TOP STORIES

• Bank of Israel Revises Economic Growth Forecast Upward
• Persian Gulf Wood Prices Stable During July - August
• Siemens Buys Into Israeli Solar Company Arava Power
• Kuwait Picks GE for $2.7 Billion Power Plant
• Protalix Receives FDA Fast Track Designation for prGCD
• Rising Exports Shrinks Israel’s Deficit

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Bank of Israel Revises Economic Growth Forecast Upward
1.2 Israel Becomes First to Raise Interest

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 NICE Establishes Actimize by Acquiring Fortent
2.2 MRM Worldwide and Virtual Animation Studio Aniboom Enter Strategic Alliance
2.3 US Approved Israeli Poultry to Expand Sales in US Kosher Market
2.4 NICE to Enhance Security Offering With the Acquisition of Hexagon

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Yahoo! Signs Definitive Agreement to Acquire Maktoob.com
3.2 Persian Gulf Wood Prices Stable During July - August
3.3 Advanced Control Systems Delivers 25 Substation Controllers to Jordanian Electric Power Company
3.4 Krispy Kreme Opens First Store in Turkey

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Siemens Buys Into Israeli Solar Company Arava Power
4.2 Ben Gurion Airport to Install Solar Energy Systems

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Middle East Carriers Continue To Grow & Gain Market Share
5.2 Kuwait Budget Surplus Falls 59%
5.3 Kuwait Picks GE for $2.7 Billion Power Plant
5.4 Iraq Plans Second Oil Bid Round By Mid-December
5.5 Qatar Entertainment City Awards $27m Contract
5.6 UAE Inflation Rises 0.4% in July
5.7 Dubai Sets Up Oil & Energy Bodies
5.8 Saudi Inflation Falls To Two-Year Low in July
5.9 Washington Links Pakistani Aid to IPI

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 New Vehicle Registrations in June Up 34.1% In Turkey
6.2 Cyprus Finance Ministry Says Deficit Is Rising
6.3 Key Greek Sectors Suffer Revenue Slump

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israeli Girls Outsmart Boys on Matriculation Exams in 2008

*REGIONAL:

7.2 Armenia & Turkey Agree To Establish Diplomatic Ties

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Orphan Drug Status Granted to BioCancell's Ovarian Cancer Drug
8.2 Rosetta Genomics & SRL Announce Exclusive Distribution Agreement for Mid East & India
8.3 BrainStorm Cell Therapeutics Secures Funding to Reach Clinical Trials for ALS
8.4 Protalix Receives FDA Fast Track Designation for prGCD
8.5 Foamix Receives US Patent on Novel Foam Technology
8.6 IDRI to Use NanoPass Microneedle Technology for Intradermal Vaccines and Diagnostic Skin Tests

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Infinite Memories Selected by Flash Memory Summit 2009 as a Best Of Show Awards Winner
9.2 Optibase Selected by ZTE to Provide Encoding Solutions for CANTV IPTV Services in Venezuela
9.3 NICE Wins $55m Mega Contract From a Government Agency for its Security Solution
9.4 Wavion Delivers Wireless Broadband Access to Ekaterinburg and other Ural Cities
9.5 Voltaire Scale-out Fabrics Connect World’s Most Power-Efficient Supercomputers
9.6 BluePhoenix Completes IT Modernization Project for Israel Local Authorities
9.7 RiT Technologies Implements its PatchView IIM Solution in Radio Free Europe
9.8 Intalio & Mellanox Technologies Deliver First High Performance Private Cloud Appliance
9.9 Optibase Introduces MovieMaker H.264 PCI Express Encoder

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10: ISRAEL ECONOMIC STATISTICS

10.1 State of the Economy Index up 1.2% in July
10.2 Rising Exports Shrinks Israel’s Deficit
10.3 Israel’s Unemployment Rate Hits 8%
10.4 Number of Jobseekers Declines
10.5 Passenger Traffic at Ben Gurion Breaks Record
10.6 Israeli Home Price Rises Fastest In World
10.7 Israeli Credit Card Use Up 1.5%

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11: In Depth

11.1 ISRAEL: Moody's Issues Annual Report on Israel
11.2 LEBANON: Flying High
11.3 KUWAIT: Food and Drink Report Q4 2009
11.4 KUWAIT: Retail Steady
11.5 QATAR: Concrete Evidence
11.6 EGYPT: Moody’s Changes Egypt's Outlook To Stable From Negative
11.7 EGYPT: Easing Congestion
11.8 MOROCCO: Collaborative Construction
11.9 TURKEY: Azerbaijani Gas Causes Nabucco Concern
11.10 MALTA: Fitch Affirms Malta at 'A+'; Outlook Stable

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Bank of Israel Revises Economic Growth Forecast Upward

The Bank of Israel has revised upward its growth forecast for Israel's economy in 2009 and 2010. The Bank of Israel Governor Prof. Fischer now expects 0% growth this year, compared with its previous forecast of -1.5%. For 2010, the forecast is now for 2.5% growth, up from 1.5% in its previous forecast. Economists had expected an upward revision, following positive macro-economic figures released over recent months, which pointed to the economy exiting a recession. In Q2/09, the economy surprisingly grew 1%. The Bank of Israel is actually pessimistic about developments in the labor market and raised its unemployment forecast to an average of 8.1% in 2009 from 7.7%. In other words, the central bank predicts 243,000 unemployed by year end, up from its earlier prediction, made in April, of 231,000. The Bank of Israel stated that the annual forecast implies a quarterly path of moderate growth of about 2.5% per quarter, annual rate, during the rest of 2009, and a slow increase in unemployment in the second half of the year. The Bank of Israel also raised its current account surplus to $7 billion from $2 billion as a result of the considerable improvement in the terms of trade and the steep decline in imports. Based on National Accounts figures for the first half of 2009 and on economic indicators of the last few months, it appears that the decline in economic activity that had been expected to end only at the end of 2009 had effectively ended in the second quarter. A similar pattern also emerged in other advanced economies. (BoI01.09)

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1.2 Israel Becomes First to Raise Interest

On 24 August, Bank of Israel Governor Fischer announced that he would raise the interest by 0.25% to bring the rate to 0.75%. The hike is meant to prevent inflation. Fischer's decision followed unexpectedly high inflation last month. Prices rose by an average of 1.1% in July, while the target rate was only 0.8-0.9%. Israel will precede the US and Europe in raising interest. No Western countries have raised interest since the global financial crisis began several months ago. Fischer's move surprised analysts, most of whom had expected the Israeli rate to remain stable. Interest rates worldwide are not expected to rise for another several months. A statement accompanying the announcement said the other countries were not experiencing the same inflation as Israel. (IsraelNN25.08)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 NICE Establishes Actimize by Acquiring Fortent

NICE Systems and Actimize, a NICE Systems Company, announced the signing and closing of a definitive agreement to acquire New York’s Fortent - a leading provider of analytics based Anti-Money Laundering and financial crime prevention software solutions for the financial services industry. With limited overlap in customer base and complementary analytics technology, Actimize clients will now include the majority of the world's largest banks and all top ten global banks. They will benefit from the broadest, most comprehensive solutions and from a robust service and support organization. Furthermore, Actimize, which is now expected to be a $100 million business in 2010, will continue to leverage NICE's presence within thousands of financial institutions worldwide to further accelerate market presence. Under the terms of the agreement, NICE will be acquiring Fortent's Compliance and Risk Management business. Fortent will become part of Actimize which continues to operate as a wholly owned subsidiary of NICE, with the Fortent team becoming an integral part of Actimize. NICE will acquire Fortent in an all cash transaction for a total consideration of $73.5 million. The deal is expected to be accretive on a non-GAAP basis starting first quarter 2010, excluding acquisition related expenses and amortization of acquired intangible assets as well as certain business combination accounting entries.

Ra’anana’s NICE Systems (http://www.nice.com) is the leading provider of Insight from Interactions solutions and value-added services, powered by the convergence of advanced analytics of unstructured multimedia content and transactional data - from telephony, web, email, radio, video, and other data sources. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. (NICE31.08)

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2.2 MRM Worldwide and Virtual Animation Studio Aniboom Enter Strategic Alliance

MRM Worldwide, a top-ten global digital advertising agency and an operating company of McCann Worldgroup, has entered a strategic partnership with Aniboom. This partnership gives marketers an innovative animation platform for their branding initiatives in that MRM Worldwide clients have access to Aniboom's network of nearly 8,000 professional-level animators from 70 countries across the globe to create cutting edge, top-quality animations for their advertising and marketing needs. MRM and Aniboom will be able to provide marketers with a wide array of intriguing animation solutions which support their brands and help build buzz. Aniboom's alliance with MRM Worldwide comes on the heels of several partnerships Aniboom is executing on behalf of renowned entertainment brands. Fox Broadcasting Company and 20th Century Fox Television recently turned to Aniboom to help develop concepts for their next animated holiday special. Also, the Aniboom/HISTORY competition is underway, where Aniboom's animators are developing short form animations for the highly anticipated The People Speak film airing on HISTORY later this year.

Israel’s Aniboom (http://www.aniboom.com) is the premier virtual animation studio that partners with untapped talent around the world to create, produce and distribute unique and high-quality animation creations. Utilizing the web in an effort to seek out the best global talent, Aniboom's vibrant community of world class animators and animation enthusiasts cultivates and develops content intended for commercial application across the realms of TV, Film, Advertising, Digital Video-Gaming, Web, and Mobile Content worldwide. Aniboom's unique virtual studio model has set a new standard on how animated content is created, fostered and gained commercial success. (Aniboom 31.08)

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2.3 US Approved Israeli Poultry to Expand Sales in US Kosher Market

An already crowded kosher poultry market in the US may soon be even more crowded as representatives of the Food Safety and Inspection Service (FSIS) of the US Department of Agriculture approved chicken farmers, slaughterhouses and chicken food product factories to export to the American market. The visit was part of the FSIS's regular inspections of factories worldwide that export chicken food products to the American market. The FSIS approval means that the US considers veterinarian supervision to be equal to US standards. Sources at the Israel Export Institute say that Israel exports some 800 tons of chicken food products to the kosher market in the United States, but the estimated potential for this market is higher. Companies like Of Tov are considering a major expansion of the export of kosher poultry to the US. Kosher food sources say that the expansion of exports by the Israelis would most certainly set off further competition in a market already dominated by such major US kosher poultry producers as Empire which has in recent months significantly increased production of the kosher poultry. Newly acquired Agriprocessor continues to produce upward of 30,000 chickens a day. In addition, several new smaller poultry kosher slaughterhouses have also increased the choices for consumers. (KTN31.08)

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2.4 NICE to Enhance Security Offering With the Acquisition of Hexagon

NICE Systems signed a definitive agreement to acquire Hexagon System Engineering, an Israel-based company that provides cellular location tracking technology. Hexagon's unique technology enables law enforcement, internal security and intelligence agencies to fight crime and terror more effectively. The Hexagon solution will further bolster the NiceTrack portfolio in addressing the growing demand for location tracking capabilities. Under the agreement, NICE would acquire the company for approximately $11 million. The transaction is anticipated to close shortly. The company does not anticipate material impact on its financial results in years 2009 and 2010. Hexagon's technology enables high levels of cellular location accuracy at a fraction of the infrastructure deployment costs versus competitive alternatives. The technology has been developed by Hexagon for over a decade and successfully deployed worldwide. With this transaction NICE strengthens its position in communications interception market by adding innovative technology for communications information analysis that is complementary to the NiceTrack offering.

