Israel is falling behind on AI according to a Comptroller report (Dall-E AI)

State Report Reveals Missteps as Israel Slips in Global AI Rankings

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The Judean Staff
Science & Technology

After a painstaking seven-month audit and a delayed release of findings, Israel’s State Comptroller Matanyahu Englman has published a hard-hitting report exposing the country’s steep decline in international AI rankings. The report outlines a sweeping list of issues—under-prioritization, chronic underfunding, amateurish management, lack of centralized oversight, and a bureaucratic tangle of political bodies vying for control. These failures have driven Israel down in nearly every significant AI performance ranking worldwide, spotlighting a government unable to secure its future in one of the 21st century’s most crucial industries.

A Systematic Failure: How Government Inertia Crippled Israeli AI

Englman’s findings paint a dismal picture of how successive governments have mishandled an industry expected to drive the next wave of economic and technological innovation. Despite repeated calls from global tech leaders and industry insiders, the Israeli government has placed AI near the bottom of its priorities. Political instability, fragmented leadership, and lack of an overarching strategy have seen Israel slip from a promising position in AI readiness to a middling rank at best. The Oxford Government AI Readiness Index, which evaluates over 190 countries’ readiness to integrate AI, saw Israel fall from a respectable 20th in 2022 to a dismal 30th in 2023, languishing between Saudi Arabia and the Czech Republic. The Tortoise Media Global AI Index and the AIPRM public policy ranking paint a similar picture of decay.

Despite allocating a NIS 1 billion budget to the field, the funds have mostly stagnated due to lack of coordination, unmet targets, and project delays. Key initiatives from 2022, like the national supercomputer and AI language models in Hebrew and Arabic, are years behind schedule, with only 40% of the allocated funds for 2023 deployed thus far. Englman did not mince words, calling out the “erratic prioritization and amateurish management” that has kept Israel from establishing itself as a powerhouse in a technology that will impact every facet of life in coming years.

Competing Ministries and an Ill-Timed Taskforce: The Battle for AI Control

Timing of the report’s release has drawn particular attention. Just as Prime Minister Netanyahu’s office announces a new AI taskforce under the office's Director General Yossi Shelley, questions have arisen over this taskforce’s true intent. Many in Israel’s tech industry suspect that this move is more about political branding than genuine reform, pointing out that the Prime Minister’s Office has struggled to execute similarly ambitious projects in the past—such as the North Israel Rehabilitation and Gaza Border Area programs—amid widespread criticism.

Meanwhile, the Ministry of Innovation, Science and Technology, along with the Israel Innovation Authority, is already mandated to develop Israel’s AI strategy and has been executing a NIS 1 billion strategic plan in coordination with existing professional entities. Critics argue that a new taskforce will only add another layer to an already convoluted system of ministries and councils, further diluting accountability.

The controversy underscores a deeper issue: repeated shifts in government have interrupted or halted programs that are critical to national interests. As Englman scathingly remarked, “There is no justification for changes in government to derail a program that serves as a fundamental pillar of Israel’s future.”

Global Competitors Surge Ahead as Israel Flounders

Other countries, once considered technological peers, are capitalizing on Israel’s missteps. In the latest rankings, nations like Malaysia, Spain, and Luxembourg outpace Israel. Even Saudi Arabia has risen in the standings, casting a shadow on Israel's traditional reputation as a high-tech leader. Notably, Israel is the only country among the top 30 AI leaders lacking a national AI strategy.

According to Englman, the current administration’s failure to establish a central AI authority, as previously agreed between Netanyahu and the National Security Council in 2019, has only worsened the situation. Without an overarching body to coordinate AI efforts across sectors, Israel has been unable to pool resources, synchronize projects, or define a long-term strategy for AI implementation.

Industry Experts Warn of Looming Irrelevance Without Immediate Reform

Israel’s technology community is voicing increasing concern that AI leadership is slipping away just as the world stands on the brink of a major AI revolution. Englman notes that while other governments are proactively legislating AI standards to align with global benchmarks, Israel's National Infrastructures Forum has chosen to take a “wait and see” approach. This has led to stalled regulations and no coherent legislative framework to govern AI development, putting Israel behind leaders like the European Union, which has enacted rigorous standards to regulate AI usage and development.

Industry experts warn that, without urgent reforms, Israel risks losing its foothold in a technology that will drive economies and industries in the near future. They cite Israel’s cybersecurity success as a potential model, crediting timely government intervention that helped propel Israel to a top cybersecurity position globally. However, with AI, Israel appears to be repeating past mistakes—delaying action until the industry is already well-established and fragmented.

Dr. Eli David, who is one of the world's leading AI experts who specializes in deep learning and evolutionary computation also chimed in on Israel's AI problem. David, who has one of the most influential accounts on Elon Musk's social media platform X (formerly Twitter) believes that government should not assist the growth of Artificial Intelligence, opting instead for the free market to sort that out itself.

In a post on his account in Hebrew, David scolded the current administration, specifically the Minister of Finance Bezalel Smotrich for being ignorant to the needs of the market and predicted that AI entrepreneurs and investors would abandon Israel over his policies. David wrote: "The government is supposed to create a friendly environment for businesses and entrepreneurs, the complete opposite of what it is doing. And now the failed Finance Minister (Bezalel the Red), who has zero economic education, is passing a budget that will finally ensure that entrepreneurs and investors will flee Israel." David made a point of using a pejorative nickname for Smotrich that mocks Smotrich's tenure at the helm of Israel's budget and finances as being ineffective.

The Government’s Response: A Defensive Rebuttal and Vague Promises

In response to the scathing report, a statement from the National Infrastructures Forum, backed by the Ministry of Innovation, Science and Technology and other entities, defended the current framework, claiming that Israel continues to rank among the top ten in AI globally. They highlighted accomplishments like signing international treaties and supporting thousands of Israeli tech companies that integrate AI solutions.

However, critics argue that these defenses miss the core issues raised by Englman’s report: Israel has no cohesive AI policy, suffers from chronic underfunding and management gaps, and has allowed infighting to stifle progress on strategic programs.

Conclusion: The Call for an AI Revolution in Israel’s Governance

The State Comptroller’s report has set off alarm bells among Israel’s leading technologists, business leaders, and policymakers, urging a wholesale rethinking of the nation’s AI strategy. Without decisive action to prioritize AI at a national level, streamline oversight, and fully fund initiatives, Israel risks squandering its once-advantageous position as a global tech leader. In a rapidly advancing AI world, Israel’s global standing—and its economic future—hang in the balance.

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