---

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THIS DOCUMENT IS A COPY OF THE FORM 10-Q BEING FILED ON MAY 16, 2003 PURSUANT TO A RULE 201 TEMPORARY
HARDSHIP EXEMPTION.



SECURITIES AND EXCHANGE COMMISSIONWASHINGTON D.C. 20549

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FORM 10-Q

(Mark One)

|x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2003

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934.
|- | -----------------------------------------------------------------------------------------------------------

For the transition period from _______________ to _______________

Commission file number 0-538

AMPAL-AMERICAN ISRAEL CORPORATION (Exact Name of Registrant as Specified in Its Charter)

|New York
(State or Other Jurisdiction of
Incorporation of Organization) | 13-0435685
(I.R.S. Employer
Identification Number
|----------------------------------------------------------------------- | -------------------------------------------------

|555 Madison Avenue, New York, New York
(Address of Principal Executive Offices) | 10022
(Zip code)
|------------------------------------------------------------------------------- | ----------------

Registrant's Telephone Number, Including Area Code (212) 593-9842

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

Indicate by check mark whether the registrant   (1)   has filed all reports required to be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months (or for such shorter period that the registrant was required to file such reports) , and
      (2)  has been subject to such filing requirements for the past 90 days.

|Yesx | Noo
|---- | ---

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
      of the Exchange Act).

|Yeso | Nox
|---- | ---

The number of shares outstanding of the issuer's Class A Stock, its only authorized common
      stock, is 19,711,123 (as of May 9, 2003).



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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

Index to Form 10-Q

|        |                                                                                         | Page
|------- | --------------------------------------------------------------------------------------- | ----
|Part I  | Financial Information                                                                   |     
|        |                                                                                         |     
|Item 1  | Financial Statements                                                                   
|        | Consolidated Statements of Operations   Three Months Ended March 31, 2003 and 2002      | 1   
|        | Consolidated Balance Sheets                                                             | 2   
|        | Consolidated Statements of Cash Flows                                                   | 4   
|        | Consolidated Statements of Changes in Shareholders' Equity                              | 6   
|        | Consolidated Statements of Comprehensive Loss                                           | 8   
|        | Notes to the consolidated Financial Statements                                          | 9   
|Item 2  | Management's Discussion and Analysis of   Financial Condition and Results of Operations | 12  
|Item 3  | Quantitative and Qualitative Disclosures   About Market Risks                           | 18  
|Item 4  | Controls and Procedures                                                                 | 19  
|        |                                                                                         |     
|Part II | Other Information                                                                       | 19  
|        |                                                                                         |     
|Item 1  | Legal Proceedings                                                                       | 19  
|Item 2  | Changes in Securities and Use of Proceeds                                               | 19  
|Item 3  | Defaults upon Senior Securities                                                         | 19  
|Item 4  | Submission to Matters to a Vote of Security Holders                                     | 19  
|Item 5  | Other Information                                                                       | 19  
|Item 6  | Exhibits and Reports on Form 8-K                                                        | 19  



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ITEM
1.    FINANCIAL STATEMENTS

AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATED>STATEMENTS OF OPERATIONS

|THREE MONTHS ENDED MARCH 31,              | 2003       | 2002     
|----------------------------------------- | ---------- | ---------
|
|                                          |            |          
|REVENUES                                  |            |          
|Equity in (losses) earnings of affiliates | $    (509) | $   2,047
|Interest                                  | 135        | 337      
|Real estate income                        | 2,105      | 1,839    
|Realized and unrealized gains (losses) on
|investments                               | 908        | (2,860)  
|Other                                     | 2,295      | 1,309    
|                                          |            |          
|Total Revenues                            | 4,934      | 2,672    
|                                          |            |          
|EXPENSES                                 
|Interest                                  | 2,217      | 2,525    
|Real estate expenses                      | 1,933      | 1,922    
|Loss from impairment of investments       | -          | 3,892    
|Minority interests                        | 509        | (477)    
|Translation loss (gain)                   | 321        | (957)    
|Other (mainly general and administrative) | 2,337      | 1,615    
|                                          |            |          
|Total expenses                            | 7,317      | 8,520    
|                                          |            |          
|Loss before income taxes                  | (2,383)    | (5,848)  
|(Benefit)provision for income taxes       | (216)      | 327      
|                                          |            |          
|Net loss                                  | $(2,167)   | $(6,175) 
|                                          |            |          
|                                          |            |          
|Basic and Diluted EPS                    
|Loss per Class A share                    | $  (0.11)  | $  (0.32)
|                                          |            |          
|Shares used in calculation (in thousands) | 19,686     | 19,277   
|                                          |            |          

The
accompanying notes are an integral part of the consolidated financial statements.

1

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATED
BALANCE SHEETS

|ASSETS AS OF                           | March 31,
2003 | December 31,
2002
|-------------------------------------- | -------------- | -----------------
|
|                                       |                |                  
|Cash and cash equivalents              | $    1,386     | $    1,557       
|                                       |                |                  
|Deposits, notes and loans receivable   | 9,429          | 10,962           
|Investments                            | 218,505        | 215,094          
|Real estate property, less accumulated
|Depreciation of $9,608 and $9,166      | 65,275         | 65,598           
|Other assets                           | 31,811         | 30,488           
|                                       |                |                  
|                                       |                |                  
|Total Assets                           | $326,406       | $323,699         
|                                       |                |                  
|                                       |                |                  

The
accompanying notes are an integral part of the consolidated financial statements.