Ra'anana’s NICE Systems (http://www.nice.com) is the leading provider of Insight from Interactions solutions and value-added services, powered by the convergence of advanced analytics of unstructured multimedia content and transactional data - from telephony, web, email, radio, video, and other data sources. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. (NICE31.08)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Yahoo! Signs Definitive Agreement to Acquire Maktoob.com

Yahoo! has entered into a definitive agreement to acquire Jordan’s Maktoob.com, the leading online community in the Arab world, with more than 16.5 million unique users. Internet users in the region will benefit from the combination of Yahoo!’s popular products and services with Maktoob's compelling local content, which today reaches one in three people online throughout the Arab world. This acquisition will extend Yahoo!'s current offerings by adding capabilities to deliver relevant Arabic-language content and services, as well as Arabic versions of Yahoo!’s popular Yahoo! Messenger and Yahoo! Mail services. Maktoob.com is accessed by users in countries that include UAE, Jordan, Kuwait, Egypt and Saudi Arabia.

While internet usage in the Middle East has grown more than tenfold since 2000, most markets are still in early stages of adoption. According to the World Bank, there are more than 320 million Arabic speakers worldwide, while less than one per cent of all online content is in Arabic. With Yahoo! and Maktoob.com’s combined audience and platform, advertisers will have access to the reach and sophisticated targeting capabilities they need to effectively engage with the region’s online consumers. Spending on online advertising is expected to grow by 35 – 40% this year in the region, according to Madar Research.

Following the acquisition, Maktoob.com will become a wholly-owned subsidiary of Yahoo!. Upon completion of the deal, the remaining Maktoob Group companies – including Souq.com, cashU.com, Araby.com and Tahadi.com – will operate under a new entity called the Jabbar Internet Group. Yahoo! and the Jabbar will continue to have a strong commercial relationship going forward, which will include the promotion of Jabbar companies on the Maktoob.com portal. Financial terms were not disclosed. (Yahoo!25.08)

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3.2 Persian Gulf Wood Prices Stable During July - August

Persian Gulf wood prices continued to remain stable since rates recorded in July until the second week of August, a significant development that follows 18 months of continuously declining prices, according to Danube Building Materials. As the market witnesses heightened buying activity within the building materials sector, Danube announced its aims to address the increased demand for wood, especially with many regional developments approaching their completion. According to statistics released by Danube, wood prices began to stabilize in the first week of July, and are expected to increase further in the coming months. In addition, prices of other building materials continue to register growth, including steel props, which rose to Dh45 ($12.25) per piece from Dh42; scaffolding planks, which are currently being sold at Dh59 per piece from Dh58; and Red Meranti from West Malaysia, which has increased to Dh2,750 per ton from Dh2,700. The only product, which has seen a dip in price versus the rate in May is cement, which now wholesales at Dh15 per bag from Dh16. In addition to wood, Danube also named other products, which have seen no variation in their retail prices, including Russian Beechwood. European Whitewood has also seen an increase in prices within the same period, from Dh1,050 per cubic meter to Dh1,075. (TradeArabia 27.08)

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3.3 Advanced Control Systems Delivers 25 Substation Controllers to Jordanian Electric Power Company

Atlanta, Georgia’s Advanced Control Systems (ACS) has delivered 25 Connex 30 substation controllers to the Jordanian Electric Power Company (JEPCO) in Amman, Jordan. The purchase of the units, which comply with the new substation integration standard IEC-61850, advances a smart grid effort that began in 2000 with the implementation of a PRISM Distribution Management System from ACS that included 35 substation controllers replacing legacy RTUs. In January 2008, ACS delivered to JEPCO 500 new, advanced NTX-10 switch controllers. These pole mounted units equipped with analog input modules are capable of performing fault calculations on the network and communicating them to the master station to enable automated Fault Detection, Isolation and Restoration (FDIR). The NTX-10s with D 060 analog input modules are part of plans by JEPCO to eventually utilize some 6000 such units on the network. ACS' research and development team in Atlanta worked with parent company EFACEC's Portuguese R&D arm to develop the new D 060 intelligent analog input module in a first collaboration showcasing the American team's smart grid innovation and the European team's expertise in compliance to the highest levels of international standards. (ACS 18.08)

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3.4 Krispy Kreme Opens First Store in Turkey

Qatar-based Almana Group, which operates in Turkey’s food market, is bringing U.S.-based baked-goods chain Krispy Kreme Doughnuts to Turkey. The company has invested $3.5m to bring the doughnut company to Turkey and is planning to open its first store on a main street in an upper-end residential area on Istanbul’s Asian side. Almana Group expects to attain $3m in annual sales. Krispy Kreme sells 7.5m doughnuts a day around the world. The doughnut company is a 72-year-old brand and has a presence in 17 countries and 530 sales locations around the world. The decision to introduce the brand to the Turkish market followed the company’s success in the UK. The company mainly targets Turkish youth and hopes to generate a doughnut craze in a matter of a few years. Most of Krispy Kreme’s suppliers are local and the company will provide employment for 60 people. Krispy Kreme Turkey is planning to increase its number of stores to 20 within the next three years. (KK19.08)

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Siemens Buys Into Israeli Solar Company Arava Power

Siemens had made its first solar energy investment in Israel, acquiring a 40% stake in Arava Power Company for $15 million. The acquisition was made while Siemens is in talks to acquire Solel Solar Systems. Siemens invested in the company through its Siemens Project Ventures unit. Arava Power is a leader in photovoltaic systems for the generation of electricity. Kibbutz Ketura owns 40% of the company, and a group of US Jewish investors owning the rest. The acquisition was made at a company value of $37.5 million. Siemens and Arava Power also signed a framework agreement to build solar power plants with a total capacity of 40 megawatts. The first project will be the construction of a 4.9-megawatt facility at Kibbutz Ketura, which already has an electricity production license from the Public Utilities Authority (Electricity). Arava Power (http://www.aravapower.com) was founded in 2006. It is headquartered in Kibbutz Ketura, and has 20 employees. (Globes 28.08)

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4.2 Ben Gurion Airport to Install Solar Energy Systems

The Israel Airports Authority plans to install a pilot 50-kilowatt solar energy system on a 500 square meters area at the long-term parking lot. The size of the project is limited to the amount of electricity that can be sold by private power producers to Israel Electric Corporation (IEC). The Airports Authority aims to earn NIS 400,000 a year from the system, which will provide electricity to the airport. The Airports Authority has not yet estimated the investment needed in the pilot project, which if successful, will be expanded to border terminals. Airports Authority chairman Eli said that the plan was part of a goal to turn Ben Gurion Airport into an environmental leader. Planning for the solar energy project should last through the end of the year. At the same time, the Airports Authority is undertaking energy conservation measures to reduce its NIS 60 million energy cost by 15%, or NIS 7.5 million, in 2009. (Globes 23.08)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Middle East Carriers Continue To Grow & Gain Market Share

Middle East carriers continued to grow and the region was the only one to show an increase in both passenger demand and air freight in July, according to the International Air Transport Association (IATA). IATA announced on 27 August that international scheduled traffic results for July showing global passenger demand declining 2.9% compared to the same month in the previous year while freight demand was down 11.3%. The international passenger load factors stood at 80.3%. Indeed, Middle Eastern carriers were the only region to grow in July. The 13.2% growth in July was slightly better than the 12.9% recorded in June. The growth is fueled by increased capacity and greater market share in traffic between Europe and Asia. The global July passenger demand fall of 2.9% was a relative improvement over the 7.2% drop in June and the 6.8% decline recorded over the first seven months of the year. Regional airlines were also bucking global trends in freight demand. Middle Eastern carriers were the only region to grow, posting a 1% growth in demand compared to July 2008, IATA said. Global demand for cargo declined 11.3% in July, a relative improvement over the -16.5% recorded in June and the -19.3% average for the first seven months of the year. Despite this improvement, the July freight load factor of 47.6% was lower than the 49% recorded in July 2008. (BI-ME28.08)

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5.2 Kuwait Budget Surplus Falls 59%

Kuwait's budget surplus for 2008/09 stood at KD2.7 billion ($9.4bn), down 59% from KD6.6 billion in the previous year, according to a new report from the National Bank of Kuwait (NBK). NBK's report said that extraordinary transfers to the Public Institution for Social Security (PIFSS) which amounted to KD5.5 billion along with the high cost of fuel incurred by the Ministry of Electricity and Water (MEW) were the drivers behind an 88% rise in total spending. Excluding the special PIFSS transfer, the latest surplus would have been KD8.3 billion, NBK added. It said that government revenues stood at KD21 billion, up 10% from the previous fiscal year, and 66% above the government's own budget projection. Oil revenues rose only 11.2% on the back of slightly higher oil prices but they were negatively affected by cuts in OPEC crude production during the past fiscal year. In contrast, NBK noted that non-oil revenues witnessed a small drop of 0.6% to reach KD1.3 billion. Fees related to land sales were down by KD10.4 million (84%), reflecting the slump in real estate activity. The NBK report said the budget for the current fiscal year 2009/2010 projects a KD4 billion deficit, including a 36% drop in both revenues and expenditures from previous budget figures. Oil revenues are expected to shrink by 41% on the back of lower oil prices, while non-oil revenues are projected to rise by 12%. (AB25.08)

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5.3 Kuwait Picks GE for $2.7 Billion Power Plant

Kuwait's central tenders committee has chosen US General Electric to build a 2,000 megawatt power plant. General Electric, which was the preferred choice of Kuwait's Ministry of Electricity and Water, submitted a bid for $2.7 billion to build the Subbiya plant. In April, Kuwait issued a new tender to build turbines for the plant in the north of the country, which is due to come on stream in 2011, saying it expected the cost to be far less than earlier estimates in excess of KD700 million. Apart from General Electric, Kuwait had pre-qualified Germany's Siemens, Japan's Mitsui & Co and Marubeni Corporation Spain's Iberdrola Ingenieria y Construccion , and Canada's SNC-Lavalin. Kuwait, which has one of the world's highest per capita power consumption rates, has said it plans to boost power capacity to around 16,000 megawatts from 10,000 MW by 2012 to meet soaring demand. (Reuters 25.08)

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5.4 Iraq Plans Second Oil Bid Round By Mid-December

Iraq, which pre-qualified about 45 companies to bid on oil projects, plans to award contracts for the six partly developed and four undeveloped fields offered in its second licensing round by mid-December. Contracts can then be signed by early January, before the country goes to the polls and if this deadline isn’t met a new cabinet will approve them, Iraq’s Oil Minister said. Iraq, holder of the world’s third-largest crude reserves, is offering 10 projects covering more than a dozen fields for development in the second licensing round since the 2003 US- led liberation as it seeks oil revenue to help rebuild its war- ravaged economy. International companies vying for the deposits, including Majnoon, Iraq’s largest undeveloped field, want higher returns for working in a country lacking security and an oil law. Iraq awarded only one contract in its first bid round in June because of disagreements on fees. Iraq will take a 25%stake in licenses awarded in the second round. Other pre-qualified companies include Anadarko Petroleum Corp., BG Group Plc, BHP Billiton Ltd., Chevron Corp., OAO Gazprom, Eni SpA, OAO Lukoil, Nexen Inc., Total SA and Turkish state energy company Turkiye Petrolleri AO. All bids must come directly from, or in partnership with, pre-qualified bidders. The OPEC producer is struggling to increase output and revenue from crude sales after six years of conflict and prior sanctions destroyed the country’s economy and infrastructure. Companies investing in Iraq are looking to take a stake in the long-term potential that the country’s 115 billion barrels of reserves hold after gaining a foothold through the service contracts for operational fields. (BI-ME 25.08)

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5.5 Qatar Entertainment City Awards $27m Contract

Abu Dhabi Investment House's (ADIH) Qatar Entertainment City project has awarded a $27.4m contract to HBK Contracting to complete Phase II of the Qatar Entertainment City’s infrastructure within 18 months. Phase II of the infrastructure work includes the construction of roads, sewage network, water systems, main irrigation system including a connecting network for fire fighting. HBK will also be establishing the electrical work such as road lighting as well as the construction of six bridges over the water canal and implementing a traffic system. Entertainment City is an ADIH concept of a mixed-use development containing components of retail, residential and hospitality with a focus on entertainment. Currently, Qatar Entertainment City, a 1m square meter waterfront project is being established in the Lusail Development, North of Doha. QEC has recently completed Phase I of the infrastructure, where the 1.5km canal dividing the northern district of the city from its southern district has been completed. The canal is one of the key points within the project as it will also be used as a transportation channel for visitors and residents. Besides QEC, ADIH is also involved in India Entertainment City, which is also in the process of being implemented in Navi Mumbai, Maharashtra. (TA31.08)

