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Insiders Stress Importance of Israeli Infrastructure Development

December 9, 2012 9:55 am 0 comments

The Jerusalem Light Rail, one of Israel's recent infrastructure improvements. Photo: Matanya/Wikimedia Commons.

NEW YORK—”I guarantee it! Your investment will not return 500 percent,” Yehuda Raveh, managing partner of the Israel Infrastructure Fund (IIF), told a recent meeting of investors in New York.

What Raveh did promise was an innovative approach to the financing and development of urgently needed transportation, water, communications, and energy infrastructure projects in Israel, coupled with reliable returns of up to 17 percent for investors in the country’s future.

“An ideal situation for institutional investors and high-net-worth individuals who believe in Israel,” Raveh told on Nov. 27.

Israel is a nation quite literally on the move. In just more than six decades, the Israeli population has increased almost 15-fold, going from 600,000 in 1948 to more than 8 million in 2012. Multiple waves of immigration have been characterized by diversity—Russian, Ethiopian, Yemeni, North American and many others.

The brightness and security of the nation’s future is “enhanced by investment in its infrastructure,” Consul General of Israel in New York Ido Aharoni said at the investors’ meeting, especially considering that Israel finds itself in a Middle East “where the entire regional order has become a regional disorder.” The strong performance of the Israeli economy, its rising stock market, and a government policy that recognizes the importance of investment and attention to infrastructure are essential elements of future planning, Aharoni said.

Sigalit Siag, chief fiscal officer of the Israeli Economic Ministry, said facilitating infrastructure growth “encourages significant investment from foreign entities.” She anticipates that about 75 billion shekels will be allotted to transportation during the next five years.

The IIF is helping to meet Israel’s mobility challenge by developing a cooperative model of government and private-sector funding integration that gets things done. Its Highway 431 project was completed significantly prior to its due date, according to Raveh.

“That has never happened in the public sector,” Raveh told Had the project not been finished on time, the IFF would have been fined 1 million shekels per day for the delay, Raveh said.

In Jerusalem, Mayor Nir Barkat—a former venture capitalist—is leading the charge to augment the ancient city’s rich historic character with a modern and global feel through partnerships, investment, and infrastructure development.

At a Nov. 15 talk with aspiring leaders at the Harvard University Kennedy School of Government in Cambridge, Mass., Barkat described the need for a new model of governing—one that emphasizes working with diverse communities and private-public partnerships. He described the development of local councils under his leadership to give a voice to the diverse array of Jerusalem communities—secular, Arab, Haredi, and Christian. Furthermore, drawing on his business background, he advocated for the creation of a young management team that led the way in forming private-public partnerships that leverage Jerusalem’s unique history, diversity, and strengths in education and life sciences to create new opportunities for investment and growth.

Barkat specifically touted the NIS 8.5 billion plan to build 12 skyscrapers at Jerusalem’s entrance as part of a massive modern business district as the result of his model. The project is expected to bring 40,000 new jobs to the city and allow Jerusalem to compete in the global marketplace.

During a Nov. 11 meeting in New York focused on expansion of development in the Negev, former Prime Minister Ehud Olmert noted that infrastructure improvements, especially high-speed railways, unify the country and increase the efficiency of travel from the north to the south. He praised rail development overall, but noted that several rail projects have not met their scheduled start dates. Asked by how private investment in the construction and operation of transportation infrastructure could impact cost and efficiency—and help meet or beat completion deadlines—Olmert declined to answer, citing a need for additional information.

Founded in 2007 to foster development of transportation, water purification, energy, communication, and other significant infrastructure projects, the IIF has partnered in such projects as CityPass, the 23-station Jerusalem light rail system that began operations in August 2011. The IIF participates in the management of Highway 6, known as the Cross Israel Highway, Highway 431, energy pipelines, energy production, and communications projects.

Five years after its founding, the IFF manages more than $1 billion of infrastructure investment—largely in Israel.  The fund can virtually guarantee significant returns to institutional and individual investors based on government guarantees.

“No war, no situation will negatively affect energy, transportation or water purification,” Raveh said. “These are not negatively affected; consumption actually goes up in times of crisis… These stable, continuing investments are little affected by crises, hostilities, or economic changes.”

Responding to a question concerning the safety of investing in Israel, Raveh said, “Don’t believe every word you read in the newspapers. Tel Aviv was never attacked, nor was Jerusalem. Investing in Israel has steadiness and assurance.”

—With reporting by Sean Savage

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