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Eli Greenbaum, Partner, Yigal Arnon & Co.: Israel’s Cybersecurity Frontier

May 2016 by Marc Jacob

Beer Sheva is a city used to protecting the frontier. During Roman times, it was a dusty outpost forming part of the Limes Arabicus, a series of desert fortresses defending the empire from raiding tribes. Earlier, the Bible repeatedly cited Beer Sheva as the southern civilized limit of the Israelite kingdoms. Even today, tourists in Beer Sheva can visit the remains of the fortress guarding the borders of biblical Israel. But today the frontier is the Internet and Beer Sheva offers protection of the electronic sort – Beer Sheva is quickly becoming a global center of cybersecurity technology.

Israel exports more cybersecurity related products and services than all other countries in the world combined, excluding the United States. Reports from 2015 have tiny Israel making 10% of all global sales in cybersecurity products and attracting a whopping 20% of global investment in the sector. Much of that investment is centered in the desert city of Beer Sheva, where Israel has constructed a hub for cybersecurity research and development. Those investments are bolstered by Beer Sheva’s physical proximity to Israel’s military technological intelligence units and the burgeoning Ben Gurion University, one of Israel’s great research institutions.

Israel early on identified cybersecurity as an area of national importance. The small country’s technological skill and uninterrupted concerns of security made cybersecurity a natural arena for national investment. In 2010, Israel adopted its National Cyber Initiative, which established a National Cyber Bureau for the purposes of advising the government on cybersecurity matters, encouraging cooperation between academia, industry and the defense community, and advancing Israel as a global center of cyber technology. Since then the Bureau has, in cooperation with other government agencies, allocated almost $100 million in fostering entrepreneurship and academic excellence in the field. The Israeli Office of the Chief Scientist, another government agency, has adopted a preferential policy for funding private initiatives in cybersecurity research and development. In addition to the Beer Sheva center, the Bureau has also assisted in establishing a second academic cybersecurity center at Tel-Aviv University. This latter center has a broad interdisciplinary focus, which includes political science and legal issues.

Pundits typically ascribe Israel’s cyber prowess to its human capital – a cadre of technologists trained by a military that needs to retain its cyber primacy. For example, the Israeli cloud security Adallom which was acquired by Microsoft in 2015 was founded by alumni of military cyber units. This trend goes back to 1993, when a veteran of the same unit established Checkpoint, one of the first commercial purveyors of network security software. But this perspective, with its focus on highly trained individuals, perhaps gives short shrift to the value that broader institutional structures provide to the Israeli cybersecurity ecosystem. Economists have studied the place of government institutions in encouraging cybersecurity investment, asking why state support should be necessary in bolstering cyber ventures. Security is a market good, and vulnerable entities will cough up good money to obtain security goods and services. If so, why should any government intervention – and Israel’s government has certainly intervened – be necessary in bolstering cybersecurity investment? One answer is that good cybersecurity defense requires a wealth of information – information about emerging threats, information about existing vulnerabilities, and information about developing technologies. Private entities may not have the incentive or capability to share this information among themselves, and government may have a place in providing sensitive information or encouraging information sharing. This perspective can explain recent debates in the United States concerning the sharing of cybersecurity information, debates that culminated in the passing of the legislation that allowed companies to share threat information between themselves and with the government. The United Kingdom has also created frameworks for the public-private sharing of cybersecurity information, such as the Cybersecurity Information Sharing Partnership established in 2013.

Israel may not (yet) have express legislation that allows for private entities to share cyber data, but it does have government or public institutions that facilitate informal access to such information. Most obviously, the Israeli military provides a hub where individuals share high level threat and vulnerability information under the umbrella of the state. In a country that has compulsory military service, and where discharged soldiers regularly come back to their units to train and serve in the reserves, it becomes possible to see how the military could function as an informal watering-hole for the exchange of cybersecurity information. The establishment of the Beer Sheva and Tel-Aviv centers, and the creation of the National Cyber Bureau, add more points of contact where such information can be informally exchanged between individuals active in the industry. In other words, Israel has constructed a set of institutions that allow for the informal flow of high level cybersecurity information. Though such informal sharing cannot provide a basis for real-time response to cyber attacks, it does perhaps provide a fertile bed for the development of long-term strategy and the growth of commercial ventures.

Long after its Roman garrisons had disappeared into the desert dust, Beer Sheva played a pivotal role in British military history. Towards the end of World War I, General Edmund Allenby and a company of parched lighthorsemen overpowered the Turkish battlements defending the city. Once again, Beer Sheva showed its critical role in defending the Holy Land – after the battle, Jerusalem and the rest of the country swiftly fell into British hands. Today, the cyberhub of Beer Sheva is reprising its central role in military and civilian defense, but the battlefield plays out in digital bits instead of the arid desert, and the weapons are innovation and information sharing instead of trenches and bayonets. And perhaps, Israel is hoping, these digital swords can be beaten into the instruments of commercial success.

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