TOP STORIES

• Israel Formulating Tourism Standard
• UAE to Help Iraq Obtain Access To Global Investment
• Turkey's Foreign Trade Deficit $28 Billion for First Half
• PERSIAN GULF States May Opt For Nuclear Power

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Israel's Chief of Staff Unveils Five-Year Plan

Back to Top

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Formulating Tourism Standard
2.2 Hexagon Acquires Laser Technologies Company in Israel
2.3 Elbit Systems Group Awarded Two Prestigious Israel Defense Prizes

Back to Top

3: REGIONAL PRIVATE SECTOR NEWS

3.1 Dematco Enters MoU with Tendall to Provide Investment Products According to Muslim Law
3.2 Nawras Selects Telenity's Video Ringback Tone (RBT) Solution
3.3 Optimi Awarded Major Network Optimization Contract by Oman Mobile
3.4 Acro Appoints Distributor in Turkey

Back to Top

4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel's First Private Port To Open In Haifa

Back to Top

5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 New Finance Minister For Jordan
5.2 Minister Says Iraqi Oil in Jordan Soon
5.3 UAE to Help Iraq Obtain Access To Global Investment
5.4 UAE Leads Arab Mid East in Number of Net Users
5.5 Saudi Inflation Climbs To Seven-Year High Of 4%
5.6 Yemen to Build Nuclear Reactor Amid Growing Shortfall of Electricity Supplies
5.7 Egypt Economy Grows At Fastest Rate in Five Years
5.8 Egypt Gets Record 9.7 Million Visitors in 2006-07
5.9 United States and Morocco Sign $700 Million Aid Program

Back to Top

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:

6.1 Turkey's Foreign Trade Deficit $28 Billion for First Half
6.2 Turkish Inflation Figures In July
6.3 Greek Fires Have No Impact On Hellenic Republic Sovereign Rating

Back to Top

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Rosh HaShanah – the Jewish New Year
7.2 Fast of Gedaliya Marked on 16 September

*REGIONAL:

7.3 Ramadan Begins on 24 September
7.4 Turkey's Parliament Elects Gul As Its 11th President

Back to Top

8: ISRAEL LIFE SCIENCE NEWS

8.1 Teva Announces Approval of Generic Accupril Tablets
8.2 BioLineRx In-Licenses Novel Drug for the Treatment of Acute Kidney Injury
8.3 Protalix BioTherapeutics Treats First Patient in Phase III Clinical Trial of prGCD
8.4 Compugen & Teva Join on Splice Variant of MCP1 for Treatment of Chronic Inflammatory Diseases

Back to Top

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 RACSA Chooses Alvarion's WiMAX Solution
9.2 COMMIT Selects RADVISION 3G-324M for Its Latest TD-SCDMA Mobile Terminal Reference Design
9.3 Optibase IPTV Encoder System Chosen by ZTE Corporation in China
9.4 ECI Telecom Selected as Sole Supplier for National Packet-Optical Network in Poland
9.5 Toshiba Introduces Industry's First MaxxAudio PC
9.6 Viettel Selects ECI Telecom's Optical & Broadband Access Solutions for Vietnam
9.7 InRob Tech & Frontline Robotics Strengthen Collaboration on Robotics Defense Projects
9.8 MIND Announces Two New Wins that Strengthen Presence in the US Market
9.9 Dune Networks Announces Availability of SPAUI Implementation on Altera FPGAs
9.10 Emtel Chooses Alvarion's Solution for WiMAX Network Deployment in Mauritius
9.11 First True Push Email Service for Gmail Users Worldwide is Launched by emoze
9.12 Tele2 Places a First-Time Order for ECtel's Revenue Assurance Solution

Back to Top

10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Economy Grew At Annual 6.6% in First Half
10.2 Israel's PPP GDP Per Capita Hits Record High in 2006
10.3 Israel's Unemployment Rate Drops
10.4 Israel's Incoming Tourism Returns to Pre-Lebanon Levels

Back to Top

In Depth

11.1 PERSIAN GULF States May Opt For Nuclear Power
11.2 BAHRAIN: Fitch Upgrades to Long-term FCIDR 'A'; Outlook Stable
11.3 ABU DHABI: Taking Tourism on the Road
11.4 OMAN: Planting Seeds
11.5 SAUDI ARABIA: On the Right Track
11.6 SAUDI ARABIA: Manufacturing the Future
11.7 EGYPT: Phasing Out Energy Subsidies
11.8 TUNISIA: The Stability Payoff
11.9 TURKEY: The Ultimate Prize
11.10 TURKEY: The Presidency of Normalization

Back to Top

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Israel's Chief of Staff Unveils Five-Year Plan

IDF Radio reported that IDF Chief of Staff Lt.-Gen. Ashkenazi has unveiled the IDF's work plan for the next five years. The IDF will greatly expand all its systems while simultaneously ensuring that high-quality personnel stay in uniform. Under the plan, ground forces will be strengthened by continuing the Merkava tank program. Hundreds of current tanks will be upgraded, with an emphasis on active armor. The Air Force will receive the F-35 Joint Strike Fighter, and expand its unmanned aerial vehicle (UAV) capability. The Navy will receive new multi-purpose ships. Investment will continue in the Arrow anti-ballistic missile program and the “Iron Dome” anti-missile and rocket program. Military Intelligence will implement its program for keeping trained personnel, even as the number of IDF recruits continues to decline. Military Intelligence will improve service conditions and compensation for its personnel. The IDF will also pursue expanded training of both regular Army and reservist ground forces and procure large quantities of munitions. Ashkenazi said that the plan would strengthen the IDF as it copes with the defense challenges that the country faces and will face over the next five years. (Globes 03.09)

Back to Table of Contents

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Formulating Tourism Standard

The Israel Standards Institute is formulating a special standard for services in the tourist industry, with the aim of ensuring that tourism services providers give tourists proper service and make them want to make repeat visits. According to Standards Institute director general Patir, the introduction of a tourism services standard is vital, given the fact that demand in Israel for tourism services often exceeds the services on offer, and that the workforce in the industry undergoes rapid turnover. It was therefore important, she said, to ensure best practice among service providers, which could be achieved by providing the industry with a clear, unequivocal standard for quality service. Patir is planning to introduce a standard along the lines of that in effect in Spain which, she claims, is one of the world leaders. She notes that 60 million tourists visit Spain every year, compared with 2.2 million tourists in Israel. Patir says this figure proves that the Spanish have a high standard of service in their tourism industry, which encourages tourists to make repeat visits. The standard that the Standards Institution is now working on will be comprehensive and detailed. It will, for example, set down requirements for maximum time that tourists have to wait for service at reception desks. It will also set out standards for hotels, including the frequency of change in bedding and towels in rooms, lighting, the selection of toiletries in bathrooms, and the range of cheeses on offer at breakfast. The standard will also set out guidelines for the proper temperature in swimming pools, the range of oils used at spas, and the level of professional training required of fitness coaches working in the industry. It will also govern services provided by travel agents, tour guides, scuba diving coaches and others. (Globes 03.09)

Back to Table of Contents

2.2 Hexagon Acquires Laser Technologies Company in Israel

Stockholm, Sweden's Hexagon has entered into an agreement to acquire all outstanding shares of Ramat HaSharon, Israel's CogniTens (http://www.cognitens.com), a 3D non contact measurement technologies company. CogniTens is built on the concept of providing manufacturers with full surface and features measurements using advanced 3D optical technology. The company's dimensional measurement solutions are especially designed for use in demanding engineering and shop floor environments of automotive and other manufacturing industries. The acquisition of CogniTens gives Hexagon an exciting new technology in the high speed, non contact, shop floor measurement and scanning segment of the metrology market. This addition in technology and market proven products will enable Hexagon to position itself in all segments of the rapidly growing non contact sheet metal market combining CogniTens 3D measurement products with the laser tracker technologies from Leica Geosystems and the articulated arms technologies from Romer. CogniTens was consolidated as of 1 September 2007. Hexagon AB is a global technology group with strong market positions within measurement technologies and polymers. (Hexagon03.09)

Back to Table of Contents

2.3 Elbit Systems Group Awarded Two Prestigious Israel Defense Prizes

HAIFA, Israel's Elbit Systems has been awarded the prestigious Israel Defense Prize for 2007 for two military system developments which make a significant contribution to enhancing Israel's security. The prize is presented annually by the Israeli Minister of Defense. Elbit Electro-Optics Systems Elop Ltd. (Elop) received the 2007 Israel Defense Prize for development of an innovative system for ground forces. Elop developed the system in cooperation with teams from the IDF (Israel Defense Force) Ground Forces Command and the Directorate of Defense R&D (MAFAT) of the Israel Ministry of Defense, joint winners of the prize. Elop was also an Israel Defense Prize recipient in 2005. Elisra Electronic Systems Ltd. (Elisra), a 70%-subsidiary of Elbit Systems, won the 2007 Israel Defense Prize for the development of a system based on advanced technological components, together with teams from MAFAT and the Israel Air Force.

