Israel Electronics Assn head warns on cyber regulation

Shlomo Waxe

Shlomo Waxe filed objections to a draft order on Ministry of Defense supervision of cyber security exports.

Israel Association of Electronics and Software Industries (IAESI) CEO Shlomo Waxe warned supervision of cyber security exports will destroy the industry.

In an objection filed by the association to the Ministry of Defense and the National Cyber Bureau at the Prime Minister’s Office, Waxe wrote: “Already, even before the order has been approved, the companies in the field are feeling concerns from investors and prospective clients. If we wish to truly lead the cyber sector, then we must suspend this process, reconsider the subject, and maybe even wait and study how other leading countries act. It is enough to wait for developments in the US and to see what decisions are taken there.”

Thursday was the deadline set by the Defense Export Controls Agency at the Ministry of Defense and the National Cyber Bureau to file objections by organizations and companies working in the cyber sector. The draft order was first revealed in “Globes” in January.

The new regulation will require Israeli companies to receive a license from the Ministry of Defense to export some cyber security systems, specifically those with offensive and intelligence gathering capabilities.

If a company wished to export such technology, it would undergo a similar process to that faced by defense firms that sell weapons systems to foreign clients.

“In the draft order, the security considerations trumped the strategic, economic interests of the State of Israel, and the hit taken by the cyber sector which is mainly focused on export and funded by foreign investors could be fatal and irreversible,” said the objection letter.

“Is it sensible for the State of Israel to be the first in the world to impose supervision on cyber security? Will such a decision help realize the Prime Minister’s dream of making Israel one of the top five cyber powers in the world? Our answer to each is a stern no.”

The IAESI also objected to the lack of clarity in the draft order over the export of cyber systems which might lead to uncertainty among players in the field over what is permissible. “Given that supervision of military exports carries criminal consequences, any intelligent person will act according to the unwritten rule ‘if there is any doubt then there is no doubt’ and that will severely hurt the cyber security.”

“Throwing out good value”

Speaking to “Globes” on Thursday, Waxe said: “The entire industry is stressed; there are many question marks, and for now everyone is holding off on investing until there is some clarification. Until we finally have a relative advantage together, with annual sales of $3-3.5 billion per year, we start hurting ourselves. The big cyber market is not in Israel, it is abroad; this regulation will close us off. And if we are going to have such supervision, why does it have to be by the security establishment? We are acting like Shiite suicide bombers and destroying the value we have.”

The Ministry of Defense received other objections to the draft order. Some were filed by organizations and law firms representing a collection of interested parties.

A defense source said on Thursday, “As of yesterday there were few objections, but throughout today we may receive more.” The source believed it will take several months to review the objections, during which no unilateral steps will be taken in a matter that may hurt the cyber companies.

DECA director Dubi Lavi addressed the industry’s concerns last week: “We understand the draft order as currently worded needs to undergo changes; in some sections there will be substantial changes. We are considering establishing a joint committee with officials from the Ministry of Defense, the National Cyber Bureau at the Prime Minister’s Office, and the manufacturers in order to draft a better order to minimize any damage to the industry.”

Published by Globes [online], Israel business news - www.globes-online.com - on March 4, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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