Israel Makes Its Mark in Cyberspace

JERUSALEM — Cyberspace is proving to be the great equalizer for Israel, enabling the Jewish state to overcome the earthly vexations of distance and politics and carve itself a niche as an Internet superpower.

Network security? An industry leader is Israel’s Check Point. Internet telephony? One of the first was VocalTech, operating out of the Tel Aviv area. Video transmissions and multimedia on the World Wide Web? Look up VDONet, Geo, and other Israeli firms.

“There are more start-ups in Israel in Internet technology than anywhere but Silicon Valley,” said Ed Zander, president of Sun Microsystems’ computer unit.

Sun is among a slew of U.S. giants getting in on the act; its Israeli subsidiary is developing software to enable old PCs to live anew as smart Internet terminals. Microsoft, IBM, Intel and others operate research facilities here also.

Israel’s high-tech success is a godsend at a time of declining fortunes overall for the Jewish state: A five-year economic boom is grinding to a halt and the government’s tough policies have resurrected Arab-Israeli animosities. High-tech is the reason exports and foreign investment are continuing to grow--although at a more modest pace than in recent years.

David Rubin, Israel’s leading economic representative in North America, said high-tech exports are approaching $5 billion annually, a quarter of Israel’s overall world sales.

*

Opinions differ on why, exactly, the nation of 5.8 million has been so successful with the Internet.

Many note that the recent influx of Soviet immigrants--almost 800,000 have come since 1990--included many who were highly trained. Israel now leads the world with 135 engineers per every 10,000 citizens. That’s double the U.S. figure and five times Britain’s.

One result is the Internet Telecom firm, a firm set up by Russian immigrants which like VocalTech specializes in Internet voice transmission--a technology that could one day pose a cheap alternative to international phone calls.

Others point to what appears to be a national effort--ranging from world-class engineering schools like Haifa’s Technion to the high level of investment in research and development, currently at 2.5% of gross domestic product.

Through the years, this effort was largely harnessed toward developing an advanced military industry; but today, this sword is increasingly being beaten into software.

This is most obvious in the software applications that require encryption and compression of huge amounts of information--for example, digitized video and sound to be sent on the Internet--into tiny packets of data.

“The Israeli military’s encryption systems are second to none in the world,” said John Carabello, who organized a recent Internet World Fair in Jerusalem. The military-trained engineers “get products out in six months that would take IBM two years.

“They’re crucial to the evolution of the Internet.”

“We recruit engineers from a certain military unit,” confirmed Ziv Eliraz, the business development manager for Geo, whose Emblaze software enables real-time video transmission on the Internet.

Geo, whose October public offering in London netted $160 million, doubled its sales to $1.4 million last year and is looking to earn substantially more in 1997.

Rubin said he believed the reason for Israel’s Internet prowess was psychological--a deep-seated drive to find a “virtual” niche that neutralizes the isolation Israelis have suffered in the real world.

“We are stuck here in the Middle East, but the Internet has made distances irrelevant and removed borders.” Rubin said. “When you buy or sell software, no one cares if you’re sitting in New York, Cairo or Tel Aviv.”