on reforms to immigration enforcement.
Funding for the Department of Homeland Security ran out on Saturday.
As Reuters reports, officials at DHS have been limiting staff travel, including hundreds of FEMA employees working in disaster areas.
The freeze comes after President Trump said the federal government will step in to protect the Potomac River following the collapse of a major pipe in the D.C. region, which caused more than 240 million gallons of sewage to leak into the river.
News outlets have also been reporting that DHS is using so-called administrative subpoenas to obtain citizens' records from email providers and other online companies.
Responding earlier this week, New York Congressman Adriano Espayat wrote on X, these subpoenas are signed by DHS staff, not a judge, and are being used to target immigrants, advocates, and journalists.
Oregon Senator Ron Wyden and I are introducing legislation to ensure immigration agencies, including ICE and DHS, cannot maliciously obtain your personal information.
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