
Israel’s Tech Firms Do Business in Saudi Arabia Quietly - gavman
https://www.bloomberg.com/news/features/2017-02-02/how-do-israel-s-tech-firms-do-business-in-saudi-arabia-very-quietly
======
Animats
The "binary options" scam industry, which is mostly run from a suburb of Tel
Aviv, has been targeting the Arab world recently. Mostly by default. The
industry isn't allowed to scam Israelis, but the rest of the world's suckers
are fair game under Israel law. They've been kicked out of the US, and
recently, most of the EU. So they're telemarketing into the Arab countries
now.

This requires hiring Arabic speakers, who are available in Israel. Greed
apparently overrides Arab-Israeli differences in this area.

(Big 15-part expose in the Times of Israel: "The Wolves of Tel Aviv".[1]
Summary: binary options are bets against the house, not against other
speculators. Binary options "brokers" are not really brokers, they're shills
for the house. Worse, the house cheats, tweaking the prices to make customers
lose. Even if customers win, the house won't pay up. 80% of investors lose all
their money. This brings in over 0.7% of Israel's GDP, and that's just the
part that pays taxes.)

[1] [http://www.timesofisrael.com/the-wolves-of-tel-aviv-
israels-...](http://www.timesofisrael.com/the-wolves-of-tel-aviv-israels-vast-
amoral-binary-options-scam-exposed/)

~~~
staticautomatic
I'm looking forward to reading this, but my first impression is that calling a
scam "amoral" is bizarre.

~~~
edanm
I wouldn't take the word "amoral" in the title too seriously. This website has
been working very hard (and somewhat successfully, I think) to take down the
industry over the last few months. And the subtitle of the report is:

"An industry turning over hundreds of millions of dollars, employing thousands
of people, is cynically cheating naive would-be investors worldwide via a
range of corrupt practices. It is doing terrible harm to its victims, and it
risks doing the same to Israel’s reputation"

I don't think they're particularly ambivalent about this industry being a bad
thing.

------
Cyph0n
I'm a Muslim Arab American and I am against Israel's more aggressive policies
and actions.

But I definitely respect Israel as a state, and especially the Israeli tech
sector. Israel has consistently produced world-class companies in almost every
field you can think of. It's quite impressive once you consider all of the
factors.

The author of "Startup Nation" argued that one key reason behind this success
is how the military ties back into civilian companies, especially with the
mandatory service. I'm not sure how important that is, given how many other
countries have a similar model yet they've achieved nothing close to what
Israel has. There are a few that have, such as Singapore and South Korea.

I'm hoping that my home country Tunisia can replicate (at least somewhat) the
Israeli success story. We have a lot of talented people both inside the
country and overseas. The biggest thing we're lacking right now is a
functioning economy (yep, tough times)... but I hope we can get there in the
near future!

~~~
narag
_I 'm hoping that my home country Tunisia can replicate (at least somewhat)
the Israeli success story._

I don't believe I'm the only one in Europe that has a special sympathy for
your country. But trying to replicate Israel spirit? I don't think so. It's
like when people over here talk about making an "european SV", not very
realistic. I neither see my country doing anything similar if you find
consollation in that :-)

There are two reasons. One that someone pointed in a downvoted comment nearby:
funds from governments (Israel and USA). The other one is a ruthless killer
instinct. Both are shared by SV. If you've been around here for long enough,
you might remember a couple of references that show clearly both factors. For
government backing there was an article about SV origins in WW2. The other one
is a YC standard interview question about how founders "hacked the system" for
their own profit.

Yesterday I got in a somewhat esoteric argument about how righteous people get
very strict about abstract ideas like environment protection. This is the
default actitude for many smart people. So the questions that matter are: are
your government willing to put a lot of money to grow a sharp industry, and is
"selfishness" taboo in your society? Otherwise, we're doomed :)

~~~
philtar
Why do you have special sympathy for Tunisia?

~~~
flukus
I could be wrong here, but they kicked off the Arab spring and so far seem to
be the only ones that have descended into Islamism. As far as middle eastern
countries go, Tunisia seems like a good one to set an example.

~~~
narag
On the mark.

Edit: well, after writing this, I hope you don't mind if I point that Tunisia
is not middle east and that you probably wanted to write "haven't" ;)

------
marginalcodex
As someone with direct experience with this, it's nice (and important) to see
this reality get more recognition. Something unmentioned in the article is
that the military/intelligence relations are far stronger and better
integrated than the tech relationships.

