Is Israel-California partnership paying dividends?

California Gov. Jerry Brown had some choice words for Glenn Yago.

The Milken Institute, the Santa Monica-based think tank that employs Yago, has provided a good deal of citizen muscle behind a March 2014 agreement Brown signed with Israeli Prime Minister Benjamin Netanyahu that pledges to deepen ties between the two states.

Though he’s neither a politician nor a diplomat, Yago, a financial economist, is a crucial figure in implementing that memorandum of understanding (MOU).

When the two encountered each other at a posh conference at the Beverly Hilton in May 2015, Brown wanted Yago to understand something about the California-Israel MOU: “This is not just a press release,” Yago recalls the governor telling him.

Not all MOUs are created equal

The memorandum Israel signs intermittently with the U.S. government, for instance, including one currently in the final stages, determines the amount of military aid Israel will get. The document Brown signed in Mountain View (near San Jose) is not that concrete. In fact, it has more in common with a press release than, say, a trade agreement.

The MOU lays out bold blueprints for collaboration but brackets them in qualifiers such as “plan” and “intend.” In the final paragraph, almost as a postscript, it notes that it “does not create any legally binding rights or obligations for either Participant.”

In interviews with the Journal, leaders involved in the memo’s implementation noted a political paradox it creates: It is at once a diplomatic watershed and a more or less pie-in-the-sky 493 words of text.

In the words of Gili Ovadia, the head of the Israel Economic Mission to the West Coast, the treaty is “political paper.”

“The memorandum of understanding isn’t worth a lot,” Ovadia said.

But the “amazing atmosphere” it creates has to be worth something, he said.

Ovadia spoke with the Journal from his San Francisco office the day after he returned from a trip to Southern California for two back-to-back symposia on water innovation in Marina del Rey and San Diego.

Appraising the memo, he said, “It doesn’t really have money. It doesn’t have people. It doesn’t have mechanisms. It was just a piece of paper signed by two really important men — maybe the most important people for [California and Israel]. I think it generates a lot of interest, a lot of attention, a lot of press.”

He attributed the water conference, for instance, in part to momentum from the MOU.

By itself, though, it doesn’t do much of anything.

“That’s always the challenge with MOUs,” said Yaki Lopez, consul for political affairs at the Israeli consulate in Los Angeles. “To make sure they’re action-oriented, to make sure it’s not just ink on paper.”

Lopez called the MOU “the crown jewel” of all the accomplishments of West Coast Consul General of Israel David Siegel, who completed his post here at the end of July, after five years of service in Los Angeles and the Southwest.

Asked to pinpoint its impact over the more than two years it has been on the books, Lopez, like Ovadia, mentioned the optics: “It created a whole exciting and vibrant atmosphere for the two states to work together.”

If anybody should be able to point to tangible outcomes, it’s Yago, an informal evangelist for collaboration between California and Israel who divides his time between the two.

As the head of the Milken Institute’s Financial Innovation Lab, his job is more or less to figure out how to stimulate technology transfer, in particular these days from Israel to California.

“There are some very concrete, tangible results going on right now,” he said. “People are working on specific projects. Everything from perchlorate remediation of groundwater contamination in the San Fernando Valley to putting in rain catchment for toilets in schools in San Diego and in L.A.”

The proliferation of projects being undertaken under the Milken Institute’s umbrella can’t be claimed as direct outcomes of the MOU, although each received a boost when Netanyahu and Brown shook hands like exuberant new business partners.

“You need air cover to start working on these things,” Yago said.

A ‘cascading effect’

In most discussions of California-Israel collaboration, water is first and foremost.

While California and Israel share a parched climate, Israel, unlike the Golden State, is a water exporter. Policymakers here point to this difference as evidence that Sacramento could learn a thing or two from the Israeli model.

But the state of California has a weak regulatory grip on water use, and an alphabet soup of local agencies are most directly responsible for keeping the taps running.

So it’s not the statewide agreement but rather a series of local and municipal pacts in Southern California that it inspired which have generated Israel buzz over the past two years.

L.A. City Councilmember Bob Blumenfield was the intellectual grandfather of the MOU. A bill he wrote but that didn’t pass while he was serving in the state assembly eventually formed the template for a letter of intent then-Gov. Arnold Schwarzenegger signed outlining the need for an MOU, and ultimately for the MOU itself, he said.

He’s also among the first local officials to apply the MOU as a mandate for collaboration at the municipal level.

“At lunch right after the signing ceremony, I said to myself and the folks who were around me, ‘I want L.A. to be the first city to implement this thing,’” he said in an interview. “And so the Israel-Los Angeles task force was born.”

In October 2014, the task force met for the first time, building on L.A.’s sister-city relationship with Eilat, a council of Israeli industry leaders and city officials aimed at harnessing Israeli innovation to the city’s struggles.

The brokering of diplomatic relationships between local governments and the Israelis has boomed since Brown and Netanyahu consecrated the practice — a phenomenon Lopez described as a “cascading effect.”

On Sept. 1, 2015, the Los Angeles County Board of Supervisors and the Beverly Hills City Council voted on the same evening to partner with Israel on a number of issues, beginning with water conservation.

For climatic reasons, water is normally the first item on the agenda, but it’s not the only one. The Brown-Netanyahu pact highlighted water, alternative energy, health and biotechnology, cybersecurity, arts and culture, education and agricultural technology.

The day after Ovadia attended the water conference in Marina del Rey, a summit brought Israeli and Californian cybersecurity leaders together at the Wallis Annenberg Center for the Performing Arts in Beverly Hills.

Addressing the audience from the stage in the main theater, Beverly Hills Mayor John Mirisch said the prosperous city hopes to leverage Israeli network protection as it integrates driverless cars into its public transportation grids.

