Dan Singer - Start-up Nation

Israel owes much of its success to a deep Diaspora network that other countries, from Ireland to India and China, have also developed. Yet the non-Israeli Jewish Diaspora ties are not automatic, nor are they the key catalysts to the development of the tech sector in Israel. In fact, whereas China’s Diaspora is the source of 70 percent of foreign direct investment (FDI) into China and India’s Diaspora did much to help build its homeland’s high-tech infrastructure when the country’s economy and legal system were both underdeveloped, Israel’s experience has been different. The vast majority of American Jewish investors historically would not touch the Israeli economy. It was not until much later, when Israel became more successful, that many Diaspora Jews started looking at Israel as a place to do business, not just as a draw for their sympathy and philanthropy.

So it has required creativity for Israel to learn how to use its Diaspora community in order to catalyze its economy. The tradition of Israelis’ tapping into a very small but passionate subset of the Jewish Diaspora to help build the state has its roots in institutions like Israel’s start-up air force.

The fantasy of an Israeli aircraft industry took shape on a bumpy flight over the North Pole in 1951, inside what was to become the first aircraft in Israel’s new national airline. The conversation was between a pair of opposites: Shimon Peres, the erudite future president of Israel, who in 1951 was the chief arms buyer for the new Jewish state, and Al Schwimmer, a swashbuckling American aviation engineer from Los Angeles, whose pals included Howard Hughes and Kirk Kerkorian. Schwimmer’s first name was Adolph, but against the backdrop of World War II, he’d opted for Al. 9

Peres and Schwimmer were on one of their many flights over the Arctic tundra in used planes purchased for Israel’s fledgling air force. Flying over the North Pole was dangerous, but they took the risk because the route was shorter—no small consideration when piloting planes that were falling apart.

Al Schwimmer was a raconteur who’d been captivated by the airline business in its earliest days, when flying machines were an exotic novelty. He was working for TWA when the United States entered World War II and the entire airline was drafted into the war effort. Though not officially in the U.S. Air Force, Schwimmer and his fellow fliers were given military ranks and uniforms and spent the war ferrying troops, equipment, and the occasional movie star all over the world.

During the war, Schwimmer’s identity as a Jew meant little to him and had almost no influence on his thinking or way of life. But seeing a liberated concentration camp and the newsreel footage of countless bodies and speaking with Jewish refugees in Europe trying to reach Palestine transformed him. Almost overnight, Schwimmer became a committed Zionist.

When he heard that the British in Palestine were turning back ships full of European Jewish refugees, Schwimmer came up with what he was convinced was a better way: fly over the British navy patrols and smuggle the Jews in by landing them at hidden airfields. He tracked down Ben-Gurion’s secret emissary in New York and pitched him the idea. For months, the representative of the Haganah, the main underground Jewish army in Palestine, sat on the idea. But when it became clear that the British would soon withdraw and a full-scale Arab-Jewish war over Israel’s independence would ensue, the Haganah contacted Schwimmer.

By this time they had an even more urgent need than smuggling refugees: building an air force. The Haganah did not have a single aircraft and would be completely exposed to the Egyptian air force. Could Schwimmer buy and repair fighter planes and smuggle them into Israel?

Schwimmer told Ben-Gurion’s agents that he’d start immediately, even though he knew he would be violating the 1935 Neutrality Act, which prohibited U.S. citizens from exporting weaponry without government authorization. This wasn’t just chutzpah . This was criminal.

Within days, Schwimmer had tracked down a handful of Jewish pilots and mechanics from the United States and the United Kingdom for what he told them would be the first civilian Jewish airline. He was obsessed with secrecy, and did not even want to bring them into the fold about the idea of building fighter planes. Few were even informed that the planes were destined for Israel. When outsiders inquired, the cover story was that they were building a national airline for Panama and would ferry cattle to Europe.

Though the FBI impounded the largest aircraft he bought—three Constellations—Schwimmer and his gang succeeded in smuggling out other aircraft, some by literally flying over the heads of the FBI agents who’d demanded that the planes be grounded. At the last minute, the Haganah cut a separate deal to buy German Messerschmitts from Czechoslovakia, which Schwimmer was also drafted to fly to Israel.

When the 1948 War of Independence came, Schwimmer’s aircraft fought off Egyptian planes that were bombing Tel Aviv. In certain battles, the barely trained Israeli pilots were instrumental in ensuring that the Negev Desert—a relatively large triangular swath of land starting a few miles south of Jerusalem and Tel Aviv, between the Egyptian Sinai and Jordan—became part of Israel.

After Israel prevailed in the War of Independence, Schwimmer returned to the United States, despite being a wanted man. The FBI had figured out the smuggling scheme, and the U.S. Justice Department had built a criminal case against him. His trial, along with those of a number of the pilots he had recruited, was a public sensation. The defendants pleaded not guilty, on the grounds that the law itself was unjust. Schwimmer got off with paying a fine, which was widely seen as exoneration.

Once Schwimmer was cleared, it didn’t take him long to get back into the smuggling game. By 1950, Schwimmer had joined forces with Shimon Peres, then a young Ben-Gurion protégé working for the new Israeli Defense Ministry. Peres had tried to buy thirty surplus Mustang aircraft for the Israeli Air Force, but the United States had decided to destroy the planes instead. Their wings were sliced off and their fuselages cut in two.

So Schwimmer’s team bought the cut-up planes at cost from a Texas junk dealer, reconstructed them, and made sure they had all their parts and were operational. Then the team disassembled the planes again, packed them in crates marked “Irrigation Equipment,” and shipped them to Israel.

But because of the urgency with which they had to get the aircraft to Israel, a few of the planes were left assembled, and Schwimmer and Peres flew these to Tel Aviv. And that is how they found themselves in 1951 talking about a future Israeli aviation industry. Peres became captivated by Schwimmer’s ideas for creating an aircraft industry in Israel that would serve a purpose beyond short-term military strategy. It was part of Peres’s fascination with creating industries in Israel.

Schwimmer insisted that in a world flooded with surplus aircraft from the war, there was no reason why Israel could not buy planes cheaply, repair and improve them, and sell them to militaries and airlines in many countries, while building Israel’s own commercial industry. Shortly after they returned to the United States, Peres took Schwimmer to meet Ben-Gurion, who was on his first visit to America as Israel’s prime minister.

“You learning Hebrew now?” was Ben-Gurion’s first question when Schwimmer reached out his hand to greet him; they had met repeatedly during the War of Independence. Schwimmer laughed and changed the subject: “Nice girls here in California, don’t ya think, Mr. Prime Minister?”

Ben-Gurion wanted to know what Schwimmer was working on. Schwimmer told him about the renovations he was carrying out.