The article correctly points out that the Arab states involved (this doesn't
seem to apply to the non-arab muslim states) will not normalize formal
relationships, without movement on the Palestinian front. However, despite
this, these dynamics have made Arab countries much more susceptible to
pressuring the Palestinians, and not putting diplomatic pressure on Israel on
the things they care about (ie Operation Protective Edge).

An important point to note is that as all of the Arab countries becoming
friendly to Israel are non-democratic, and their citizens don't view Israel
along the same lines as their governments.

------
vidoc
This makes me think of an interesting experience I had in my first job, almost
20 years ago! I was working for a small company that was at the time
pioneering on-demand video systems. We were a software company but did sell
our stuff as an appliances as we did need some control on the hardware.

I was once flown to Ryad to deliver our best system to our client, a wealthy
hotel resort with a cost-no-object kind of attitude in terms of what perks
they supplied to their clients. Our marketing strategy was basically not
putting too much emphasis on the hardware and we'd typically be very open in
terms of what we had assembled and how much the components retailed for. We'd
typically give them a 'dossier' (trendy these days uh?) with hardware details
and the manuals of all the components we had assembled.

Things went well, the engineers I was working with were super cool, first
demos went without a hiss, we were just rolling the whole week! The night
before I was flying back home, my boss called me from Europe in panic mode:
someone had read those damn manuals and found out that our mpeg2 decoding
hardware was made by an Israeli company and wanted us to cancel everything.

What was interesting was how all engineers I talked to the next day went out
of their way to apologize and tell me how completely stupid this whole matter
was. Few months later, when the client found out there was basically all
alternatives to this card basically sucked, the finally changed their mind :)

~~~
edblarney
"I talked to the next day didn't apologize and tell me how completely stupid
this whole matter was"

I dare say you should not be so presumptuous to assume that local customs and
values are 'stupid'.

There can be lot of resentment between two groups of people, and not all of it
is unwarranted.

Would you buy software from a company that by de-facto policy did not hire
Black people? Maybe not. Someone from another part of the world might consider
that to be 'stupid' or 'irrelevant to the situation', because of a lack of
understanding of the context (i.e. maybe it's a very segregated part of the
world and such weird policies are reciprocated)

I have no love for anti-Israeli antagonists, at the same time, issues such as
very illegal Jewish settlements on land upon which Arabs are basically kicked
off of at the point of a gun - are real. Anyhow - I take no sides on the
issue, other than to point out how these things are very real problems,
locally.

It's good to see that 'sound states' such as Israel and Saudi can get along,
despite historical antagonisms and despite some pretty big differences in
ethos even outside of historical issues ... but I think it's important not to
project our own cultural context (or rather dismiss theirs), and try to
understand them in their respective situations.

~~~
vidoc
> I dare say you should not be so presumptuous to assume that local customs
> and values are 'stupid'.

Apologies for the misunderstanding, a long day for me, and perhaps too long a
sentence. I edited it back the way it was supposed to be.

What I meant, of course, is that all the tech guys I had been working with did
apologize, and I'd say were event shameful about the whole matter.

~~~
Udik
How were they right in apologising? Would you have bought technology from
apartheid South Africa? It's not a matter of what the people at the company
that developed the product actually think or are, it's a matter of boycotting
business with a country that it's doing deeply wrong things.

~~~
vidoc
> How were they right in apologising?

It wasn't at all a question of being right or wrong, I was just happy to see
that despite whatever their opinions could be, this didn't prevent them from
finding that making the link between a company and a country was
intellectually dishonest.

> Would you have bought technology from apartheid South Africa? It's not a
> matter of what the people at the company that developed the product actually
> think or are, it's a matter of boycotting business with a country that it's
> doing deeply wrong things.

To answer your question, I don't know. For the record, while I am personally
hostile to a lot of things Israel is doing in the region, I don't think it's
very intelligent or realistic to assume that all Israeli companies de-facto
support all its most controversial policies. At the very least, a little bit
of common sense could be used I think. If the technology you are talking about
is sold by a company that obviously encourages and participates in something I
disagree with (e.g: an arms manufacturer inherently part of the military
industrial complex of Apartheid South Africa, or an Israel company located on
illegal settlements in the West bank manufacturing products with prison
labor). But in absence of such evidence, isn't it a sort of collective
punishment? In our case btw, the whole project was in jeopardy because someone
found that our infrastructure had one PCI card made by an Israeli/American
company.

