Israels former top scientist lashes out

Dr. Ami Appelbaum  credit: Jonathan Bloom
Dr. Ami Appelbaum credit: Jonathan Bloom

After six years as chair of the Israel Innovation Authority, Dr. Ami Appelbaum champions its independence from political control, and describes his fears and hopes for Israel's tech sector.

Exactly one week after the outbreak of the war, on October 14, Dr. Ami Appelbaum ended his tenure as chairperson of the Israel Innovation Authority (IIA). His six-year term as Israel’s top scientist may have ended with cannons roaring in the background, but at the Ministry of Science, the departure was met with complete silence, and almost completely ignored. Applebaum, who served under five ministers, simply did not show up for work that morning. There was not a word from his direct superior, Minister of Innovation, Science and Technology Ofir Akunis.

Despite the tensions that prevailed between him, ministry brass, and the government, Appelbaum notes that during his term, Akunis actually accepted most of his professional recommendations. Akunis even requested that he should extend his term, but Applebaum insisted on ending it exactly six years after being appointed to the position. In fact, Applebaum had considered leaving even earlier. "I didn't want to work with this government even before my departure, since the beginning of last year," he says in a candid interview with "Globes". "But I told myself that I had to stay. If people like me -- who uphold the professionalism of the unit they are entrusted with -- leave and unqualified replacements are appointed instead, the damage will be even greater."

If you ask Applebaum, the damage is already done. A swathe of political interventions, he says, has disrupted the IIA’s work and its independence. Thus, he says, one of the most professional, apolitical, and best-funded government agencies has become a pawn in a political game. Appelbaum reveals that the Authority operated for a year without a board of directors, and that even today, more than a year after the establishment of the sixth Netanyahu government, the board is still not fully manned. According to him, the downturn began during the previous government, under then-Minister Orit Farkash-Hacohen.

The IIA’s independence is critical to its functioning as a statutory authority separate from the political stratum. In the past, any change in the Authority's work plan required approval by the government and the director general of the Ministry of Economy. When it became an independent authority, about a decade ago, approval was entrusted to an independent board of directors in a way that shortened procedures and improved the Authority's ability to update its assistance programs for start-ups and entrepreneurs in the center and periphery.

"This professional separation from politics is super important, but it was a joke as far as the ministers were concerned," says Applebaum. "It drives them crazy that there is an authority with a one and a half billion-shekel budget right in front of them, and they can’t touch it, according to law. So, where can they exert influence? In the appointment of the board of directors, or the preceding stage: the establishment of an executive search committee -- or in our case, non-establishment of the search committee. Minister Farkash-Hacohen refused to appoint a new search committee for the board of directors after the previous one ended its term. So, each minister has their own way of thinking about how they might gain more control over the Authority.

"It wasn't until the end of her term that she agreed to appoint a search committee, and we even received some first-class candidates. We met for hours on defining the position and its requirements. And then the government changed, Akunis took office, and requested that the appointment should be delayed, to do legal due diligence, which took months."

"I lost friends because of this job"

The Israel Innovation Authority was established in 1965 as the Office of the Chief Scientist in the Ministry of Industry and Trade. It primarily supported research and development by government research institutes. After several incarnations, in 2016 the Office of the Chief Scientist became an independent entity: the National Authority for Technological Innovation, responsible for advancing Israel's technological position in the international arena. Despite its independent status, attempts at political intervention have increased in recent years, even before Farkash-Hacohen and Akunis. Appelbaum tells of another incident with one minister of economy whom he declines to name. "The minister in charge can determine policy according to law, but is not allowed to determine where various budgets will go within the authority.

"One minister of economy came to me one day asking that a tender we wanted to issue for a food sector technology incubator should be published [specifying] companies based in Safed. I didn’t understand why only Safed, and I told him, 'There will be no such thing - over my dead body. All our tenders are issued properly, according to clear criteria. The best will win -- and it won’t be Safed. But for a minister, it’s a problem, because they have political agendas, and need to be elected again in the next primaries."

Were your decisions always professional?

