Israel About to Impose Limits on Cyber Technology Exports

Barbara Opall-Rome, Defense News
January 26, 2016
Israeli Gov’t Reaches Out Before Clamping Down on Cyber Exports

TEL AVIV, Israel — In an attempt to balance pressure from Israel’s security establishment with his desire for a competitive market unburdened by over-regulation, Prime Minister Benjamin Netanyahu and his National Cyber Bureau (NCB) are soliciting industrial and private-sector feedback before the government moves to codify new cyber-related, dual-use export controls.

Comments regarding proposed amendments to Israel’s defense and dual-use licensing policy were originally due Feb. 7, but were extended Tuesday to March 3 due to enormous pressure from nearly all quarters of Israel’s growing cyber industry.

“The unprecedented nature of this move for public cooperation pertaining to dual use and defense export controls attests to the high awareness … of the sensitivities of this matter and the importance of implementing the process in a most reasoned and cautious manner,” Israel’s NCB noted on its website.

As it now stands, draft amendments call for restricting four distinct categories of products, technologies and services: intrusion software, vulnerability detection, defense of strategic networks and facilities, and advanced forensics.

A letter of explanation and a two-page detailed draft of proposed amendments are posted on the website of Israel’s Defense Export Controls Agency, part of the MoD, and the NCB, part of the Prime Minister’s Office.

Proposals were influenced by the internationally accepted Wassenaar Arrangement of dual-use export controls and the product of an often contentious, three-year interagency review that included the NCB, MoD, the Ministry of Economy, Foreign Ministry and the National Security Council.

In an address Tuesday that kicked off a two-day CyberTech 2016 international conference here, Netanyahu said his goal was to come up with an export control policy that “defined narrow elements of national security” yet preserved “the greatest freedoms possible” to develop and grow Israel’s cyber industry.

“My goal is to continue growing the cyber industry nationally and internationally for us at the same rate that we’ve done in the past. My goal is to enable that growth, that productivity, while maintaining a very narrow band of interests, of national security,” Netanyahu said.

Speaking to a crowd of more than 8,000 from nearly three dozen countries, Netanyahu noted that at one time, before Israel opened and grew its economy, free market principles were eclipsed by security-driven regulation and bureaucratic red tape.

“The rules in Israel were … in general, they tended to say that everything is forbidden unless something is permitted. We changed it and we said in many areas everything is permitted unless specifically forbidden. In cyber today, that is where we’re going.

“That will enable us to grow our cyber industry without getting into conflicts in the future. It’s something that we’re doing in an open discussion with our cyber companies,” he said.

Netanyahu told CyberTech 2016 participants that Israel has already achieved its goal of being one of the five leading cyber powers in the world. With some US $3.5 billion in cyber-related exports last year and a target for some 20 percent of worldwide investment, he noted that the Israeli market is larger than all other nations combined apart from the United States.

Such growth, exports and investment, Netanyahu said, cannot be realized without cooperation in the field of cybersecurity.

“I recognize that in this field, unless we cooperate, there cannot be growth and I am a champion of growth. … So with great deliberation, after much thought, we’ve decided to embark on a course that deals first with our cyber security in this country, and second with our cooperation by taking calculated risks of cooperation with governments and with companies.”

Meeting after his conference address with 10 founders of Israeli cyber companies that either raised substantial capital or carried out major exits in 2015, Netanyahu assured business leaders that he is seeking “as few regulations as possible along with as much security as possible.”

According to statements released by his office, Netanyahu told business executives that debates over cyber-related export control policy should be sorted out soon.

At the same meeting with business executives, Eviatar Matania, director of the Israeli NCB, noted that an interagency panel has been struggling with the issue of oversight for nearly three years in attempts to strike the right balance.

“At the end of the process, we will settle things. The direction is that there will be fewer restrictions along with a prospering industry,” Matania said. “Our main goal is continued prosperity of the industry.”