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The Nazareth Code: Can Israel’s Booming Tech Sector Heal the Wounds of Israeli Arabs?

An ambitious new high-tech industrial park doubles as an initiative to bring more Arabs into the Israeli economy

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Aerial view of the new industrial park in Nazareth. (Arie Dahan)
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Driving through Nazareth’s industrial zone is no easy task. Congested, confusing, and somewhat chaotic, it is not very inviting to first-time visitors. But at the end of the freshly paved road lined with auto-body shops, garages, warehouses, and one oddly situated girls school, awaits a surprising sight: a new industrial park, recently built by the Israeli billionaire and philanthropist Stef Wertheimer.

Constructed to promote Arab-Jewish economic cooperation and coexistence by providing “quality employment” in export-oriented industries, the park, which formally opened in April, is also an attractive tourist destination: Towering above the biblical Jezreel valley to the south, it affords a stunning view of one of Israel’s lushest landscapes. Once you enter, it looks more like a museum than a place of business. The illuminated sunlit lobby exhibits bronze sculptures by the local Arab artist Sana Farah Bishara that suggest the work of August Rodin, while the surrounding stone walls are draped with abstract-art tapestries by the Israeli choreographer Noa Eshkol. With top-notch facilities, breathtaking views, and a work atmosphere evocative of the Metropolitan Museum of Art, the park appears to have everything necessary for an ideal industrial hub—except for one thing.

There are very few people. Operating at only 30 percent occupancy, the Nazareth Industrial Park has the feel of a luxury ghost town.

Supposedly, the occupants will be here soon—and join with Amdocs, the Israeli software and telecommunication-services giant, that is already operating in the park—making it the next great hope for social activists and business entrepreneurs who have labored to integrate Arabs into Israel’s ever-expanding high-tech sector. In Start-Up Nation, the best-selling 2009 book about Israel’s high-tech economy, authors Dan Senor and Saul Singer set out to tell “the story of Israel’s economic miracle,” but the only place Israeli Arabs are mentioned is in a chapter warning against their continued exclusion from this booming sector. With more companies listed on the Nasdaq than any other country except the United States, Israel has a high-tech sector that exports more than $35 billion annually in goods and services, but when you do the math you begin to realize just how conspicuously absent Arabs are from this crucial industry. According to the most recent government figures, there are no fewer than 261,000 Israelis working in the broader high-tech sector. Of those, it is estimated that only 6,000 are Arabs, despite making up 20 percent of the total population of just under 8 million people.

Which is how the inauguration of the Nazareth Industrial Park has come to be seen as the beginning of a historic transformation—one that could include Arabs in the lucrative high-tech industry, and thereby create a more equal and just Israeli society.

***

Not far from the industrial park are the offices of Tsofen, the Israeli NGO that has been spearheading efforts at integrating Arabs into the high-tech sector. Founded five years ago as a joint Arab-Jewish initiative by Smadar Nehab and Yossi Coten, two former high-tech executives, and Sami Saadi, a veteran CPA and social activist from the Arab town of Arraba in the Galilee, the organization has committed itself to economic integration as a pathway to “transforming Israel” and sustaining genuine and lasting coexistence between Arabs and Jews. The primary way in which they aim to achieve their goal is by training talented Arab college graduates to write code. (In Hebrew, tsofen means “code.”) The NGO helps out with job placement, résumé-writing, and the cultivation of crucial social skills needed to pass a job interview while also lobbying the private and public sectors to turn their attention—and refocus their investments—toward Arab communities.

Saadi is an amicable, charismatic man with a warm smile. I first met him a few months ago at the Inter-Agency Task Force on Israeli Arab Issues in New York, where he was trying to raise awareness for his cause among American Jews. “We, as an Arab society, have been left out,” he told me, as we sat in the peaceful balcony of the hilltop Jewish village of Hararit, which overlooks his hometown. He briefly surveyed the array of circumstances that caused this to happen—the sensitive military origins of the Israeli high-tech sector, which excluded Arabs due to security concerns; the massive immigration of Russian Jews in the 1980s that supplied the technical know-how to launch the high-tech boom; misplaced priorities and poor leadership within Arab society itself—before looking ahead to the future. “We will have time to come to terms about history and determine who was worse to whom,” he said, “but for now, let’s give Jewish and Arab youths the opportunity to work together, on par—not as the Arab in the role of the construction worker or hummus maker and the Jew as the company owner, but with the Arab also as the boss.”

