Usually, mixing business with politics isn’t such a good idea if you’re trying to sell somebody something. You never know whom you’re going to offend, and the customer (and cash) is king.

But if you’re just giving away your product, I guess politics can play a role – maybe a big one. That’s definitely the philosophy of Zvi Schreiber, CEO of G.ho.st. When you hold an opening event at a gap in the security fence (“separation wall”) separating Jerusalem from Bethlehem, you’re wading ankle deep in one of the hottest political issues in the region.

That’s exactly what Schreiber did, launching the final beta version of his G.ho.st virtual operating system at “this symbol of division,” according to special guest Tony Blair, who added “I’ve done many launches in my life, but this ranks as about the most unusual.”

With G.ho.st, users can store up to 15 gigs of files, and use an office suite with their files, browse the internet, and access their e-mail from any computer in the world. User accounts are stored in the “cloud,” the one run by Amazon, and you can log into your G.ho.st  account anywhere.

Why the security fence? Because most of the programming for G.ho.st  is being done by programmers who live in Ramallah! G.ho.st’s corporate offices are in Israel proper, but Schreiber has outsourced almost all of the G.ho.st  architecture work to programmers in the Palestinian Authority (according to what he told me). “I’m perhaps the only CEO in the world who can’t visit the company’s main office, even though it’s like 15 kilometers my house in Jerusalem,” Schreiber said at the event.

In my interview with him, Schreiber described how staff meetings are held in a gas station near Jericho. “We’ve even had company meetings there, since it’s the only place we can get together that both sets of employees can get to,” he said. But it’s worth it, he added; “I’ve always wanted to make a contribution to coexistence, and a high-tech firm with offices in Israel and the PA seemed like a good way to do it.”

What to make of G.ho.st? The question come up because there are those who are accusing G.ho.st of “exploitation” in the guise of “promoting coexistence.” Why? Schreiber says his PA programmers are well compensated – “I’m not aware of any other company in the PA that gives out options to its employees,” Schreiber told me – but for sure the salaries those benefits are based on are going to be significantly less than he would pay to Israeli employees.

In that sense, Schreiber has succeeded in replacing Bangalore with Ramallah. If you think there’s nothing wrong with exporting jobs to the Far East, then there’s nothing wrong with exporting jobs to the Palestinian Authority; if you believe employers have a responsibility to their national entities and the citizens of the country that afforded them the opportunity to be in a position to employ others, then you have a problem with G.ho.st.

In addition, because the Palestinians are such bitter enemies of Israel, some would argue that Schreiber is wrong on two counts: One, he’s providing jobs to Palestinians who want to see us dead (or maybe just deported), and two, he’s exporting jobs that Israelis would be happy to do during these recessionary times.

According to this AFP article, most of the Ramallah employees work for a third of the pay of their Israeli counterparts. Quoting Dror Globerman of Ma’ariv, the article says:

“I think the incentives are definitely there. (The West Bank) is cheap and close, and Palestinian engineers are talented people.”

So it’s all about the money for G.ho.st – or is it? The AFP article goes on to say:

However, the persistent threat of political instability still encourages most Israeli entrepreneurs to look to calmer parts of the globe. “No one can guarantee that a Palestinian engineer will always be able to reach his office or have an Internet connection,” Dror says. “Israelis are used to having these fears addressed to them by foreign investors.”

In other words, Ramallah is not Bangalore. Given the volatile political and security situation, work could be suspended due to an IDF action in response to a terror attack at any time, or (probably more likely) a shootout between Hamas and Fatah troops near the G.ho.st offices. (Given the rampant crime in the PA, I wonder if Schreiber has to pay protection money to criminal gangs – or the “official” police -  in order to be left alone? See, that’s a question you can’t ask a CEO!). For dealing with those issues, Schreiber deserves a lot of credit.

And G.ho.st fits right in with Binyamin Netanyahu’s declared desire to help the PA economically – the idea being that once Palestinians get a taste of the “good life” in Israel, they’ll have a strong incentive to play peace ball. That there is something to this is clear when you speak to Arabs in Wadi Ara (as I did) about what they think of proposals to move the border and rope them into Palestinian Authority controlled areas.

So what do you think the Palestinians think about all this? Do they feel “colonialized” or “exploited” by Schreiber? Not according to this article by Ma’an, the official PA news agency.

The project, three years in the making, was funded by the Benchmark Capital Fund and Noa Rothman’s foundation, and hired Palestinian and Israeli developers trained in local universities to push forward the development.