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5.6 UAE Inflation Rises 0.4% in July

UAE inflation in July rose 0.39%, driven mainly by price spikes in household appliances and food items, according to the latest data from the economy ministry. Average inflation for the first seven months of this year was 2.96%, while inflation rose 0.03% in June over May this year. After being a key policy challenge and economic concern in 2008, inflation levels have fallen sharply in the GCC in 2009. The UAE and Qatar will see the greatest reversal in inflation trends, from the highest regional inflation rates in 2007 and 2008 to deflation in 2009 due to a fall in housing prices. (BI-ME 27.08)

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5.7 Dubai Sets Up Oil & Energy Bodies

Sheik Mohammed bin Rashid Al Maktoum, Dubai's ruler, issued two decrees on 31 August setting up an administrative body to manage the emirate's crude oil sales and an authority to manage energy supplies in the emirate. Sheikh Mohammed's office said he had issued decree number 18 of 2009 setting up the Oil Affairs Bureau and decree number 19 establishing the Supreme Council for Energy. The oil body would monitor "production, sale and export of crude oil in the emirate" which has dwindling oil reserves. The emirate of Abu Dhabi holds most of the UAE's oil. The UAE is the third biggest oil exporter in the world. The energy body will "ensure energy supplies to the emirate through saving basic energy sources at reasonable cost and lessening the environmental impact resulting from this". (TA31.08)

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5.8 Saudi Inflation Falls To Two-Year Low in July

Saudi Arabia's inflation is expected to keep falling after it reached a two-year low of 4.2% in July, Muhammad al-Jasser, Governor of the Saudi Arabian Monetary Agency (SAMA) announced. The sharp fluctuations during H1/09 in the price of oil, the kingdom's economic mainstay, must prompt it to diversify its revenue sources further. Annual inflation in Saudi Arabia fell to 4.2% in July from a record 11.1% a year earlier due mainly to a slowdown in the rise of home rents and food prices. The drop has coincided with a dramatic slowdown in lending, especially to the private sector amid the global economic slowdown and concerns over the solvency of two major private conglomerates. Jasser told the Saudi monarch that lending to the private sector rose 27.1% in 2008. At the end of July, the rate fell to 3.6%. (SAMA31.08)

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5.9 Washington Links Pakistani Aid to IPI

U.S. officials indicated they would withhold financial aid to Pakistan to discourage Islamabad from moving ahead with a pipeline project with Iran. Pakistan would receive 750m cubic feet of natural gas from the planned 1,724-mile Iran-Pakistan-India natural gas pipeline to generate electricity. Pakistani intelligence officials have raised repeated objections to the route of the pipeline, which would travel through the volatile Baluchistan province. Pricing terms and an uncertain role for India continue to weigh on project developments as well. Richard Holbrooke, the U.S. special envoy to the region, put foreign aid to Pakistan on the table to encourage Islamabad to back away from the project, Pakistan's The Nation newspaper reports. Washington opposes any project that could give Tehran economic benefits, especially in the energy sector. Bipartisan lawmakers are pushing tough sanctions on foreign exporters that supply gasoline to Iran. Sources to The Nation said they briefed Holbrooke on the looming energy crisis in Pakistan. Holbrooke, for his part, said he appreciated the developments, noting the United States would cooperate with Islamabad on alternative solutions. (The Nation 18.08)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 New Vehicle Registrations in June Up 34.1% In Turkey

The number of newly registered motor vehicles in Turkey in June increased by 34.1% over the same month of 2008 to 87,278, suggesting that a previously announced cut in the private consumption tax (OTV) continued to maintain its positive impact on domestic demand. According to data released by the Turkish Statistics Institute (TurkStat), the increase in the number of newly registered motor vehicles in June over the preceding month was 13.6%. Passenger cars made up 51% of the new vehicles on the road (44,491), followed by motorcycles with 22.2% (19,391) and small trucks with 21.4% (18,681). In June, Istanbul had the majority of new vehicle registrations, with a 37.3% share of the total. This was followed by Ankara with 8.5%, 6.1% in Izmir, 4.4% in Antalya, 3.3% in Bursa, 2.4% in Adana and 2.5% in Mersin. In the January-June period, the total number of motor vehicles in Turkey increased by 295,775 compared to the same period a year ago. The total number of registered motor vehicles in Turkey as of the end of June hit 14.06 million. Renault was the leading brand name in car registrations in June, with 16.1%. Hyundai came in second at 14.7%, followed by Ford with 10.3%, Fiat with 10.2%, Opel with 5.8%, Volkswagen with 5.4%, Toyota with 4.9%, Mercedes-Benz with 4.3% and Peugeot with 2.8%. The government had recently introduced a series of tax incentives as part of efforts to help the ailing domestic market recuperate. (Zaman26.08)

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6.2 Cyprus Finance Ministry Says Deficit Is Rising

Cyprus is facing a rising public deficit, its Finance Ministry said on 19 August, giving no other response to IMF calls for it to cut a shortfall the Fund says will hit 3.9% of GDP this year. Public finances are currently facing challenges and the public deficit is showing an upward trend, primarily because of the impact of the world crisis on public revenue. The Finance Ministry did not give a new forecast for the public deficit for this year. Authorities had previously said they would strive for it to remain below 3%, a threshold among European Union members. Cyprus’ sources of revenue have dried up because of the economic downturn with fewer European tourists visiting its beaches, and a slump in a once buoyant property market which had kept public coffers in surplus over previous years. Authorities would continue to monitor the situation and take corrective measures if required, the ministry said without elaborating. The IMF said in a report on Monday it expected the island nation to register a 3.9% deficit in 2009 after posting surpluses in 2007 and 2008. (FM19.08)

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6.3 Key Greek Sectors Suffer Revenue Slump

As signs emerge that the eurozone may by emerging from recession, data released showed that several of the Greek economy’s key sectors are reeling from the global crisis. Data from the Bank of Greece showed that January-June tourism receipts fell 14.7% to €3.1b. Revenues from tourism, which accounts for about 20% of the country’s annual economic growth, fell to €1.3b in June from 1.5m in the same month a year earlier. The performance of the tourism sector this summer has been described by experts as being crucial in determining the extent of the economy’s slowdown this year. In Q2/09, Greece’s gross domestic product contracted for the first time in 16 years, shrinking by 0.2% on an annual basis. On the shipping front, central bank data showed that transport receipts, which are mostly derived from shippers, fell 28.4% in the first half of the year to €6.7b. In June, revenues dropped off by some €600m to stand at €1.1b. Central bank data showed that exports in the January-June period dropped 21.8% to €7.4b. But imports also fell sharply, dropping almost 30% to €22.8b, helping narrow the current account deficit which hit €14.7b for the six-month period, down from €19.1b last year. (BoG19.08)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israeli Girls Outsmart Boys on Matriculation Exams in 2008

Israel's high-school-aged girls consistently outperformed boys on matriculation exams (bagruyot) in the course of 2008, according to the Israel Today Hebrew newspaper. In the humanities, more girls took the matriculation exams and scored higher than their male counterparts. In literature, 2,415 girls took the exam versus only 585 boys. The women scored an average of 83.3 while the guys scored an average of only 79.4. In English, 2,000 more girls took the exam and scored an average of 85.79 versus the guys, whose score was 85.77. The differences were more distinct in social studies, where 7,182 girls took the exam versus 2,888, and in citizenship, where girls scored an average of 78 versus the guy's 73.3. In Bible, the girls outscored the guys 78 to 73.3. In chemistry and biology, the girls also managed to match or outperform the guys. In chemistry, 4,594 girls took the exam versus 2,798 – both groups scored an average of 84. In biology, 7,108 girls took the exam versus 3,942 boys and scored an average of 83.5, while the boys' results were 81. In physics, mathematics and mechanics, more boys took the exams than girls, but the average scores of the two groups were approximately equal. Earlier in the summer, the Ministry of Education released statistics showing that overall high-school matriculation results have dropped. In 2008, only 44.4% of students finished their matriculation exams – in 2007 that number had stood at 46.3%. In the Arab sector, matriculation rates dropped from 35.53% to 31.94%. (IsraelNN24.08)

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*REGIONAL:

Armenia & Turkey Agree To Establish Diplomatic Ties

Swiss, Turkish and Armenian Foreign Ministries issue a joint statement, pledging Turkey and the latter two countries’ intention to establish diplomatic ties after a six-week negotiation process. The deal reached after the talks will be submitted to Parliament’s of the two countries Turkey and Armenia have decided to begin a six-week negotiation process that will lead to the establishment of diplomatic ties. The agreement follows behind the doors discussions on whether Armenian President Sarkisian will return visit Turkey on 14 October to watch the World Cup match between Turkey and Armenia. Turkish President Abdullah Gul visited Armenia last year on 6 September to watch the match, the first Turkish president to visit the neighboring country. Turkey severed its ties with Armenia in 1994 in solidarity with Azerbaijan, which had fought a losing war with the country over the region of Nagorno-Karabakh. Turkish border with Armenia has been closed since then. Armenia's efforts to get countries around the world to recognize the 1915 deaths of Armenians as genocide had soured the relations even further. Turkey argues the deaths were due to civil disturbance during World War One within the Ottoman Empire and rejects the genocide claims. Turkey and Armenia have been trying to establish diplomatic ties in the last few years.

The Republic of Turkey and the Republic of Armenia have agreed to start their internal political consultations on the two protocols – the “Protocol on the establishment of diplomatic relations” and the “Protocol on the development of bilateral relations” – which have been initialed in the course of their efforts under Swiss mediation. The two Protocols provide for a framework for the normalization of the bilateral relations within a reasonable timeframe. The political consultations will be completed within six weeks, following which the two Protocols will be signed and submitted to the respective Parliaments for the ratification on each side. Both sides will make their best efforts for the timely progression of the ratification in line with their constitutional and legal procedures. (Various31.08)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Orphan Drug Status Granted to BioCancell's Ovarian Cancer Drug

Tikcro Technologies announced that the US Department of Health and Human Services has granted orphan drug status to BioCancell's BC-819 drug, currently in Phase I/IIa clinical trials, for its use in treating ovarian cancer. Tikcro holds 36% of Biocancell (after conversion of notes and exercise of warrants), and 27% on a fully diluted basis. The US FDA defines an orphan drug as one that treats a disease affecting less than 200,000 people each year. The main benefit received under orphan drug status is the right to market the drug exclusively for 7 years from the date it is approved. Additional benefits include certain tax benefits and waived FDA fees. The first patient in a Phase I/IIa clinical trial for advanced ovarian cancer using BC-819 began treatment in the Q2/09. The trial addresses patients suffering from advanced ovarian cancer characterized by ascites, peritoneal cavity fluid containing cancerous cells that did not previously respond to standard treatment for the disease. The trial is expected to include a total of 12 patients, each receiving nine weekly treatments. The University of Pennsylvania Medical Center in the US and three centers in Israel: the Wolfson Medical Center in Holon, the Meir Medical Center in Kfar Saba and the Hadassah Medical Center in Jerusalem, are recruiting patients for the trial. The Massey Cancer Center of Virginia Commonwealth University in the US is expected to begin recruitment pending certain local regulatory approvals. Tel Aviv’s Tikcro (http://www.tikcro.com) has holdings in Jerusalem’s BioCancell Therapeutics (http://www.biocancell.com), a clinical-stage biopharmaceutical company operating in the area of cancer treatment. BioCancell is conducting the following clinical trials in Israel and in the U.S. using its leading drug, BC-819. (Tikcro 24.08)

