The budgets are bare-bones and the talent pool is limited, but Israel has emerged as a surprising powerhouse in the foreign film industry.
The Israeli film "Footnote," up for an Academy Award for Best Foreign Language Film this year, is Israel's fourth such nomination in the past five years, giving Israel more nominations during that period than any other country.
It's an indication to the renaissance of Israeli cinema, which has grown from a fledgling industry with poor cinematography and low box office sales to a darling of world film festivals. That's in spite – or perhaps because – of the country's troubled international reputation, due to its lengthy conflict with the Arab world.
The last three Israeli films that made it to the Oscar shortlist all mine the country's troubles with its Arab neighbors. "Beaufort," nominated in 2008, and "Waltz with Bashir," nominated a year after, both explored Israeli soldiers' experiences in Lebanon.
"Ajami," the 2010 nominee, centers on Arab-Jewish tensions in a violence-ridden neighborhood near Tel Aviv.
This year's nomination went to an Israeli film featuring a more internal conflict _ two professors of Talmud, a father and son, dueling for academic prestige and a coveted national prize.
"It's a badge of honor for Israel," said Moshe Edery, producer of "Footnote," at a news conference after the Oscar nomination. "It's Israel's best business card around the world, especially these days."
Israeli cinema was long an embarrassment. Cheap comic melodramas were the norm in the 1960s and 1970s. Called "bourekas films" – the Israeli equivalent of spaghetti Westerns – they dealt with ethnic stereotypes of European and Middle Eastern Jews.
Sick of those tired tropes, a group of Israeli moviemakers created an Israeli national movie fund in 1979, hopefully named the "Israeli Fund to Encourage Quality Films."
With meager funding from studios and other private entities, filmmakers rely on public funds. But even with help from the new fund, the industry still floundered for two decades.
In 1995, the government cut public funding for cinema in half, leaving enough money to produce only five films a year. Three years later the industry hit an all-time low: Only 0.3% of Israeli moviegoers bought tickets to Hebrew-language cinema.
The national film body took on a new name, the Israel Film Fund, and in 2000 it begged Israel's parliament to save Israeli cinema. It did, boosting the budget to $10 million a year for investment in feature films, mandating that young filmmakers get a chance to make themselves known.
It's what gave Joseph Cedar, the Israeli director of the Oscar-nominated films "Footnote" and "Beaufort," his first big break fresh out of film school: The Israel Film Fund supported his first feature, "Time of Favor," which debuted in 2000.
"We didn't know him, but he had enthusiasm. There was something about his passion," said Katriel Schory, executive director of the national fund. "We took a chance."
Investments by European, Canadian producers
In the past, "cinema funds would not support a filmmaker's first feature," said Renen Schorr, founder and director of the Sam Spiegel Film & Television School in Jerusalem. "Today, Israel wants young people to make their first films."
The boost in public funding has dovetailed with investments in Israeli cinema by European and Canadian producers, totaling about $15 million and increasing the number of films Israel puts out annually to nearly 20, according to the Film Fund.
Israel's television industry has also blossomed in recent years. After cable channels and a commercial TV station broke the monopoly and monotony of a lone state-run channel in the early 90s, there was a sudden need for new TV content, spurring competition and creativity among local screenwriters.
Now Hollywood TV executives are taking notice, adapting Israeli shows for American audiences. Showtime's hit thriller "Homeland" is adapted from the Israeli drama "Prisoners of War," the NBC game show "Who's Still Standing" originated in Israel, and other Israeli adaptations are currently in development for American TV.
Despite the surge in budgets, funding is a fraction of public money available for filmmakers in European countries.
While Israel has scored some Academy Award nominations in recent years, it hasn't won. None of the 10 Israeli films that made the best foreign language film shortlist over the years has won the big prize.
Now the focus is on Cedar, director of "Footnote," but he told reporters that the coveted Oscar isn't the only measure of success for a filmmaker.
That is exactly the lesson that his Oscar-nominated film imparts, he said.
"'Footnote' deals with the question of what happens when, while you're living your daily life, a prize is offered, which really takes over your moral reasoning and changes your perspective and sometimes completely destroys your perspective," Cedar said, summarizing the main plot line of his movie.