"Absolutely, yes. During my tenure there were no political or unprofessional maneuvers at the authority. Look, we’re dealing here with a huge budget ranging from NIS 1.3 billion to 1.7 billion a year and another similar amount from the private sector as leverage. Did you ever once hear of financial corruption at the Innovation Authority? I can also say that I lost many friends because of this position. People who would call me the night before a research committee discussion to say, ‘Ami, our proposal is coming up tomorrow, we've known each other for twenty years,’ and in the end, didn't get anything, because that was the committee's decision.

"For example, someone requested that we should allocate more budgets to the Arab sector. There is no doubt that the human capital in Arab society is not well utilized, but if you want to bring them into the workforce, you must have an organized plan. Therefore, until there is such a plan, we would not agree to do so. I was sent many times to meetings in Ashkelon, Dimona, and Safed, about providing them assistance, and each time I would say, ‘That's fine, but we need professional criteria.’"

And now that you are no longer in office, are you afraid that unprofessional things will be done?

"I really hope not. When the RFP for my replacement came out, the threshold requirements were lowered to the level of someone without any qualifications, real technological experience, or extensive international experience. Theoretically, even the manager of a small workshop could have gotten the job. I must say that very I was worried about this because of the appointments we hear about in this government. In the end, I was pleasantly surprised by the appointment of Alon Stopel as my replacement; a person with a wealth of technological experience from MAFAT [the Directorate of Defense Research and Development at the Israel Ministry of Defense] and Elbit.

"There is no doubt that Stopel is a very worthy person and I am sure that he will do his job well. Still, I would be happy to see a person from the private sector in the position, who knows the technologies and the mindset of start-up companies, because that is the Innovation Authority’s focus".

"The Authority is strong even without me"

One of the most significant changes at the IIA in recent years was its transfer from the Ministry of Economy to the Ministry of Innovation, Science and Technology. The move was backed by the previous minister Farkash-Hacohen. As the minister overseeing Israeli high-tech’s best years, 2021 to 2022, Farkash-Hacohen tried to be a kind of "high-tech Czar", and promote the industry in many arenas: education, academia, and artificial intelligence. Applebaum was dissatisfied with the move. "The Ministry of Science is an unnecessary ministry that should not exist," he says. "The bulk of its budget goes to applied research, but we deal with that at the Authority, too. So, what for? The very act of moving the Authority was a big mistake. "

"People are afraid to invest here"

Appelbaum was born on Passover eve 1951, on Kibbutz Sa'ad, a cooperative on the Gaza border founded by the Bnei Akiva movement. His father was a member of the Palmach religious platoon that first settled the Negev; his mother cared for young people on the kibbutz. "Those were the days when religious Zionism was humane and liberal, with different values from what there is today," he says sadly.

"Since 1967, I have been severely critical of what has been happening in religious Zionism: the nationalism, settlements, loss of basic human values, and the understanding that a person is a person is a person. I am no longer part of that, but the education I received - the values of integrity and giving to the country - are with me all along the way".

Appelbaum began his professional career with a doctorate at the Technion in materials engineering. He wrote his master's thesis with Prof. Dan Shechtman, who later received the Nobel Prize. He moved to the US for eight years to continue his studies, working as a postdoctoral student at AT&T Labs in New Jersey and then at Rockwell International. In the 1990s, after he returned to Israel and managed a startup in Migdal Ha’emek, he joined capital equipment maker KLA-Tencor. After being appointed general manager of the company in Israel, he then went back to the US to serve as the company's VP Operations.

"I persuaded them to bring production to Israel. Today, half of what is produced in the factory in Migdal Ha’emek is developed locally by Israeli teams, and half is things developed in the US and produced here. We are good at creating high added value. I persuaded them that if they came here we would reduce costs by 30%. They laughed at me; they thought I was crazy. At that time there were maybe 100 employees with $30 million turnover, and when I left, we had 600 employees and $700 million."

Could you accomplish this in the Israel of 2024?