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8.2 Rosetta Genomics & SRL Announce Exclusive Distribution Agreement for Mid East & India

Rosetta Genomics and Super Religare Laboratories Limited (SRL), India’s largest diagnostics network, signed an exclusive distribution agreement for Rosetta Genomics’ three currently-available diagnostic tests. Under the terms of the agreement, SRL will market Rosetta Genomics’ miRview tests in India, Saudi Arabia, Qatar, and the UAE. Samples will be sent from SRL’s territories to Rosetta Genomics’ Philadelphia-based CLIA-certified laboratory for analysis. The terms of the deal were not disclosed. The two companies have also discussed the possibility to expand their relationship into research and development projects. Rehovot’s Rosetta Genomics (http://www.rosettagenomics.com) is a leading developer of microRNA-based molecular diagnostics. Founded in 2000, the company’s integrative research platform combining bioinformatics and state-of-the-art laboratory processes has led to the discovery of hundreds of biologically validated novel human microRNAs. Building on its strong IP position and proprietary platform technologies, Rosetta Genomics is working on the application of these technologies in the development of a full range of microRNA-based diagnostic tools. The company’s first three microRNA-based tests, miRview squamous, miRview mets and miRview meso, are commercially available through its Philadelphia-based CLIA-certified lab. Rosetta Genomics is the 2008 winner of Wall Street Journal’s Technology Innovation Awards in the medical/biotech category. (Rosetta19.08)

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8.3 BrainStorm Cell Therapeutics Secures Funding to Reach Clinical Trials for ALS

BrainStorm Cell Therapeutics has secured the funding required to complete pre-clinical trials underway for the treatment of ALS (Amyotrophic Lateral Sclerosis, also known as Lou Gehrig’s disease). The company expects to begin Phase I clinical studies in 2010. The new funding includes both a prestigious grant from the Israeli government’s Office of the Chief Scientist (OCS) as well as private investment. The non-equity OCS grant amounts up to $450,000 and marks the third consecutive year in which BrainStorm has been selected as a recipient. The company previously was awarded OCS grants totaling $798,000. BrainStorm’s royalty obligations to the OCS are capped at the amount of the grant received from the OCS.

Petah Tikva’s BrainStorm Cell Therapeutics (http://www.brainstorm-cell.com) is an emerging company developing adult stem cell therapeutic products, derived from autologous (self) bone marrow cells, for the treatment of neurodegenerative diseases. The technology allows for the differentiation of bone marrow-derived stem cells into functional neurons and astrocytes, as demonstrated in animal models. The Company holds rights to develop and commercialize the technology through an exclusive, worldwide licensing agreement with Ramot at Tel Aviv University Ltd., the technology transfer company of Tel-Aviv University. The Company's currently focus is on ALS and Parkinson's, although its technology has promise for treating several others diseases including MS, Huntington's disease and stroke. (BrainStorm24.08)

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8.4 Protalix Receives FDA Fast Track Designation for prGCD

Protalix BioTherapeutics received Fast Track Designation from the U.S. Food and Drug Administration (FDA) for prGCD, the Company’s proprietary plant-cell expressed recombinant form of glucocerebrosidase (GCD) for the treatment of Gaucher disease. Fast Track designation is an FDA approved process that facilitates the development and expedites the review of drugs to treat serious diseases and fill an unmet medical need with the goal of getting important new treatments to patients earlier. This process allows a company to file the sections of the New Drug Application (NDA) as they become available instead of filing all the sections at once. Protalix plans to submit the first section of the rolling NDA for prGCD, allowed under the Fast Track process, in the very near future. Protalix expects to complete the Company’s Phase III trial of prGCD for the treatment of Gaucher’s disease in September, to report top-line results in October and to complete the NDA filing before the end of the year. Additionally, the Company has initiated a treatment protocol that allows physicians and other care-providers to treat Gaucher disease patients in the United States and additional countries world-wide with prGCD while the drug is still under investigation.

Carmiel’s Protalix (http://www.protalix.com) is a biopharmaceutical company. Its goal is to become a fully integrated biopharmaceutical company focused on the development and commercialization of proprietary recombinant therapeutic proteins to be expressed through its proprietary plant cell based expression system. Protalix’s ProCellEx presents a proprietary method for the expression of recombinant proteins that Protalix believes will allow for the cost-effective, industrial-scale production of recombinant therapeutic proteins in an environment free of mammalian components and viruses. Protalix is conducting a Phase III pivotal study for its lead product candidate, prGCD, to be used in enzyme replacement therapy for Gaucher disease, a rare and serious lysosomal storage disorder in humans with severe and debilitating symptoms. (Protalix 24.08)

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8.5 Foamix Receives US Patent on Novel Foam Technology

Foamix has been awarded US Patent #7575739 pertaining to its foam technology. The patent covers unique foam compositions, suitable for the treatment of heat and chemical burns, wounds, bacterial, fungal and viral infections. Foamix expends significant resources on protecting its intellectual property. To date, Foamix has five issued U.S. patents covering its OilGel and topical foam technology platforms. An additional 70 U.S. patent applications, protecting its proprietary foam platforms are under prosecution, covering compositions, applications, methods of use and delivery devices. The Company employs leading U.S. patent counsel (Wilmer Hale, Boston) as well as an in-house intellectual property team. Headquartered in Ness Ziona, Israel, Foamix (http://www.foamix.co.il) is a leading developer of topical foams for dermatology and gynecology. Foamix's state-of-the-art foams provide controlled delivery of a variety of active ingredients. Foamix is currently collaborating with 10 pharmaceutical and cosmetic companies on 12 projects in the development of proprietary dermatological and gynecologic foam drugs. Additionally, the Company has an extensive in-house pipeline of dermatological and gynecological drugs in foam presentation. Foamix holds 5 US patents and has 70 patents pending in the United States. (Foamix 24.08)

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8.6 IDRI to Use NanoPass Microneedle Technology for Intradermal Vaccines and Diagnostic Skin Tests

Seattle’s Infectious Disease Research Institute (IDRI) and NanoPass Technologies entered into an agreement whereby IDRI licenses NanoPass' proprietary MicronJet microneedle technology for the intradermal delivery of products against a number of diseases including tuberculosis, HIV, malaria, leishmaniasis and leprosy, among others. The financial details of the agreement are confidential. NanoPass' single use, microneedles-based device can be used with any standard syringe to deliver liquid substance directly and consistently into the skin. IDRI also plans to apply the MicronJet technology for the administration of diagnostic skin tests. Because microneedles are very short, they do not reach the free nerve endings of the skin that are responsible for pain sensation, and therefore most substances can be administered with microneedles with less pain. Furthermore, the microneedles are so small that they are barely visible to the naked eye, making the MicronJet far less intimidating than a conventional needle - and perfect for children and needle-phobic patients. IDRI is a not-for-profit organization committed to applying innovative science to the research and development of products to prevent, detect and treat infectious diseases of poverty. Ness Ziona’s NanoPass (http://www.nanopass.com) is an Israel-based company developing an innovative delivery device for the enhancement of vaccines and other therapeutics. The Company has proven efficacy and safety in multiple applications including seasonal flu and insulin delivery. NanoPass is continuously engaged in joint clinical development with top pharmaceutical companies to demonstrate the benefits of its technology for various indications. (IDRI 31.08)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Infinite Memories Selected by Flash Memory Summit 2009 as a Best Of Show Awards Winner

Infinite Memories has been chosen by the Flash Memory Summit as a Best of Show awards winner for 2009 in the category of Most Innovative Flash Memory Customer Implementation. The annual Best of Show awards is the premier opportunity for industry recognition of innovative products and solutions, and how they are being used in the marketplace. Their innovative product addresses market segments such as; software recovery, embedded and removable memory for toys and games, security applications, music and video distribution, and promotional material. The requirements for media used by the applications in these segments are a low cost structure, superior reliability and leveraged security. Infinite Memories innovative best cost structure technology solution, comprising tailored QUAD NROM technology to OTP (One-Time-Programming) design, combined with advanced system solutions to address the various SD and USB formats and typical hosts. Infinite Memories technology features unprecedented 4 bits/cell and ~1 F2/bit density, realizing 1Gb, 26 mm2 die, with superior reliability having 100 years retention and 100M read cycle capabilities, NAND compatible performance and true field programmability capability. Rosh HaAyin’s Infinite Memories (http://www.infinite-memories.com) was established in 2007, the company has developed unique Flash memory technologies including the most advanced silicon memory platform for content distribution. Infinite Memories created QUAD NROM technology to OTP (One-Time-Programming) design, combined with advanced system solutions to address the various SD and USB formats and typical hosts. Infinite Memories technology features unprecedented 4 bits/cell and ~1 F2/bit density, realizing 1Gb, 26 mm2 die, with superior reliability having 100 years retention and 100M read cycle capabilities, NAND compatible performance and true field programmability capabilities. (Infinite Memories 19.08)

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9.2 Optibase Selected by ZTE to Provide Encoding Solutions for CANTV IPTV Services in Venezuela

Optibase announced that ZTE Corporation, a leading equipment provider of comprehensive IPTV end-to-end solution, will integrate Optibase’s advanced Media Gateway IPTV encoding platforms in its end-to-end ZTE Eye-Will IPTV solution for deployment by CANTV in Venezuela. This IPTV solution allows CANTV to offer first ever IPTV services in Venezuela, with over 140 channels to 67,000 subscribers. CANTV’s service will feature video-on-demand (VOD), live TV pause, personal video recorder capabilities and time-shifted TV and is expected to launch at the end of 2009. Optibase will provide H.264 encoding platforms for broadcasting hundreds of live channels over the operator’s managed IP-based network. Optibase MGW 5100 carrier-grade platforms are professional MPEG-4 AVC (H.264) standard definition, hardware-based encoders. MGW 5100 platforms provide reliable processing power required for 24/7 applications, delivering exceptional video quality in a wide range of bit-rates. Their rich set of features and management capabilities are combined with advanced compression tools to offer exceptional video quality in a wide range of bit-rates. MGW 5100 supports secondary stream functionality for PiP application.

Herzliya’s Optibase (http://www.optibase.com) provides video over IP solutions, specializing in video encoding, decoding and streaming for federal and state government agencies, Telco operators, enterprise organizations and the world's leading broadcast service providers. With a collection of open, standards-based products, Optibase enables its customers to take full advantage of video distribution over their IP network, ensuring superb video quality in a scale of bit-rates for simple and effective video streaming to desktops, STBs and VOD applications. (Optibase19.08)

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9.3 NICE Wins $55m Mega Contract From a Government Agency for its Security Solution

NICE Systems won a mega security contract from a government agency. The government agency will be implementing NICE's NiceTrack technology, for advanced telecom interception. NICE has received an advanced payment for the first phase of the contract, which is expected to generate $55m in revenues starting in 2010 over a period of two to three years. The NiceTrack solution, which is part of the NICE Security Group offering, enables interception of all types of communications and generates comprehensive intelligence. NiceTrack offers a unified set of solutions for the collection and analysis of both telephony and Internet data for law enforcement, intelligence and internal security organizations. The solution provides a complete suite of operational tools and applications, which ensure that meaningful, mission-critical information is delivered on time to security decision makers and operational staff, enabling them to detect threats and achieve a fast and appropriate response.