The way to achieve this fundamental restructuring of Israeli society, Sami believes, is clear. “Economic development can offer the solution to the political problems,” he explained. “How do people bring about real change? When you empower them and when you give them an outlook for the future. Technology is that outlook.”

If there is any hope for bridging the political gaps through economic cooperation, you can find it at Galil Software, a Nazareth-based outsourcing company that provides a variety of software-development services for Israeli firms. Founded by predominantly Jewish investors in 2008, the company employs around 150 workers (90 percent of whom are non-Jews) with Arab and Druze personnel filling a range of positions from software engineers all the way up to the executive boardroom. (The company’s previous CEO, Inas Said, was also Arab.)

Sitting in Galil’s conference room sipping Turkish coffee with the staff, I met a motley crew of techies: The men were mostly dressed in jeans, sneakers and T-shirts while their female coworkers sported a stylistic mélange that ranged from traditional Muslim garb to skinny jeans and low-cut blouses. With the friendly conversation sustaining a balance of coquettish banter and office gossip (the talk of the day was the impending sale of the Israeli navigational application Waze to Google for a whopping $1 billion), it was apparent that Galil has been able to unite an ethnically, religiously, and culturally diverse group of people around the common goal of writing code. Adi Bouganim, the company’s HR manager, who is probably one of the only Jewish high-tech employees in Israel who is a minority in a workplace that has its own Muslim prayer room, told me that the close-knit work experience emits “a feeling of home” and that her time there has taught her that “language, religion, or nationality were not impediments but rather conducive” to productivity.

Like Bouganim, Shadi Omari, a quality-assurance team leader at Galil, feels at home; unlike her, however, he had a much harder time getting there. Omari, a Muslim from Acre, is in his mid-thirties and has more than 15 years experience in Israel’s competitive high-tech industry, which makes him something of a pioneer. “When I began working, it was not that easy,” he recalled. Most of his friends mocked him for studying computer science in college and warned that he would end up a teacher (a profession that many Arab college grads find themselves pursuing, reluctantly, after failing to find private sector work). Jovial and witty, Omari, who never misses a punch-line and casually incorporates IDF lingo into his speech (he uses the term “fire and forget” to describe finishing a project), was able to find employment in several prominent high-tech companies around Tel Aviv, thus gaining the experience and reputation that eventually landed him a job as team leader at Galil.

But his path to success was not without hurdles. “Our chances of finding work are not similar to those of ‘Moshe,’ ” he said. “And if I go to a job interview and don’t get the job then I can’t help but wonder why they hired Moshe and not me. Even if I am better than him, and can”—IDF lingo again—“ ‘eat him without salt.’ ” Even after finding work, there remained particularly painful moments that reminded him of his outsider status. Recalling an incident from the Second Intifada a decade ago, he prefaces his story with what sounded like a pretty genuine “oy vey.” “I was walking around smiling because I had just finished a project while everyone was walking around with mourning faces,” he remembered. As a result his boss summoned him to inquire why he appeared so happy. “When he asked me if I was happy about what just had happened I asked, ‘what just happened?’ ”: Unlike his co-workers, he hadn’t yet heard of that day’s deadly terrorist attack.

Rita Churi, a star programmer on Omari’s team, had a similar story to tell. Diffident and reserved, the young Christian Arab who graduated from the Technion, Israel’s internationally acclaimed institute of technology, explained that “we don’t have endless possibilities,” pointing to the geographic impediments to finding work. (There are still only a handful of high-tech companies operating in the Galilee, where a majority of Israeli Arabs reside.) The intimate relationship between the defense establishment and high-tech industry also dissuades employers from hiring Arabs. In college, Churi was forced to enter an unequal playing field “when suddenly the Jewish students were getting hired despite the fact that their grades weren’t as good as mine,” she said.

