June 15, 2016 – Former Ambassador Daniel B. Shapiro’s Remarks at the 2016 Herzliya Conference

During my five years in Israel one of the annual highlights has been visiting IDC and participating in the Herzliya Conference.

Within Israel, few institutions have done more than IDC to develop new platforms for promoting open discourse and solving real-world problems. Few institutions have done more to train the next generation of policymakers and national security professionals. And few institutions have done more to build bridges between Israelis and their counterparts throughout the world. We are proud to be your partners and we are proud to support this annual gathering.

I want to acknowledge Professor Uriel Reichman, this institution’s visionary founder; Professor Alex Mintz, the conference chair; Dr. Ronen Hoffman, the conference manager; and last but not least, Tommy Steiner and the entire conference team that is responsible for putting on one of Israel’s most impressive and trend-setting gatherings.

During a week like this one, I also want to thank Israeli leaders, the Israeli people, and so many friends and counterparts who have expressed their solidarity with the American people following the horrific terrorist attack in Orlando, which took 49 innocent lives. All Americans were attacked, make no mistake, but the LGBT community was targeted and suffered unbearable losses. As Americans, President Obama said Sunday, we are united in our grief—but also in our resolve and we will continue to take all necessary actions to defend our people.

Actions speak louder than words. We will continue to do what is necessary to defend our communities and our homeland. Beyond our borders, we will continue our broader campaign against violent extremism, including our military campaign against terrorist groups like ISIL.

Not long before the tragedy in Orlando, I visited the Sarona market. I went as a friend and as an ally. I was drawn there to express my country’s solidarity as Israel struggles with yet another deplorable, unjustifiable act of terror. We condemn this terrible attack without reservation.  It can never be justified or explained away.  May the memories of the fallen be a blessing and source of comfort to their families and communities, and may the wounded find Refuah Shlemah.

Our common sense of grief, friendship, and resolve unites us in these dark days and reinforces our commitment and our cooperation to fight hate, to defend our peoples, and to secure peace.

I am so pleased our Deputy Secretary of State, my good friend, Antony Blinken, one of the Administration’s most senior and experienced policymakers, will speak to the conference this evening.  He will address American foreign policy from a global perspective, as well as the common security interests and common values that are at the heart of the historic U.S.-Israel relationship, including our robust support for Israel’s missile defense programs and our ongoing efforts to finalize a new ten-year memorandum of understanding on military assistance that will cement our unparalleled security relationship well into the next decade.

But in recent years our extraordinary alliance has expanded beyond the security and values spheres to become an alliance of common prosperity.

I want to devote the bulk of my remarks to this tremendously important development, which we frankly don’t spend enough time talking about.

First, I will offer a few words about how our two innovation-based economies have become increasingly interconnected with synergies that are unmistakable.

Second, I will discuss how we are working together to solve some of the central economic challenges of the 21st century.

Third, I will describe how we have intensified our government-to-government cooperation and have begun to better align and upgrade our economic policies. Good policy remains a key accelerator and an essential requirement for future economic growth.   

“Americans admire a people,” said President Nixon, “who can scratch a desert and produce a garden.”

That admiration was on full display during President Obama’s visit in 2013. “If people want to see the future of the world economy,” he said, “they should look at Tel Aviv, home to hundreds of start-ups and research centers.” Innovation, the president said, is now “just as important to the relationship between the United States and Israel as our security cooperation.”

Our economic and commercial relationship now spans IT, bio-tech, life sciences, health care solutions, energy, pharmaceuticals, food and beverage, defense industries, cybersecurity, and aviation, to name just a few sectors.

It should come as no surprise that our two innovation economies have so many synergies. The strong spirit of entrepreneurship and innovation that flourishes in both our countries simply makes U.S. and Israeli companies—and their respective economic eco-systems—an excellent match.

The innovation and creativity that pour forth from the engineers of Start-Up Nation have drawn American technology companies here in huge numbers.  American companies account for two-thirds of the approximately 300 international R&D centers in Israel. One of the first, Microsoft, just celebrated its 25th anniversary in Israel.

Critical components of leading American high-tech products are invented and designed in Israel, making these American companies more competitive and more profitable globally.  Cisco, Intel, Motorola, Applied Materials, and HP are just a few examples.

For Israeli start-ups looking to scale-up, connecting with America is a natural step given our size, our global connections, and our world-class intellectual property laws. We grant thousands of patents a year to Israelis. Our capital markets are open and accessible. There are more Israeli companies listed on the NASDAQ exchange than Indian, Japanese, and Korean listings combined.