2

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

|LIABILITIES AND
SHAREHOLDERS' EQUITY AS OF      | March 31,
2003 | December 31
2002
|----------------------------------------------- | -------------- | ----------------
|
|                                                |                |                 
|LIABILITIES                                     |                |                 
|Notes and loans payable                         | $ 133,195      | $ 114,257       
|Debentures                                      | 3,707          | 22,546          
|Accounts payable, accrued                      
|Expense and others                              | 89,992         | 86,718          
|                                                |                |                 
|Total Liabilities                               | 226,894        | 223,521         
|                                                |                |                 
|SHAREHOLDERS EQUITY                            
|4% Cumulative Convertible Preferred Stock, $5  
|par value; authorized 189,287 shares; issued   
|135,760 and 139,391 shares; outstanding 132,410
|and 136,041 shares                              | 679            | 697             
|                                                |                |                 
|6-1/2% Cumulative Convertible Preferred Stock, 
|$5 par value; authorized 988,055 shares; issued
|699,592 and 706,450 shares; outstanding 577,056
|and 583,914 shares                              | 3,498          | 3,532           
|                                                |                |                 
|Class A Stock; $1 par value; authorized        
|60,000,000 shares; issued 25,541,534 and       
|25,502,805 shares; outstanding 19,709,870      
|and 19,671,141 shares                           | 25,542         | 25,503          
|                                                |                |                 
|Additional paid-in capital                      | 58,138         | 58,125          
|Retained earnings                               | 65,308         | 67,475          
|Treasury Stock, at cost                         | (31,096)       | (31,096)        
|Accumulated other comprehensive loss            | (22,557)       | (24,058)        
|                                                |                |                 
|Total shareholders' equity                      | 99,512         | 100,178         
|                                                |                |                 
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      | $ 326,406      | $ 323,699       
|                                                |                |                 
|                                                |                |                 

The
accompanying notes are an integral part of the consolidated financial statements.

3

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AMPAL-AMERICAN ISRAEL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

|THREE MONTHS ENDED MARCH 31,                   | 2003     | 2002    
|---------------------------------------------- | -------- | --------
|
|                                               |          |         
|Cash flows from operating activities:          |          |         
|Net loss                                       | $(2,167) | $(6,175)
|Adjustments to reconcile net income to net    
|cash provided by operating activities:        
|Equity in losses(gains)of affiliates           | 509      | (2,047) 
|Realized and unrealized losses (gains)        
|on investments                                 | (908)    | 2,860   
|Gain on sale of real estate rental property    | -        | (137)   
|Depreciation expense                           | 504      | 555     
|Net amortization                               | (73)     | (3)     
|Loss from impairment of investments and loans  | -        | 3,892   
|Translation loss (gain)                        | 321      | (957)   
|Minority interests                             | 509      | (477)   
|(Increase)decrease in other assets             | (985)    | 7,007   
|Increase (decrease) in accounts payable,      
|accrued expenses and others                    | 2,958    | (592)   
|Investments made in trading securities         | (1,702)  | (15)    
|Proceeds from sale of trading securities       | 1,508    | 468     
|Dividends received from affiliates             | -        | 43      
|                                               |          |         
|Net cash provided by operating activities      | 474      | 4,422   
|                                               |          |         
|Cash Flows from investing activities:         
|Deposits, notes and loans receivable collected | 1,852    | 1,846   
|Deposits, notes and loans receivable granted   | (240)    | (709)   
|Investments made in-                          
|affiliates and others                          | (1,061)  | (967)   
|Proceeds from sale of real estate property,   
|net of commissions and transfer taxes          | -        | 250     
|Return of capital by partnership               | 134      | 107     
|Capital improvements                           | (352)    | (373)   
|                                               |          |         
|Net cash provided by investing                
|activities                                     | 333      | 154     
|                                               |          |         

The
accompanying notes are an integral part of the consolidated financial statements.

4

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF CASH FLOWS

|THREE MONTHS ENDED MARCH 31,                     | 2003          | 2002    
|------------------------------------------------ | ------------- | --------
|
|                                                 |               |         
|Cash flows from financing activities:            |               |         
|Notes and loans payable received                 | $ 19,937      | $    621
|                                                 |               |         
|Notes and loans payable repaid:                 
|Others                                           | (1,239)       | (8,478) 
|Debentures repaid                                | (19,271)      | (1,763) 
|                                                 |               |         
|Net Cash used in financing                      
|activities                                       | (573)         | (9,620) 
|                                                 |               |         
|Effect of exchange rate changes on cash and     
|cash equivalents                                 | (405)         | (895)   
|                                                 |               |         
|                                                 |               |         
|Net (decrease)in cash and cash equivalents       | (171)         | (5,939) 
|Cash and cash equivalents at beginning of       
|period                                           | 1,557         | 7,973   
|                                                 |               |         
|                                                 |               |         
|Cash and cash equivalents at end of period       | $   1,386     | $ 2,034 
|                                                 |               |         
|                                                 |               |         
|Supplemental Disclosure of Cash Flow Information
|Cash paid during the period:                    
|Interest paid to others:                         | $   3,449     | $ 4,602 
|                                                 |               |         
|                                                 |               |         
|Income taxes paid                                | $          27 | 137     
|                                                 |               |         
|                                                 |               |         

The
accompanying notes are an integral part of the consolidated financial statement.

5

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

|THREE MONTHS ENDED MARCH 31,               | 2003       | 2002        
|------------------------------------------ | ---------- | ------------
|
|                                           |            |             
|4% PREFERRED STOCK                         |            |             
|Balance, beginning of year                 | $      697 | $        731
|                                           |            |             
|Conversion of 3,631 and 1,605 shares into 
|Class A Stock                              | (18)       | (8)         
|                                           |            |             
|Balance, end of period                     | $      679 | $        723
|                                           |            |             
|                                           |            |             
|6-1/2% PREFERRED STOCK                    
|Balance, beginning of year                 | $   3,532  | $     3,633 
|                                           |            |             
|Conversion of 6,858 and 10,853 shares into
|Class A Stock                              | (34)       | (54)        
|                                           |            |             
|Balance, end of period                     | $   3,498  | $     3,579 
|                                           |            |             
|                                           |            |             
|CLASS A STOCK                             
|Balance beginning of year                  | $ 25,503   | $   25,408  
|                                           |            |             
|Issuance of shares upon conversion of     
|Preferred Stock                            | 39         | 40          
|                                           |            |             
|Balance, end of period                     | $ 25,542   | $   25,448  
|                                           |            |             
|                                           |            |             
|ADDITIONAL PAID-IN CAPITAL                
|Balance, beginning of year                 | $ 58,125   | $   58,253  
|                                           |            |             
|Conversion of Preferred Stock              | 13         | 22          
|                                           |            |             
|Balance, end of period                     | $ 58,138   | $   58,275  
|                                           |            |             
|                                           |            |             
|RETAINED EARNINGS                         
|Balance, beginning of year                 | $ 67,475   | $ 111,740   
|                                           |            |             
|Net loss                                   | (2,167)    | (6,175)     
|                                           |            |             
|Balance, end of period                     | $ 65,308   | $ 105,565   
|                                           |            |             

The
accompanying notes are an integral part of the consolidated financial statements.