Elbit Systems (http://www.elbit.co.il) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Elbit Systems Group, which includes the company and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Group also focuses on the upgrading of existing military platforms and developing new technologies for defense, homeland security and commercial aviation applications. (Elbit03.09)

Back to Table of Contents

3: REGIONAL PRIVATE SECTOR NEWS

3.1 Dematco Enters MoU with Tendall to Provide Investment Products According to Muslim Law

Encino, California's Dematco announced that its wholly owned subsidiary Dematco, Ltd. has concluded an MoU with Tendall FZCO, a financial services company based in Dubai. The MoU states that Dematco, Ltd. will comply with Sharia, or Muslim law, during the conversion into electronic form of financial assets and instruments and derivatives to be traded on an electronic exchange for Tendall FZCO. The MoU is intended to be followed by a definitive Agreement which can endure for up to two years or to the date of such definitive Agreement. In the first instance, the parties will focus on beneficial trusts that own Senior Life Settlement Policies which Dematco is currently working on with US parties. The Company expects to earn significant fees from this activity, and Management anticipates that the revenues will commence during the last quarter of 2007. Dematco, Inc., through its subsidiary Dematco, Ltd., is engaged in the business of dematerializing or converting financial instruments from paper form to electronic form so as to enable such instruments to be traded electronically on exchanges or exchange platforms on a peer to peer basis. (Dematco22.08)

Back to Table of Contents

3.2 Nawras Selects Telenity's Video Ringback Tone (RBT) Solution

Monroe, Connecticut's Telenity, a leading provider of next generation converged services platforms and applications for communications networks, announced that Nawras, the second leading operator in Oman, has selected Telenity's next generation video-enabled Canvas CoolRings, Personalized Audio and Video Ringback Tone Application and several other converged value added services to be deployed in its network. These services will run in conjunction with Telenity's service delivery platform, Canvas CSP, which is already deployed in Nawras' network. The offer also includes licenses for service creation where Nawras is enabled to create their own new services with the Telenity infrastructure. Previously Nawras had selected Telenity's Canvas CSP, Converged Services Platform as an end-to-end SDP solution to make its network programmable and offer converged multimodal services cost-effectively and quickly. Leveraging the capabilities of the already deployed Canvas CSP, Nawras is now able to reach its current 2G and future 3G customers with innovative personalized services efficiently with faster time-to-market. Nawras launched the second mobile services in Oman on the 16th of March 2005 and is a venture between - Qtel, the fixed and mobile operator in Qatar, - TDC, a leading European telecom operator in Denmark and strong local Omani partners. (Telenity 30.08)

Back to Table of Contents

3.3 Optimi Awarded Major Network Optimization Contract by Oman Mobile

Atlanta, Georgia's Optimi, a global leader of customizable planning, optimization and monitoring solutions for new wireless technologies, has been selected by Oman Mobile to provide advanced network planning and optimization tools and services. Under the agreement, Optimi will supply state-of-the-art products x-Wizard, x-ACP (Automatic Cell Planning) and x-AFP (Automatic Frequency Planning), and Optimi's experts will deliver consultancy services to support Oman Mobile's country-wide network optimization activities. (Optimi 29.08)

Back to Table of Contents

3.4 Acro Appoints Distributor in Turkey

New York's Acro, a developer of explosive detection solutions, today announced the appointment of Bensan Mumessillik Import, Export, Industry and Trade Company (Bensan Mumessillik Ith.Ihr. San. ve Tic.) as a distributor in Turkey. Bensan Mumessillik will distribute Acro's groundbreaking patented peroxide explosive tester -ACRO-P.E.T. The innovative pen-like tester is able to identify peroxide-based explosives, such as Triacetone Triperoxide (TATP), which are almost impossible to identify, since they do not contain nitro groups or colors and may appear in a variety of shapes and forms, including liquid. Improvised explosive devices based on materials containing peroxide have increasingly been used in recent years by various terrorist organizations. ACRO-P.E.T. is designed to support the widest range of law enforcement and military operating environments, including airports, border control facilities, streets and battlefields, among others. It is a vital tool in the global war against terrorism. (Acro30.08)

Back to Table of Contents

4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel's First Private Port To Open In Haifa

Israel Shipyards will soon begin operating Israel's first privately owned port in Haifa. After lengthy negotiations, Globes announced that the company signed an agreement with Israel Ports Development & Assets Company allowing for the handling and storage of 200,000 tons of cargo a year. Israel Shipyards is still reportedly negotiating to build another pier on the company's land at an investment of $6m. The ministers of finance and national infrastructures approved Israel Shipyards' port operations as part of the ports reform. The reform limits Israel Shipyards to handling 5% of cargo handled by Israel ports a year. The approval covers a 200-meter pier and one acre of storage space. The permit is for up to 50 years. In addition, Israel Shipyards will provide ship maintenance and repair services at its site. (Globes23.08)

Back to Table of Contents

5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 New Finance Minister For Jordan

Jordan's Prime Minister Maaruf Bakhit has reshuffled his cabinet, appointing new finance, water and health ministers. Finance Ministry secretary general Hamad Al-Kassasbe was allocated the finance portfolio, replacing Ziad Fariz who quit last month amid a reported row over fuel hikes. Fariz, who was also deputy premier, resigned on August 21 after Bakhit ruled out any plans to raise fuel prices this year to tackle a budget deficit of hundreds of millions of dollars exacerbated by increasing oil prices worldwide. A team of experts headed by Fariz had conducted a study to recommend price hikes in the energy-starved kingdom which imports all of its oil and which has sought to liberalize the heavily subsidized sector. The 2 September reshuffle brought in Mohammed al-Shatnawi from the private sector to replace Zafer al-Aalem as minister of water, and Salah al-Mawajde of the health ministry as the new health minister, replacing Saad al-Kharabshe, the official said. The new appointments come ahead of the planned parliamentary polls on November 20. (Various03.09)

Back to Table of Contents

5.2 Minister Says Iraqi Oil in Jordan Soon

Jordanian Minister of Energy & Mineral Resources Shraideh said the Iraqi government has informed Jordan its readiness to provide Jordan with Iraqi oil. The minister expected the first shipment of Iraqi oil to arrive in Jordan in the coming shortly, adding that Jordanian trucks already moved to Jordanian-Iraqi borders to meet Iraqi oil trucks. Shraideh estimated that the quantities will start from 10,000 bpd, climbing to 100,000 bpd. He added that the first stage will be with low quantities to deal with security conditions. The Iraqi government, the minister added, will protect the oil trucks throughout Iraq until the Jordanian borders, where oil will be carried by Jordanian trucks to Zarqa oil Refinery. Jordan had earlier signed agreement with Iraq, during the visit of Prime Minister Al Bakhit to Iraq last year, according to which Iraq committed to provide Jordan with oil in preferable prices, but security instability prevented implementing the agreement at that time. (Petra23.08)

Back to Table of Contents

5.3 UAE to Help Iraq Obtain Access To Global Investment

The UAE will play a major role in channeling regional and international private investments to Iraq, Sultan Bin Saeed Al Mansouri, UAE Minister of Development and Public Sector said on 29 August. Addressing an Iraqi business delegation, Al Mansouri said the UAE continues to have strong economic, political and cultural ties with Iraq and will help the nation develop its government and business infrastructure. Al Mansouri said the UAE's business community has an opportunity to launch their Iraq ventures from the UAE. Last year Iraq-UAE trade exceeded $8b. With Iraq set for major reconstruction and economic revival, Mansouri said the bilateral trade could double in a few years time. (Various29.08)

Back to Table of Contents

5.4 UAE Leads Arab Mid East in Number of Net Users

The UAE registered the highest number of internet users in 2006 where access percentage was 36.1% of the total population, clinching the top position in the Arab Middle East. The number of internet users in the UAE is estimated at 1.4 million persons, constituting 7.3% of the internet users in the Middle East, says the Internet World Stats report. Internet users in the Arab Middle East increased at the rate of 479.3% over the past six years whereas by the end of 2006 there were 19 million internet users representing 1.8% of the total users worldwide, which reached a billion during the same period. Findings of the report showed that the Middle East ranked sixth among regions of the world that use internet technology. The use of communication and information technology in the Arab region still lags behind, whereby landlines, cell phones and the internet are in use at the rate of 10,24 and 8% respectively. According to the Digital Access Index (DAI), decline in the use of information technology in the Arab countries, especially in the gulf region could be attributed to lack of technology awareness rather than deficiency of technological infrastructure. The UAE bagged the 9th position among countries with the highest access to communication and information technology, followed by Qatar which ranked 23rd and Kuwait in the 35th position. Among countries of declining access Syria came third, Yemen was placed in the 16th position followed by Mauritania 34th and Sudan 38th while Iraq and Somalia were not included in the list. (IWS26.08)

Back to Table of Contents

5.5 Saudi Inflation Climbs To Seven-Year High Of 4%

Saudi inflation hit a seven-year high of 3.83% in July as rents rose at their fastest pace since at least 2004, and a currency pegged to the weak dollar helped drive up the cost of food imports. Inflation is accelerating across the Gulf region as governments invest more of their windfall oil revenue in tourism projects and infrastructure. With exchange rates pegged to the dollar, most Gulf central banks have to track US monetary policy, constraining their efforts to contain prices. The Saudi cost of living index rose to 105.6 at the end of July, from 101.7 a year earlier, data from the Central Department of Statistics showed on 28 August. It was biggest increase since 2000 for the index, based on 1999 prices. Rents rose 9.8% compared with 6.7% in June when the inflation rate was 3.06%. It was the fastest increase in rents since at least 2004. Economic growth, powered by a tripling of oil prices since 2002, has driven up Saudi property costs.