Meanwhile, in the energy sector, one American company—Noble Energy—is helping Israel become energy secure by developing its offshore natural gas resources, which will supply both the Israeli domestic and regional export markets.

All of this cooperation and collaboration translates into jobs in both countries.  Two-way job creation and joint product development touch the lives of millions of Americans and Israelis either directly or indirectly.

Israel is home to over 2,500 U.S. firms employing some 72,000 Israelis, according to an estimate by the U.S. Chamber of Commerce.  Thousands more jobs are supported  indirectly by these employers.  The New England-Israel Business Council just released a study that shows that Israeli-founded businesses have generated about 9,000 jobs in Massachusetts alone, and indirectly support an additional 18,000.  These companies represent nearly four percent of the state’s GDP. And that is just one state.

And with El Al’s non-stop service to Boston and United Airlines’ new – and soon to be daily – non-stop service to San Francisco, our innovation economies will be even more tightly connected.

In the spring, I traveled to the Bay Area on one of the first of those United flights with dozens of Israeli high-tech executives and entrepreneurs as part of a delegation organized by the Israeli business newspaper, Calcalist.  I experienced up-close how innovation is driving our common prosperity.

The delegation made quite a buzz in Silicon Valley. Major companies, like Google, Cisco, WeWork, Yelp, Twitter, UpWest Labs, and GoPro opened their doors to us, eager to connect with Israeli entrepreneurs.  And Israeli participants took back lessons from U.S. industry and investors, including the latest trends in social entrepreneurship, which I expect will be a more prominent feature of the next wave of Israeli innovation.

At home, President Obama has emphasized the importance of expanding opportunity and access to all segments of society, which can generate both profits and higher social returns. Israeli leaders, partly in response to President Rivlin’s call for a common future for all Israeli citizens, are also increasingly focused on the imperative of inclusion and spreading the benefits and opportunities of Israel’s hi-tech economy to all segments of society.

At the U.S. Embassy, we have also made supporting such efforts a priority of our work in Israel. Through our Middle East Partnership Initiative we have teamed up with partners like Tsofen, Kamatech, and the MIT Enterprise Forum, and other local initiatives.

Through these programs, we are trying to help close gaps by supporting wider access to advanced English studies and science and technology education, and by helping accelerate businesses among the Arab, Haredi, and Ethiopian communities.

Just last week, for the second year, we have awarded prizes to Israeli start-ups that have developed new innovations for combating terrorism—and this year’s winners reflect the diversity that is crucial to our shared future. 

The second aspect of the U.S.-Israel economic success story is that we are engaged in joint efforts to respond to critical 21st century global economic challenges. Addressing these global challenges can generate public good as well as prosperity.

For example, as the world economy becomes increasingly digitized, and as the risk from cyber crime and security breaches grows exponentially across nearly every industry, our two countries have become world leaders in developing cyber-security solutions.

Not too long ago, I hopped on the train to Beersheva – less than an hour from Tel Aviv – and saw how American and Israeli companies are working side-by-side at CyberSpark. It is a fast-growing, world-class, hi-tech office park, adjacent to a top academic institution, Ben-Gurion University of the Negev, and not far from where critical public-sector institutions, like the IDF’s cyber and intelligence units, will soon be located.  This unique eco-system is rapidly attracting more American companies to take part in developing the defenses that will protect the new economy.

Water is another area where we are increasingly working together. After addressing their own century-long water crisis via breakthrough technologies in desalination, recycling, conservation, management and irrigation, Israelis are now working more closely than ever before with Americans—especially in the Southwestern United States—to help us tackle our huge water challenges.

The new reverse osmosis desalination plant in Carlsbad, California, designed by IDE, an Israeli company, is one of the largest and most technologically advanced in that region.

When I visited IDE’s Sorek desalination plant a few weeks ago, the largest of its kind in the world, it was inspiring to learn about how far Israel has come and how keen Israelis are to move deeper into the American market.

In terms of clean energy and addressing the challenge of climate change, Israel has the potential to be a world leader. In his speech at the U.N. Climate Change conference in Paris, Prime Minister Netanyahu spoke about Israel’s technological prowess in areas such as solar and other renewables, and energy efficiency.  He is right.  Israel has the chance to not only deploy those new technologies here at home, but also to hasten the global clean tech revolution.

So our private sectors have led the way in building our economic partnership. The continued pursuit of our common prosperity will also depend on our ability to modernize and upgrade the economic policy frameworks that are so critical to continued growth and innovation.