“That’s what our relationship is about — is finding solutions,” he said.

The latest step forward in Israel’s trickle-down diplomacy in California was a unanimous vote by 37 local elected officials who make up the regional council of the Southern California Association of Governments (SCAG) — a technocratic inter-government agency.

On June 7, SCAG approved an MOU with its Israeli counterpart.

Like the March 2014 accord, the agreement with the Federation of Local Governments in Israel is an equivocal document. Studded by the words “whereas” and “may,” it also “does not create any legally binding rights or obligations for either Participant.”

It does, however, include 18 million Californians in 191 cities and six counties — L.A., Orange, Santa Barbara, Riverside, Imperial and Ventura — under some sort of Israel MOU endorsed by their local elected officials.

It also adds smart growth, emergency preparedness, public safety and the startup ecosystem to the list of focus areas provided by the Mountain View agreement.

The Israeli-American Nexus (IAX) and the Israeli American Council (IAC), both prominent and well-connected nonprofits in L.A., acted as citizen diplomats in facilitating the agreement. But the political will was furnished by the two heads of state.

That handshake “definitely paved the way for this partnership,” said IAX and IAC official Shawn Evenhaim, a local developer.

In an interview with the Journal, Evenhaim sounded a lot like Brown in his directive to Glenn Yago in July 2015: “The intention of this was not to sign a document and file it somewhere.”

How to import chutzpah

There are limits to what a contract can do, even between two heads of state.

For instance, Israel’s success in tackling its water problem is often chalked up to a certain Jewish chutzpah, and it’s much easier to import a technology patent than a cultural attitude.

Nonetheless, some have tried. The prevailing method is to put the leaders and high-ranking officials of public and private agencies on jetliners to Israel, including people such as Scott Houston.

Houston is a director of the West Basin Municipal Water District, a water agency that delivers 220,000 acre-feet of water each year to customers in an area covering much of the South Bay.

In July 2015, he traveled with the Milken Institute to Israel, where he learned, among other things, that Israel is crisscrossed by 110 miles of “purple pipe” (they’re actually purple) that carry 85 percent of its wastewater from treatment plants to farms.

But asked to summarize what he took away from the trip, he noted a tight-belted reverence for the Israeli watershed by its consumers.

“We’re trying to instill that here,” he said on the sidelines of the water conference in Marina del Rey, steps away from the Pacific Ocean.

For instance, he said, Israel seems to have overcome what he called the “ick factor,” which still gives pause to Americans: a psychological aversion to piping treated wastewater into our gardens and fields.

About a week after Karen Ross, secretary of the California Department of Food and Agriculture, came back from Israel, where she’d been traveling with IAC, she summed up her trip in much the same way.

“A real takeaway is the water ethic — how precious every drop of water is within the country,” she wrote in a statement to the Journal.

While there, she met at the Milken Institute’s request with a group of agriculture officials, academics and industry leaders for a daylong session on delivering Israeli solutions to California markets and vice
versa.

The working group was the latest in a series of intensive working sessions hosted by the think tank and aimed at coupling Israeli and Californian knowhow to crack tough market and sustainability problems.

“They’re kind of like mini Manhattan Projects,” Yago said of the labs. “Instead of creating a nuclear bomb, we’re trying to create solutions to global problems.”

Ross wrote in a blog post that the June 23 brainstorm had dwelled on the fact that smart agriculture technology “doesn’t generate the rate of return compared to other elements of the tech industry.”

If it did, Netafim, an Israeli company and the world’s largest drip irrigation concern, would likely see its revenues multiply.

The company encourages farmers to switch from the less efficient (and more expensive) flooding agriculture method popular in California.

Watering the plants rather than the ground, as drip irrigation purports to do, is one of the simplest ways California could imitate Israel’s portfolio of water solutions.

(Of course, Israel is already on to the next best thing: Yago mentioned a technique now in beta called precision irrigation, which involves plant growth cycles and something he called “fertigation or nutrigation.”)

Ze’ev Barylka, Netafim’s U.S. marketing director, is confident U.S. agriculture will make the switch to drip irrigation eventually, although, he said, “It’s a long process.”

It’s something his company has been pushing since it arrived in the United States 35 years ago.

“It’s very difficult to isolate what is the contribution of the MOU because we have been living [with the spirit of] the MOU for 35 years,” he said when asked about the agreement’s contribution to Netafim’s bottom line.

He went on, “It’s benefiting the [agriculture technology] sector overall in terms of visibility, activity, on the internet, in articles, in awareness, in education — all that.”

Ramifications of the agreement have yet to fully play out, according to some of its architects. A number of Israeli sustainability technologies are taking baby steps into the California market.

Blumenfield said the Department of Water & Power is currently looking into Israeli technology to clean up San Fernando Valley groundwater pollution left behind by the defense industry. But for now, “they’re studying rather than going sort of headlong.”

In the meanwhile, there are some more immediate effects, like generating coverage of Israel beyond the negative press afforded to it by the Boycott, Divestment and Sanctions (BDS) movement.

Blumenfield said the memo and the publicity it generates “help people understand the dangers of a BDS movement that is designed to do the opposite [of what the memo seeks to do]. That’s not why we created the task force, obviously. But it is a tangible political outcome.”

Despite its political outcomes, the MOU’s chief mechanism of action has proven to be other than political.

“Most of what we do these days is innovation — innovation on water, innovation on stem cells, innovation on biotech,” Siegel said at the Beverly Hills cybersecurity
event. He added, “Innovation is job No. 1 in this relationship.”

Siegel’s formula is simple: joint innovation equals diplomacy.

Blumenfield had a similar formula for collaboration: “Israel is the startup nation and California is the scale-up nation.”