Ra'anana’s NICE Systems (http://www.nice.com) is the leading provider of Insight from Interactions solutions and value-added services, powered by advanced analytics of unstructured multimedia content - from telephony, web, radio and video communications. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. (NICE19.08)

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9.4 Wavion Delivers Wireless Broadband Access to Ekaterinburg and other Ural Cities

Wavion announced a project with Uralsvyazinform, the largest provider of telecommunications services in the Urals region, Russia, to deploy broadband wireless access to the towns and cities of Urals region. Wavion will be delivering this project with ARD Satcom, local integrator in this project. The project, already in deployment, will provide Wi-Fi coverage to both business and residential customers, starting with the city-wide coverage of Ekaterinburg, Ural’s capital city. The large cities and smaller towns of the region will follow as part of this multi year program. Wavion will provide an end-to-end wireless broadband access solution based on Wi-Fi, WBS-2400 base stations. Wavion’s powerful WBS-2400 spatially adaptive beamforming base stations provide extended range and higher throughput connectivity to standards-based Wi-Fi clients. Wavion’s Wi-Fi solution requires one third of the units than other competing Access Points (APs) to cover the same area, with superior indoor penetration and fewer dead spots. This superior Wi-Fi performance makes Wavion an ideal infrastructure solution for wide-area metro coverage. Yokneam’s Wavion (http://www.wavionnetworks.com) is transforming the metro Wi-Fi and rural markets with a new category of spatially adaptive base stations. The company’s digital beamforming and SDMA technologies are the first and only to resolve the significant performance, penetration and profitability challenges facing large scale metro and rural deployments. (Wavion24.08)

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9.5 Voltaire Scale-out Fabrics Connect World’s Most Power-Efficient Supercomputers

Voltaire’s switches are connecting the world’s most energy efficient supercomputers, according to the findings of the latest Green500 list announced by Green500.org. Voltaire switches serve as the high-performance interconnect for the top 4 and 26 of the top 100 most energy efficient supercomputers on the list. Voltaire Grid Director InfiniBand switches deliver 20 or 40 Gb/s bandwidths and low latency with less than 5 watts per port power consumption. The Green500 (www.green500.org) is a list ranking the most energy-efficient supercomputers in the world and serves as a complementary view to the Top500 (www.top500.org) list of the most powerful supercomputers. Ra’anana’s Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire’s family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. Used by more than 30% of the Fortune 100 and other premier organizations across many industries, including many of the TOP500 supercomputers, Voltaire products are included in server and blade offerings from Bull, HP, IBM, NEC and Sun and provide the internal server-to-storage connectivity for the HP-Oracle Database Machine. (Voltaire26.08)

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9.6 BluePhoenix Completes IT Modernization Project for Israel Local Authorities

BluePhoenix Solutions has completed a major IT modernization project for Israel Local Authorities Data Processing Center (LADPC). This project leads LADPC to the technology frontline, and enables LADPC to present a comprehensive solution while using integration, BPM, portal, and document management tools to shorten development time and improve customer service. LADPC, the IT service bureau for over 200 local municipal authorities in Israel, finished a successful modernization project for a legacy mainframe ADABAS/Natural and COBOL environment to a modern open system environment based on an Oracle database and Java. The shift to a new, modern open system environment enables the use of new products and methodologies like integration through SOA, BI tools, BPM, document management, municipality portal and SAAS. These tools and concepts provide a comprehensive solution to the LADPC customer base. The project was conducted by the development and system division of LADPC together with modernization experts from BluePhoenix Solutions, the leader in value-driven IT legacy modernization solutions. The project was executed utilizing the BluePhoenix automated suite of tools that enables conducting the modernization is a short time frame, with low cost and a fast ROI.

Herzliya’s BluePhoenix Solutions (http://www.bphx.com) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, rehosting and renewal. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime. (BluePhoenix26.08)

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9.7 RiT Technologies Implements its PatchView IIM Solution in Radio Free Europe

RiT Technologies has completed the deployment of its intelligent infrastructure management solution for Radio Free Europe (RFE), one of the worldwide largest news broadcasters, in its headquarters in Prague, the Czech Republic. RFE's selection of RiT followed its decision to undertake a major communications infrastructure upgrade project after building a new state-of-the-art building to house its new network. Specifically, RFE was looking for a solution that would improve physical access control to its network assets, minimize the maintenance required for smooth operations and assure business continuity. After a thorough study and evaluation, RFE's IT staff chose to deploy RiT's PatchView infrastructure management system throughout its data and communications networks, and to integrate it with the building's HVAC system, surveillance cameras, door access, and other physical infrastructure components. The installation has enabled RFE to achieve a whole new level of network visibility, security and control, while reducing the overall IT budget. With a smoother-running network, RFE has been able to achieve a more efficient work environment, more satisfied management and happier employees. Tel Aviv’s RiT (http://www.rittech.com) is a leading provider of intelligent solutions for infrastructure management, asset management, environment and security, and network utilization. RiT Enterprise solutions address datacenters, communication rooms and workspace environments, ensuring maximum utilization, reliability, decreased downtime, physical security, automated deployment, asset tracking, and troubleshooting. RiT Environment and Security solutions enable companies to effectively control their datacenters, communications rooms and remote physical sites and facilities in real-time, comprehensively and accurately. RiT Carrier solutions provide carriers with the full array of network mapping, testing and bandwidth qualification capabilities needed for access network installation and service provisioning. RiT's field-tested solutions are delivering value in thousands of installations for top-tier enterprises and operators throughout the world. (RiT26.08)

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9.8 Intalio & Mellanox Technologies Deliver First High Performance Private Cloud Appliance

Palo Alto, California’s Intalio, The Private Cloud Company, announced a strategic partnership with Mellanox Technologies. Through this partnership, Mellanox Technologies will supply its world leading InfiniBand adapters and switches used by the Intalio|Cloud Appliance as a unified networking fabric. The Intalio|Cloud Appliance integrates in a single rack all the hardware and software required for building a true enterprise-class private cloud computing platform. The hardware is made of standard components using HP BladeSystem blade servers and enclosures, Solid State Drives (SSD) for all database storage, and the InfiniBand interconnect technology to effectively connect them all together. The Intalio|Cloud Appliance is used for powering Intalio|Cloud On-Demand and Intalio|Cloud Managed-On-Premises. With the latter option, all hardware and systems administration services are provided on-premises by Intalio, while customers only pay for a monthly user fee.

Intalio selected InfiniBand over alternative networking technologies for its record bandwidth (40Gbps), unrivaled low latency (1.2 microseconds) and kernel bypass to maximize system efficiency, application adaptability and productivity of jobs outsourced by Intalio's customers. Using InfiniBand, the Intalio|Cloud Appliance benefits from a unified networking fabric, removing the need for deploying and managing multiple networking technologies such as Ethernet and Fibre Channel, thereby reducing networking hardware acquisition costs by up to 50% and network management costs by up to 30%, while boosting performance. InfiniBand's high bandwidth and low latency also reduces the I/O overhead introduced by virtualization for implementing a scalable multi-tenant architecture. By offering up to 4 times as much bandwidth as 10 Gigabit Ethernet, InfiniBand dramatically reduces the performance impact of real-time Virtual Machine (VM) replication for fail-over and disaster recovery purposes.

Yokneam’s Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox Technologies 31.08)

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9.9 Optibase Introduces MovieMaker H.264 PCI Express Encoder

Optibase announced the release of MovieMaker H.264, a high-performance H.264 PCIe encoder. MovieMaker H.264 offers a video encoding, streaming and archiving solution with excellent video quality in a range of bit rates, resolutions and frame rates, for corporate communications, real-time event streaming, and high quality video surveillance. MovieMaker H.264 receives inputs from live feeds and can save both high and low resolution versions while streaming. MovieMaker H.264 offers secondary stream capabilities for encoding two channels from a single source simultaneously. With multi-board support, it provides up to 8 streams from a single PC. MovieMaker H.264 also offers a comprehensive encoding application and full-feature SDK. Herzliya’s Optibase (http://www.optibase.com) provides video over IP solutions, specializing in video encoding, decoding and streaming for federal and state government agencies, Telco operators, enterprise organizations and the world's leading broadcast service providers. With a collection of open, standards-based products, Optibase enables its customers to take full advantage of video distribution over their IP network, ensuring superb video quality in a scale of bit-rates for simple and effective video streaming to desktops, STBs and VOD applications. (Optibase 01.09)

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10: ISRAEL ECONOMIC STATISTICS

10.1 State of the Economy Index up 1.2% in July

The Bank of Israel's combined State of the Economy Index rose 1.2% in July, indicating that economic activity is expanding. In addition, the index for June has been revised upwards, and is now stated to have risen 0.6%, compared with an original reading of a 0.2% rise. From June 2008 to April 2009, the index fell steadily month after month. The index for May has also been revised upwards, to give a 0.1% rise, instead of the 0.3% fall in the original reading. The index of exports of services rose sharply in July, by 3.2%, while the index of exports of goods rose 0.4%. The imports index rose 4.3% in July, following a similar rise in June. Although the economy is emerging from recession, the number of jobseekers continues to rise, as expected. The number of people looking for work was 236,400 in July, 18.5% more than in July 2008, and 2.1% more than in June this year, the Central Bureau of Statistics reports. Some 25,200 Israelis joined the ranks of the unemployed in July, most of them (65%) as a result of layoffs. However, seasonally adjusted figures indicate a 2.1% fall in jobseeker numbers in July, to 225,600. The number of non-graduate jobseekers fell 1.7%, while the number of graduate jobseekers fell 2.7%. (Globes 19.08)

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10.2 Rising Exports Shrinks Israel’s Deficit

The Central Bureau of Statistics announced on 19 August that the export of goods, excluding diamonds, rose by an annualized 11.3% in May-July, after falling by an annualized 15.9% in February-April. Exports to the US rose by an annualized 25.1% in May-July, after falling by an annualized 9.6% in February-April, while exports to Asian countries rose by an annualized 20.2%, after falling by an annualized 21.8% in three preceding months. Exports to the EU, was the exception to the growth trend, falling by a further annualized 7.2% in May-July, after falling by 43.5% in February-April. Exports to the rest of the world rose by an annualized 5.7% in May-July, after falling by an annualized 21.6% in February-April.

Israel's trade deficit, excluding diamonds, fell $3.6b in January-July from $8.4b in the corresponding months of 2008. Export of goods, excluding diamonds, totaled $19.5b in January-July 2009, and imports, excluding diamonds, totaled $23.1b.

The breakdown of Israel's trade balances, excluding diamonds, in January-July by region is as follows: US a trade surplus of $3.1b, up from $2.7b in the corresponding months of last year; EU - a deficit of $2.8b; Asia - a deficit of $2b; and the rest of the world - a deficit of $2b. The breakdown of Israel's trading partners, excluding diamonds, in January-July by region is as follows: EU - 37% of imports and 30% of exports; US - 14% of imports and 32% of exports; Asia - 21% of imports and 15% of exports; the rest of the world - 28% of imports and 23% of exports. Imports of goods, excluding fuel, diamonds, ships, and planes, fell by an annualized 5.4% in May-July, after falling 37.1% in February-April. (Globes 19.08)

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10.3 Israel’s Unemployment Rate Hits 8%

On 27 August, the Central Bureau of Statistics announced that Israel’s unemployment rate rose to 8% of the civilian labor force during Q2/09 from 7.6% in the preceding quarter. The number of unemployed rose to 241,000 in the second quarter from 228,000 in the first quarter - a net increase of 13,000 newly unemployed. Recently, the Central Bureau of Statistics published the unemployment figures for May, showing a rise to 8.4%. However, the Central Bureau of Statistics has now made clear, the monthly statistics are not precise, and the actual level of unemployment in May was much lower. The original unemployment figure for the first quarter of 7.8% has now been adjusted to 7.6%. Although the second quarter figures indicate a rise in unemployment, initial figures for June indicate a moderating trend. Among other things, there has been a rise in placements in part-time jobs. This reduces the level of unemployment, though the jobs are only part time. The Bank of Israel predicts that the unemployment will rise to 9% by the end of the year, or 270,000 people. If this prediction comes true, it will mean an additional 30,000 jobless people. The Ministry of Finance is slightly more optimistic; it predicts an unemployment rate of 8.5% by the end of the year. (Globes 27.08)

