An expert lesson in what not do to with US$185 million

The average voter around the world is often caught up with the seemingly large government budgets of a million dollars or euros for a local community project. Will there be enough? And yet, globally, the real big sums are often found in international cooperation schemes.

One of the largest “gravy chains” is the budget of the European Union, which spends billions every year simply trying to encourage the pooling of knowledge in technology, industry and education to name just a few areas of interest. For example, Horizon 2020, which commences in 2013 and is geared to ramping up r&d, is valued at €80 billion ($105 billion).

Horizon will replace the EU’s Seventh Research Framework Programme. This has specifically sought to bring in and exploit the brain power of non EU members such as Israel.

According to Marcel Shaton, general manager of ISERD – the Israel-Europe R&D Directorate, since 2007 some 1,530 Israeli scientists and companies have been given the option to participate in projects valued at €2 billion ($2.6 billion), and the research grants given to Israeli recipients amounted to €570 million ($743 million).

Cool, no? Now to join Horizon 2020 and reap new wealth – fund research, create jobs, and develop exports – the Israeli government has to commit around the equivalent of US$185. To put it crudely: invest 185 million and create billions down stream.

However, according to reports, it seems that Israel, a country that loves to be called the ‘start up nation’, is having a problem taking on this decision, which many would see as a no-brainer. I suppose that Israeli politicians and civil servants are too caught up with the pressing issues of a general election campaign to make the leap.

Unfortunately, this is not the first time in recent months that financial planners in Jerusalem have frozen the hopes of small businesses. Just recently, the funding for mentoring SMEs was simply withdrawn overnight. Advisors were faced with no choice but to abandon their clients. It was stunning and demeaning, but none of that could be felt or understood in the long corridors of the unknown officials.

To show the importance of the abandoned scheme, one mentor wrote to me saying how he had received the following quote from a recent client. “I have to thank you a lot for your help. I have now my 2’nd container from China…..” Real revenues, less people depending on government support, custom duties and taxes for the Finance Ministry, employment. Not bad for sponsoring a mentor a few hundred dollars…………………which are no longer available.

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