Yesterday, Israel announced it is suspending working diplomatic relations with the nations that supported the controversial UN Security Council Resolution 2334, condemning Israeli settlements on land claimed by Palestine. The nations include Britain, France, Russia, China, Japan, Ukraine, Angola, Egypt, Uruguay, Spain, Senegal, Malaysia, Venezuela and New Zealand. The US abstained from voting on the resolution which was carried 14:0.
New Zealand co-sponsored the controversial resolution just prior to Christmas. It effectively says that Israel should immediately and completely cease all settlement activities on "Palestinian territory" - including in East Jerusalem - which Israel captured during the 1967 war.
Foreign Affairs Minister Murray McCully had earlier warned against Israeli expansion of settlements on the West Bank saying they stood on the way of a two State solution. The UN considers the settlements illegal. But with over 500,000 Israelis settled in East Jerusalem and the West Bank since 1967, withdrawal is not a simple matter.
It would be cynical to state that the New Zealand decision to co-sponsor this resolution was based purely on a strategic assessment that our trading interests are better served through being onside with the powerful Middle Eastern Gulf States.
New Zealand clearly has big fish to fry in the Middle East.
But the free trade agreement with the Gulf Cooperation Council is still pending months after the Saudi sheep fiasco was supposedly put to bed.
But as the Ministry of Foreign Affairs and Trade (MFAT) notes the Gulf Cooperation Council (GCC) countries are a "natural fit when it comes to trade". MFAT points out they are rich in oil and gas, but lack farmland for food production and have high demand for imported food and drinks. New Zealand's trusted dairy and meat exports meet some of that demand. GCC countries are also motivated to reduce their trade reliance on oil and diversify their economies into high-tech and service sectors. There is strong potential for New Zealand's Government, service sector businesses and education providers to work with GCC countries towards this goal.
The maths underlines the strategic intent.
The GCC is New Zealand's eighth largest trading partner with the United Arab Emirates and Saudi Arabia being the key markets. For the year ending September 2015, New Zealand goods and services exports to the GCC totalled $2 billion and total bilateral trade between the GCC and New Zealand totalled $4.1 billion.
But while NZ's bilateral trade with Israel is currently short of $150 million - the ability to prosper from close links with the Middle Eastern nation in the high technology area could provide a valuable impetus to put Kiwi entrepreneurship on a more professional footing and help build national wealth.
This was the underlying rationale for the 60-strong group of New Zealand business leaders, entrepreneurs, and commentators to go to Israel earlier this year to study its outstanding record of innovation successes in the "StartUp Nation."
The Reactor Fund is the key initiative to emerge from the visit.
But in November the Israeli ambassador to New Zealand Itzhak Gerberg revealed to a followup summit in Auckland that
New Zealand and Israel were close to signing an innovation agreement that would lead to joint research and development.
This initiative grew from strong business diplomacy by the Prime Minister's chief scientist Sir Peter Gluckman.
Gerberg said in November that while the agreement had not yet been signed it was in the hands of lawyers.
Earlier this year, NZ also forged a film co-production agreement with Israel.
The Reactor Fund - looks set to be based on a a classic venture capital limited partner/general partner model.
Moutter says it will have a mandate to invest in technology companies looking to go global and in the expansion phase where they will likely have $1m-5m in annualised revenues and need $5m-20m in expansion capital to accelerate their commercialisation and growth.
Moutter expects the fund to invest over a five-year term and harvest over the subsequent five years thus providing a valuable capital boost for early-stage Kiwi companies.
The planned Reactor Fund will help:
• Address the funding gap in the NZ innovation eco-system, particularly for expansion stage businesses who require expansion capital to support commercialisation, scaling and market entry;
• Enable participating NZ corporates to invest in non-core, but rapidly growing technology sectors, in a collaborative cross sector partnership;
• Share risk by diversifying across a large and well supported pool of investment opportunities, managed by a world class VC fund management team;
• Create a place to outsource innovation to and unlock 'warehoused corporate IP' by releasing these into the start-up eco-system;
• Create the vehicle to include other funds (financial, MNC's, foreign VCs, etc) through a proposed classic GP/LP structure or through syndication.
• Fran O'Sullivan was a participant in the Israel Innovation Mission. Her trip was partially funded through an award setup in honour of the late Michael Nathan, former CEO of the Israel New Zealand Trade Association.