“It was a program aiming to bring some of the prosperity and skills to Palestinians that have brought success to the Israeli [IT] industry,” one organizer said.

The program’s launch, in front of Israel’s separation wall in the Bethlehem-area town of Beit Jala, focused on the potential of creativity and economic development for the creation of a stable future for both Israel and Palestine.

Of course, there was the requisite paragraph afterwards on how there needs to be a full Israeli withdrawal to the pre-1967 borders and the return of descendants of refugees, etc. etc. But it sounds to me like Ma’an knows a good thing when it sees it. As the AFP article quotes Ramallah office director Khaled Ayyash as saying:

“We are creating jobs, we are getting good salaries, and we can work here in Palestine instead of going abroad.”

At first it sounded like another dream deal: An Israeli company sold a one third interest in a medical device it developed to a British-Taiwanese company for $370 million – making the total value of SafeSky’s LifeKeeper Patch over $1 billion. The deal, between SafeSky and Micro-Star International (MSI), is one of the biggest ever in relative terms for an Israeli hi-tech industry.

According to the company, the LifeKeeper patch can read information about the wearer’s medical state – recording data such as body temperature, heart rate and rhythms, blood pressure, and blood sugar levels. When you wear the patch, the information is transmitted via Bluetooth to a cell phone, where an application records the information. The phone program evaluates the data, and if the information being recorded indicates that that wearer is in danger of a heart attack or stroke, it can send an emergency message out to doctors or emergency services, who can then locate the wearer using the phone’s GPS capabilities. (I’m proud to say I had the first full English-language report on this, which you can read here)

Sounds like a medical miracle! And the fact that a company was willing to stake so much money for just a partial ownership seems like a miracle, too – in fact, it’s pretty miraculous that any company would have that kind of money around today!

Maybe it’s jealousy or politics (one of the co-inventors of the patch is said to be a good friend of Prime Minister Netanyahu), but a smattering of reports have appeared in the Israeli press over the past day or so questioning whether there was a deal, or whether the patch even exists! This, despite assurances by the owners that the deal was done and the check from MSI is already in the hands of SafeSky’s Tel Aviv lawyers. In an interview for a print publication (whose name I am not authorized to reveal online!) the interviewer asked co-inventor Amos Bouchnik about the reports, and he dismissed them:

“We’re not paying attention to them at all. We’ve kept the device under wraps at the request of the purchaser in order to ensure maximum industrial security. MSI will conduct a presentation in Tel Aviv in the near future and demonstrate it to doctors. The company has been examining this device for the past 18 months and it is indeed a device that will change the face of medicine.”

SafeSky is a private company, it made a deal for a product it owns, and it doesn’t have to reveal any details of its work – including to the media. But apparently the media doesn’t agree. Channel One ran a rather snide report questioning whether the device even exists! As if Bouchnik and his partner Arik Klein (Netanyahu’s friend) made the whole thing up! Note that both are very successful dentists, of all things – entrepreneurial dentists, who own chains of dental clinics and are involved in several other businesses. SafeSky, which they wholly own, has other products as well, such as “a better solar panel,” which can collect 100 times more energy than panels currently in use.

Not only do the two own the exclusive patents to the patch: They have never taken VC or other investment money, meaning they don’t owe anybody anything.

And therein probably lies the root of their spate of bad press, if I know my Israeli reporters. Probably some goon demanded to see the patch in action, and Bouchnik and Klein told them no way – to which the reporter got very offended and threatened to do a hatchet job on them. Unimpressed, the two sent the reporter his or her way, and s/he made good on the threat by running a nasty story questioning not only their ethics and reliability, but their sanity (as if they made the whole thing up!)

And if you think I’m being too hard on the reporter, I invite you to listen to the news magazines on Israel’s second radio channel (Reshet Bet), at 9 AM, 10 AM, Noon, and 5 PM. In the many live interviews with newsmakers they conduct, the speakers – ranging from politicians to plain old Joes – have to contend with constant interruptions, innuendo, and overall nastiness and rudeness. I mean it; speakers get interrupted by the hosts at nearly every sentence. It’s as if the hosts have to hear themselves speak every few seconds, in order to make sure everyone knows they’re in charge! That’s the caliber of reporter in Israel’s media – and making up a story just to get back at a company that doesn’t want to play ball with them is definitely not out of the realm of possibility. (Note: Picture is NOT of the LifeKeeper Patch, but for illustrative purposes only!)