In her mid twenties, Churi is married without children—an anomaly among most Israeli-Arab women her age. As an Arab woman, she admitted that high-tech provided her with a dual sense of empowerment. This duality that many female techies convey was most evident when I met her coworker Lina Choscha, a young Circassian Muslim who wore full Muslim garb that covers her head. Like Churi, Choscha is in her mid twenties, graduated from the Technion, and, with some help from Tsofen’s crew, was able to get a job as a software developer at Galil. Brimming with self-confidence and a captivating smile, Choscha is a symbol of just how empowering a career in high-tech can be for Arab women: Still single, she commutes daily from her pastoral (and very religious) village on the slopes of Mount Tabor to Nazareth. High-tech, she explained, offered her not only a way to make a good living, but “prestige” and a pipeline to experience the outside world. It also allowed her to have control over her life. “You always feel empowered when you have a job, an education, your own salary, and, when you are not married, that you are, ‘for your own’,” she remarked. “I think that times have changed. Women are encouraged to work and get an education and develop. It’s not like it used to be.”

***

When I asked Omari whether economic cooperation can bridge the deep political chasms, he conceded that it was a definite possibility, though he insisted that “it takes two to tango.” But it appears there might actually be a need for more than two partners in this dance. Although the Israeli government has certainly contributed to recent successes—it subsidizes employers’ labor costs, offers grants for relocation, and provides job training (not to mention also partially funding some of Tsofen’s programs)—almost everyone I spoke to agreed that such assistance is insufficient. “Just as in the 1990s the government invested in the integration of immigrants from the former Soviet Union into the workforce, that is what needs to be done today with Arab engineers,” Smadar Nehab, Tsofen’s CEO, has argued. What is really needed, many experts opine, is a massive investment of at least a billion shekels aimed at improving poor infrastructure, public transportation, and education; constructing industrial parks near Arab communities (whose members are less mobile than their Jewish counterparts); and funding daycare and job-training centers that would allow qualified Arab college graduates to transition into high-tech. “So far there has been a lot of talk,” Saadi concluded, “but not enough action on the government’s part.”

“Let’s give Jewish and Arab youths the opportunity to work together, on par—not as the Arab in the role of the construction worker or hummus maker and the Jew as the company owner, but with the Arab also as the boss.”

In response to such claims, a government spokesperson recently announced that the integration of Arabs into high-tech is a matter of “national interest” and revealed that the government implements a policy of “affirmative action” in its hiring in order to support this goal. Last year, the Netanyahu Administration launched a media ad campaign to combat anti-Arab discrimination in the workplace.

But while government assistance is imperative for the integration of Israeli-Arabs into the high-tech sector it is the willingness of the private sector itself to incorporate them that matters most. Not coincidentally, Saadi and his colleagues constantly emphasize the need to “unleash market forces” and lobby private firms to embrace Arab applicants. Holding to a Field of Dreams type of expectation that “if you build it they will come,” many activists here believe that if you develop the skilled labor and sufficient infrastructure, the private sector will then be forced to follow, not for any altruistic reasons but out of a simple cost-benefit analysis. In order to continue developing and expand, the Israeli high-tech sector is in dire need of skilled labor, especially now that many former Russian immigrants have begun to retire. Elisha Yanay, who heads the Israel Association of Electronics and Software Industries, has accordingly admitted that “the Israeli high-tech needs Arabs as much as Arabs need the high-tech.” Saadi hopes Arabs will be able to capitalize on these growing market demands for skilled labor by enticing private companies to take advantage of the competitive wages, lower production costs, and reduced municipal taxes that Arab communities provide in comparison with the enclaves around Tel Aviv and Haifa, where the bulk of Israeli high-tech currently operates. “Ultimately, what matters for investors is money. And that is what makes people accept you: because they need the skilled labor,” Shadi Omari of Galil explained. “There is no escaping this reality.”

The third barrier to be surmounted lies within Arab society itself. Given their historical alienation from the high-tech sector, many Arabs remain skeptical about the merits of acquiring a technological education only to be unable afterward to find work. Saadi therefore devotes much of his time to “rebranding” high-tech in Arab communities—where pharmacy, medicine, and education remain the most popular options for students. Saadi recalled how every time he talks to young Arabs about his visit to Google’s headquarters “their eyes light up.” He would like to see a similar reaction in their parents who in most cases still have the last say about what they eventually study. “Arab society is full of disappointment, and people are skeptical,” Saadi said, “but they don’t really have anything to lose.”

