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Why Israeli tech companies fear the Jewish Nation State bill

July 12, 2018 at 4:00 pm

A Jewish settlement can be seen in Jerusalem [Mahfouz Abu Turk/Apaimages]

Israeli politicians have been trying for years to pass a “Nation State” bill to prioritise the country’s Jewish characteristics over democratic principles. The controversial proposal described by its critics as an “apartheid bill” is momentous; second only to the declaration of national independence, as some have claimed. While Israel has always insisted that it is a Jewish state, this bill will give further legal weight to that claim and permit discrimination on the basis of race and religion.

One section of Israeli society, however, is more opposed than the rest of the population to the promotion of the country’s Jewishness at the expense of equality. They are the heads of Israel’s tech industries. If the bill makes it to the statute book, the likes of Intel and Motorola are unlikely to enjoy the benefits that triggered a “start-up revolution” lauded constantly by Israel and its supporters as a symbol of the country’s innovation and openness.

The bill will lie to rest a debate that’s been ongoing since the founding of the country; can Israel reconcile its ethno-religious identity with the principals of democracy. Critics say it can’t pointing to its many discriminatory laws; Jewish only swimming pools, not to mention the apartheid regime it has imposed in the occupied territories where there are Jewish only settlements, Jewish only roads and two distinct legal systems: military rule for non-Jews and civilian rule for Jews. Despite endorsing admission committees permitting Jewish communities to vet Israeli citizens on the basis of race and religion and block Arabs from taking residence in a Jewish neighbourhood, the country’s President, Reuven Rivlin, has come out in opposition to the bill.

Israel has gone to great lengths to guard its ethno-religious identity. The Jewish majority it hopes to maintain would not have been possible without first the ethnic cleansing of Palestinians in 1948 and the ongoing occupation of their land. Its founders realised very early that the country’s Jewish identity needed to be enshrined in law even if these laws contravened principals of democracy. Foundational rules like the Law of Return, the Absentee Property Law, and the Citizenship Law, all discriminated against the Palestinians.

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The ultra-nationalist laws however, which have the backing of the majority of the country’s population, have come at a cost to companies that need to bring in non-Jewish talent from outside Israel. They look to Silicon Valley with envy. The global centre of technology located in the US is famous for attracting diverse talent. It is one of the key reasons for its success, which would have been impossible without a high degree of freedom and openness. While the same tech giants have found relative success in Israel, they are now protesting that their growth has been hindered by an Israeli government that is more obsessed with racial purity and the country’s Jewish identity above all else.

One of the main concerns is the skills shortage, which executives say will get worse if Israel continues on its path of making it more difficult to employ non-Jews. Even though the sector is the object of national pride and has become an incubator for internationally renowned brands, the image of a boom in innovation hides the serious challenges they face in developing companies dependent on an international talent in a country hostile to foreigners. These companies are now reaching a point of saturation where there are not enough skilled Jews in Israel to meet the demands.

With nearly 270,000 out of about four million working-age Israelis already in tech, industry executives, according to the Financial Times, are warning that the sector risks running short of its crucial ingredient — skilled Israelis.

Talent shortages, the FT admits, plague high-tech sectors globally, but industry bosses point out that in Israel companies are running up against a particular twist to this universal problem: the struggle to secure work and residency visas for non-Jewish foreign talent. “I am not aware of any way for me as a CEO to bring in talented non-Jewish people to work here for a long period of time,” Liad Agmon, founder of two Israeli start-ups said. He complained that executives like him have been “begging” the government for 20 years to introduce a programme that would allow them to recruit non-Jews without having to go through a bureaucratic maze, but their pleas were ignored.

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Agmon went into more detail about the problems tech companies face in employing non-Jews. The executive told the FT that Indian and Chinese engineers, who make up the bulk of high-tech immigration to the US and UK, rarely consider Israel as an option. They are turned off either by the difficult visa process, misplaced perceptions of safety or by salaries, which he says lag behind western standards.

For tech companies to grow to another level in Israel, the country, they say, needs to produce more people and overcome the skills shortage. In the meantime firms are being forced to look elsewhere. Ukraine and India are said to be popular outsourcing destinations; a trend that has seen overseas spending rise to $1 billion according to a survey by a recruitment firm.

One of the solutions encouraged by the bosses is to get firms to look at recruitments from under-represented sections of society, including ultra-orthodox Jews, Arab citizens and women. But that may still not be sufficient. A population of eight million is not enough to produce the number of people to sustain a steady growth of the tech industry within Israel.

The shortage is most acute when it comes to senior engineers. “Getting some super talent from Silicon Valley and getting them to move to Israel, if they don’t have a Jewish background or a deep connection to Israel, it’s a high task,” a senior engineer told the FT.


The Israel Innovation Authority wants to double employment in the tech sector to 500,000 over the decade. This is highly optimistic under the current government which is pursuing an ultra- nationalist, ultra-right wing agenda. A bill that has been denounced for its racism and as having no equivalence in any constitution in the world, is likely to make matters worse for the high tech companies.

The “Nation State Bill” has been debated a number of times in the Knesset. It passed its first reading last May. The vote was carried with the support of 64 lawmakers compared to 50 against. Members of the Joint List, a minority party in the Knesset, have compared the bill to South Africa’s 1950 Group Areas Act, noting that “the law establishing apartheid separated groups”. They said: “South Africa was boycotted by the by the whole world, and you’re trying to bring a boycott on Israel.”

It may be too soon for the tech giants to fear the growing Boycott, Divestment and Sanctions (BDS) campaign against Israel. In the meantime, their worries over recruitment of foreign talent are set to get worse once an apartheid bill declaring Israel as the “national home of the Jewish people” and claiming that “the right of national self-determination in the state of Israel is unique to the Jewish people,” becomes part of the country’s legal system.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.