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10.4 Number of Jobseekers Declines

On 19 August, the Israel National Employment Service announced the first drop in the number of jobseekers since May 2008. The number of jobseekers in July 2009 totaled 210,410 compared with 210,470 in June. The figures show that 23,000 new Israelis joined the ranks of the unemployed in July of whom 16,500 were fired. This figure has fallen by an average of 1.4% a month since April. However, before the crisis there was only an average of 10,000 to 11,000 new unemployed each month. (Globes 19.08)

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10.5 Passenger Traffic at Ben Gurion Breaks Record

On 1 September the Israel Airports Authority announced that 1.42 million passengers passed through Ben Gurion International Airport in August 2009, up 6% from August 2008. This was an all-time record for one month. The August record reversed a downward trend. In July 1.166 million passengers passed through the airport, down 2.7% from July 2008. In July and August, 2,588,373 travelers passed through Ben Gurion Airport. During August three peak days were recorded in which 60,000 passengers passed through the airport on each day. On four other busy days there were 55,000 passengers per day. In terms of aircraft traffic, the busiest day was August 27 when there were 359 flights. The most popular destination during July and August 2009 with 295,711 outgoing passengers was Turkey, closely followed by the US (294,3511), Germany (211,445), France (201,520) and Italy (188,451). (IAA01.09)

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10.6 Israeli Home Price Rises Fastest In World

The Q2/09 survey by "Global Property Guide" indicates signs of recovery in some residential real estate markets around the world. The survey found that housing prices in Israel were 8.4% higher in Q2/09 than in Q2/08 - the highest growth in any market in the survey. "Global Property Guide" said that housing prices rose in the second quarter in seven countries where they had fallen in 2008: China, Portugal, Australia, New Zealand, France, Sweden and Hong Kong. However, housing prices in most markets were lower in the second quarter than in the corresponding quarter, indicating that the crisis in the global residential real estate market is not yet over. Housing prices in Australia rose 3.73% and in New Zealand by 3.31%, compared with the corresponding quarter. Housing prices in Switzerland rose by 4.9% in the first half of 2009, though the rise in the second quarter compared with the corresponding quarter was negligible. (Globes 26.08)

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10.7 Israeli Credit Card Use Up 1.5%

On 26 August, the Central Bureau of Statistics announced that credit card use rose by a seasonally adjusted 1.5% in July 2009, compared with June. Credit card use rose by 4.3% in January-July compared with the corresponding period in 2008. The figures point to increased private consumption, an important economic growth engine, despite the economic crisis, and confirm the claim that the economy is emerging from recession. Credit card use for food and beverages, 20% of all use, rose by 2.1% in July, compared with June. Credit card purchases of computers and software, 3% of total purchases, rose by 6.7% in July, and purchases of communications services and equipment, 10% of total purchases, rose by 6%. Credit card purchases in the "other" category (fuel, gas, and electricity; computer and software; communications services and equipment; transport services and equipment; books, office equipment, and advertising; and medical services and medication) rose by 2.1% in July, and by nearly 4% in May-July. (Globes 26.08)

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11: In Depth

11.1 ISRAEL: Moody's Issues Annual Report on Israel

On 27 August, Moody's Investors Service (http://www.moodys.com) said Israel's A1 government bond ratings are underpinned by the country's high levels of economic, institutional and financial strength, but constrained by its moderate susceptibility to event risk. Moody's Investors Service new annual sovereign credit report on Israel said the country's ratings have a stable outlook.

The rating agency said that short-term economic outlook in Israel is relatively good, with only a modest fall in GDP this year, reflecting the absence of the main sources of the global crisis: toxic bank assets or a real estate bubble. GDP rose by 1% on an annualized basis in the second quarter, following a 3.2% decline in Q1.

"The modest contraction and signs of an incipient recovery are also evidence of the economy's underlying flexibility and exceptional resilience in the face of various shocks," explains Anthony Thomas, a Vice President-Senior Analyst in Moody's Sovereign Risk Group. "Indeed, against a backdrop of numerous challenges over the past decade, the global financial crisis could almost be categorized as 'more of the same.'"

Although the recession now appears to be over for Israel, Moody's believes a more robust recovery will have to come from global rather than domestic developments, given that Israel is a small, open economy. In the longer term, Thomas said the country's growth model appears to be intact. The economy depends on hi-tech exports to fuel overall domestic growth and Moody's notes that its main markets are the US and the EU and that it has made meaningful progress in new market areas, notably China. "That the economic model is intact is fortunate," says Thomas. "The economy's lack of natural resources and small size leave it few alternatives to being an innovative exporter."

While Moody's considers economic and financial risk to be low in Israel, however, political risk - namely the security situation - is more serious. Thomas pointed out that the country has the highest military expenditure in the world, which has contributed to its government debt over time. The US' new administration has shown heightened interest in the peace process with the Palestinian Authority, but Israeli-Palestinian tensions are unlikely to ease enough to reduce defense spending meaningfully.

If defense spending could be reduced, all else equal, however, Moody's notes that the government's debt metrics would improve. "This is particularly important in Israel given the role its relatively high debt/GDP and debt/revenue ratios have played in limiting the upside to its ratings outlook," adds Thomas. Aside from the situation with the Palestinians, Moody's notes that Israel's moderate susceptibility to event risk also takes into account its strained relations with Syria and Iran, which means it is likely to remain elevated. Nevertheless, renewed efforts to improve Israeli-Palestinian relations would be important validation of the country's A1 government ratings. The issuance of this credit report by Moody's is an annual update to the markets and is not a formal action to alter the credit rating of the issuer. (Moody’s27.08)

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11.2 LEBANON: Flying High

One of Lebanon's most important sectors - tourism - is enjoying its best year on record, thanks in no small part to the country's improved transport links, and in particular the record-breaking performance of Beirut's airport. Tourism is already one of the driving forces of the Lebanese economy - contributing just under 10% to GDP - and is a sector that the country hopes will continue to provide further employment and revenue. One of the key pieces in Lebanon's transport infrastructure network is Beirut Rafik Hariri International Airport (BRHIA), the country's main entry point for overseas tourists that is also becoming important as a cargo hub.

According to data released by airport authorities in August, BRHIA looks set for another record year, with nearly 2.7m passengers passing through its terminals in the first seven months of 2009, up by 28.9% compared to the same period last year. Meanwhile, the number of planes touching down and taking off also increased by 31.4%, with the airport handling 31,100 flights. BRHIA also recorded an 11.3% increase in the volume of cargo handled in the first seven months of this year, with 41,000 tonnes shifted, a further reflection of the upward trend in the Lebanese economy.

Such is the growing importance of BRHIA as an international aviation hub that Air Arabia, the Middle East's largest low-cost carrier, is considering establishing its third operations centre at the airport. According to Karim Hijazi, the managing director of aviation consultancy firm Air Synapsis, BRHIA has the inside track to become the Sharjah-headquartered airline's new base. "We compared Egypt and Lebanon, and technically Beirut could be the best choice for Air Arabia for their third hub," Hijazi said in an interview with the Khaleej Times in mid-August.

Such praise for Beirut's airport and the rest of the country's transport infrastructure has not always been the norm. Over the years, Lebanon's transport facilities have come in for a good deal of criticism, as successive governments have suffered shortages of funds to improve the country's land, sea and air links, while at the same time meeting other demands on the budget.

Of course, along with the criticism has come some fairly rough treatment and years of often-enforced neglect. Lebanon's 16-year war, which ended in 1990, resulted in widespread damage to the transport grid. The long-running violence and political instability meant there was little opportunity to repair or upgrade infrastructure. With a return to peace, efforts were made to restore and improve existing transport links and undertake new projects, though fiscal constraints meant that there was never enough funding to do all that was required. Despite those restrictions, Beirut's airport underwent a series of upgrades, with two new runways added and passenger-handling capacity increased to 6m annually through the expansion of its primary terminal.

However, some of this work was undone in the summer of 2006, when Israel defended itself against attacks from Lebanon. Though its operation targeted the Islamist Hezbollah movement, there were also widespread strikes against transport infrastructure across the country, including in regions not under Hezbollah control. This resulted in the damage or destruction of some 600 km of roads, 73 bridges and many of Lebanon's main transport facilities, in particular ports up and down the coast and the BRHIA, which had all three of its runways put out of action.

Though the war damage to the airport was quickly repaired, it did take longer for confidence to return, with many international airlines wary of resuming flights into Beirut so soon after the conflict. Confidence was also shaken in May 2008, when protests led by Hezbollah closed the BRHIA for a week, though since that time the airport has operated undisturbed by internal or external disruptions. (OBG01.09)

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11.3 KUWAIT: Food and Drink Report Q4 2009

Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Kuwait Food and Drink Report Q4 2009" report to their offering.

Kuwait remains unmoved in sixth position in BMI's regional Food & Drink Business Environment Ratings table for Q4/09. Its low placing largely reflects its modest per capita food consumption growth outlook. On the economic front, BMI expect the energy-exporting Kuwaiti economy to contract by 1% in 2009, which is a fairly resilient appraisal under the backdrop of the global economic meltdown.

Nevertheless, despite a GDP per capita close to $30,000 and a reasonably sized population of 3.2mn by regional standards, Kuwait's mass grocery retail (MGR) sector has yet to truly take-off. Government legislation restricting private retailers from launching in residential areas has affected private retailers. Kuwait's grocery retail landscape is dominated by the co-operative segment, which differentiates it from the wider Gulf region where the supermarket and hypermarket segments account for the bulk of MGR sales. The Union of Consumer Co-operative Societies (UCCS) accounts for the majority of grocery sales. To provide a comparison, BMI estimate that the size of the UAE's hypermarket segment by value sales to have been almost 2.5 times larger than Kuwait's in 2008.

In the same year, BMI estimates that co-operative stores accounted for almost 60% of MGR sales. However, through to 2013, BMI has forecast co-operative store sales to increase by a modest 13.2%. The segment is expected to lose impetus as a greater proportion of consumers trade up to modern supermarkets and hypermarkets. Should the government relax its co-operative supporting legislation, this process will probably accelerate.

Despite these regulatory challenges, Kuwaiti MGR operator Sultan Group has established itself as the country's largest private retailer. It currently operates 11 large retail outlets as well as a growing number of convenience stores. The convenience segment remains Kuwait's least developed. Through to 2013, Sultan is well placed to capitalize on BMI's forecast that store sales will increase by 20% from a low base to reach $0.11bn.

Earlier this quarter, the UAE-based retailer EMKE Group announced its intention to invest AED1.5bn (KWD117.5mn) through to 2010 to expand its hypermarket presence in Abu Dhabi. It is also committed to increasing its presence in a number of regional markets, which should result in further investment into Kuwait through its Lulu banner. Carrefour also has a hypermarket presence in Kuwait through its joint venture with the UAE-based retailer Majid Al Futtaim (MAF). It currently only operates one hypermarket store in the country. Both retailers should benefit from BMI's forecast that through to 2013, hypermarket sales will increase by 21.2% and reach $0.51bn. (R&M28.08)

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11.4 KUWAIT: Retail Steady

Kuwait's retailers are confident their sector is on the verge of picking up after a slow first half of the year, though shoppers themselves seem to be more cautious, waiting to see the way the economy will go before splashing out. The Oxford Business Group found that the sector has enjoyed high levels of growth in recent years, reflected by the sharp rise in gross leasable space, which is expected to top 1.1m sq meters by the beginning of next year, triple the 2006 figure of 345,000 sq meters. However, with the economic slowdown, various estimates put the expected fall in Kuwait's GDP at around 1% for 2009, not dramatic but a sharp contrast to the figures enjoyed in recent years.

The economy is nevertheless expected to return to positive territory next year, the IMF is predicting GDP to expand by 2.4% in 2010, though the retail sector is tipped to exceed this.