Annual inflation has not exceeded 3% since 1995, according to central bank data. Qatar and the UAE have also said rents are driving up inflation. Inflation was 12.8% in Qatar at the end of the second quarter and 9.3% in the UAE at the end of last year, according to the latest available figures. Kuwait blamed the dollar's decline against other currencies for rising inflation, and dropped its peg to the dollar in May in favor of one against a basket of currencies. The dollar's slide over the previous 12 months to a record low against the Euro and a 26-year trough against sterling in July drove up the cost of Saudi food imports from Europe. Food costs jumped 5.9%. The Saudi central bank has repeatedly ruled out any change to the riyal exchange rate, which has been pegged at 3.75 to the dollar since 2003. The kingdom paid for less than 25% of its exports in currencies other than the dollar and the riyal, while the Euro alone accounts for more than a third of Kuwait's imports. (GDN29.08)

Back to Table of Contents

5.6 Yemen to Build Nuclear Reactor Amid Growing Shortfall of Electricity Supplies

Foreign firms are to construct a nuclear reactor in Yemen to help this country to deal with its growing shortfall of electricity supplies, according to statements by Yemen's electricity and energy minister Yehya. The minister said the Yemeni government's drive towards nuclear power generation was based on the economic feasibility of this technology. He did not provide details of the proposed location for the plant or when it would be built. Yemen suffers a severe shortage of power supply and thus locals encounter daily power outages. All in all, the entire power production capacity of the country's two main power plants hits about 900 MW, which serves only about half of the population. (Al Bawaba 28.08)

Back to Table of Contents

5.7 Egypt Economy Grows At Fastest Rate in Five Years

Egypt's economy grew 7.1% in the year to end June, its fastest annual rate in five years, Egypt's Economic Development Minister Osman Mohamed Osman was quoted as saying. The government had said in June it expected the economy to grow 7%, up from 6.9% in the previous financial year. Government officials have attributed Egypt's recent gains to a surge in exports and foreign direct investment. Growth in the last quarter of the year was 7.2%. Fitch Rating upped its outlook in June on Egypt's credit rating to positive from stable, citing ongoing economic reforms, faster economic growth and increased investments. The government said recently the current account surplus had surged 54%, as exports and revenues from tourism and the Suez Canal climbed. Net direct investment in Egypt nearly doubled in the 2006/2007 fiscal year to $11.1b the central bank had said. Egypt is also selling hundreds of state-owned companies, including some of its largest banks, in a privatization drive. (Reuters30.07)

Back to Table of Contents

5.8 Egypt Gets Record 9.7 Million Visitors in 2006-07

Egypt received a record 9.7 million visitors in 2006-07, 13% up on 8.6 million in the previous year, state news agency MENA said on 27 August. Egypt's financial year runs from July to June. The visitors brought $8.2b to the country, 14% up on $7.2b in the previous year, preserving the status of tourism as a major contributor to Egypt's current account, along with oil and gas exports, Suez Canal transit fees and remittances from Egyptians working abroad. Egyptian Tourism Minister Garrana as saying the visitors spent a cumulative total of 92.3 million nights in Egypt, 8.5% up on 85.1 million in 2005-06. The government is planning to receive 14 million visitors a year in 2011, by which time the country will have 240,000 hotel rooms, compared to 184,000 now, he added. The government is looking to tourism for job creation, saying that every five extra visitors create one extra job, either directly or indirectly. (MENA27.08)

Back to Table of Contents

5.9 United States and Morocco Sign $700 Million Aid Program

On 31 August, the governments of Morocco and the United States signed the largest Millennium Challenge Corporation (MCC) compact to date for nearly $700m with the goal of stimulating sustainable economic and social growth in the North African country. King Mohammed VI presided over the signing ceremony during which formalized $697.5m MCC agreement. The MCC's contribution will be funneled into projects that fall under Morocco's National Initiative for Human Development (INDH), a large-scale program dedicated to job creation, national literacy, health issues and general economic development for the most needy. The MCC grant, to be paid out over a period of five years, seeks to generate economic growth in Morocco by stimulating productivity and increasing employment levels. The compact will focus on small business creation, agricultural productivity, natural resource protection and the enhancement and preservation of local cultures. The compact is expected to contribute $118m dollars annually to Morocco's GDP and to directly assist more than 600,000 families. The Millennium Challenge Corporation (MCC) is a United States Government corporation designed to partner with developing nations. Established in January 2004, MCC is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people. MCC's mission is to reduce global poverty through the promotion of sustainable economic growth. (MCC31.08)

Back to Table of Contents

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:

6.1 Turkey's Foreign Trade Deficit $28 Billion for First Half

Turkey's foreign trade deficit reached $28b in the first six months of 2007, according to the figures released by the Turkish Board of Statistics (TUIK). Russia, Germany and China made the top three on Turkey's imports list and 86% of Turkey's total trade deficit with $24.1b. Imports from Russia increased by 30.6% while imports from Germany were up by 8.9% and imports from China increased by 26.8% over the same period last year. Turkey's imports from Russia, Germany and China were $10.5b, $7.8b and $5.7b respectively. (TUIK03.09)

Back to Table of Contents

6.2 Turkish Inflation Figures In July

On 3 September, the Turkish Board of Statistics (TUIK) announced that the consumer prices rose by 0.02% and producer prices increased by 0.85% in August 2007. As of August, annual inflation was calculated as 7.39% in Consumer Price Index (TUFE) and 3.72% in Producer Price Index (UFE). TUFE increased by 3.13% and UFE rose by 3.93% in the first eight months of 2007. Meanwhile, annual inflation based on average figures for the past 12 months as of August was 9.46% in consumer prices and 8.29% in producer prices. (TUIK03.09)

Back to Table of Contents

6.3 Greek Fires Have No Impact On Hellenic Republic Sovereign Rating

Standard & Poor's Ratings Services (http://www.standardandpoors.com) said on 30 August that the fires, which have swept across large parts of the Hellenic Republic (Greece; A/Stable/A-1) recently would have no impact on the sovereign rating. There is currently no official indication of the economic and fiscal cost of the fires. First estimates however, suggest an amount between €3b and €5b (1.4%-2.4% of GDP in 2007). It is unclear how much of this expense would accrue to the government, although €300m has already been set aside to provide short-term relief to fire victims. Meanwhile, some financial assistance is likely to come from the EU's solidarity fund. Economic growth and consequently government revenues may also slow as one of the fallouts from the fire damage could be reduced tourism. "More relevant for the future rating trajectory will be the economic agenda of the government that will emerge from the Sept. 16, 2007, early parliamentary elections," said Standard & Poor's credit analyst Trevor Cullinan. "Of particular importance will be proposed measures to reform the unsustainable Greek social security system, as the ratings are constrained by the significant increase in aging-related public spending expected in the coming decades, exacerbating an already high public debt burden." (RatingsDirect 30.078)

Back to Table of Contents

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Rosh HaShanah – the Jewish New Year

Rosh Hashanah, commonly known as the Jewish New Year, is celebrated on the first and second days of Tishrei, which this year fall on 13 – 14 September. In Hebrew, Rosh Hashanah literally means "first of the year." The name Rosh Hashanah is not used in the Bible to discuss this holiday. The Bible refers to the holiday as Yom Ha-Zikaron (the day of remembrance) or Yom Truah (the day of the sounding of the shofar). The holiday is instituted in Leviticus 23:24-25. The shofar is a ram's horn; the sounding of the shofar in the synagogue is one of the most important observances of this holiday. The Bible gives no specific reason for this practice, though one that has been suggested is that the shofar's sound is a call to repentance. No work is permitted on Rosh Hashanah. Much of the day is spent in synagogue, where the regular daily liturgy is somewhat expanded. In fact, there is a special prayer book called the machzor used for Rosh Hashanah and Yom Kippur because of the extensive liturgical changes for these holidays. Religious services for the holiday focus on the concept of G-d's sovereignty. One popular observance during this holiday is eating apples dipped in honey, reflecting the wish for a sweet new year.

