Concerns over potential judiciary upheaval and corruption make Israel-based firms less attractive to Utah tech investors.

Utah businesses face a complicated environment for tech partnerships with Israel

Concerns over potential judiciary upheaval and corruption make Israel-based firms less attractive to Utah tech investors.

In September last year, Utah Gov. Spencer Cox led a delegation of 66 people to Jerusalem, where the group focused on bilateral trade opportunities with Israeli companies. The trip also allowed Cox to have several high-profile meetings with Israeli officials like President Isaac Herzog.

“Israel became a very clear and natural choice because we share so much in common,” Cox said during the trip. “I just felt that this is where we needed to be.”

Cox made headlines for saying military support to Israel should remain atop US policy priority, but the trip deeply focused on trade and technology collaboration. Tech- and infrastructure-focused Utah officials met with members of the Israeli government and private sector to look for solutions to long-term problems like the diminishing Salt Lake.

“Utah’s Unified Economic Opportunity Commission met in four separate meetings with the Israeli Innovation Authority, Ministry of Transport, Israeli Water Authority and Israel Planning Administration,” wrote Natalie Gochnour, director of the Kem C. Gardner Policy Institute and associate dean at the University of Utah’s David Eccles School of Business, in a column for the Salt Lake Tribune.

The meeting wasn’t the first time a Utah politician has traveled to take a tour of Israeli culture and politics. In 2009, then-Governor Jon Huntsman went on a similar trip where he focused on irrigation and energy sector connections.

More broadly, the business relationship between Israel and the US has flourished for decades as the governments and companies from both countries embraced common goals and efforts. But as the international community has begun to connect human rights abuses by the Israeli government to the technology sector and a larger system of discrimination in recent years, this relationship has been strained and has begun to change.

One of those long-term relationships is the BIRD Foundation, a bilateral program set up by the Israeli and US governments in the 1970s to fund collaborative tech projects with companies from both countries.

Utah companies have won more than $1.1 million in grants through the BIRD Foundation, according to the Jewish Virtual Library. Last year, the BIRD Foundation held an event aiming to promote these opportunities for tech companies in Utah, where a fast-growing tech scene and international community make for appealing partnerships.

The connection has some history. In 2015, according to the Jewish Virtual Library, Utah companies were paid $1.8 million to develop materials for the Israeli military through the US’s Foreign Military Funding program.

“Israel is certainly a place where potential business and trade partners can be found,” the JVL wrote. “It can also be a source, however, for innovative programs and ideas for addressing problems facing the citizens of Utah.”

And the BIRD Foundation, while it originally had a mission of avoiding “security” technology, adapted its role after 9/11, allowing for homeland security projects.

The BIRD Foundation stands for “Binational Industrial Research and Development” and was created as a joint project by the U.S. and Israeli governments to help fund private-sector technology by incentivizing Israeli and U.S. companies to develop projects together. They provide up to 50 percent of a project’s development costs, maxing out at $1 million. They focus largely on science and technology efforts, which means a large number of the funding goes toward defense projects.

"As the international community has begun to connect human rights abuses by the Israeli government to the technology sector and a larger system of discrimination in recent years, this relationship has been strained and has begun to change."

According to its website, BIRD finances about 20 projects each year. BIRD HLS, which focuses on homeland security projects, was established in 2004 through a bill passed unanimously by the U.S. Congress. It was estimated by the Congressional Budget Office to cost $47 million to the U.S. government over five years.

BIRD has given out about $300 million in grants to nearly 1000 projects since its inception. These include projects for companies like Texas Instruments, Kodak, John Deere, Pepsi Co, Dell and many more household names.

Some of Utah’s companies have taken advantage of BIRD HLS to develop security-focused AI programs. Orem’s LiveView Technologies, for example, won a grant to develop an AI video security program with Israeli tech firms in 2020.

But the timing highlights a key problem for collaborations between the U.S. and Israeli firms.

This past year, Israeli firms and the broader public have protested what they refer to as the erosion of democracy. After far-right Israeli politicians won control of the government, they began to propose harsh measures against Palestinian populations across the region while also proposing to overhaul the court system and secure power for their leadership.

