Dovi Frances to help set up Israel AI National Directorate

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Although an AI directorate already exists in the Innovation Authority, Frances will act as advisor to a new directorate in the Prime Minister's Office, possibly with involvement of Elon Musk, "Globes" has learned.

In recent weeks the Israeli government has been moving forward in setting up an National Directorate that will coordinate all the government's AI activities from within the Prime Minister's Office. To a great extent this directorate will be at the expense of the directorate set up in the Ministry of Innovation, Science and Technology and the Israel Innovation Authority, which has already been allocated NIS 1 billion.

Sources familiar with the matter have told "Globes" that venture capital investor Dovi Frances, the owner of Group 11, will be appointed as an advisor to the new AI directorate, which is being set up, until a director general can be appointed. The appointment has not been finalized but if it goes ahead, Frances will support preparation work for three months ahead of legislation of the AI National Directorate bill, which will be discussed in the Knesset in the first quarter of 2025. Frances will be responsible for forming a work plan, proposing a budget, setting up an external advisory committee and listing potential candidates for director general.

Frances, who is considered close to Prime Minister Benjamin Netanyahu and accountant general Yali Rothenberg, has been involved in recent years in promoting the Yozma 2 fund in the Israel Innovation Authority, which is encouraging institutional investors to invest in Israeli venture capital funds - an item that has been included in the state budget.

The AI initiative is being undertaken outside of the Israel Innovation Authority, and "Globes" has learned that NIS 150 million has already been allocated to the accountant general's initiative. There is currently no estimated final budget, which will only be decided at the end of the preparatory work in early 2025.

Senior figures who are familiar with the plan that has been presented by Frances to Netanyahu say that the two men are expecting the involvement of several senior personalities in the international business community to help realize the plan. Some of these personalities are close to President Donald Trump including Elon Musk, Peter Thiel, who founded PayPal with Musk, OpenAI cofounder Ilya Sutskever who after leaving the ChatGPT developer has founded SST, a new AI company that will be based in San Francisco and Tel Aviv.

The election of Trump as US President opens up for Frances and Netanyahu's associates, the opportunity to renew the strategic alliance with senior UAE and Saudi officials. During the Biden administration the UAE and Saudi Arabia invested tens of billions of dollars in buying graphic processors and servers for AI development, gave tax benefits to entrepreneurs and investors in the field, and flew hundreds of experts from Europe and the US to work in the Gulf - at the same time they distanced themselves from Israel, and tightened relations with China. The new Israeli AI National Directorate would hope to work together with UAE national security adviser Tahnoun bin Zayed, who manages the UAE-US AI fund G42, and with other senior officials in the Emirates, Bahrain and Saudi Arabia.

Another name mentioned as likely to cooperate with the Israeli AI National Directorate is Argentina President Javier Milei, who recently met with Frances and Thiel on this issue. The national directorate is also in talks with Microsoft and Nvidia, on assisting as consultants and perhaps even take part in activities, even though they are not part of the government cloud tender like Google and Amazon.

Musk, who visited Israel about a year ago and was photographed wearing a disk for the release of the hostages from Hamas a few weeks later, is expected to receive a position in the White House as an advisor to Trump, reportedly with responsibilities for streamlining and cutting government structure, and introducing AI technologies. Musk's cryptocurrency, space, AI and electric vehicle activities may also benefit from the relationship with the new Trump administration.

Peter Thiel, who is chairman of Palantir frequently visits Israel with CEO Alex Karp and last year moved Palantir's board meeting to Israel as a sign of solidarity with Israel after the Hamas massacre on October 7. He was then photographed in a meeting with Ministry of Defense DDR&D (MAFAT) CEO Danny Gold and other senior officials in the Israeli defense establishment.

A four-part plan

Senior figures who have seen the plan Frances presented to Netanyahu say that it includes four sections: health, education, financial services and security. Each of these areas will be examined according to AI infrastructure, budget, software and government interfaces required, and will be developed both internally - in terms of the government ministries and public bodies and citizens who will take part - and externally, to create a partnership with companies such as Nvidia and Microsoft and countries such as the UAE and US.

Thus, for example, in the field of health, the national directorate hopes to cooperate with all health bodies in Israel to define needs: hospitals, health funds, the Ministry of Health, universities and research institutes, startups, Israeli and foreign venture capital funds and foreign health ministries. One of the applications in the health care system may be, for example, reduction of medical malpractice expenses from the entire healthcare system, which is estimated at NIS 1 billion annually.

While the government stresses the need for an independent, top priority directorate, the AI directorate at the Ministry of Innovation, Science and Technology and in the tech industry, many criticize the fact that the government is creating another directorate and building a strategic plan for national AI, after this has already been done several times in the past by Isaac Ben Israel at the ministry and former Ministers of Science Orit Farkash-HaCohen and her successor Ofir Akunis. Today, the AI directorate at the Innovation Authority operates according to Farkash HaCohen's plan.

Another criticism is the government's plan to establish another directorate, while the government has already approved a budget of NIS 1 billion in two installments for the existing directorate, including one that was approved in the 2025 budget last week and which will spread an investment of NIS 500 million over three years. Sources in the Prime Minister's Office believe that even after the allocation of the budget the new law, will make it possible to divert this budget to the new directorate.

No response to this report has been forthcoming from the Prime Minister's Office or Dovi Frances.

Published by Globes, Israel business news - en.globes.co.il - on November 10, 2024.

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