When I think about it actually, I'm afraid that the concept of boycott is
completely idiotic to begin with. Let me just give you a funny example: you
see, I happen to be French, and I don't know if you remember but circa
2002-2003, there was a little bit of a disagreement between the government of
my country and the government of the US with regards to a UN resolution for a
regime change in Irak. Rapidly, a classic campaign of demonization and boycott
of anything French was activated by some politicians and propagated by the
media. I'm not going to remind you the grotesque Freedom Fries or the bottles
of wine being poured on the sideways. I have been on the receiving end of this
idiocy personally. During this period, I was on vacation on the east coast,
and one evening in Boston, as I was having dinner with some buddies, the
waiter who had just taken our order came back to the table, asked me where I
was from, and informed us that he had just talked to the manager and had his
agreement to not serve us because I happened to be French and that was his way
to protest against the government of France. The waiter left the table, my
friend and I stared at each other in disbelief and left shortly afterwards.

Not doing the crybaby here and needless to say how little i cared about this
pathetic incident. In the end, I remember how laughable I found that however
noble the patriotic intentions of this waiter were, the only thing this poor
soul really achieved was to piss me off, and embarrass my American friends.
Politically speaking however, nada. In a way, I almost wish I had been equally
as brainwashed, naive, and ignorant of the world at this guy, buying all sorts
of nonsense such as links between Saddam Hussein and Al Qaeda (lol) - In fact,
since he didn't even bother asking me what I thought, he would have made even
more of a fool of himself punishing a guy sharing his own opinion.

~~~
Udik
There is nothing personal in boycotting products from a specific country. It
doesn't matter whether the company you're boycotting is an active supporter of
the policies you disagree with or not, as you don't mean to punish _that_
company, but to both show that you consider some behaviours unacceptable and
to create a political pressure for change. I repeat my question, would you
have happily bought products from apartheid South Africa? The anti-apartheid,
boycott and divestment movements in the 1980s put strong pressure on South
Africa to end apartheid. If everybody had been patting SA on the back (as they
are doing with Israel) probably apartheid would still be going on (as
settlements construction is still going on in Israel).

As for your personal experience re. french fries and idiot waiters and
restaurant owners in the US, that has very little to do with boycott and much
with pure ignorance. But brought up in this context it's a pure straw man
argument.

~~~
vidoc
> There is nothing personal in boycotting products from a specific country. It
> doesn't matter whether the company you're boycotting is an active supporter
> of the policies you disagree with or not, as you don't mean to punish that
> company, but to both show that you consider some behaviours unacceptable and
> to create a political pressure for change.

Hehe, thanks for having taken the time to provide your definition of
boycotting, now in all fairness, at this point I was hoping you had realized
we basically agreed on what boycotting is but were arguing about its merits.
So hey, your definition is spot on, and my personal opinion is that the very
idea that punishing individuals or companies will create political pressure
and generate change is not only unfair and stupid, but it's also a fallacy.

> I repeat my question, would you have happily bought products from apartheid
> South Africa?

I thought my answer was clear since I made sure to add some examples but
apparently not, so let me try again: I would try to use common sense, if the
product comes from a company that supports or encourages the apartheid I
probably would pass, in case I didn't have such evidence, or evidence that the
company encouraged the end of the apartheid, it would be different.

> As for your personal experience re. french fries and idiot waiters and
> restaurant owners in the US, that has very little to do with boycott and
> much with pure ignorance. But brought up in this context it's a pure straw
> man argument.

It actually does, so in case you honestly didn't get the commonality between
this anecdote and boycotting, here we go. In both cases, an individual or a
company gets penalized, irregardless of its own opinion, because it belongs to
a particular group disagreed upon. But hey let me know if it's still unclear,
I'll provide your some images. Now in case you are just interested in rhetoric
here, I hate to say it but you need a few more miles to become a master of
sophism.

~~~
Udik
No, if you take as an example of boycotting a waiter who refused to serve you
at a restaurant, we don't agree on a definition of it. By the way, and just to
show you how completely inconsistent your argument is, in 2003 you probably
supported your government's stance, so according to your own reasoning
(companies and individuals are the same, let's punish only those who support),
the waiter was actually right in not wanting to serve you.

As for your answer to my question, you said: "To answer your question, I don't
know".

------
dharmon
I worked with an Israeli company that had to do something like this.

While in the country I was going to visit their office, but I couldn't find
the address anywhere on the website, only their NY satellite office. I was
later told this was because they have manufacturing customers in Pakistan and
Bangladesh, from which they hide their true identity.