Back to Table of Contents

7.2 Fast of Gedaliya Marked on 16 September

The Fast of Gedaliya (or Tzom Gedaliya, falling on the 3rd of Tishrei), follows Rosh HaShana. This year it is observed on 16 September. It marks the assassination of Gedaliya b. Achikam and the exile of the small Jewish community that remained in Israel after the Destruction. When Nebuchadnezzar King of Babylonia, destroyed the Temple in Jerusalem in 586 BCE and exiled the Jewish people to Babylonia, he allowed an impoverished remnant to remain in the land and appointed Gedaliah Ben Achikam as their Governor. Many Jews who had fled to Moab, Ammon, Edom, and other neighboring lands returned to the land of Judea, tended the vineyards given to them by the king of Babylonia and enjoyed a new respite after their earlier oppression. However, political machinations led Yishmael Ben Netaniah, to assassinate Gedaliah. Yishmael murdered Gedaliah, together with most of the Jews who had joined him and numbers of Babylonians whom the Babylonian King had left with Gedaliah The remaining Jews feared the vengeance of the Babylonian King and fled to Egypt. The surviving remnant of Jews was thus dispersed and the land remained desolate, until the Jewish polity was re-established in some 70 years' time. When Rosh Hashanah falls on Thursday and Friday, the fast is postponed till Sunday, since no public fast is observed on Shabbat with the exception of Yom Kippur. The fast is observed from daybreak till the stars appear at night.

Back to Table of Contents

*REGIONAL:

7.3 Ramadan Begins on 24 September

Ramadan in 2007 will start on Thursday, 13 September and will continue for 30 days until Friday, 12 October. It is the ninth month of the Muslim calendar. The Month of Ramadan is also when it is believed the Koran was sent down from heaven. Fasting is one of the Five Pillars of the religion of Islam and one of the highest forms of Islamic worship. Abstinence from earthly pleasures and curbing evil intentions and desires is regarded as an act of obedience and submission to God as well as atonement for sins, errors, and mistakes. Muslims fast during Ramadan from the moment when it first starts to get light until sunset. Muslims fast as an act of faith and worship towards Allah, seeking to suppress their desires and increase their spiritual piety. Fasting together as a worldwide community - Ummah - affirms the brotherhood and equality of man before Allah. This fast lasts the entire month. Ramadan is a time when Muslims concentrate on their faith and spend less time on the concerns of their everyday lives. It is a time of worship and contemplation. During the Fast of Ramadan other strict restraints are also placed on the daily lives of Muslims. They are not allowed to smoke and sexual relations are also forbidden during fasting. At the end of the day the fast is broken with prayer and a meal called the iftar. In the evening following the iftar it is customary for Muslims to go out visiting family and friends. The fast is resumed the next morning. It is also a period in which business activity is significantly slower and usually no major business decisions are taken.

The last ten days of Ramadan are considered highly blessed, especially the 27th night which is also called the 'Night of Power', or the 'Night of Destiny'. It is believed that on this night the prophet Muhammad received the first revelation of the Koran. For many Muslims, this period is marked by a heightened spiritual intensity and they may spend these nights praying and reciting the Koran. After 30 days of fasting, the end of the month of Ramadan is observed with a day of celebration, called Eid-el-Fitr.

Back to Table of Contents

7.4 Turkey's Parliament Elects Gul As Its 11th President

Turkey's Parliament elected Foreign Minister Abdullah Gul as the 11th president on 28 August, as expected during the third round of presidential election. Gul's election has been termed as a major victory for the AKP's Islamist government after months of confrontation with the secular establishment. Voting began mid-afternoon, with legislators casting ballots in envelopes, in alphabetical order according to the province they represent. The parliamentary speaker planned to announce the result once the counting was completed. In the third round 448 deputies participated in the Gul was elected with 339 votes which is more than the simple majority of votes which is 276. According to the Turkish constitution the candidate, who wins a simple majority of votes (276 out of 550 deputies), in the third round becomes the 11th president of Turkey. A day earlier, the military, which has ousted four governments since 1960, issued a stern warning about the threat to secularism.

Abdullah Gul's first act as the new president of Turkey was to approve Prime Minister Erdogan's Cabinet, with minor changes to his previous Cabinet. The Cabinet is made up of 24 ministers and the prime minister. There will be nine state ministers, three of whom also serve as deputy prime ministers.

Gul is the fifth civilian president of Turkish Republic. Turkey has held 18 elections since the inauguration of the Republican Era on October 23, 1923. The election in 1980 was unfruitful, but the remaining 17 were successfully concluded with the election of a president. Turkey only elected a president by popular vote once. General Kenan Evren was elected this way after following the referendum where his presidency, as well as the new constitution prepared after the military coup on Sept. 12, 1980 was voted on. Turkey's most troubled presidential election was the election of Fahri Koruturk, who served as the last president before the military coup of 1980. It took 15 rounds to elect Koruturk president. (Various28.08)

Back to Table of Contents

8: ISRAEL LIFE SCIENCE NEWS

8.1 Teva Announces Approval of Generic Accupril Tablets

Teva Pharmaceutical Industries announced that, following the expiration of pediatric exclusivity for U.S. Patent No. 4,743,450, the U.S. FDA has granted final approval for the Company's Abbreviated New Drug Application (ANDA) to market its generic version of Pfizer's hypertension treatment Accupril (Quinapril Hydrochloride) Tablets, 5 mg, 10 mg, 20 mg and 40 mg. Shipment of this product will commence shortly. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Jerusalem, Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva27.08)

Back to Table of Contents

8.2 BioLineRx In-Licenses Novel Drug for the Treatment of Acute Kidney Injury

BioLineRx signed a worldwide exclusive license agreement with Gene Vector Technologies Ltd. for the development and commercialization of BL-4040, a novel drug for the treatment of acute kidney injury (AKI). Financial terms of the license were not disclosed. BL-4040 is a genetically-engineered version of the major capsid protein VP1, derived from the outer protein shell of the virus SV40, therefore it does not contain any viral material. By boosting the natural stress response and survival pathways of kidney cells, BL-4040 may prevent apoptosis (cell death) of kidney cells following AKI. In pre-clinical trials, BL-4040 has been shown to protect cultured cells from apoptosis in vitro and to dramatically increase survival when AKI was induced in mice. The compound was shown to be effective for the treatment of AKI over a wide dose range and was well-tolerated even at a 1,000 fold excess dose. BL-4040 was invented by Professor Oppenheim of the Department of Hematology and Dr. Haviv of the Department of Nephrology, Hadassah University Hospital, Jerusalem.

Jerusalem, Israel's BioLineRx (http://www.biolinerx.com) is dedicated to building a robust pipeline of promising therapeutics for unmet medical needs. The Company's leading programs are for schizophrenia and treatment of damaged heart tissue post-myocardial infarction. Additional products under development include compounds for the treatment of cancer and CNS, cardiovascular, metabolic, infectious and autoimmune diseases. (BioLineRx 27.08)

Back to Table of Contents

8.3 Protalix BioTherapeutics Treats First Patient in Phase III Clinical Trial of prGCD

Protalix BioTherapeutics has treated the first patient in its phase III clinical trial of the Company's lead product candidate, prGCD, a proprietary plant cell expressed recombinant form of human Glucocerebrosidase (GCD) for the treatment of Gaucher disease, a lysosomal storage disorder in humans. The phase III clinical trial will take place in centers in the United States, Israel and other locations worldwide. The trial design consists of 30 male and female patients with Gaucher disease in a randomized, double- blind, dose ranging study, with two parallel groups. Karmiel, Israel's Protalix (http://www.protalix.com) is a clinical stage biopharmaceutical company. Its goal is to become a fully integrated biopharmaceutical company focused on 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 is safe and scalable and will allow for the cost-effective, industrial-scale production of recombinant therapeutic proteins. (Protalix27.08)

Back to Table of Contents

8.4 Compugen & Teva Join on Splice Variant of MCP1 for Treatment of Chronic Inflammatory Diseases

Compugen signed an agreement with Teva Pharmaceutical Industries covering CGEN-54, a Compugen-discovered novel splice variant of MCP1. The agreement covers both an initial research collaboration and an option to Teva for a worldwide exclusive development and commercialization license. CGEN-54, a drug candidate for chronic inflammatory diseases, is one of a large number of novel splice variants predicted in silico using a Compugen discovery engine, and then validated experimentally. This discovery engine is based on the Company's long-term leadership in the field of alternative splicing and was designed to identify novel splice variants of known, clinically-related proteins through the analysis of a proprietary predictive model of the human transcriptome. According to the agreement, Compugen will provide Teva with research quantities of CGEN-54. Teva will then conduct further in vivo validation experiments and has received from Compugen an option to enter into an exclusive, worldwide milestone and royalty-bearing license agreement for the development and commercialization of any resulting products. Tel Aviv, Israel's Compugen's (http://www.cgen.com) mission is to be the world leader in the discovery and licensing of product candidates to the drug and diagnostic industry. The Company's powerful discovery engines enable the predictive discovery of numerous potential therapeutics and diagnostic biomarkers. This capability results from the Company's decade-long pioneering efforts in the deeper understanding of important biological phenomena at the molecular level through the incorporation of ideas and methods from mathematics, computer science and physics into biology, chemistry and medicine. (Compugen28.08)

Back to Table of Contents

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 RACSA Chooses Alvarion's WiMAX Solution