6

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATEDSTATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

|THREE MONTHS ENDED MARCH 31,                     | 2003      | 2002     
|------------------------------------------------ | --------- | ---------
|
|                                                 |           |          
|TREASURY STOCK                                   |           |          
|                                                 |           |          
|4% PREFERRED STOCK                              
|Balance, end of period                           | (84)      | (84)     
|                                                 |           |          
|6-1/2% PREFERRED STOCK                          
|Balance, end of period                           | (1,853)   | (1,853)  
|                                                 |           |          
|CLASS A STOCK                                   
|Balance, beginning and end of period - 5,831,664
|and 6,160,664 shares, at cost                    | (29,159)  | (31,301) 
|                                                 |           |          
|Balance, end of period                           | $(31,096) | $(33,238)
|                                                 |           |          
|                                                 |           |          
|ACCUMULATED OTHER COMPREHENSIVE LOSS            
|                                                 |           |          
|Cumulative translation adjustments:             
|Balance, beginning of year                       | (20,750)  | (20,163) 
|Foreign currency translation adjustment          | 628       | (1,339)  
|                                                 |           |          
|Balance, end of period                           | (20,122)  | (21,502) 
|                                                 |           |          
|Unrealized gain on marketable securities:       
|Balance, beginning of year                       | (3,308)   | 4,856    
|Unrealized gain(loss), net                       | 873       | (3,615)  
|Sale of available-for-sale securities            | -         | (681)    
|                                                 |           |          
|Balance, end of period                           | (2,435)   | 560      
|                                                 |           |          
|Balance, end of period                           | $(22,557) | $(20,942)
|                                                 |           |          

The
accompanying notes are an integral part of the consolidated financial statements.

7

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS

|THREE MONTHS ENDED MARCH 31,                   | 2003     | 2002      
|---------------------------------------------- | -------- | ----------
|
|                                               |          |           
|Net loss                                       | $(2,167) | $ (6,175) 
|                                               |          |           
|Other comprehensive income (loss), net of tax:
|Foreign currency translation adjustments       | 628      | (1,339)   
|Unrealized gain(loss) on securities            | 873      | (3,615)   
|                                               |          |           
|Other comprehensive income(loss)               | 1,501    | (4,954)   
|                                               |          |           
|Comprehensive loss                             | $  (666) | $(11,129) 
|                                               |          |           
|                                               |          |           
|Related Tax benefit (expense) of other        
|Comprehensive loss:                           
|Foreign currency translation adjustments       | $  (212) | $      109
|                                               |          |           
|Unrealized (loss) on securities                | $  (306) | $ (1,102) 
|                                               |          |           

The accompanying
notes are an integral part of the consolidated financial statements.

8

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIESNOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

|1. | As
used in these financial statements, the term the Company refers
               to Ampal-American Israel Corporation (Ampal) and its
consolidated                subsidiaries.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The
March 31, 2003 consolidated balance sheet presented herein was derived from
               the audited December 31, 2002 consolidated financial statements of the
Company.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reference
should be made to the Companys consolidated financial statements for the year ended
December 31, 2002 for a description of the accounting policies, which have been continued
without change. Also, reference should be made to the notes to the Companys
December 31, 2002 consolidated financial statements for additional details of the Companys
consolidated financial condition, results of operations and cash flows. The details in
those notes have not changed except as a result of normal transactions in the interim.
All adjustments (of a normal recurring nature) which are, in the opinion of management,
necessary to a fair presentation of the results of the interim period have been included.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Recently
Issued Accounting Pronouncements
|-- | -----------------------------------------

| | In
November 2002, the FASB issued FASB Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45 requires the guarantor to
recognize, at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. It also elaborates on the disclosures to
be made by a guarantor in its financial statements about its obligations under certain
guarantees that it has issued and to be made in regard of product warranties. The Company
does not expect the adoption of FIN 45 to have a material effect on our consolidated
financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2003, the FASB issued FASB Interpretation No. 46 Consolidation of Variable
Interest Entities (FIN 46). Under this FIN, entities are separated into two
populations: (1) those for which voting interests are used to determine consolidation
(this is the most common situation) and (2) those for which variable interests are used
to determine consolidation. FIN 46 explains how to identify Variable Interest Entities
(VIE) and how to determine when a business enterprise should include the assets,
liabilities, non-controlling interests, and results of activities of a VIE in its
consolidated financial statements. FIN 46 is effective as follows: for variable interests
in variable interest entities created after January 31, 2003, FIN 46 shall apply
immediately, for variable interests in variable interest entities created before that
date, FIN 46 shall apply for public entities as of the beginning of the first interim or
annual reporting period beginning after June 15, 2003. FIN 46 is effective immediately
for certain disclosure requirements and variable interest entities created after January
31, 2003 and in fiscal 2003 for all other variable interest entities. As the Company does
not have variable interest entities, the adoption of FIN 46 will not have an effect on
the Companys financial position, results of operations or cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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|4. | Employee
Stock Based Compensation
The
Company accounts for all plans under APB Opinion No. 25, under which no compensation costs
were incurred. Pro forma information regarding net loss required under SFAS No. 148 has
been determined for the options under the plans, in accordance with SFAS No. 123 and SFAS No. 148, the
Companys net loss and EPS would have been reduced as follows:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Three Months Ended March 31           | 2003     | 2002    
|------------------------------------- | -------- | --------
|
|                                      |          |         
|Net loss:                             |          |         
|As reported                           | $(2,167) | $(6,175)
|Less-stock based compensation expense
|Determined under fair value method    | (123)    | (906)   
|                                      |          |         
|Pro forma                             | $(2,290) | $(7,081)
|                                      |          |         
|Basic and diluted EPS:               
|As reported                           | $(0.11)  | $(0.32) 
|                                      |          |         
|Pro forma                             | $(0.12)  | $(0.37) 
|                                      |          |         

