Israel Minister Says Cyber Push Balances Security, Business

Source: Mizrahi-Tefahot Bank Ltd. via Bloomberg

Jacob Perry, Israel's science and technology minister. Close

Jacob Perry, Israel's science and technology minister.

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Source: Mizrahi-Tefahot Bank Ltd. via Bloomberg

Jacob Perry, Israel's science and technology minister.

Israel must balance business needs with security risks as it seeks to boost cyber exports and investment, Science and Technology Minister Jacob Perry said.

“To work in a global market like the markets today, you have to bring investments,” saidPerry, a former head of Israel’s Shin Bet internal security service, in an interview yesterday. “So you seek foreign investors from abroad, and you need to check if there is not a hostile penetration to a business.”

As it develops a cyber-exports policy, Israel -- whose government alone fends off thousands of cyber attacks a day -- must also weigh its desire to boost exports against its vulnerability as a target. “With cyber, you arrive very quickly to a point where decisions need to be made on what can be exported and how much we want to share,” Perry said.

Israel’s cyber-technology exports totaled $3 billion in 2013, or about 5 percent of the global market, the government’s National Cyber Bureau said. Prime Minister Benjamin Netanyahu has made developing the cyber industry a national priority, saying the benefits of opening Israeli technologies to foreign partnerships compensate for security risks.

The government set up the National Cyber Bureau more than two years ago to coordinate the country’s cyber defense strategy and is building a national center for technology development and education in the southern city of Beersheba.

Industry Burgeoning

The focus on promoting the cyber industry has made the need for an industry-specific export policy pressing, said Perry, who has served as chairman of Mizrahi Tefahot Bank (MZTF) Ltd., Israel’s fourth-largest lender by assets, and Cellcom Israel Ltd. (CEL), the country’s biggest wireless operator. A team has been working on the policy since the beginning of the year.

While nearly all defensive technologies can be sold abroad, offensive tools are a different story. “In the same way you don’t share sophisticated weaponry with everyone, you don’t share cyber,” Perry, 70, said. “We need to be cautious and at the same time sensitive not to hurt trade or investment.”

Iran has accused Israel of trying to sabotage its nuclear program with the Stuxnet and Flame viruses. After Flame was detected, Moshe Ya’alon, now Israel’s defense minister, said it is “reasonable that whoever sees the Iranian threat as significant would use various measures, including this, to hurt it.”

Foreign Investors

Within the past three years, the country’s cyber-security industry has grown from a few dozen companies to more than 220, according to the Tel Aviv-based IVC Research Center that monitors the industry. Last year, Israeli cyber companies raised $165 million, or 11 percent of the total amount the sector attracted worldwide, the Cyber Bureau said. Israeli companies make up 15 percent of all those in the field raising money, it added.

Israeli cyber companies have also attracted foreign cash. California-based Francisco Partners LLC bought Herzliya-based NSO Group Technologies Ltd., which developed technology to track calls and encrypted data on mobile phones, for about $120 million in March, Israel’s Ha’aretz daily reported. That same month, Palo Alto Networks (PANW) bought Cyvera, whose technology protects computer networks from cyber attacks, for $200 million.

“Today, cyber is a weapon,” Perry said. “And the same way you definitely don’t share sophisticated weaponry with everyone, the same goes for cyber.”

To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Amy Teibel, Karl Maier

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