Alvarion announced that RACSA, a leading operator in Costa Rica, selected its 4Motion solution to provide extended wireless access services to business and residential customers in several major cities in Costa Rica. Coasin is Alvarion's local partner for this deployment project. Using the award-winning BreezeMAX platform as its radio access network (RAN), Alvarion's 4Motion solution operates at 3.5 GHz and allows RACSA to offer reliable, high-speed voice and data services to Costa Rica's urban and rural areas. 4Motion is the foundation of Alvarion's all-IP OPEN WiMAX ecosystem, which combines BreezeMAX and best of breed systems for creating an operator-centric network solution for WiMAX. As a government-authorized operator in one of the top countries in Latin America for internet use, RACSA chose Alvarion for its well-known WiMAX expertise and rapid time-to-market advantage, enabled by the availability of the 4Motion. With this successful network deployment, subscribers are now able to connect easily and quickly, benefiting from high-quality service in both dense and very remote areas. With more than 3 million units deployed in 150 countries, Tel Aviv, Israel's Alvarion (http://www.alvarion.com) is the world's leading provider of innovative wireless broadband network solutions enabling Personal Broadband to improve lifestyles and productivity with portable and mobile data, VoIP, video and other services. Alvarion is leading the market to Open WiMAX solutions with the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands with both fixed and mobile solutions. (Alvarion22.08)

Back to Table of Contents

9.2 COMMIT Selects RADVISION 3G-324M for Its Latest TD-SCDMA Mobile Terminal Reference Design

RADVISION announced that China's COMMIT Incorporated, a pioneer of TD-SCDMA wireless chipset solutions, is using the RADVISION 3G-324M Toolkit and RTSP Client Toolkit to develop a video-enabled 3G handset that is particularly suited for China's growing TD-SCDMA market. The new COMMIT mobile terminal reference design has realized stable high performance VT and streaming features. The RADVISION 3G-324M Toolkit is uniquely adept in enabling these features – with easy to use APIs, optimized CPU usage, patent-pending multiplexing technology, and many optional features that reduce time-to-market while optimizing interoperability. RADVISION's 3G-324M stack is part of the company's IMS client offering, which includes a video share application. This enables RADVISION customers to develop future-proof solutions and gain a head start on emerging IMS deployments. Tel Aviv, Israel's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video networking infrastructure and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the unified communications evolution by combining the power of video, voice, data and wireless – for high definition video conferencing systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION 21.08)

Back to Table of Contents

9.3 Optibase IPTV Encoder System Chosen by ZTE Corporation in China

Optibase and ZTE Corporation, a leading global provider of telecommunications equipment and network solutions in China, announced a strategic alliance to provide integrated TV over IP services. ZTE selected Optibase's Media Gateway (MGW) platforms to provide advanced MPEG-4/H.264 encoding and streaming solutions as part of its IPTV offering. Optibase's MGW encoding platforms are state-of-the-art streaming solutions that allow carriers to broadcast high quality TV over broadband IP networks. Optibase's MGW 5100 offers a high-density, modular platform that encodes, transcodes, transmits and recasts broadcast quality HD and SD MPEG-4/H.264 and MPEG-2 video channels in real-time. Herzliya, Israel's Optibase (http://www.optibase.com) provides professional encoding, decoding, video server upload and streaming solutions for telecom operators, service providers, broadcasters and content creators. The company's platforms enable the creation, broadband streaming and playback of high quality digital video. Optibase's breadth of product offerings are used in applications, such as: video over DSL/Fiber networks, post production for the broadcast and cables industries, archiving; high-end surveillance, distance learning; and business television. (Optibase 21.08)

Back to Table of Contents

9.4 ECI Telecom Selected as Sole Supplier for National Packet-Optical Network in Poland

ECI Telecom announced that ATM S.A., a leading integrator and carrier of carriers in Poland, has selected ECI's optical solution to build its first national converged TDM-packet-DWDM (Dense Wavelength Division Multiplexing) backbone network. Through this converged architecture, ATM will be able to offer its carrier customers a multitude of high-speed circuit, data and wavelength services. ATM selected ECI Telecom's flagship XDM line of MultiService Transport Platforms (MSTP) to upgrade its existing optical network because of its efficient multi-degree flexibility that enables several network layers on one platform including DWDM, Ethernet and SDH. These platforms will be first deployed in four cities in Southern Poland. The XDM's All-Range WDM optics, supporting a full range of distances from metro access to regional and long haul, will be used by ATM to cost-effectively bridge very long fiber spans and to easily expand the network into other parts of Poland in 2008. In addition, the XDM's unique feature-set of optical transport network (OTN) mapping and multiplexing will ensure highest transparency, quality of service and multi-vendor interoperability for all SDH and data services, including 10GE LAN. Petah Tikva, Israel's ECI Telecom (http://www.ecitele.com) delivers innovative communications platforms to carriers and service providers worldwide. ECI provides efficient platforms and solutions that enable customers to rapidly deploy cost-effective, revenue-generating services. (ECI21.08)

Back to Table of Contents

9.5 Toshiba Introduces Industry's First MaxxAudio PC

Waves announced that Toshiba is using MaxxAudio technologies in their new Qosmio G40 and F40 notebook for Japan models. These are the industry's first notebook PCs to adopt the powerful psycho-acoustic technologies which improve the acoustic performance of small integrated speakers. Waves MaxxAudio provides a comprehensive APO solution for small speaker compensation using patented psycho-acoustic algorithms, including patented technologies for dynamics, frequency response, and imaging. Waves' new MaxxAudio technologies not only improve audio quality, they allow for smaller speakers enabling innovative industrial designs. With more than a decade of leadership in the development of psychoacoustic algorithms, Waves now offers a variety of solutions under the Maxx brand (http://www.maxx.com). Manufacturers of consumer electronics are dramatically improving performance and reducing system costs using Maxx technologies. These solutions include custom semiconductor devices and licensing Waves' proprietary algorithms to DSP and computer platforms. Tel Aviv, Israel's Waves (http://www.waves.com) introduced the industry's first audio plug-in 1992 and has become the world's leading developer and provider of professional digital audio processing tools. Waves technologies are used to improve sound quality in the creation of hit records, major motion pictures, popular gaming and multimedia titles the world over. (Waves21.08)

Back to Table of Contents

9.6 Viettel Selects ECI Telecom's Optical & Broadband Access Solutions for Vietnam

ECI Telecom announced that Viettel has selected ECI's optical and broadband access solutions to expand their network in Vietnam. As one of the major suppliers of equipment for Viettel's network, ECI has supplied its XDM Multi-Service Transmission Platform (MSTP), BroadGate (BGTM) Multi-Service Provisioning Platform (MSPP), and Hi-FOCuS Multi-Service Access Node (MSAN) platform in an IP DSLAM configuration. This win demonstrates ECI's growing strength and presence not only in the Vietnam market, but also in the emerging markets of Southeast Asia. The project is being implemented by ECI's business partner in Vietnam, Ntegrator. ECI and Ntegrator have been leading suppliers in Viettel for the past nine years, supplying optical equipment for nationwide wireless backhaul. Under this new contract, ECI is once again providing leading edge optical solutions as well as broadband access for Viettel's network expansion. Petah Tikva, Israel's ECI Telecom (http://www.ecitele.com) delivers innovative communications platforms to carriers and service providers worldwide. ECI provides efficient platforms and solutions that enable customers to rapidly deploy cost-effective, revenue-generating services. (ECI27.08)

Back to Table of Contents

9.7 InRob Tech & Frontline Robotics Strengthen Collaboration on Robotics Defense Projects

InRob announced it is continuing to strengthen its collaboration with Frontline Robotics, a Canadian company that specializes in developing systems and technologies for robot platforms. Frontline Robotics develops systems and technologies for unmanned ground vehicles (UGVs) that focus on perimeter security and public safety. Frontline Robotics' software technology and integration expertise perfectly complements InRob's own remote control systems for robotic platforms. As part of the new collaboration, engineering teams from both companies are currently working on the technical coordination to ensure smooth integration of all UGV systems. In addition, the companies have already begun to market their joint products to potential customers. InRob Tech (http://www.inrobtech.com) is a Yavne, Israel based high-tech company specializing in the planning, manufacturing and service support of advanced wireless and remote control systems, operating all types of robots and other vehicles. The Company is Israel's leader in its field, and supports the IDF (Israeli Defense Forces), Israeli police, and other military and civilian companies dealing with security. Founded in 1988, the Company works closely with other high-tech companies to provide the most advanced and comprehensive UGV solutions to the market. (InRob Tech27.08)

Back to Table of Contents

9.8 MIND Announces Two New Wins that Strengthen Presence in the US Market

MIND CTI has won two new large deals in the US. MIND has been selected by a wireless communications service provider in the US to support its unique model for mobile solutions thanks to its product flexibility and openness in managing innovative needs. This is a five-year agreement for managed services (extended maintenance and enhanced support services that include performing day to day billing operational tasks). The MIND solution that will be deployed includes consolidated billing, customer care, order management, inventory, provisioning and mediation. The second win is with a provider of both wireless and wireline services in the US. As a first phase MIND was chosen to perform billing and customer care for the new offering of the wireless services. This new win is for the fix line operation, where the consolidated MIND billing, customer care, order management and inventory platform will be deployed to replace legacy systems for voice, data and corporate services. The MIND platform, once fully rolled out, should provide a unified view of all customers and services across all offerings. Implementation of these projects will be completed within two to four quarters. Yokneam, Israel's MIND CTI (http://www.mindcti.com) is a leading provider of convergent prepaid and postpaid end-to-end billing and customer care solutions for Wireless, Wireline, VoIP and Quad-play carriers worldwide. A global company, with over ten years of experience in providing solutions to carriers, MIND operates from offices in Europe, Israel and the United States, serving customers in more than 40 countries around the world. (MIND 28.08)

