Geopolitics

If Kerry Fails: Palestinian Fallout If Peace Talks Collapse

A failure of the American peace initiative in the Middle East could cause a severe political crisis that will undermine both the economy and the stability of the Palestinian Authority.

U.S. Secretary of State John Kerry and Palestinian President Mahmud Abbas in Ramallah on Jan. 4, 2014
U.S. Secretary of State John Kerry and Palestinian President Mahmud Abbas in Ramallah on Jan. 4, 2014
Daniel Rubinstein

TEL AVIV — Politics and economics go together in the Middle East too.

In a study published earlier this month, a panel of economists of the Palestinian Central Bureau of Statistics tried to measure the effects on the Palestinian economy if there is no real progress in the coming year in the peace process.

If the push for peace by Secretary of State John Kerry defies the odds, and advances are made, the study predicts as much as a 20% increase in financial support from donating countries, a loosening of the restrictions of movements between Israel and the territories and an increase in Palestinian workers in Israel. Furthermore, such a scenario would lead to increased taxes collected by the Palestinian authority, and a resulting reduction in the budget deficit and a 9% increase in public investments.

But the study ultimately offers a more pessimistic outlook, predicting a crash of the political and economic conditions in the West Bank and Gaza. This forecast sees impending cuts in foreign aid, troubles in the transfer of tax money from Israel and a decrease of tax collections in the territories.

The pessimists also put forward the possibility of worsening restrictions of movement from Israel, which would lead to a 28% increase in unemployment. The situation in Gaza, where already today yearly per capita income is half that of the West Bank, is predicted to be catastrophic.

The dominant opinion reigning in both Israel and the Palestinian Territory is that no political progress is expected to take place in the coming year. Moreover, there is a possibility of an open political crisis between Israel and the Palestinian Authority if the American initiative collapses.

In such a scenario, violent confrontations will spread, the Israeli security activity in the territories will increase and an international boycott on Israel will probably gain steam.
This prediction is certainly a bad one for the Palestinians, and their economy, but it does not bode well for Israelis either.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money but the simplest of errors exposed the scam and limited the damage to investors.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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