Path-breaking scientific venture funds like BIRD, a historic Free Trade Agreement in the mid-1980s, American energy guarantees and also our generous loan guarantees and economic assistance may have set the stage for the launch of Start-Up Nation, but these structures must adapt and adjust for the future.

In 1985, Israel’s economy was facing multiple challenges: high inflation, large government budget deficits, and slow growth. The decision by our two governments to create the U.S.-Israel Joint Economic Development Group—the “JEDG,” as we call it—was important for the economic stabilization plan that it produced, which successfully reinvigorated the Israeli economy and put it on a path toward the rapid growth it experienced in the 1990s and beyond.

The JEDG still exists and last convened here in Israel just a few weeks ago. But it is no longer simply a forum for government economists to review macroeconomic trends and the U.S. loan guarantee program.  Rather, it continues to evolve and now enables our top economic policy makers to address new areas for joint work, including clean energy, health innovation, and science and technology cooperation.

In our most recent trade discussions, we have examined ways to increase commerce between our nations – now at approximately $49 billion annually – by reducing remaining obstacles, particularly for agricultural products.  In our latest discussions with the Government of Israel, we have encouraged Israel to eliminate remaining tariffs, quotas, and non-tariff trade barriers that hinder U.S. exports.

As U.S. Trade Representative Ambassador Michael Froman has said, meaningful market access for agricultural products would “cement closer economic ties and increase our two-way trade.”

If quotas and tariffs were eased, the U.S. could export more raisins, prunes, cheese, frozen vegetables and even grape juice to Israel. That would stimulate competition and offer Israeli consumers more choices and lower prices – something to consider as you shop for your next Shabbat dinner.

So, “where’s the beef,” some of you may be asking. How do we know consumers will benefit? Well, for brisket, cholent and steak lovers, I am pleased to announce that an agreement was recently reached to renew American beef exports to Israel for the first time in over a decade.

The first shipment, which arrived this week from the great state of Nebraska, will be served at the Embassy’s Fourth of July reception.  Soon, these high-quality, delicious, kosher U.S. beef products will be available to Israeli consumers.

When you look around the world at large or small markets, the ones that have the greatest choice and lowest prices are invariably those that have opened their markets to full and free trade.  They also tend to be the countries that are most competitive in exports. The competition that comes with free trade also helps hone domestic industries and make them more competitive and responsive to emerging global consumer trends.

In addition to modernizing our trade frameworks, there is more we can do to encourage and facilitate business investment in the United States. Israelis now invest close to $24 billion in the United States, nearly triple what it was a decade earlier.

Next week, I will lead the largest ever delegation of Israeli companies to the Department of Commerce’s SelectUSA Investment Summit in Washington. Representatives from all fifty states, as well as dynamic economic regions within states, will be there, recruiting foreign companies who want to establish or expand their presence in the U.S.

The American market is increasingly attractive to Israeli companies in many diverse sectors, and it remains our job to ensure that barriers to entry are eased and potential investors here get the help they need.

Among other initiatives, our governments are also working toward finalizing the establishment of an E-2 investor visa category, to enable investors to stay long enough to establish and run their businesses.

A non-stop flow of high-level U.S. government visits to Israel has ensured that our economic alliance remains high on the agenda. NASA Administrator Charles Bolden and his counterparts at the Israel Space Agency recently agreed to deepen cooperation on space exploration. During Energy Secretary Moniz’s visit, we signed an expansive agreement with Israel to increase cooperation on fuel substitutes, smart grid technologies, and cyber protection of energy infrastructure.

Transportation Secretary Foxx examined collision avoidance and smart city technologies that can help Americans travel more safely and efficiently. He was also here to celebrate El Al’s decision to maintain its all-Boeing fleet by purchasing 787 Dreamliners.

Many Defense Department and defense industry representatives have taken pride in the contributions of local firms like Israel Aerospace Industries and Elbit in cutting edge projects like Lockheed Martin’s F-35 program, and Rafael’s partnerships in missile defense with Raytheon and numerous other American companies. And the list goes on and on.

Further integrating our innovation-based economies; resolving 21stcentury global challenges; and modernizing and upgrading our economic policies are all critical.

But as we look to increase our common prosperity, others want to isolate Israel. I am asked about BDS all the time, and understandably so, given Israelis anxiety about this pernicious campaign. I always emphasize President Obama’s and Vice President Biden’s staunch opposition.