Back to Table of Contents

9.9 Dune Networks Announces Availability of SPAUI Implementation on Altera FPGAs

Dune Networks announced the availability of SPAUI code for Altera Corporation's Stratix II GX FPGAs. The two companies worked closely together to ensure SPAUI interoperability between Dune's Next Generation devices and Altera's Stratix II GX FPGA family with embedded multi-gigabit transceivers. SPAUI, an interface based on the XAUI industry standard, incorporates several extensions to support dense 10Gbps level applications with speedup, for accommodating such factors as packet headers, full rate 12GE and in-band flow control. The Altera-based, SPAUI implementation is available at both multiples of 3.125 Gbps and 6.25 Gbps speeds and enables flexible bundling to create higher speed links. The Stratix II GX families provide the ideal platform for developing high-speed solutions for networking equipment. Stratix II GX devices deliver up to 20 full-duplex high-performance multi-gigabit transceivers. These transceivers deliver excellent jitter performance across the full 600 Mbps to 6.375 Gbps range and when used with the multiple levels of dynamic pre-emphasis and equalization circuits in the FPGA, provide a low risk design path for new system designs. Dune Networks (http://www.dunenetworks.com) is a leading semiconductor supplier of networking devices that facilitate building Data Center, Enterprise and Carrier Ethernet Solutions. The company's products are scalable in system capacity, port rate and service scheme, offering a standard compliant, highly integrated and resilient architecture. Founded in 2000, Dune's headquarters are located in Sunnyvale, California with an R&D center in the Europark Industrial Park at Yakum, Israel. (Dune28.08)

Back to Table of Contents

9.10 Emtel Chooses Alvarion's Solution for WiMAX Network Deployment in Mauritius

Alvarion announced that Emtel, a leading mobile operator, has chosen its BreezeMAX solution for a WiMAX network deployment in Mauritius. The new network is planned to provide extended data services to both corporate and residential users starting in the major cities and eventually the entire island. Alvarion's award-winning BreezeMAX 3.5 GHz will enable Emtel to offer its subscribers greater coverage and increased capacity. As part of this deployment of primary broadband services, Emtel also plans to use Alvarion's BreezeMAX PRO, and BreezeMAX Si. Eliminating professional installation, Si enables carriers to broaden their distribution channels to best fit their business models, and when combined with outdoor CPEs, optimizes their network planning by trading-off coverage, capacity and installation costs. Tel Aviv, Israel's With more than 3 million units deployed in 150 countries, Alvarion (http://www.alvarion.com) is the world's leading provider of innovative wireless broadband network solutions enabling Personal Broadband to improve lifestyles and productivity with portable and mobile data, VoIP, video and other services. Alvarion is leading the market to Open WiMAX solutions with the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands with both fixed and mobile solutions. Alvarion's products enable the delivery of personal mobile broadband, business and residential broadband access, corporate VPNs, toll quality telephony, mobile base station feeding, hotspot coverage extension, community interconnection, public safety communications, and mobile voice and data. (Alvarion 28.08)

Back to Table of Contents

9.11 First True Push Email Service for Gmail Users Worldwide is Launched by emoze

The first true push mobile email service for Gmail users worldwide, including Google Mail users (as the service is formally known in Germany, Austria and the United Kingdom), has been launched by emoze. The free service, available for downloading directly to consumers' mobile handsets at http://mobile.emoze.com, or via a web-based wizard at http://www.emoze.com, targets the millions of Gmail account holders (according to comScore Media Metrix) that would benefit from the automatic receipt of their emails on their wireless devices. emoze is committed to the democratization of mobile email by providing free push email service to the global wireless market that prefers to use any type of standard mobile device without the need for an expensive BlackBerry handset and monthly service. emoze already offers free push email service to a broad range of email data sources and mobile device operating systems and can be easily installed on more than 800 different devices on the market. Unlike other providers, emoze service is truly a push solution, which does not require users' mobile devices to periodically dial-out (while consuming battery life) and check for the receipt of new messages, calendar or contact changes. Instead, emoze automatically acts to route emails to users' handsets at real-time after determining that their device is connected and available on the network. Ra'anana, Israel's emoze (http://www.emoze.com) turns mobile phones and mobile devices in to fully functional personal communication devices with a single, simple and free download for the individual user. It delivers real-time, secure synchronization of emails, calendars, contacts and tasks - pushing data and updates to you anytime, anywhere using any mobile service provider network or WiFi and all leading brands of mobile device. (emoze 28.08)

Back to Table of Contents

9.12 Tele2 Places a First-Time Order for ECtel's Revenue Assurance Solution

ECtel received a first-time order from the multi-national operator Tele2 for its Revenue Assurance Solution, RAP. Tele2 is a leading alternative telecom operator in Europe, providing services to over 30 million customers. Tele2 offers products and services in fixed and mobile telephony, broadband and cable TV. In the current project the system will perform revenue assurance of multiple services including fixed, mobile, and broadband. RAP is ECtel's automated revenue assurance platform that facilitates cost-effective assurance of revenues and processes. It provides a unique set of functionality and capabilities and enables operators and system integrators to implement system interfaces, define Key Performance Indicators (KPIs), add or update revenue assurance KPIs, controls and more. Rosh Ha'ayin, Israel's ECtel (http://www.ectel.com) is a leading global provider of Integrated Revenue Management (IRM) solutions for communications service providers. A pioneering market leader for over 15 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next-generation operators to fully manage their revenue and cost processes. ECtel IRM Product Suite features the world-leading fraud and revenue assurance products, FraudView and RAP, that minimize operator revenue leakage across networks and operations support systems (OSSs). (ECtel29.08)

Back to Table of Contents

10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Economy Grew At Annual 6.6% in First Half

The Central Bureau of Statistics announced on 22 August that Israel's GDP rose by an annualized 6.6% in H1/07, after rising by 3.4% in H2/06 and 6% in H1/06. The growth is above the 5% predictions of both the Ministry of Finance and the Bank of Israel. The present growth rate is higher than that in 2003-6 and the highest since the 8.7% growth rate recorded in 2000. The economy has now recorded five years of continuous growth, the longest period in Israel's history. Israel's GDP has grown 21% since 2003, an increase of NIS 135 billion. GDP is now at an all-time high of NIS 660 billion and GDP per capita is $21,500.

The rapid growth in H1/07 was driven by an 8.3% annualized growth in exports, 5.9% annualized growth in investment, and an annualized growth of 7.5% in private consumption. The business product rose by an annualized 7.9%, above expectations. Export of goods and services rose by 8.3%, investment in fixed assets increased by nearly 6% and expenditure on private consumption per capita rose by 5.7%. That last measure indicates an increase in the standard of living. One of the most striking increases was posted by the hosting and food services sector, which grew by 17.5% in first half of 2007, in annualized terms. Another impressive sector was business and financial services, which posted 14.7% growth. (CBS22.08)

Back to Table of Contents

10.2 Israel's PPP GDP Per Capita Hits Record High in 2006

The Bank of Israel reports that Israel's GDP per capita adjusted for purchasing power parity was $27,688 in 2006, placing Israel 21st in a list that includes Israel and the 30 OECD countries. The OECD average was $30,872. The figures are based on the latest estimates by the Central Bureau of Statistics and OECD. Israel's GDP per capita adjusted for purchasing power parity was $26,051 in 2005. The Bank of Israel adds that the World Economic Outlook published in April 2007 estimates Israel's PPP-adjusted per capita GDP in 2007, at $31,767, which puts Israel at eighteenth place on the list with the OECD countries. That comparison of per capita GDP shows that Israel is in a similar position to that of several OECD countries, including France ($31,872) and Germany ($32,178), and not very different from the OECD average of $32,098. On the basis of Central Bureau of Statistics/OECD data, Israel ranked behind, in descending order, Norway, the US, Ireland, Iceland, Switzerland, the Netherlands, Austria, Canada, Denmark, Australia, Belgium, the UK, Sweden, Finland, Germany, Japan, France, Greece, Italy, and Spain. Israel topped New Zealand, South Korea, Portugal, Hungary, Slovakia, Poland, Mexico, and Turkey. (BoI28.08)

Back to Table of Contents

10.3 Israel's Unemployment Rate Drops

The Central Bureau of Statistics announced on 22 August that Israel's unemployment rate is continuing to fall, though more slowly than expected. The unemployment rate fell by 0.1% to 7.6% of the civilian labor force during Q2/07 from 7.7% during Q1/07. The unemployment rate for men fell to 7% from 7.2% and the unemployment rate for women fell to 8.3% from 8.4%. The monthly average number of unemployed was 220,000 during the second quarter, of whom 107,400 were men and 112,600 were women. Some 58% of the unemployed have not worked for over a year and 29% have not worked for at least six months. The unemployment rate has fallen by 1.6% from 9.2% in Q1/05. Many reforms instituted by then Finance Minister Netanyahu have since borne fruit. The number of unemployed persons fell by 11%, a decrease of 27,900 persons. The number of employed persons rose by 1.4% during the first half of the year to 2.68 million. Participation in the labor force rose to 56.6% in the first half from 56.1% in the second half of 2006, substantially less than the proportion in Western countries. (CBS22.08)

