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Striving for peace and profit

Jews and Arabs work together at an Israeli incubator, focusing on products, not politics.

March 03, 2007|Ken Ellingwood | Times Staff Writer

NAZARETH, ISRAEL — Busy in a tiny laboratory, Kamal Khawaled thinks he has figured out how to fight tooth decay: with a chemical gel and a small dose of electricity. He hopes to adapt the treatment to make teeth whiter.

That may be a breakthrough, but Khawaled is part of what may be an even bolder experiment unfolding here in Nazareth's industrial zone. Officials and activists are trying to recruit Arabs like him into the biotechnology and high-tech industries, in which they have been sorely underrepresented. Their goal is to better integrate Israel's Arab minority into the nation's economy and improve its relations with Jews.

The center of the 5-year-old effort, which relies on government loans and private investors to nurture fledgling technology enterprises, is a business incubator in this predominantly Arab city. Amid the clatter of nearby car repair and tire shops, Arab and Jewish entrepreneurs are working side by side, hoping to turn futuristic notions into successful businesses and, perhaps, make a little peace in the process.

The incubator, called New Generation Technologies, or NGT, is a proving ground for a dozen start-ups with such names as Callarity and CapsuTech.

One young company is working on a cancer treatment, another on equipment for taking photographs inside the body. There are efforts to come up with a better baby formula, create livestock feed supplements and develop technology to better track online calls, such as those made via Skype and Jajah. Most of the companies are headed by Arabs or managed jointly with Jewish partners. Three are run solely by Jews.

"Arab and Jewish [people] can live together -- they can. They have to do it in several ways: to talk together, to work together, to eat together," said Khawaled, 41, whose nascent company, called Fluorinex, has a Jewish CEO. "If people think they can do it in high tech, we can do it anywhere."

By nudging more Arab citizens into Israel's soaring technology fields, the project's organizers hope to tackle long- standing inequalities that have left the country's 1.4 million Arabs lagging behind Jews in wages, employment, health and education. In this effort, they say, tech-savvy young Arabs could prove pivotal.

"Integrating them could help build trust between the two peoples," said Helmi Kittani, an Arab co-director of the nonprofit Center for Jewish-Arab Economic Development. The group, whose other director is Jewish, spearheaded the effort to persuade the Israeli government to set up a technology incubator that would focus on Arabs.

It is too early to tell whether the businesses cultivated in the NGT incubator will take root. Most of the entrepreneurs are still testing their ideas and raising capital to turn visions into marketable products. Only one firm, the maker of a diabetes treatment, has gone to market.

But NGT executives boast that none of the enterprises has dropped out -- a survival rate that tops the average for the 22 other government-sponsored technology incubators throughout Israel.

More important, they say, it has drawn an enthusiastic response from Arab engineers and investors, who in the past gravitated to more traditional pursuits, such as construction and real estate.

Technology remains unplowed terrain for most Arabs, who make up a fifth of Israel's population but hold only 2% of its high-tech jobs, Kittani said. Arabs cite a variety of factors, including discrimination, for their underrepresentation in the world of technology.

For one thing, many of Israel's tech enterprises are outgrowths of the nation's defense industry, from which Arabs say they are often in effect barred because of security concerns. Also, Arabs are exempt from the military and most don't serve in the army, although service is compulsory for Jews. As a result, Arabs say they miss the chance to form social ties that can lead to jobs or business opportunities later.

However, Arab entrepreneurs and investors say their own community's traditions are partly to blame for the relative absence of Arabs in technology and venture capital. Part of the goal of the Nazareth project is to alter the custom that often steers the most promising Arab students into family businesses or academic programs in more conventional fields, such as law, medicine and architecture.

"Twenty years ago, to be a doctor or architect was the dream of every mother, Jewish or Arab," Kittani said. Jews changed that equation by seizing opportunities in technology, he said, but Arabs were slower to catch on.

"Arabs have not made an effort," said Omar Massarwa, the owner of a seed company. Massarwa was among six Arab businessmen who plunked down $250,000 for founding stakes in NGT in 2002. "They haven't made a good effort to enter these companies."

The incubator, which operates on a yearly budget of $360,000, has channeled about $7 million of government loans into the young businesses.

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