| | Under
SFAS No. 123, the fair value of each option is estimated on the date of grant using the
Black Scholes option-pricing model with the following assumptions: (1) expected life of
options; (2) dividend yield; (3) volatility; and (4) risk-free interest rate. For the
three months ended March 31, 2003 and 2002, no options were granted.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Segment
information presented below results primarily from operations in Israel.
|-- | --------------------------------------------------------------------------------

|THREE MONTHS ENDED MARCH 31, | 2003        | 2002        
|---------------------------- | ----------- | ------------
|
|                             |             |             
|Revenues:                    |             |             
|Finance                      | $     2,908 | $  (1,613)  
|                             |             |             
|Real Estate                  | 2,105       | 1,839       
|Leisure-time                 | 446         | 419         
|Intercompany adjustments     | (16)        | (20)        
|                             |             |             
|                             |             |             
|Total                        | $     5,443 | $        625
|                             |             |             
|                             |             |             
|Pretax Operating Loss:      
|Finance                      | $  (1,236)  | $  (8,356)  
|                             |             |             
|Real Estate                  | (179)       | (63)        
|                             |             |             
|Leisure-time                 | 50          | 47          
|                             |             |             
|Total                        | $  (1,365)  | $  (8,372)  
|                             |             |             
|                             |             |             
|Total Assets:               
|Finance*                     | $ 244,530   | $ 281,054   
|                             |             |             
|Real Estate                  | 68,816      | 69,499      
|Leisure-Time                 | 15,666      | 14,546      
|Intercompany adjustments     | (2,606)     | (4,425)     
|                             |             |             
|                             |             |             
|Total                        | $ 326,406   | $ 360,674   
|                             |             |             

*Includes
an investment in MIRS Communications Ltd. of $111 million.

10

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| | Corporate
office expense is principally applicable to the financing operations and has been charged
to that segment above. Revenues exclude equity in earnings of affiliates and pretax
operating income excludes equity in earnings of affiliates and minority interests.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
real estate segment consists of rental property owned in Israel leased to unrelated
parties and of the operations of Am-Hal Ltd., the Companys wholly-owned subsidiary
which owns and operates a chain of senior citizens facilities located in Israel. The
leisure-time segment consists primarily of Coral World International Limited (marine
parks located around the world) and Country Club Kfar Saba (the companys 51%-owned
subsidiary located in Israel).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The
following table summarizes securities that were outstanding as of March 31,
               2003 and 2002, but not included in the calculations of diluted earnings
per                Class A share because such shares are anti-dilutive.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(Shares in thousands)  | March 31,
|---------------------- | ---------
|
|Options and Rights     | 1,338    
|6-1/2% Preferred Stock | 577      
|4% Preferred Stock     | 132      

11

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

CRITICAL
ACCOUNTING POLICIES

The preparation of Ampals
consolidated financial statements is in conformity with accounting principles generally
accepted in the United States which requires management to make estimates and assumptions
in certain circumstances that affect amounts reported in the accompanying consolidated
financial statements and related footnotes. Actual results may differ from these
estimates. To facilitate the understanding of Ampals business activities, described
below are certain Ampal accounting policies that are relatively more important to the
portrayal of its financial condition and results of operations and that require managements
subjective judgments. Ampal bases its judgments on its experience and various other
assumptions that it believes to be reasonable under the circumstances. Please refer to
Note 1 to Ampals consolidated financial statements included in the Annual Report
for the year ended December 31, 2002 for a summary of all of Ampals significant
accounting policies.

Portfolio Investments

The Company accounts for a number of
its investments, including many of its investments in the high-technology and
communications industries, on the basis of the cost method. Application of this method
requires the Company to periodically review these investments in order to determine
whether to maintain the current carrying value or to write off some or all of the
investment. While the Company uses some objective measurements in its review, such as the
portfolio companys liquidity, burn rate, termination of a substantial number of
employees, achievement of milestones set forth in its business plan or projections and
seeks to obtain relevant information from the company under review, the review process
involves a number of judgments on the part of the Companys management. These
judgments include assessments of the likelihood of the company under review to obtain
additional financing, to achieve future milestones, make sales and to compete effectively
in its markets. In making these judgments the Company must also attempt to anticipate
trends in the particular companys industry as well as in the general economy. There
can be no guarantee that the Company will be accurate in its assessments and judgments.
To the extent that the Company is not correct in its conclusion it may decide to write
down all or part of the particular investment.

Investment in MIRS

MIRS is our largest investment and
is being accounted for at cost (our equity interest is 25%). The cost method is applied
due to preference features we have been granted in our investment in preferred shares in
Mirs. Revenues from guaranteed payments from Motorola are recognized as income. We
perform annual tests for impairment regarding our investment.

Marketable Securities

We determine the appropriate
classification of marketable securities at the time of purchase. To date, we hold
marketable securities classified as trading securities that are carried at fair value,
and marketable securities classified as available-for-sale that are carried at fair value
with unrealized gains and losses included in the component of accumulated other
comprehensive loss in stockholders equity. If according to managements
assessment it is determined that a decline in the fair value of any of the investments is
other than temporary, an impairment loss is recorded and included in the consolidated
statements of income as financial expenses.

12

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Long-Lived Assets

On January 1, 2002, Ampal adopted
FAS 144, Accounting for the Impairment or Disposal of Long- Lived Assets. FAS
144 requires that long- lived assets, to be held and used by an entity, be reviewed for
impairment and, if necessary, written down to the estimated fair values, whenever events
or changes in circumstances indicate that the carrying amount of the assets may not be
recoverable through undiscounted future cash flows.