Back to Table of Contents

10.4 Israel's Incoming Tourism Returns to Pre-Lebanon Levels

The Israel Hotels Association announced that Israel's tourism industry has finally emerged from pall cast by last summer's Second Lebanon War. The returns indicate that tourist numbers and occupancy rates at hotels are now similar to those in the summer of 2005. However, the increase still isn't as high as was expected. Hotel overnights by foreigners and Israelis totaled 2.1 million in July, 4% higher than in July 2006, but just 2% higher than July 2005. Hotel overnights by Israelis totaled 1.4 million in July, down 5% over July 2006, and 3% less than July 2005. Hotel overnights by foreigners totaled 700,000, a 28% increase over July 2006, but only 2% higher than in July 2005. The room occupancy rate was 67% in July, 6% higher than in July 2006, and 2% less compared with July 2005. Hotel overnights in Jerusalem totaled 248,000 in July, 22% higher than in July 2006, and 14% higher than in July 2005. Hotel overnights at the Dead Sea totaled 26,000 in July, 10% higher than in July 2006, and 7% higher than July 2005. (IHA28.08)

Back to Table of Contents

In Depth

11.1 PERSIAN GULF States May Opt For Nuclear Power

Nuclear power plants could be built in the Persian Gulf, following talks with international experts in Vienna. The International Atomic Energy Agency (IAEA) has almost completed a draft feasibility study on nuclear energy in the GCC, Bahrain's Ministry of Electricity and Water (MEW) revealed yesterday after talks with the world's nuclear watchdog. MEW assistant undersecretary of planning and projects Dr Khalid Ahmed Burashid has returned from joint GCC talks with the IAEA in Vienna recently, where it was revealed a final report on the initiative can be expected as soon as March next year.

That report will help decide whether the controversial technology is adopted by the six-nation bloc. The MEW statement gave a strong hint at the prevailing mood among the states when it noted that despite large reserves of fossil fuels "it is felt necessary at this point in time to deploy the nuclear option". Dr. Burashid represented Bahrain at the meeting, where GCC and IAEA officials convened to discuss a feasibility study on the possibility of using nuclear energy to generate electricity and water "safely and economically".

The MEW's statement said whatever means are chosen to meet these needs will prove crucial to the future success of nations in the region. "The working group for the joint study between the concerned and expert staff of the GCC and IAEA agreed on the importance of making the study focused on meeting the ever increasing demand for electrical power and desalinated water in the GCC states - those being the two essential elements for achieving sustainable development plans for the member states," the Ministry said.

The preliminary draft report on the subject is now almost complete and includes sections looking at the infrastructure needed for a nuclear energy project, required regulatory legislation and assembling a workforce for any new nuclear-powered installation. The preliminary draft will be further debated by the IAEA in meetings to be held in Vienna in September. The completed draft will then be presented to a GCC-IAEA meeting to be held in Riyadh on October 24, before a final draft is submitted to the GCC by the IAEA by March 5 next year.

The construction of nuclear power stations in GCC countries is a contentious issue, with the obvious benefits in the shape of cleaner, cheaper energy provision to the region's growing populations off-set for many by the dangers of hosting potentially hazardous nuclear materials. However, earlier this month the Bahrain-based director of the regional organization tasked with drawing up marine disaster plans in the event of a leak from Iran's Bushehr nuclear installation told GDN nuclear energy is the way forward for the GCC.

"I would recommend using nuclear power instead of gas or oil as fuel for power stations," said Marine Emergency Mutual Aid Centre (Memac) director Captain Abdul Munem Al Janahi. "New nuclear power stations are much cleaner and safer and the chance of a leak or a Chernobyl incident is almost nil. "In a small state like Bahrain, one small nuclear station could give you as much power as the country wants, and save building stations around the country. "The country would have all the power it needs and it would be cleaner and safer." (TradeArabia 27.08)

Back to Table of Contents

11.2 BAHRAIN: Fitch Upgrades to Long-term FCIDR 'A'; Outlook Stable

On 24 August, Fitch Ratings (http://www.fitchratings.com) upgraded the Kingdom of Bahrain's Long-term foreign currency Issuer Default Rating (IDR) to 'A' from 'A-' (A minus) and Long-term local currency IDR to 'A+' from 'A'. Following the upgrade, the Outlooks on both IDRs are now Stable. The Country Ceiling is also upgraded to 'A+' from 'A'. The Short-term foreign currency IDR is affirmed at 'F1'.

"Improvements in domestic and external solvency ratios, continued strong non-oil growth and advances in economic and political reform explain the rating upgrade," said Charles Seville, Associate Director in Fitch's Middle East and Africa Sovereign team.

Low and falling public debt is one of Bahrain's rating strengths. General government debt was 24% of GDP in 2006, 5% down on the previous year, and below the median for A-rated sovereigns. Taking account of its domestic bank deposits, the sovereign is a sizeable net domestic creditor. Bahrain is also a net public external creditor to the tune of 9% of current external receipts, although its position is slightly weaker than the 'A' category median as its public sector external assets are smaller.

"Unlike the majority of A-rated sovereigns, the public finances are forecast to remain in surplus, allowing the government to both increase deposits and reduce debt," said Mr. Seville. Moreover, this is despite Fitch's assumption of lower oil prices in 2008-2009. Oil accounts for a quarter of Bahrain's GDP but three-quarters of government revenue - a similar share to other GCC countries. Bahrain's breakeven oil price on the budget is higher than some other Gulf states, but the government has a good track record of adjusting to revenue shocks.

GDP growth reached 7.1% in 2006, and continues to be driven by the non-oil sector, where growth has exceeded 8% for the last four years. By contrast, output in the oil sector has contracted in real terms in each of the last three years, although it has probably now stabilized. With inflation at just 2.1% in 2006 (although this includes some subsidized goods) Bahrain is growing rapidly without the overheating observed in some other Gulf states.

As a regional financial centre, Bahrain is well placed to benefit from the higher liquidity in the region. Investors from the Gulf and outside the region increased their deposits in wholesale banks by around a third last year and purchased more financial services. At 24% of GDP, the size of the financial sector almost equals the hydrocarbon sector. The quality of the financial system and its regulation should allow it to take on competition from emerging financial centers elsewhere in the Gulf.

The government continues to take advantage of the favorable external environment to pursue structural reforms. State firms, including the oil company Bapco and the aluminum producer Alba, account for a large share of output. However, the government has placed most of its investments in a new holding company - 'Mumtalakat' - which promises improvements in management and transparency. The government continues with landmark labor reforms and has begun to address unemployment via a job matching and training scheme. The private sector is becoming more involved in infrastructure provision.

The main political society representing the Shia majority, Al Wefaq, decided to participate in elections to the lower house of the National Assembly in November 2006 and became the official opposition block. While relations between the opposition and the executive have not been trouble-free, the presence of an elected voice in parliament for the Shia majority is positive for the political climate. Tensions between the US and Iran are a concern for local and regional politics, but Bahrain's firm alliances with Saudi Arabia and the US mitigate risks. (Fitch Ratings24.08)

Back to Table of Contents

11.3 ABU DHABI: Taking Tourism on the Road

Abu Dhabi has embarked on a hard sell promotion campaign to showcase its tourism attractions, seeking to reinforce its presence in existing markets and open up new ones. The government, as noted by the Oxford Business Group, has identified tourism as a growth industry that it hopes will shore up the economy when the emirate's energy resources run dry.

In its policy agenda for 2007-08, a blueprint for the immediate future that also sets the emirate's direction into the next decade, the Abu Dhabi Executive Council said tourism was a critical element in the country's overall development. According to the document, released on August 1, the sector "will stimulate and diversify the economy, generate new private sector opportunities and elevate the emirate's international standing".

At the forefront of the campaign is the Abu Dhabi Tourism Authority (ADTA), tasked with overseeing much of the development of the sector and selling the country's image overseas as a leisure and business destination. The ADTA has increased the number of travel fairs and trade events it is attending, and is looking to expand its promotional activities beyond Europe into Asia and Latin America.

On August 14, Sheikh Sultan bin Tahnoon Al Nahyan, ADTA's chairman, held talks in Abu Dhabi with a delegation of Mexican tourism officials, including Miguel Angel Gomez Mont, the director general of Mexico's National Trust Fund for Tourism Development. The sheikh said Latin America is becoming an important market for the emirate. One outcome is a proposal for the two countries to work together to develop an integrated approach to tourism promotion, as Gomez Mont said the similarities in the tourism components of the two countries make it possible for them to work together and share expertise and best practices.

Earlier in August, the ADTA was busy raising the emirate's profile in London, with images of Abu Dhabi put on 100 of the city's trademark taxis. Having first given the campaign a trial run last November on a few cabs, the ADTA wheeled out the full-scale promotion in early August, with the taxis not only carrying pictures of Abu Dhabi tourist and cultural attractions on the outside, but information brochures on the inside as well.