“I have directed my Administration to strongly oppose boycotts, divestment campaigns, and sanctions targeting the State of Israel,” President Obama said in February. “As long as I am President, we will continue to do so.”These are our marching orders, plain and simple, and we carry them out every day.

Beyond our opposition, I also remind Israelis that it is our counter-boycott–our unceasing effort to tighten economic relations–that is perhaps the most critical element of our response.

Boycotts are not an abstract notion for the United States. We were targets of an Arab oil embargo in the 1970s. We faced a choice of oil or Israel, and we refused to surrender. Rather than buckle to blackmail, we increased our support for Israel, outlawed compliance with Arab boycotts, and doubled-down on our diplomatic efforts at Arab-Israeli peacemaking, decisions that proved momentous and hugely beneficial to both our countries.

We believe the steps we take to reject and oppose efforts to boycott or delegitimize Israel have a deadening effect on attempts by others, including more recently debated boycott and divestment measures by non-profits and local groups.

It is true that there are voices in the United States, on college campuses and elsewhere, that are promoting the BDS campaign against Israel.  They have that right.  But no one should have any doubt that the policy of the U.S. government is to vigorously oppose and counter such initiatives.

And our actions speak even louder than our words.  Others may advocate boycotting Israel – but we are doing the exact opposite.  We are actively seeking to deepen our economic partnership with Israel.  We encourage American companies to invest in Israel, and then celebrate their successes.  We are recruiting Israeli businesses to invest in the United States.

In every sector, we are trying to generate more trade, more partnerships, more investment, more joint R&D.  We do it because contributing to Israel’s economic success is the right thing to do, and it is in our interest, no matter what the critics say.  And we don’t mind at all if it generates jobs and profits for Americans at the same time.

As someone who has stood on the Tamar off-shore platform, visited Google’s new ideas incubator in Israel, consulted with experts on how to protect our data at Beersheva’s CyberSpark, sipped water at the Sorek desalination plant, and met and traveled in the United States with countless Israeli innovators and investors, I can tell you that if today’s economic landscape seems impressive, my prediction is tomorrow’s will be nothing short of breathtaking.

In many ways, for all of our successes, I believe we have barely scratched the surface of what is possible.

My confidence also flows from my own country’s deep and enduring commitment to nurturing, promoting, and sustaining peace. Whether it is de-escalation; supporting Palestinian state-building and economic development; or our decades-long support of Israeli-Egyptian and Israeli-Jordanian peace, America will never lessen its commitment to peace.

Progress toward peace would also help the fight against BDS and would further weaken those who advocate isolation. True supporters of BDS have an anti-Israel, and in some cases even anti-Semitic, agenda, independent of efforts to resolve the Israeli-Palestinian conflict.  But we must also reach those who support a two-state solution, but who might be tempted by the misguided arguments of the BDS movement.

It has always been the case that one of our most effective tools to defeat boycotts and delegitimization is the presentation of a political process, negotiations, or some political horizon that gives hope for a two states for two peoples resolution to the Israeli-Palestinian conflict.

So it is certainly in Israel’s and the United States’ interest to find the way back to direct negotiations with the Palestinians, and until then, to take steps to keep the two state solution viable for the future and avoid steps, such as settlement expansion, that seem to move the parties further away from, rather than closer toward, a two-state solution.

My confidence that we can further strengthen this alliance of prosperity also stems from Israelis’ legendary resilience.

In the south, despite the threat of missiles and tunnels, and in the north, despite decades-long security challenges from Lebanon, Israelis have done more than survive; they have thrived.

In the Western and Eastern Galilee in recent months, I met with college leaders, community representatives, innovators and social entrepreneurs. The visionary spirit, the determination, the ingenuity and the resilience – all of these were on full display.

Signs of economic dynamism were everywhere. Greater investment in higher education, community partnerships, and bringing to bear the benefits of our extraordinary alliance, these are all key inputs. And we want to be your partner. In fact, in the Eastern Galilee the U.S. Embassy is organizing a tour of the region later this year for American multinational companies that are leaders in the food and beverage sector, including medical foods, to examine R&D and other investment opportunities. This is just one of many areas where we are active.

Let me conclude by restating the commitment of our governments to create a sense of common purpose in tackling global challenges and to create the conditions that have catapulted our economic ties to unprecedented levels.

And let me also salute the thousands of innovators, entrepreneurs, investors, bankers, farmers, and traders who continue to seize those opportunities to sustain and strengthen our common prosperity.

Thank you.