Accounting for Income Taxes

As part of the process of preparing
our consolidated financial statements, we are required to estimate our income taxes in
each of the jurisdictions in which we operate. This process involves us estimating our
current tax exposure together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes. These differences result in
deferred tax assets and liabilities, which are included in our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be recovered
from future taxable income, and, to the extent we believe that recovery is not likely, we
must establish a valuation allowance. To the extent we establish a valuation allowance or
increase this allowance in a period, we must include an expense within the tax provision
in the statement of operations. A valuation allowance is currently set against certain
tax assets because management believes it is more likely than not that these deferred tax
assets will not be realized through the generation of future taxable income. We also do
not provide for taxes on undistributed earnings of our foreign subsidiaries, as it is our
intention to reinvest undistributed earnings indefinitely outside the United States.

Significant management judgment is
required in determining our provision for income taxes, our deferred tax assets and
liabilities and our future taxable income for purposes of assessing our ability to
realize any future benefit from our deferred tax assets. In the event that actual results
differ from these estimates or we adjust these estimates in future periods, our operating
results and financial position could be materially affected.

Recently Issued Accounting
Pronouncements

In November 2002, the FASB issued
FASB Interpretation No. 45 Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN
45). FIN 45 requires the guarantor to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the guarantee. It
also elaborates on the disclosures to be made by a guarantor in its financial statements
about its obligations under certain guarantees that it has issued and to be made in
regard of product warranties. The Company does not expect the adoption of FIN 45 to have
a material effect on our consolidated financial statements.

In January 2003, the FASB issued
FASB Interpretation No. 46 Consolidation of Variable Interest Entities (FIN
46). Under this FIN, entities are separated into two populations: (1) those for which
voting interests are used to determine consolidation (this is the most common situation)
and (2) those for which variable interests are used to determine consolidation. FIN 46
explains how to identify Variable Interest Entities (VIE) and how to determine when a
business enterprise should include the assets, liabilities, non-controlling interests,
and results of activities of a VIE in its consolidated financial statements. FIN 46 is
effective as follows: for variable interests in variable interest entities created after
January 31, 2003, FIN 46 shall apply immediately, for variable interests in variable
interest entities created before that date, FIN 46 shall apply for public entities as of
the beginning of the first interim or annual reporting period beginning after June 15,
2003. FIN 46 is effective immediately for certain disclosure requirements and variable
interest entities created after January 31, 2003 and in fiscal 2003 for all other
variable interest entities. As the Company does not have variable interest entities, the
adoption of FIN 46 will not have an effect on the Companys financial position,
results of operations or cash flows.

13

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Results of Operations

Ampal-American Israel Corporation (Ampal)
and its subsidiaries (the Company) recorded a consolidated net loss of $2.2
million for the three months ended March 31, 2003, as compared to a net loss of $6.2
million for the same period in 2002. The decrease in net loss is primarily attributable
to the realized and unrealized gains on investments in 2003, as compared to the realized
and unrealized losses in 2002, the absence of loss from impairment of investments in
2003, and higher other income. These increases in net income were partially offset by the
equity in losses of affiliates and a translation loss in 2003 as compared to a
translation gain in 2002.

Ampal recorded $0.9 million of
realized and unrealized gains on investments which are classified as trading securities
in the three-month period ended March 31, 2003, as compared to $2.9 million of realized
and unrealized losses in the same period in 2002. The realized and unrealized gains in
2003 are attributable mainly to the Companys investment in Blue Square Israel Ltd. (Blue
Square). Regarding the realized and unrealized losses recorded in 2002, they were
primarily attributable to the Companys investment in shares of Bank Leumi LeIsrael
B.M. (Leumi), Alvarion Ltd. (Alvarion) and Arel Communications
and Software Ltd.

Equity in earnings of affiliates
decreased to a loss of $0.5 million for the three months ended March 31, 2003, from the
income of $2 million for the same period in 2002. The loss in 2003 includes a $1.35
million provision attributed to losses from Granite Hacarmel (Granite), one
of the Companys affiliates.  According to an immediate report issued by
Granite, its management estimated that the result of its operations for the first quarter
of 2003 will culminate in a loss of between NIS 39 and NIS 57 million. The estimated loss
is not final and it is subject to review, adjustments and approval of Granites
Board of Directors. Accordingly, the impact on the Companys share of these
estimated losses would range from approximately $0.9 to $1.8 million. The Company has
determined to include in its results of operations an amount equal to the average of the
range of those losses.

The increase in other income in the
three months ended March 31, 2003, as compared to the same period in 2002, is mainly
attributable to the $1.7 million income recorded in the first quarter of 2003 with
respect to the guaranteed payment from Motorola (Israel) Ltd., which was not recorded in
the same period in 2002.

In the three-month period ended
March 31, 2002, the Company recorded $3.9 million in losses from the impairment of its
investments and loans in the following companies: Bay Heart Limited (Bay Heart)($1.5
million), Bridgewave Communications, Inc. ($0.8 million), Camelot Information
Technologies Ltd. (Camelot)($0.5 million), Netformx Ltd. ($0.5 million),
Enbaya Inc. ($0.5 million), Tulip Ltd. ($0.1 million). There were no similar losses
recorded in the first quarter of 2003.

The Company recorded lower interest
expense in the three months ended March 31, 2003, as compared to the same period in 2002,
primarily as a result of lower interest rates.

The Company recorded a translation
loss of $0.3 million in the three months ended March 31, 2003 as compared to a
translation gain of $1 million in the same period in 2002. The translation loss in 2003
and the translation gain in 2002 are attributable to the revaluation and devaluation of
the new Israeli shekel against the U.S. dollar in the respective periods.

14

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Liquidity and Capital Resources

Cash Flows

On March 31, 2003, cash and cash
equivalents were $1.4 million, as compared with $1.6 million at December 31, 2002.