"Today it would be far more difficult, what with the judicial reform and the war. People don't understand it, but in 2006, during the Second Lebanon War, the board of directors was really frightened by what was happening here. They felt that this was a dangerous place to beware of. Even in 2024, it’s a risk -- large companies, especially those who aren’t already here, will be afraid of what’s happening in Israel. Tourists aren’t coming, businesspeople aren’t coming, and it sounds terrible in the media. The exception is Intel, which knows Israel so well and even recently announced a new fab here. But other investors feel a sense of uncertainty."

Applebaum points out the certainty that prevailed during most of his tenure. "From the day I took office until the end of 2022, there was business, governmental, political, and security certainty here. Up until early 2023, we were the wonder of the world, both in dealing with Covid and in economic growth. But early last year, we became the world’s problem child.

"Up until the end of 2022, I met with everyone: the vice president of China, the prime minister of Korea, ministers from Sweden… I would meet between two and four such delegations a week. Everyone wanted to understand how to implement the Innovation Authority model, which is unique in the world: a highly professional body that is not political and managed professionally. But once the judicial reform commenced in 2023, I no longer had anything to say to the critics. So, I stayed in my position to warn and raise all the red flags. Sentiment has changed and people are simply afraid to come and invest here."

Do you think we can repair this sentiment?

"Yes. The population makeup, the desire and the drive of the Israeli entrepreneur, have not changed. In addition to that, today we have a technological revolution that, in my opinion, is greater than the industrial revolution of the past. Israel, because of its computing and digitization capabilities, can rise higher when we emerge from the crisis. But if the political and security situation does not stabilize, we won't be able to get out of it."

Given your familiarity with the American market, are foreign investors still afraid of the judicial reform?

"They are very afraid because of the regulatory issue. Employee-employer relations are a super important issue in the US, and if you suddenly don't know what will happen with the judicial system, that's a problem. American businesspeople won’t go where there is no long-term stability. So, why come to Israel? Today, they invest in startups in Berlin, Paris, London -- there are lots of entrepreneurs there -- why get involved with this dangerous place?"

Many private investors believe that Israel missed the artificial intelligence revolution.

"We're not where we want to be, but we're not completely behind either. When a new technology comes in, the state must support it in the early stages. We talked about a government program for artificial intelligence four or five years ago. We brought former Chief Scientist Dr. Orna Berry to examine the needs, we set budgets, and we established TELEM, the National Infrastructure Forum for Research and Development.

"Yes, it has to be said that the budget is minimal, and this is indeed one of the sticking points: if you want to be a global leader in the seed stages, develop the number of engineers required, bring in the right professors, and make the right regulation, you need a budget. Unfortunately, we did not receive as much funding as we requested for the artificial intelligence project, and then there was also political intervention by the Ministry of Science. This did not stop the project, but it did not receive the funding needed."

What should Israel do about the chip industry that is divided between China and the US?

"I think it’s important to do business with China, and we must not give up this limitless market. Is it okay to receive investment, or invest in Chinese companies that are not in the security sector? I see no reason not to. On the other hand, I have a problem with any country that is not a liberal democracy, and therefore we should make sure not to transfer sensitive technologies -- like quantum technologies and artificial intelligence -- which can also be used for military purposes.

"What’s more, the Americans warned us not to sell them such technologies. I myself accompanied a person from the US State Department who came to warn Israeli academics against information theft."

In 2021, US President Joe Biden approved the CHIPS and Science Act, which is intended to support domestic industry and reduce US dependence on foreign industries. How should we deal with this?

"I think Israel must be part of the American CHIPS law that supports this industry. The Americans depend on the semiconductor metrology and testing sector, a large component of which is in Israel [through companies like KLA-Tencor and Nova Measuring Instruments - A.G. and A.Z. ]".

The office of MK Orit Farkash-Hacohen, former Minister of Innovation, Science and Technology, stated: "The transfer of the Innovation Authority to the Ministry of Innovation was a professional move. It created a natural connection between the areas of R&D and high-tech under the same ministry, and was part of a broader multi-year plan. The move created the first 'Minister of High-Tech' position, which gave this important industry the government attention it deserves."

Published by Globes, Israel business news - - on February 5, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Dr. Ami Appelbaum  credit: Jonathan Bloom
Dr. Ami Appelbaum credit: Jonathan Bloom
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