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ALEX BRUMMER: Kemi's tricky Israel trade deal

Focus on technology: Business Secretary Kemi Badenoch keen to secure trade and services deal with Israel

Kemi Badenoch is a brave soul pursuing a far-reaching trade and services deal with Israel amid the country’s current political turmoil.

The swing to the far right in Jerusalem has sparked a wave of brutal tit-for-tat violence in the West Bank.

Equally significantly, Prime Minister Benjamin Netanyahu’s efforts to seize political control of Israel’s independent judiciary have sparked a backlash both in Israel, with tech companies doing well, and in the diaspora.

Focus on technology: Business Secretary Kemi Badenoch keen to secure trade and services deal with Israel

Focus on technology: Business Secretary Kemi Badenoch keen to pursue trade and services deal with Israel

When I was in Israel less than a year ago, a senior British diplomat told me that there had been a change in direction in British-Israeli relations.

British diplomacy in Israel had focused on settlements and the two-state solution. The pendulum swung towards commercial relations, the financing of technology and telecom start-ups and gambling platforms.

If Business and Commerce Secretary Badenoch is successful, there could be a new type of trade deal that would include digital, health, innovation and financial services.

It is difficult to say whether such an agreement is politically possible. Writing in The New York Times, former New York Mayor Michael Bloomberg, founder of the eponymous financial trading service, warned that after two decades of supporting Israel and its people, including building medical facilities, he feared it would “court disaster”.

Bloomberg is outraged by Knesset (Parliament) votes that could undermine democracy by flouting Supreme Court rulings on press freedom, support for minorities and the right to vote.

He says economic damage is already being done with the shekel, Israel’s robust currency, under fire. And he notes that some finance and tech groups are pulling back on new funding, adding, “I don’t blame them.”

The current legal stalemate prompted a resignation from the fiercely independent Bank of Israel, which over the decades has attracted a wealthy vein of governors directly from the IMF and World Bank, including Stanley Fischer, Jacob A Frenkel and Michael Bruno. .

Trade between Israel and Britain is considerable, at around £5 billion a year, and British businesses are very present. Engineers responsible for the Elizabeth Line in London advise on Tel Aviv’s rapid transit system. And Badenoch believes there are other key infrastructure contracts to execute.

Britain thinks it can help deregulate telecommunications and other industries.

And Israel has the technology for the digital revolution in the NHS. None of this will happen anytime soon if the latest Netanyahu government succeeds in undermining judicial and press freedoms.

metal fatigue

As if the City weren’t in enough trouble, with the exodus of listed companies to greener pastures overseas, the London Metal Exchange (LME) is in deep water.

The events that saw the price of nickel soar to $100,000 a ton after Russia invaded Ukraine have left their scars.

The involvement of Chinese investors in a scandal at the LME, owned by the Hong Kong Stock Exchange, raised questions at the time.

The LME crisis, whose legacy dates back to 1877, is seen at the Bank of England as one of the biggest tests of City regulation since the 2008 financial crisis.

The LME has a mixed history, including efforts to fix the copper market in the 1990s. But it is the first UK exchange to be fully investigated by the Financial Conduct Authority.

The nickel contract has taken on global significance due to the metal’s use in electric vehicle powertrains. Wild market swings are a huge problem for global users, including auto giants.

The chaos around the LME contract is letting competitors into the space, with London-based Global Commodities Holdings developing a physical contract.

This could be converted into an index to be traded on the Chicago Mercantile Exchange (CME).

Another own goal for the Square Mile.

Double espresso

Coffeehouses were all the rage in the 17th century and the London Stock Exchange and Lloyd’s of London trace their origins to dealings in the narrow lanes of the City.

They’re ubiquitous in the digital age, with cafes from Krakow, Poland to Austin, Texas crammed with techies.

So it’s no surprise that Starbucks, instead of selling off its UK outlets, needs to double down with a £30m investment in 100 digital stores. Finally, someone trusts British technology.

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