~~~
akoster
Unfortunately this is not a uniquely Israeli problem. Likely a similar effect
can be achieved in the states with something like LLC "shell" companies.

------
ysavir
Hopefully Saudi Arabia doesn't read Bloomberg.

~~~
Lanthanide
We do; their coverage of our stock market is often better than the domestic
coverage!

On that note, I have a feeling Mobily's stock is about to dip a bit after this
article...

~~~
thekid314
Yeah, I wonder if this will affect who gets the next exclusive interviews with
the prince.

------
tw04
>If it’s a country which is not hostile to Israel that we can help, we’ll do
it

To say Saudi Arabia isn't hostile towards Israel takes one heck of a lot of
mental gymnastics, or a burying of your head in the sand. Wahhabism isn't
exactly known to be pro-Judaism.

~~~
zionism_answers
The Saudi-Israeli romance has been developing for many years. Bear in mind
that it is the Saudi dictatorship that has established these ties. The Saudi
people are fiercely opposed to the Jewish occupation of Palestine. Anything
the Saudi government says that is critical of Israel should be taken as purely
for Saudi domestic consumption.

If you want proof that this romance has been ongoing for years, you need only
look at the public statements of the Saudi dictatorship during the Zionist
attack on Lebanon in 2006. The Saudi regime supported Israel, while of course
the Saudi people supported Hezbollah.

~~~
Cyph0n
That's a more nuanced relationship than you make it out to be. Hezbollah is a
Shia group and funded by Iran. KSA has been adamantly anti-Iran, especially
after the fall of Saddam. So in your example, it's more "the enemy of my enemy
is my friend".

Great username by the way ;)

~~~
zionism_answers
That type of sectarian analysis is oversimplified at best, inaccurate at
worst. Hostility from KSA vs. Iran is largely at the level of the dictatorship
and the extreme right wing (eg, Al Qaeda). KSA has a large Shia population.

~~~
Cyph0n
I didn't say Shia, I said Iran. There's a huge difference there. Many Shia
actually don't at all agree with Iran's policies.

~~~
quirkafleeg
I don't want to get into a political argument, since it's pointless and the
post was flagged anyway, but you did say Shia:

"Hezbollah is a Shia group"

~~~
Cyph0n
Yes, but I also said that KSA is anti-Iran, which I intended to be the main
point. I mentioned that Hezbollah is Shia to point out its relationship to
Iran.

------
davidf18
Many of the Intel processor chips are designed in Israel as is the Apple
iPhone/iPad processor. Intel employs about 10,000 in Israel and I think Apple
around 800.

There are many, many other US firms represented in Israel -- often for buying
up Israeli startups.

------
gcb0
can't say which side paid who for this piece.

------
Waterluvian
Is there any relevance to this taking place in Israel? Does it happen
elsewhere?

~~~
johncolanduoni
Uh, the fact that you're doing business with companies from a country which
doesn't have any formal diplomatic relations with you?

------
Fiahil
> Moreover, common sense tells us that in order for Saudi Arabia to get any
> weapon systems, they have to be bought under trade agreements made with
> friendly countries that manufacture those systems with official and approved
> export trade certificates from their governments. It is also certain that
> Israel is not among the countries that have commercial relations with the
> Kingdom.

I thought software sales were exempt from trade certificates ?

------
em3rgent0rdr
Saudi Arabia govt & Israel govt are friends as a result of being friends of US
foreign-policy, and because they share the same major enemy of Iran.

------
am185
they are buyer's of ISIS cheap oil. [http://www.timesofisrael.com/arab-paper-
claims-israel-bigges...](http://www.timesofisrael.com/arab-paper-claims-
israel-biggest-buyer-of-islamic-state-oil/)

------
projectramo
I wonder if these machinations are necessary.

I mean what if the company didn't try to hide its affiliations (for instance,
on the website or when customers visited).

They assume that the customer would react negatively, but do we know this or
is it just an untested assumption?

------
avip
This has nothing to do with tech.

There are unofficial trade relations between Israel and (almost?) any country
in the world.

------
godmodus
This does not belong on Hackernews tbh