The Companys sources of cash
include cash and cash equivalents, marketable securities, cash from operations, cash from
investing activities and amounts available under credit facilities, as described below.
The Company believes that these sources are sufficient to fund the current requirements
of operations, capital expenditures, investing activities, dividends on preferred stock
and other financial commitments of the Company for the next 12 months. However, to the
extent that contingencies and payment obligations described below and in other parts of
this Report require the Company to make unanticipated payments, the Company would need to
further utilize these sources of cash. To the extent that the Company intends to rely on
the sale of marketable securities in order to satisfy its cash needs, it is subject to
the risk of a shortfall in the amount of proceeds from any such sale as compared with the
anticipated sale proceeds due to a decline in the market price of those securities. In
the event of a decline in the market price of its marketable securities, the Company may
need to draw upon its other sources of cash, which may include additional borrowing,
refinancing of its existing indebtedness or liquidating other assets, the value of which
may also decline. In addition, the shares of MIRS owned by the Company have already been
pledged as security for specific loans provided to the Company for the purchase of these
shares and would therefore be unavailable if the Company wished to pledge them in order
to provide an additional source of cash.

Cash
flows from operating activities

Net cash provided by operating
activities totaled approximately $0.5 million for the three months ended March 31, 2003,
as compared to approximately $4.4 million for the same period in 2002. The decrease is
primarily attributable to the $7 million guaranteed payment made by Motorola (Israel)
Ltd. in 2002. In 2003, the payment was received by the Company at the beginning of April.

Cash
flows from investing activities

Net cash provided by investing
activities totaled approximately $0.3 million for the three months ended March 31, 2003,
as compared to approximately $0.2 million for the same period in 2002.

Cash
flows from financing activities

Net cash used in financing
activities was approximately $0.6 million at March 31, 2003, as compared to approximately
$9.6 million at March 31, 2002. The decrease in the cash used in 2003 is primarily
attributable to the pay down of notes and loans repayments ($1.2 million and $8.5 million
in 2003 and 2002, respectively).

Investments

On March 31, 2003, the aggregate
fair value of trading and available-for-sale securities was approximately $20 million, as
compared to $18.6 million at December 31, 2002. The increase in 2003 is attributable to
increases in the market prices of such securities.

15

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In 2003, the Company made the
following investments:

|(1) | A
$0.7 million in ShellCase Ltd., a developer and manufacturer of chip size packaging.The
Company currently holds an approximately 14.0% equity interest in ShellCase
          Ltd.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | A
$0.3 million in Star Management of Investments No.II (2000)       (Star),
a venture capital fund. The Company currently holds an           approximately 10% equity
interest in Star.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Debt

At March 31, 2003, the Company had
in place unused lines of credit in the aggregate amount of $6.3 million.

In connection with its investment in
MIRS, the Company has two long-term loans from Bank Hapoalim Ltd. (Hapoalim)
and Bank Leumi le-Israel B.M. (Leumi) in the outstanding amount of $37.3
million and $34.8 million, respectively, as of March 31, 2003. Both loans are due on
March 31, 2008 and bear interest at a rate of LIBOR plus 0.8%. Other than as described in
this paragraph, the loans are non-recourse to the Company and are secured by the Companys
shares in MIRS. The principal payments are due as follows: 10% on March 31, 2004, 15% on
March 31, 2005 and 25% on each of March 31, 2006, 2007 and 2008. Interest is required to
be paid annually on March 31 of each year from March 31, 2002 until and including March
31, 2008. These loans are subject to the compliance by MIRS with covenants regarding its
operations and financial results. As a result of renegotiations with the bank regarding
the covenants, Leumi will have recourse to the Company for an additional $0.5 million
beginning in 2006 with respect to the Companys repayment obligations under the
loan.

On
March 31, 2003, the Company redeemed 17.5 million in principal amount of its outstanding
debentures. The transaction was financed by a loan from Bank Hapoalim, the principal
repayments of which are due as follows: 50% on April 1, 2006, and 10% on each of April 1,
2004, 2005, 2006, 2007 and 2008. The loan bears interest at a rate of libor plus 2.5% on
the 50% of the loan which is to be repaid on April 1, 2006 and libor plus 2.4% on the
balance of the loan. The interest is payable semi-annually on October 1 and April 1 of
each year. The loan is secured by certain of the Companys marketable securities and
the Companys investment in Ophir Holdings Ltd. As of March 31, 2003, the company
had $3.7 million in debentures outstanding with interest rates of 7.5% These debentures,
which mature in 2005, are secured by $3.8 million in cash held in a secured account.

The
Company financed a portion of the development of Am-Hal, a wholly-owned subsidiary which
develops and operates luxury retirement centers for senior citizens, through bank loans
from Hapoalim. At March 31, 2003 and December 31, 2002, the amounts outstanding under
these loans were $11.5 million and $12.7 million, respectively. The loans are dollar
linked, mature through 2007-2010 and have interest rates of LIBOR plus 2.25%. The Company
generally repays these loans with the proceeds received from deposits and other payments
from the apartments in Am-Hal facilities. The loans are secured by a lien on Am-Hals
properties. The Company also issued guarantees in the amount of $4.8 million in favor of
clients of Am-Hal in order to secure their deposits.

The
Company also finances its general operations and other financial commitments through
short-term borrowings, mainly from Hapoalim. The term of these borrowings is up to one
year. The weighted average interest rates and the balances of these short-term borrowings
at March 31, 2003 and December 31, 2002 were 3.9% on $41.3 million and 4.4% on $39.8
million, respectively.

16

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As
of March 31, 2003, the Company had issued guarantees on certain outstanding loans to its
investees and subsidiaries in the aggregate principal amount of $11.8 million. This
includes:

$0.5 million guarantee to Leumi with
respect to the MIRS loan as described above.

$5.7 million guarantee on
indebtedness incurred by Bay Heart ($3.8 million of which was recorded as a loss in the
Companys financial statements) in connection with the development of its property.
There can be no guarantee that Bay Heart will become profitable or that it will generate
sufficient cash to repay its outstanding indebtedness without relying on the Companys
guarantee.