Nivine Shehadeh, who is in charge of job placement at Tsofen, located another impediment to successful integration in the inadequate social skills of Arab youths. Tasked with preparing them for job interviews, she is time and again astounded, she said, by how little they understand of how the process works. Her trove of stories included a “brilliant” Technion graduate who blew “seven interviews in seven companies in seven days” because “he didn’t know how to market himself properly”; she also cited the experiences of another candidate who in response to the question in a mock interview of where she saw herself in a few years all too truthfully answered “in a better company,” and of a recent graduate who was too shy to ask his best friend who was working in a top high-tech firm to pass on his résumé to his boss. This last example, according to Shehadeh, may be the most ubiquitous: Lacking the social capital that Jews accumulate in high school and the Army, Arab youths don’t only lack a network of friends to help get their foot through the door, but they are also reluctant to exploit the connections that they do have. “I keep telling them that a friend brings a friend,” Shehadeh explained, but she admitted that message had yet to seep through for many of the people she had worked with.

***

Many of the obvious challenges to the integration of Arabs into Israel’s high-tech sector can be eventually overcome; investors can be found, roads and factories can be built, self-confidence can be gained, and social capital can be acquired. But the one thing that cannot be easily amended is the historically charged cultural divide between Jews and Arabs rooted in decades of mistrust and animosity. Driving into Nazareth through its more recently built Jewish twin, Nazareth Illit, which overlooks it from atop, I couldn’t help but recall the conclusions of the 1968 Kerner report investigating the black urban riots that warned Americans they were fragmenting into two societies, “separate and unequal.” One doesn’t need to look at the dire statistics to realize that such a reality already exists in many parts of Israel; the moment municipal lines are crossed between these adjoining cities the endemic inequality dividing Jews and Arabs here becomes all too visible: The quality of the roads quickly deteriorates, the greenery that surrounds them disappears, and the attention to public maintenance, urban aesthetics, and overall organization and order drastically diminishes. (Nazareth’s unemployment rate is more than 50 percent higher than its Jewish neighbor’s.)

Given the persistent socioeconomic disparities that divide Arabs and Jews in today’s prosperous Israel, it is not surprising to learn that half of all Israeli-Arabs reportedly live below the poverty line. As a result, the key finding of the recent Index of Arab-Jewish Relations (an annual survey conducted by Prof. Sammy Smooha and the Israel Democracy Institute) released last month, was that in the past decade Israeli-Arabs have become more extreme in their attitudes toward the state and its Jewish majority. Even Saadi, a profound optimist, recognizes the dangers lurking beneath the surface. “I can’t look around and concede that we are living in an equal society,” he told me. “One of these days the bubble will burst.”

While the promise of a career in high-tech may not necessarily prevent that from happening, it might nevertheless provide at least some Israeli-Arabs with a sense of purpose and accomplishment that would help to gradually ameliorate some of their frustrations. For all the historical baggage that Saadi, Omari, Churi, Choscha, Shehadeh, and others with whom I spoke and met inevitably carried, they shared a cautious optimism. And it is that renewed sense of hope afforded them by a rewarding career (and the financial security and dignity that it provides) that suggests that the possibility for healing decades of Arab-Jewish enmity may very well be reliant upon the next generation of Israeli-Arabs picking up a smart phone rather than a rock.

As I was leaving the Nazareth Industrial Park, I ran into a bunch of Amdocs workers on their way to a cigarette break out on the stunning balcony and got a final taste of that technological adhesive that might very well help save Israeli society from coming apart. Dressed in jeans and T-shirts, they were all with smart-phones in hand. Some, I was later told, were Arabs and others were Jews. But it really didn’t matter, and you couldn’t tell the difference anyway. They weren’t talking politics; they were talking code.

***

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The Nazareth Code: Can Israel’s Booming Tech Sector Heal the Wounds of Israeli Arabs?

An ambitious new high-tech industrial park doubles as an initiative to bring more Arabs into the Israeli economy