A report on Kuwait issued by research firm Business Monitor International in early August predicted retail sales will rise from $39bn in 2008 to almost $51bn in 2013. Among the factors that will stimulate growth in the sector are an increasing population in the 20 to 44 age bracket, and a high level of urbanization, with nearly 99% of those living in Kuwait expected to be residing in built-up areas by 2015, up from the 96% in 2005. Industry projections put retail sales growth in the country at around 31% between 2008 and 2013, averaging slightly over 6% per annum.

While the medium-term prospects look bright, if not spectacular, the outlook in the immediate future appears to be tinged with grey. The findings of the latest MasterCard Worldwide Index of Consumer Confidence survey, covering the second half of 2009, shows that Kuwaitis are far more pessimistic over the economy than they were in the first six months of the year. According to the index, published at the beginning of August, the confidence of Kuwait's consumers has slipped from a high of 96.6 to just 49.5, with a score of 100 representing optimism and 50 being neutral.

According to Raghu Malhotra, the area business head for the Middle East (Gulf countries) at MasterCard Worldwide, a neutral position could almost be seen as a vote of confidence. "In Kuwait, while consumers are not bullish about the next six months, neither are they feeling pessimistic. This is encouraging given the economic challenges of today," Malhotra said.

There was also some good news for retailers, with the breakdown of the study showing purchasing electrical goods, along with dining out and entertainment, remained as priorities for consumers when spending, while just over-two thirds of those surveyed said they were planning to maintain the same level of discretionary and recreation spending as the last six months. While Kuwait's consumers might be somewhat wary, retailers themselves are starting to take a more upbeat view of the economy. According to a survey conducted by Dun & Bradstreet South Asia Middle East and Muthanna Investment Company (MIC), business confidence is on the rise.

The Business Optimism Index (BOI) for Kuwait for the third quarter of 2009, released at the end of July, reveals that just over half of respondents expected sales volumes to pick up from their levels in the second quarter, with just 18% predicting further falls, while forecasts for net profits are running at similar levels.

Though many businesses in the wholesale and retail trade cited tight liquidity as hampering their efforts to access finance, 33% of firms plan to boost investment expenditure, with another 28% planning to maintain investments at the same level this quarter as in the last. Positive developments such as rising oil prices and the anticipation of improved corporate performances were some of the factors driving the strengthening of business sentiment, MIC said in a statement accompanying the release of the data. "The Kuwaiti economy outlook for the third quarter is certainly brighter than it was in the previous quarter, as clearly visible by the BOI survey, where all the sectors have shown firm confidence to register an improvement in their business," the company said. While shoppers may be of a more neutral frame of mind, adopting a wait-and-see approach to spending, it seems as if many retailers are readying themselves for better times ahead. (OBG27.08)

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11.5 QATAR: Concrete Evidence

Qatar’s construction sector, having avoided the full impact of the global financial crisis, is continuing to build from a position of strength. One of the key indicators that the Qatari construction sector is still vibrant, in contrast with others in the region, is the high demand for cement, with consumption at or around the same levels as it was last year. Even though the emirate's main cement producer, the Qatar National Cement Company, has ramped up production from 3m tonnes a year in 2008 to the present level of 4.65m tones, it still cannot meet all of domestic requirements, estimated to be between 18,000 and 19,000 tonnes a day.

According to Mohamed Ali Al Sulaiti, the general manager of the Qatar National Cement Company, Qatar's daily requirements for cement mean that around 3000 tonnes of the material has to be imported daily, to complement the 15,500 tonnes of local production per day. "There are reports that the construction industry in many places in the region and outside has been hit because of the economic slowdown. Despite the increase in production, there is still shortage for cement in our country, which is a clear sign of Qatar's economic stability and strength," Al Sulaiti said in an interview with the Gulf Times on July 29.

Omar Yaji, the general manager of Gulf Holding Company (GHC), another of Qatar's cement producers, supported this view. "It is true that the construction sector is badly hit around the world due to the financial crisis. But with Qatar, the situation is different. The crisis has had no major impact on Qatar," Yaji told local media on August 8. With demand still high, GHC is also increasing its daily output to 5000 tonnes from the current 3500 via a new facility due to start production before the end of the year. "There are several giant real estate projects on the list. With such projects, there would be no drop at all in the local demand for cement," Yaji said.

Of all the countries in the Gulf region, only the cement companies in Qatar and Oman increased their earnings in the second quarter of 2009, according to a report issued by Kuwait's Global Investment House (GIH) in mid-August. The report also said that it expected Qatar, along with Saudi Arabia, to top any growth trend as construction recovered in the region.

If the Qatari building sector needed a boost at all, it received one in late July with the news that construction work on a $5.5bn project to redevelop the centre of the capital Doha will begin in the fourth quarter of this year. The Heart of Doha project, being carried out by Dohaland, a subsidiary of Qatar Foundation for Education, Science and Community Development, will see an area of 35 ha redeveloped so that architecture of downtown Doha better reflects the character of the city. Due to be completed in 2016, the five-stage, mixed-usage project foresees the construction of 226 separate buildings, along with supporting infrastructure, and should provide work to many local companies.

There are potential downsides to the ongoing construction boom, though they are probably ones many in the sector have become used to. Increasing demand for both materials and skilled workers could push prices up as varying projects vie for the products needed to carry out developments and the professionals and laborers required to turn plans into reality. This price pressure will only increase as the building sectors in other Gulf countries start to pick up, as they are predicted to do in 2010, further adding to the demand for resources in the region.

As across much of the region, there has been a fall in housing prices in Qatar, which are around 30% down so far this year, a drop that has seen the slowing in the rate of new residential projects being launched. However, any resulting slack in the building sector is being taken up by a slew of infrastructure developments that are either under way or on which work is about to start. These include ongoing work the New Doha International Airport, Qatar's largest power and desalination plant being build at Ras Laffin and the soon-to-commence Qatar-Bahrain Causeway, one of the biggest construction projects ever undertaken in the Gulf. Overall, prospects for the Qatari construction sector look good, with plenty of work on the horizon and the money available to pay for it. (OBG 01.09)

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11.6 EGYPT: Moody’s Changes Egypt's Outlook To Stable From Negative

On 19 August, Moody's Investors Service (http://www.moodys.com) changed the outlook on Egypt's sovereign ratings and ceilings back to stable from negative. This affects Egypt's Ba1 local and foreign currency government bond ratings, its Ba2 country ceiling for foreign currency bank deposits and its Baa2 country ceiling for foreign currency bonds.

"Today's rating action was primarily motivated by the easing of inflation in Egypt since its peak in August 2008, the government's efforts to contain fiscal pressures, and the relative resilience displayed by Egypt's economy and banking system in the face of recent global economic turmoil when compared with rating peers," explains Tristan Cooper, Moody's Head Analyst for Middle East Sovereigns.

Concern over the adverse social and economic consequences of soaring inflation had previously prompted Moody's to place Egypt's sovereign ratings on negative outlook in mid-2008. Such concerns have been allayed as inflation has receded somewhat and also because the bout of double-digit price growth over the past 18 months does not seem to have caused serious social or fiscal dislocations.

The Egyptian government's wide deficit was contained over the most recent fiscal year (June 2008 to June 2009) at around the previous year's deficit despite considerable upward pressure on expenditures, particularly on wages and subsidies, and the implementation of a stimulus package. Although the deficit is expected to expand this fiscal year as tax revenues decline, Moody's does not expect this to cause a large jump in the government's debt ratios, assuming that nominal GDP growth stays buoyant. The government does not face difficulties in financing its wide deficit as local banks, its main creditor, have a large appetite for government paper.

In general, Egypt's economy has been less affected to date by the global economic crisis than many rating peers. This can partly be explained by the country's moderate level of economic openness, solid external position, well-diversified economy, and stable, if rather underdeveloped, banking system that has been restructured in recent years and has limited foreign exposure. Moody's maintains its stable outlook on Egypt's banking sector.

"Despite today's outlook change to stable, Moody's continues to have credit concerns. Chief among these is the weakness of Egypt's public finances, with a substantially wider fiscal deficit and higher public debt burden than most rating peers," cautions Mr. Cooper. "Furthermore, although Egypt's inflation rate has eased, it remains elevated. This, combined with slower growth and rising unemployment, continues to present challenges in light of the country's poor social indicators." he adds.

The last rating action on Egypt was June 23, 2008, when Moody's changed the outlook on Egypt's ratings and country ceilings to negative from stable and lowered the government's local currency bond rating from Baa3 to Ba1. (Moody’s19.08)

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11.7 EGYPT: Easing Congestion

The Oxford Business Group observed that for years, a booming population has led to increasingly crowded streets, but new government initiatives may finally ease some of Egypt's traffic problems. With more than 16m inhabitants in the greater Cairo area, the erection of new buildings and the rising number of cars, the density of the capital has left little space for road construction and expansion. To address these issues, projects that offer alternatives to road transport, such as metros and high-speed trains, are being explored, while efforts to expand national thoroughfares have finally begun to move off the drawing board, with the aim of reducing congestion and improving transit times.

The biggest development in Egypt's public transportation sector in recent months is the official launch of the second phase of Cairo's new metro line. At a ceremony in late June, the government announced that a $140m contract was awarded to a consortium of firms headed by Orascom Construction Industries (OCI) for the civil and electromechanical work on the project. The consortium includes Vinci, Arab Contractors, Bouygues, Colas Rail of France, Alstom and the Thales Group. OCI and Eurovia Travaux Ferroviares have also been given a separate $24m contract for the railway construction component of phase two.

That there are a significant number of French companies is unsurprising, given the longstanding cooperation between the two governments on the project. The French minister of foreign trade, Anne-Marie Idrac, who was at the launch ceremony, told local press that since the start of the metro project 30 years ago, France has committed $1.4bn in concessional loans. For this new segment, the French government is supplying $280m in loans to the French companies involved in the plans. Total investments for phase two stand at $600m.

This second phase will see the construction of four new metro stations: Cairo Fairgrounds, the Stadium, Koliyat Al Banat and Al Ahram Street, which are expected to open in October 2012. This construction is part of the larger Line 3 metro system, which has been under construction since July 2007. It will extend 34.2 km from Imbaba in the west to Cairo International Airport in the east, and is expected to ultimately accommodate 4.5m daily commuters. The third line itself is part of a larger master plan for Cairo's metro system, which calls for the construction of six lines by 2022.

Rail projects are a significant component of the long-term plan for overhauling Egypt's transport infrastructure. In late September, the results of a two-month Egyptian-Italian feasibility study for a high-speed railway line between Cairo and Alexandria will be available, according to Mohamed Mansour, Egypt's transport minister. Egyptian technical staff and the Italian state-owned railway company Ferrovie dello Stato are studying a range of factors, including capacity, cost and possible routes. He said that if the $775,000 study finds that the train is a realistic possibility, Egypt will release a public tender for construction and operation.

This new plan comes in the middle of the Ministry of Transport's four-year refurbishment program, which began in mid-2007 and which will see $1.48bn directed towards infrastructure needs for the world's second-oldest railway network, through 2011. International organizations have added their support to the upgrades, which came after a number of fatal crashes at the beginning of the decade. In early August the minister of transport, Mohamed Lotfi Mansour, confirmed the World Bank's loan of $270m to support the project, following negotiations that lasted 30 months.

While the expanded metro and rail plans will reduce road congestion and improve safety, Egypt has also been taking measures to deal with the ever-rising number of cars on the street. While the number of cars sold has declined in the wake of the global financial crisis, down 36.3% year-on-year in June 2009 according to officials at the Automotive Marketing Information Council, in total, the number of cars in Egypt has increased some 400% over the past 25 years, making the expansion of the country's road network a vital step.