$4.8 million guarantee to Am- Hal
tenants as described above.

$0.8 million guarantee to Galha
1960 Ltd.

FOREIGN CURRENCY CONTRACTS

The Companys derivative
financial instruments consist of foreign currency forward exchange contracts. These
contracts are utilized by the Company, from time to time, to manage risk exposure to
movements in foreign exchange rates. None of these contracts have been designated as
hedging instruments. These contracts are recognized as assets or liabilities on the
balance sheet at their fair value, which is the estimated amount at which they could be
settled based on market prices or dealer quotes, where available, or based on pricing
models. Changes in fair value are recognized currently in earnings.

FORWARD LOOKING STATEMENTS

This Quarterly Report (including but
not limited to factors discussed above, in the Managements Discussion and
Analysis of Financial Condition and Results of Operations, as well as those
discussed elsewhere in this Quarterly Report on Form 10-Q) includes forward-looking
statements (as such term is defined in the Private Securities Litigation Reform Act of
1995) and information relating to the Company that are based on the beliefs of management
of the Company as well as assumptions made by and information currently available to the
management of the Company. When used in this Quarterly Report, the words anticipate,
believe, estimate, expect, intend, plan, and similar expressions, as they relate to the
Company or the management of the Company, identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future events or
future financial performance of the Company, the outcome of which is subject to certain
risks and other factors which could cause actual results to differ materially from those
anticipated by the forward-looking statements, including among others, the economic and
political conditions in Israel, the Middle East, including the situation in Iraq, and the
global business and economic conditions in the different sectors and markets where the
Companys portfolio companies operate.

Should any of those risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual
results or outcome may vary from those described herein as anticipated, believed,
estimated, expected, intended or planned. Subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements in this paragraph and elsewhere
described in this quarterly Report and other Reports filed with the Securities and
Exchange Commission.

17

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ITEM 3.   QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS AND SENSITIVITY
ANALYSIS

The Company is exposed to various
market risks, including changes in interest rates, foreign currency rates and equity
price changes. The following analysis presents the hypothetical loss in earnings, cash
flows and fair values of the financial instruments which were held by the Company at
March 31, 2003, and are sensitive to the above market risks.

During the three months ended March
31, 2003, there have been no material changes in the market risk exposures facing the
Company as compared to those the Company faced in the fiscal year ended December 31,
2002.

Interest Rate Risks

At March 31, 2003, the Company had
financial assets totaling $10 million and financial liabilities totaling $136.9 million.
For fixed rate financial instruments, interest rate changes affect the fair market value
but do not impact earnings or cash flows. Conversely, for variable rate financial
instruments, interest rate changes generally do not affect the fair market value but do
impact future earnings and cash flows, assuming other factors are held constant.

At March 31, 2003, the Company had
fixed rate financial assets of $6 million and variable rate financial assets of $4
million. Holding other variables constant, a ten percent increase in interest rates would
decrease the unrealized fair value of the fixed financial assets by approximately $0.1
million.

At March 31, 2003, the Company had
fixed rate debt of $13.8 million and variable rate debt of $123.1 million. A ten percent
decrease in interest rates would increase the unrealized fair value of the fixed rate
debt by approximately $0.1 million.

The net decrease in earnings for the
next year resulting from a ten percent interest rate increase would be approximately $0.5
million, holding other variables constant.

Exchange Rate Sensitivity Analysis

The Companys exchange rate
exposure on its financial instruments results from its investments and ongoing operations
in Israel. During 2003, the Company entered into various foreign exchange forward
purchase contracts to partially hedge this exposure. At March 31, 2003, the Company had
open foreign exchange forward purchase contracts in the amount of $19.5 million. Holding
other variables constant, if there were a ten percent devaluation of the foreign
currency, the Companys cumulative translation (loss) reflected in the Companys
accumulated other comprehensive (loss) would increase by $1.6 million, and in the
statements of income (loss), a ten percent devaluation of the foreign currency would
decrease net earnings in the amount of approximately $1.1 million.

Equity Price Risk

The Companys investments at
March 31, 2003, included marketable securities (trading and available-for-sale) which are
recorded at fair value of $20 million. Those securities have exposure to price risk. The
estimated potential loss in fair value resulting from a hypothetical ten percent decrease
in prices quoted on stock exchanges is approximately $2 million.

18

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ITEM 4.   CONTROLS AND PROCEDURES

Within
the 90-day period prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of management, including its
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of Ampals disclosure controls and procedures. Based upon that
evaluation, Ampals management, including its Chief Executive Officer and Chief
Financial Officer, concluded that these controls and procedures are effective.

There
have been no significant changes in Ampals internal controls or in other factors
that could significantly affect internal controls subsequent to the date that the Company
carried out its evaluation.

Part II  OTHER INFORMATION

|Item 1. | Legal Proceedings
|------- | -----------------

| | None.
| | -----

|Item 2. | Changes in Securities and Use of Proceeds
|------- | -----------------------------------------

| | None.
| | -----

|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

| | None.
| | -----

|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

| | None.
| | -----

|Item 5. | Other Information
|------- | -----------------

| | None.
| | -----

Item
6.   Exhibits and Reports on Form 8-K

| | (a) | Exhibits:
| | --- | ---------

| | 11.1 | Schedule
Setting Forth Computation of Loss per Share of Class A Stock.
| | ---- | ----------------------------------------------------------------------

| | 99.1 | Certification
of Jack Bigio pursuant to 18 U.S.C. Section 1350, as adopted     pursuant to Section 906
of Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 | Certification
of Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted     pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Reports
on Form 8-K: None
| | --- | -------------------------

19

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto dully authorized.

