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Palestinian Tech Firms Fueled by Israel, Google, Cisco, Intel

While peace talks are on the rocks, Palestinian tech firms have quietly been making business deals with Israel and the United States that include investment by Cisco, Google, Intel, and more.

Palestinian Internet cafe

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Peace negotiations between Israel
and the Palestinian Authority have ground to a near-halt again, but the IT departments of the two countries are getting along just fine. Israeli high-tech firms
are increasingly outsourcing work to the West Bank, while the State
Department, Google and Cisco have all recently announced investments in Palestine’s
technical infrastructure.

The stereotype of
Israeli-Arab relations says little trade takes place between
Israel and its Arab neighbors. In fact, there is a long history of business
deals between firms on both sides of the border.
Microsoft Israel outsources
their technical support to Egyptian call centers
filled with
Hebrew-speaking Egyptians. Israeli software firms
regularly operate in the United Arab Emirates, Qatar and Bahrain both
directly and through third-party intermediaries.

A recent Associated Press report covered the growing trend of Israeli
high-tech firms outsourcing work to Palestinians
. In this case,
the Palestinian Authority fulfills the role for Israel that India or
Mexico performs for the United States–offering a talented, technically
proficient labor market that will work for less pay. The AP spoke to
businessmen and non-governmental representatives on each side:

The cultural gap is much smaller than
we would think,” said Gai Anbar, chief executive of Comply, an
Israeli start-up in this central Israeli town that develops software
for global pharmaceutical companies like Merck and Teva.

At a previous job, he worked with
engineers in India and eastern Europe, but found communication
difficult. So in 2007, when he was looking to outsource work at his
new start-up, he turned to Palestinian engineers. He said they speak
like Israelis do — they are direct and uninhibited. Today, Comply
employs four Palestinians.

Palestinian engineers have also warmed
up to the idea. “I doubt you would find a company who says, ‘I
am closed for business'” to Israelis, said Ala Alaeddin,
chairman of the Palestinian Information Technology Association.

Although West Bank urban centers such
as Ramallah and Nablus are located within an hour’s drive of Tel Aviv
and even closer to Jerusalem, travel is virtually impossible for both
Israeli and Palestinian civilians. A complicated permit system
largely restricts Palestinians from traveling into Israel or Israeli West Bank settlements, while Israeli citizens are
prohibited from entering areas of the West Bank under Palestinian
Authority control. Instead, Israeli and Palestinian businesspeople communicate via Skype, instant message and email.

For Palestinians, Israel is by far
their largest export market and business partner. Israelis
similarly benefit from the geographic proximity between Israel
and the West Bank. While bigotry persists on both
sides, the almighty dollar is supreme in the region. For
Israelis and Palestinians willing to cooperate, the financial rewards
can be considerable.

Meanwhile, foreign investors and NGOs
are pumping cash into the Palestinian Authority’s nascent tech
industry.

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The State Department announced on
December 17 the launch of the Palestine
Information Communications Technology Capacity Building Initiative

(PITI). PITI is a collaborative project between the State Department,
USAID, Partners for a New Beginning, Cisco, Google, HP, Intel, Medcor
and Salesforce.com. The project is designed to “enhance Palestinian
economic capacity in the information communications technology (ICT)
sector by facilitating partnerships between Palestinian ICT companies
and U.S. multinational companies, particularly those with operations
in the West Bank, Gaza, Israel, Jordan, and the broader Middle East.”

Included in the current round of aid:

  • Cisco will invest $5 million in a
    venture capital fund for Palestinian startups.

  • Google is investing $2 million
    which will include contributions to the same VC fund and to the
    local operations of NGO Mercy
    Corps
    .

  • A long term commitment by HP to
    expanding business operations in Palestine and local collaborations
    with USAID.

  • Intel will expand cooperation with
    Palestinian IT/software firm Asal
    Technologies
    .

Palestinian blog Bazinga uncovered a
Facebook
status message
by Google’s Gisele Hiscock announcing the tech
giant’s investment in the Palestinian Authority.

[Image of Palestinian Internet cafe
via Flickr user The
Advocacy Project
]

Follow Neal Ungerleider on
Twitter
.