To this end, a number of roads and projects are in the planning and construction phases. The Cairo-Alexandria Highway aims to transform the current road into a 231-km-long freeway. Another major project is the Mediterranean Coastal Highway, which runs 562 km from Port Said to Marsa Matrouth along the northern coast of the Mediterranean. The two roads are estimated to cost $546m and $269m, respectively. The two remaining large-scale highway projects are those connecting Shoubra to Banha and Kafr El Zayat to Alexandria. The latter, which is intended to relieve congestion bound for Alexandria from the Delta region, will stretch 110 km and cost an estimated $273m. The Shoubra-Banha Highway, which is projected to accommodate 125,000 vehicles a day, is expected to cost about $129m.

Still, while these projects should significantly expand the roads, the growing number of cars poses serious structured and environmental challenges. For a more sustainable solution, the government needs to maintain its commitment to public transport and draw in sufficient private investment to create a modern and efficient transportation network for its citizens. (OBG19.08)

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11.8 MOROCCO: Collaborative Construction

As Morocco's construction sector weathers a mild slowdown after several years of rapid growth, officials are moving to offset the drop in demand for high-end developments by stepping-up support for social housing projects. For private developers, many of whom have been hit hard by the delays on upmarket plans, the constant demand for affordable housing offers a reliable alternative.

In recent years developers have capitalized on Morocco's growing reputation as a tourist destination, building large-scale luxury resorts and second homes for both foreigners and expatriates, but this year's volatile global economy has started to take its toll on the sector. Although many of the major projects are long term and will not be significantly affected by the fluctuations, completion time has increased for most projects. In a poll of companies in the building and public works sector carried out by the High Planning Commission (Haut Commissariat au Plan, HCP), 35% of the participants reported an increase in activity, while 48% reported stagnation and 17% a decrease.

Although high-end demand has slowed along with the world markets, there is no shortage of people who need affordable housing. A booming population and growing urbanization have made it difficult for the supply of affordable housing to keep up with demand. The housing and town plan minister, Toufik Jhira, estimated that social housing accounts for 70% of the national market. In 2008, although 129,000 social housing units were constructed, up from 121,000 the previous year, Morocco's housing deficit remains high, at nearly 1m units.

To address these needs, the government has stepped up its commitment to provide housing, and hopes to build around 150,000 a year through 2012. In February 2009 the government signed two agreements, pledging a total of Dh52bn (€4.7bn) for affordable housing projects, and 3853 ha of public land to be made available for building 200,000 units in 32 cities across the country. This plan is only the latest step in the government's program to provide housing for all its citizens. The Cities Without Slums (Villes Sans Bidonvilles) project, which was launched in 2004, aims to move 289,000 households from shantytowns into permanent residences. The rate of makeshift housing demolition has sped up considerably in recent years, from 5000 in 2004 to 50,000 in 2008. As of 2008, 64 new cities, containing a total of 268,000 homes, had been planned.

While government initiatives are likely to remain an essential piece of the plan to reduce the shortage, private companies are also contributing. In 2008 Al Omrane, the state-owned real estate company, broke ground on 22,000 units and pledged to build another 129,000 with a maximum sales price of Dh140,000 (€12,600) in the next four years.

As important as it is to construct new residences, more financing must also be made available to enable Moroccans to purchase homes. Thanks to an injection from the government into the Damane Assakane (housing guarantee) program, there will be more loans on offer in the coming year. The funding is being given primarily through the Fonds de Garantie en Faveur de Populations - Revenues Irregulier et Modestes (FOGARIM) and Fonds de Garantie des Prets Destines au Logement au Profit du Personnel des Secteurs Public et Prive et aux Personnes Exer?ant pour leur Propre Compte (FOGALOGE) loans. Under the FOGARIM program, people with low or irregular incomes are eligible for housing loans for properties up to Dh200,000 (€18,000). The loan covers 70% of the price of the home. As of March 2009, 47,473 households had benefitted from the program. FOGALOGE loans cover 50% of the price of homes up to Dh800,000 (€72,000) for individuals making up to Dh120,000 (€10,800) per year, or Dh180,000 (€16,200) for couples.

In addition to the government loans, private banks, much like developers on the construction side, have also been designing programs to take advantage of the potential in the lower end of the market. Attijariwafa Bank recently began offering a fixed-rate mortgage up to Dh800,000 (€72,000) of the purchase or construction price of a new home and the Groupement Professionnel des Banques du Maroc recently announced that it would support the financing of real estate projects, including social housing.

This increased private sector interest should help ease the government's burden. Still, some have argued that for development to really take off, more should be done to encourage investors. Deputy and parliamentary committee finance member Abdelhamid Mernissi told local media that the state should reduce land prices and increase bonuses from Dh30,000 (€2,665) to Dh40,000 (€3,553) for those who target social housing. Others have called on the government to ease its quantitative measurements for affordable units. Currently, it is defined as properties of 100 sq meters at a price of Dh200,000 (€18,000), while low total property value housing has a price of under DH140,000 (€12,600) and an area of less than 60 sq meters. With space scarce in major cities, the area could be reduced to 40 sq meters, while the price could be raised to Dh300,000 (€27,000) to increase developers' profits.

Still, even without these added incentives, investing in the affordable segment seems like a solid option, despite lacking the same potential for high returns as more lucrative, high-end projects. Until the economy improves, and big risks once again offer the prospect of great rewards, social housing, and Morocco's underprivileged citizens, stand to benefit. (OBG25.08)

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11.9 TURKEY: Azerbaijani Gas Causes Nabucco Concern

Strengthened relations between Azerbaijan and Russia worry those involved in the Nabucco project, which aims to transport Azerbaijani gas to Europe. If Azerbaijan directs 13b cubic meters of Phase II's natural gas to Russia, Nabucco's goal of diversifying the sources and delivery methods of Caspian natural gas may suffer a serious blow. The second phase of Azerbaijan’s Shah Deniz gas-field project, which has proven highly competitive among countries in the region, may see natural gas transported to Europe via Russia’s proposed South Stream pipeline.

Since the Nabucco pipeline project aims to transport Azerbaijani gas to Europe, that country’s closer relations with Russia have heightened tensions over the two plans. Turkey demands a share from Phase II of Shah Deniz, which will start production after 2013, while Italy has also approached Azerbaijan over the proposed Turkey-Greece-Italy, or ITGI, project. If Azerbaijan directs 13b cubic meters of Phase II’s natural gas to Russia, Nabucco’s goal of diversifying the sources and delivery methods of Caspian natural gas may suffer a serious blow.

During a visit to Turkey at the beginning of the month, Russian Prime Minister Putin told journalists that the South Stream pipeline would not block Nabucco and that there is enough oil and natural gas in Shah Deniz to justify different routes.

The Importance of Azerbaijani gas

Phase II of Shah Deniz is crucial both for Nabucco and Turkey. The Nabucco project will start with 8b cubic meters of natural gas in 2015. Since the inception of the international effort, the aim has been to diversify the European Union’s natural-gas supply. Once the EU, which is largely dependent on Russian gas, is connected with Caspian resources, it will have increased access to alternative sources of energy for years to come.

Russia’s previous natural-gas-purchase agreement with Azerbaijan has prompted concerns that Moscow may be preparing to buy a major stake in Phase II of Shah Deniz before the Nabucco deal is finalized. Turkey is meanwhile demanding a share of Phase II production to strengthen supply security and ensure its prominent role in regional energy diplomacy, while Italy seeks to diversify the Mediterranean’s energy sources by bringing Azerbaijani gas to the Adriatic coast.

EU Energy Commissioner Andris Piebalgs signaled that Russia, whose South Stream project rivals Nabucco, should be prepared for competition. Noting that Nabucco will meet at least 5 percent of Europe’s gas demand, Piebalgs said that countries from Poland to the Mediterranean are dependent on supplies from Russia’s Gazprom. The Nabucco project’s attempt to transport gas from other suppliers should be viewed by Gazprom as a rivalry, not a loss, he said, adding that the competition will improve service for European consumers and not affect prices. Negotiations concerning Azerbaijan’s supply for the Nabucco project are ongoing.

Nabucco’s management has sidestepped the wait for Azerbaijan’s approval by launching talks with Iraq in an attempt to speed up the project’s launch. During the intergovernmental-agreement sessions on the Nabucco project in Ankara, Iraq pledged to supply 15b cubic meters of natural gas. Although Nabucco’s initial supply problem appears to be solved, the pipeline reportedly faces a struggle to reach Caspian resources faced with the domination of Russian natural gas. (Hurriyet19.08)

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11.10 MALTA: Fitch Affirms Malta at 'A+'; Outlook Stable

On 21 August Fitch Ratings (http://www.fitchratings.com) affirmed the Republic of Malta's Long-term foreign currency and local currency Issuer Default ratings (IDRs) at 'A+', respectively. Both ratings have Stable Outlooks. Fitch has affirmed Malta's Short-term IDR at 'F1' and Country Ceiling at 'AAA', which is the common Country Ceiling for the euro area.

"Malta's rating affirmation reflects modest success during its first year in the euro area and the considerable progress made in preparing the Malta Dockyards for privatization," says Chris Pryce, Director in Fitch's Sovereign Group. "The rating further reflects Malta's relative success in managing the present recession, as output has not fallen by more than two% and there has only been a limited deterioration in the government's accounts, which marks a better performance than higher-rated peers."

Fitch expects Malta's government to encourage labor productivity and boost economic competitiveness to raise incomes and attract foreign investment as the forecast economic recovery gathers pace in coming years. The agency also expects that the government will seek to renew its drive for fiscal consolidation, mainly by curbing the growth of public spending, which was offset by the recession.

After a sluggish performance in the first half of the decade, partly due to a decline in the textiles industry, GDP growth picked up in the past four years and averaged an acceptable 3.2% per year until the global economic downturn derailed Malta's growth in late 2008. Although consistent with the 'A' rating median, Malta's income per head has nonetheless remained below EU/EMU levels. A determined effort is likely to be needed to reduce over-manning which is evident in many parts of the economy as well as to attract and develop new industries and services. Malta has demonstrated that it can attract new industries such as pharmaceuticals, aircraft maintenance, online gaming, and a variety of business services ranging from call centers and financial service back offices to high quality professional support services. Educational development will help such efforts, and further structural reforms, such as a reduction in public subsidies and an end to automatic wage indexation, will enhance competition.

The government's successful fiscal consolidation program, pursued from 2003 when its deficit was almost 10% of GDP, to 2007 when it fell to 2.2%, below the Maastricht 3% guideline, was interrupted in 2008 when the deficit slipped to 4.6%, partly as a result of redundancy payments to Dockyard employees (1% of GDP). The deficit is not expected to deteriorate much in 2009 and may well improve in 2010. The widening of the fiscal deficit between 2007 and 2009 is expected to be relatively moderate by the standards of other Euro area members. Public debt rose as a proportion of GDP to 63.0% in 2008 and is expected to rise to 67%-68% by the end of 2010. This is not high compared to many other European countries. Malta's government, like its domestic banks, obtains most of its finance from domestic investors, both institutional and households. This framework has not been altered by euro area membership and has helped Malta navigate a period of significant volatility in euro sovereign debt markets.

The international banking sector, though large in comparison to Malta's GDP, is not integrated into the domestic economy and mainly provides services for foreigners. It is not thought to pose a systemic threat to the domestic banking industry. Malta's banks have limited exposure to so-called toxic assets and bank regulation is conservative. Lending policies have been conservative and most funding is derived from retail deposits. Domestic banks continue to extend credit and the government has not needed to intervene through recapitalization and/or liquidity injections. Nonetheless, profitability is likely to be affected by lower volumes and interest margins, and non-performing loans are expected to increase, particularly in the highly-concentrated real estate portfolio.

Malta's rating continues to benefit from its sound democratic government, under which a constitutional mechanism seeks to ensure that the political party with the largest share of the vote gains a working majority in parliament. There are strong civil institutions and corruption is limited. (Fitch 21.08)

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- Israeli Shekel conversions done at a rate of NIS 3.80 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.60 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.40
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.66 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 60 = $1.00

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