Much of this controversy has surrounded the re-election of Prime Minister Benjamin Netanyahu, who has faced trial for numerous corruption charges. He led a group of ultranationalist, right-wing Israelis to win the government late last year. Several key positions went to settler leaders like Bezalel Smotrich, who lives inside Palestinian territory and has made violent public statements denying the existence of and calling for the violent extermination of Palestinians.

Meanwhile, throughout the beginning of 2023, the Israeli military has massively increased raids and violent missions targeting Palestinians across the West Bank in response to a growing wave of armed resistance by Palestinians. At one point, a group of settlers joined soldiers to carry out what was labeled a “pogrom” by Jewish Israeli leftists attacking the Palestinian community of Huwara. As of mid-March, at least 80 Palestinians had been killed during military operations and 14 Israelis by Palestinian attacks.

The Israeli public has responded to these events with a large wave of protests largely against what they see as a power grab by right-wing groups. But the events also have a connection to long-term human rights issues in the region.

International human rights groups like Amnesty International, Human Rights Watch and the United Nations have written long-form, paradox-shifting reports that label the Israeli state’s occupation of Palestine “apartheid.”

Palestinian civil society organizations, for their part, have documented extensive abuses for decades, culminating in a joint report by several non-governmental organizations (NGOs) in 2022. The report argues that the legal framework of apartheid and population transfer is central to the Israeli government’s mission. Israeli human rights groups like B’Tselem have echoed this finding to argue that the reality on the ground is apartheid.

“Israel imposes a system of oppression and domination against Palestinians across all areas under its control: in Israel and the OPT (Occupied Palestinian Territories), and against Palestinian refugees, in order to benefit Jewish Israelis,” Amnesty International wrote of their report in 2022. “This amounts to apartheid as prohibited in international law.”

As Palestinian writer Amjad Iraqi noted, the Israeli left isn’t necessarily protesting this when taking to the streets in recent months. But ironically, many in Israel have responded to the ultranationalist government by proposing they move their money and companies abroad to avoid association—a form of boycott, he points out.

“It took only two months for Israelis to shatter one of their biggest political taboos in the fight against the far-right government,” Iraqi wrote in a piece called, “Israelis, welcome to BDS,” which stands for “Boycott, Divestment, and Sanctions.”

As he points out, Israeli tech companies and VC firms have threatened to leave the region, Knesset members are abstaining from voting, army reservists are refusing service and left-wing Israelis are encouraging the international community to cancel their meetings with Israeli government officials.

“None of these groups will admit it, but this is, by all accounts, one of the most impressive BDS campaigns ever witnessed,” Iraqi wrote.

Utah, meanwhile, has shown deep deference toward the Israeli government in recent years. In 2021, the state adopted a law banning boycotts of Israel. In May of that year, among an uprising of Palestinian-led protests across the region, Cox—along with Utah Senate President J. Stuart Adams and House Speaker Brad Wilson—issued a statement saying they “stand firmly” behind Israel.

This set of laws supporting Israel in the U.S. could create an unexpected outcome, however, according to Jewish Currents journalist Alex Kane. Pointing out that the liberal Israeli companies that have moved their money to overseas banks are citing the “future of Israeli democracy” as opposed to human rights violations against Palestinians, but they still could run afoul of anti-BDS laws.

“Lawyers and advocates for Palestinian rights, however, say that anti-BDS laws don’t actually differentiate between types of boycotts and divestment and that companies divesting from Israel over the judicial overhaul could still be affected by the laws,” Kane wrote.

The result is a complicated environment for Utah companies looking for international opportunities and tech partnerships while also avoiding programs that may be associated with human rights abuses. At the end of the day, it can be more about appearances than anything else, according to Kane.

“Most tech executives and investors have said that they would take these steps for business reasons—in other words, because of concerns that a hamstrung judiciary, and the corruption that might ensue, would make Israel-based firms unattractive to foreign investors,” Kane wrote.

Jack Dodson is a reporter and documentary filmmaker most recently based in Palestine-Israel from 2018-2022. He has reported for Vice, BBC, The Intercept, Middle East Eye, among many others. He has a master’s in investigative journalism and documentary from Columbia Journalism School and a bachelor’s degree from Elon University in rhetoric.