| |  | AMPAL-AMERICAN ISRAEL CORPORATIONBy:/s/ Jack Bigio
Jack BigioChief Executive Officer(Principal Executive Officer)
| |  | -------------------------------------------------------------------------------------------------------------------------------

| |  | By:/s/ Irit Eluz
Irit EluzCFO and Vice President - Financeand Treasurer(Principal Financial Officer)
| |  | ------------------------------------------------------------------------------------------------------------------

| |  | By:/s/ Alla Kanter
Alla KanterVice President - Accounting(Principal Accounting Officer)
| |  | -----------------------------------------------------------------------------------------------------

| |  | By:/s/ Giora Bar-Nir
Giora Bar-NirController(Principal Accounting Officer)
| |  | ----------------------------------------------------------------------------------------

Dated: May 15, 2003

20

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I, Jack Bigio, certify that:

|1. | I
have reviewed this quarterly report on Form 10-Q of Ampal  American
               Israel Corporation;
|-- | ---------------------------------------------------------------------------------------------------------

|2. | Based
on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to
make                the statements made, in light of the circumstances under which such
statements                were made, no misleading with respect to the period covered by
this quarterly                report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based
on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects
the                financial condition, results of operations and cash flows of the
registrant as                of, and for, the periods presented in this quarterly report;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the registrant, including its consolidated subsidiaries,           is made
known to us by others within those entities, particularly during the           period in
which this quarterly report is being prepared;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated
the effectiveness of the registrants disclosure controls and           procedures
as of a date within 90 days prior to the filing date of this           quarterly report
(the Evaluation Date); and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented
in this quarterly report our conclusions about the effectiveness of           the
disclosure controls and procedures based on our evaluation as of the           Evaluation
Date;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function):
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all
significant deficiencies in the design or operation of internal controls           which
could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

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| | b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the registrants internal controls.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The
registrants other certifying officers and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal
controls                subsequent to the date of our most recent evaluation, including
any corrective                actions with regard to significant deficiencies and
material weaknesses.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 15, 2003 |  | /s/ Jack Bigio
Jack BigioPresident and Chief Executive Officer
|------------------ |  | ----------------------------------------------------------------------------

22

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I, Irit Eluz, certify that:

|1. | I
have reviewed this quarterly report on Form 10-Q of Ampal  American
               Israel Corporation;
|-- | ---------------------------------------------------------------------------------------------------------

|2. | Based
on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to
make                the statements made, in light of the circumstances under which such
statements                were made, no misleading with respect to the period covered by
this quarterly                report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based
on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects
the                financial condition, results of operations and cash flows of the
registrant as                of, and for, the periods presented in this quarterly report;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed
such disclosure controls and procedures to ensure that material           information
relating to the registrant, including its consolidated subsidiaries,           is made
known to us by others within those entities, particularly during the           period in
which this quarterly report is being prepared;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated
the effectiveness of the registrants disclosure controls and           procedures
as of a date within 90 days prior to the filing date of this           quarterly report
(the Evaluation Date); and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented
in this quarterly report our conclusions about the effectiveness of           the
disclosure controls and procedures based on our evaluation as of the           Evaluation
Date;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function):
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all
significant deficiencies in the design or operation of internal controls           which
could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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| | b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the registrants internal controls.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The
registrants other certifying officers and I have indicated in this
               quarterly report whether or not there were significant changes in internal
               controls or in other factors that could significantly affect internal
controls                subsequent to the date of our most recent evaluation, including
any corrective                actions with regard to significant deficiencies and
material weaknesses.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  May 15, 2003 |  | /s/ Irit Eluz

Irit EluzCFO and Vice President - Finance andTreasurer
|------------------- |  | -----------------------------------------------------------------------------------

24

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

Exhibit Index

Exhibit
No.                    Description

| | 11.1 | Schedule
Setting Forth Computation of EarningsPer
Share of Class A Stock.....................
| | ---- | ---------------------------------------------------------------------------------------------

| | 99.1 | Certification
of Jack Bigio pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                  Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 | Certification
of Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------

25

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Exhibit 11.1

AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

SCHEDULE SETTING FORTH COMPUTATION OF LOSS PER SHARE OF CLASS A STOCK

|THREE MONTHS ENDED MARCH 31,   | 2003      | 2002      
|------------------------------ | --------- | ----------
|
|                               |           |           
|BASIC AND DILUTED EPS          |           |           
|Net loss (1)                   | $(2,222)  | $(6,232)  
|Loss per Class A Share         | $  (0.11) | $    (.32)
|Shares used in calculation (2) | 19,686    | 19,277    

| | (1) | After
deduction of accrued preferred stock dividends of $55 and $57,           respectively
| | --- | -------------------------------------------------------------------------------------------

| | (2) | In
2003 and 2002, the conversion of the 4% and 6-1/2% Preferred           Stocks and the
exercise of stock
options was excluded from the diluted EPS calculation due to the antidilutive effect.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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Exhibit 99.1

CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In
connection with the quarterly report of Ampal-American Israel Corporation (the Company)
on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Jack Bigio, Chief
Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

(1)                  The
report fully complies with the requirements of Section 13(a) or 15(d) of the
               Securities Exchange Act of 1934; and

(2)                  The
information contained in the Report fairly presents, in all material
               respects, the financial condition and results of operations of the
Company.

| |  | /s/ Jack Bigio

Jack BigioPresident and CEOAmpal-American Israel CorporationMay 15, 2003
| |  | ------------------------------------------------------------------------------------------------------

A signed original of this written
statement required by Section 906 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its staff upon
request.

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Exhibit 99.2

CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In
connection with the quarterly report of Ampal-American Israel Corporation (the Company)
on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Irit Eluz, Chief
Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

(1)                  The
report fully complies with the requirements of Section 13(a) or 15(d) of the
               Securities Exchange Act of 1934; and

(2)                   The
information contained in the Report fairly presents, in all material
               respects, the financial condition and results of operations of the
Company.

| |  | /s/ Irit Eluz

Irit EluzCFO and Vice President - Finance and TreasurerAmpal-American Israel Corporation
May 15, 2003
| |  | ----------------------------------------------------------------------------------------------------------------------------------

A signed original of this written
statement required by Section 906 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its staff upon
request.

28

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