Yuval Adler could have been many things. He studied philosophy after army service and went on to study for a PhD at Columbia University. He was also an artist who was good enough to have his work - a mixture of sculpture, installation and video - exhibited in galleries in New York. And to fund these more esoteric activities, Adler made good money working part time on the maths side of a hedge fund operation.

But despite the fact that he was qualified to work in any of these fields at a high level, Adler decided several years ago to take a more difficult path - he wanted to be a filmmaker. It has not been plain sailing and Adler admits to a period of crisis when he was struggling to make the grade. However, the consensus among critics around the world who have seen his debut effort, Bethlehem, is that he has made the correct choice. The taut thriller set in the murky world of security services inside the Territories has been highly acclaimed and was nominated by Israel as its entry for the foreign language Oscar. And it is the launch movie for Seret, London's Israeli film and TV festival.

For Adler, Bethlehem is the culmination of a long and at times problematic process. He wasn't sure that he could make a film or that he would even get the chance. However, what he did have was passion, commitment and crucially, a very good idea.

"It was while I was living in New York that I saw a video of a Palestinian collaborator being shot. I was fascinated when I found out more about the incident because it wasn't really about the liberation of Palestine but because one faction had quarrelled with another. I decided it would be interesting to follow the human side of this story."

What Adler wanted was a story about an intelligence handler and the boy he recruited - a human drama with a political background. The result is a thriller but also a film based on a surprisingly tender relationship. "I decided I wanted to make a movie about the situation on the Palestinian and the Israeli side. I approached Ali Waked [a Palestinian journalist] to co-write the script with me. Although there is politics in the film, this is about the way the handlers work. People assume that the relationship is about threats or bribes but actually it's much more complex than that. There is no black or white in the film. I wanted to show what the life of an informant looked like and what the life of a handler looked like. The idea was less to show the big picture and more to do a close up on the lives of a few people in the conflict."

Although he has a background in philosophy, there was, he says, none in the film. "I did not want to make the film to make any point. There is no message. This is just a drama."

Many assumed that because Adler worked in army intelligence that much of his research came from personal experience. However, he points out that his work was related to technical issues, mainly on drones. So the research started from scratch. Plenty of it was unglamorous. He spent months gaining a working knowledge of Arabic, scouting locations in areas which could be dangerous for an Israeli. He and Waked also visited refugee camps in the West Bank to hear from the occupants.

Adler had no difficulty in finding people from Israel's internal security organisation, Shin Bet, to talk. "It was very easy to get them to speak about things - sometimes I wondered if they were actually telling me too much. But we did lots of research and I think we told the story accurately." Indeed, many with experience of the Israeli security services have been very impressed by how true to life Bethlehem is.

If constructing a debut film was not hard enough, Adler decided in the middle of the project that none of the actors would be professionals. It started off with the 17-year-old Palestinan informant, played by Shadi Mar'i. "We wanted a teenage kid, not someone older who could pass as a kid. We found him in a village near Nazareth - his brother in the film, Ibrahim, teaches acting in Nazareth." Eventually Adler decided that if some of the actors were going to be amateur then all of them should be in the hope that the film would work more seamlessly. The handler, played by Tsahi Halevy, turned out to have talents which went beyond acting. Before the film came out he won the Israeli version of The Voice talent contest.

Bethlehem was well received in Israel - by most people at least. "There were some ideologues who didn't like the fact that the handler was not painted as more evil but aside from that it has been good. We were the biggest film in 2013 in Israel and considering this is not a romantic comedy, that pleases me. What did surprise me was that it found an audience outside Israel. There is the problem of the translation - you would not automatically know when a character is speaking Hebrew or Arabic. Also, if you know nothing about the security situation it might be difficult to understand everything that goes on. So I'm happy and surprised it has done so well."

Adler will be in London for Sunday's gala screening of Bethlehem at Seret. He has no explanation as to why Israelis are producing such a plethora of good drama, other than attributing it to a talented generation. But he is gratified that the rest of the world is paying attention Israeli film and TV. The week-long festival is taking place in cinemas around the capital and will showcase the best in Israeli film and documentary.

For programming and ticket details for the festival go to www.seret.org.uk