Ali Ahmed Al Hosani, ADTA's marketing manager, said the UK was one of the most significant tourism markets in Europe and one that already provided a strong flow of visitors to the emirate. "In 2006, visitors from the UK accounted for 8.8% of total visitor arrivals to Abu Dhabi," Al Hosani said. "This promotional campaign is specifically aimed at familiarizing Abu Dhabi's potential visitors with the emirate's distinctive tourist offerings." The campaign has a wider penetration than among Britons alone, with London being one of the world's most popular tourist destinations for international visitors.

The authority also sponsored a fun run in London on August 8, part of the activities of the Society of Incentive Travel Executives' Young Leaders Academy, all part of ADTA's push to attract more meetings, incentives, conferences and exhibitions (MICE) tourism, one of the target niches identified in the policy strategy.

In late June, the authority launched a road show to tout Abu Dhabi's tourism wares closer to home, with the exhibition traveling to fellow Gulf Co-operation Council countries. The series of exhibitions, staged in Jeddah, Riyadh, Doha and Kuwait, aimed to raise Abu Dhabi's profile as a holiday destination and as a MICE centre. Such has been the success of the ADTA that it won the World Travel Award prize for best promotion board, with Abu Dhabi also taking the top award as best new tourism destination in a ballot of among more than 11,000 industry professionals. Apart from this recognition, Abu Dhabi's tourism industry has been racking up some impressive statistics. Foreign arrivals were up 12% in 2006, with 1.34m overseas visitors passing through Customs.

However, this is well short of the 3m targeted in the executive council's policy statement, a goal to be reached by 2015. Significantly, the largest segment of this projected figure will come from business travelers and participants in MICE activities, with the combined figure set at 1.79m. Along with the estimated 1.2m leisure tourists Abu Dhabi hopes to attract by 2015, the emirate hopes to generate earnings of $7bn annually from the industry. (OBG21.08)

Back to Table of Contents

11.4 OMAN: Planting Seeds

Oman's burgeoning technology sector is to receive a major boost, with the German company Neuhaus Partners, announcing it is to assist small- and medium-sized (SMEs) in the sultanate and across the region through a venture capital fund designed to seed new start ups.

The Oxford Business Group stated that the Omani Centre for Investment Promotion and Export Development (OCIPED) will facilitate the formation of the fund, which will provide the capital requirements of young entrepreneurs and support SMEs. The proposal, made public at a press conference in Muscat on August 18, foresees the Oman Venture Capital Fund raising up to $135m, mainly through markets in Oman and the other countries of the Gulf Co-operation Council, with pension funds, financial institutions and wealthy individuals seen as the prime investors.

According to Gottfried Neuhaus, the managing partner of Neuhaus Partners, a significant proportion of the funds raised will be made available to technology start ups in Oman and aimed at repeating the successes of similar business models in Europe and the US. While the fund will look at putting money into technology firms in other regional countries, the focus will be on the sultanate, said Neuhaus. "There is talent in Oman," he told the local press on August 20. "The education standard is quite high. There is intelligence. What is needed is the will to be successful. We just have to try it out. I often see people with that will, with a desire to do something for the country."

The tenure of the fund, expected to start operations in October or November, would be 10 years and the minimum investment would be $6.7m. The fund will look to invest between $670,000 to $4.3m in new ventures, divesting its holding through an initial public offering once these units start to turn a profit. However, while supporting young entrepreneurs, a healthy carrot was also dangled in front of potential investors at the press conference. "We expect an annual return of 20% to the investors," said Neuhaus.

The sultanate's objective is to develop a solid knowledge-based economy in Oman, having first made it a policy priority in 1996 in the National Strategy for Digital Oman and e-Government, which was formally launched in November 2002. Quite apart from establishing an ambitious program to boost the level of state services that are available online, the government has also been encouraging technology firms to set up shop and expand.

One of the key players in promoting the growth of the technology industry in Oman is the Knowledge Oasis Muscat (KOM), which serves as an information and technology park and an incubator for small- and medium-sized internet technology firms. Already home to 12 such start-ups, as well as some 50 Omani and international technology companies, KOM is a local partner in the venture fund.

News of the planned capital fund launch comes as the Omani economy, while growing strongly, is facing challenges from inflation, which is running at a 30-month high of 5.9% as of June 2006. However, according to the ministry of national economy, GDP has increased by 4.8% in the first quarter. Combined with a recent HSBC Holdings report suggesting this could increase to a year-end figure of 6.5%, it is clear there are opportunities aplenty for new start-ups. "Technology based companies have achieved phenomenal growth in recent years and the establishment of the Oman Venture Capital Fund will encourage more young Omanis" to start their own companies within the sector, said Faisal bin Turki Al Said, the head of the Follow-Up and Development Division of OCIPED, one of the supporters of the venture.

“Quite apart from creating much needed jobs in Oman - unemployment is currently around 20%, according to official figures - the fund will also assist in developing a new generation of Omani entrepreneurs by providing access to financing and appropriate technology,” according to Al Said. With the support of the Oman Venture Capital Fund, Oman's knowledge economy is about to get even smarter. (OBG22.08)

Back to Table of Contents

11.5 SAUDI ARABIA: On the Right Track

Saudi Arabia is embarking on a major railway expansion plan in an effort to increase local and international commerce, as well as make trains a more accessible mode of transport for the population. The expansion program, which is expected to cost billions of dollars, has been gaining momentum. The project will involve the construction of 250 concrete bridges and the laying of 4.5m railway ties and nearly 4800 km of railway track. A north-south track, running from the northwestern region of the kingdom to Riyadh and the Gulf port of Ras al-Zawr, will be a vital component in servicing major industrial activities.

Along with some 4m tons of phosphate ores and bauxite from mines in the country's northwestern region to Riyadh, the line will also carry general cargo and up to 2m passengers each year. The architects behind the plan believe the network will facilitate the economic development of Saudi Arabia's eastern, northern and central regions.

A 576km section, to run from Al Zubaira Mines sector to the planned aluminum and fertilizer complex in Ras al-Zawr, was won by a consortium of Saudi Binladin Group and the Mohammed Al Swailem Company, in partnership with undisclosed German partners, in a $613.3m contract. Local Al Suwaikat Group won the award to provide a 410km section from Al Zubaira through the Al Nafoud desert with a $510m bid.

The biggest of the three contracts attracted the most international attention. Japan's Mitsui & Co, the Australian construction company Barclay Mowlem and the kingdom's Al Rashid Trading & Company will build an 818 km section of the line. It will stretch from the northern desert area of Al Nafoud to Al Haditha, Hazm al-Jalamid and Al Basita at a cost of $763m.

Meanwhile, another rail project that has attracted significant attention is the Saudi Landbridge Project. Being the first rail link between the Red Sea and the Gulf, the aim is to provide cost-savings benefits for the region's shipping lanes as well as a passenger link across the country. It is expected to change national trade patterns and has the potential to turn Saudi Arabia into a regional trading hub.

At present, goods destined for Riyadh are shipped around the peninsula and off loaded, to be shipped by trucks. Using the land bridge could save 10 days of seafaring. However, it remains to be seen if the new route will provide the hoped for economic benefits after the additional costs of loading and offloading cargo containers at each end of the line are factored in.

The rail project is planned to connect the commercial centers on the Red Sea with the oil and gas industries operating on the Gulf side of the country. The project will include a segment linking Dammam to the industrial port of Jubail, the upgrading of the existing Riyadh-Dammam line and the full integration of all three into a smoothly running network.

Saudi Arabia will grant contracts to the private sector for the construction and operation of the Saudi Landbridge via a Build-Operate-Transfer (BOT) scheme. The government-owned Saudi Railways Organization (SRO) envisions the new network to serve approximately 70% of the total population and economic activities.

Also being considered is a transit system for Mecca, Jeddah and Medinah. The Mecca-Medina Rail Link Project (MMRL) aims to cater to passengers, predominantly religious pilgrims and commuters wishing to travel between Mecca, Jeddah and Medina. The project will consist of a high-speed line linking the three cities with six new stations. The Saudi government will grant concessions to the private sector for the construction and operation of the MMRL via a design-build- operate-transfer contract. The estimated cost of the project is $4bn.

Plans have been set to establish an elevated electric train project in Medina to facilitate mass transit of people making the hajj between the Prophet's Mosque, the Quba Mosque and the Shuhada area. The project is designed to transport 20,000 passengers an hour.

With the major expansion of the railway network in Saudi comes demand for trains, heavy equipment and spare parts. The SRO has entered into contracts with 20 American companies to meet these needs, with agreements to train Saudi personnel in the kingdom and the US in the operation and maintenance of the engines. SRO currently has 59 locomotives, all manufactured in the US. Reciprocated trade between the SRO and American companies has registered a substantial increase over the past few years. Last year alone saw a $5.2m contract for the supply of eight electro-motive diesel trains from Chicago-based EMD Inc, as well as another contract worth $14m with Johnstown America Corporation for delivery of 200 coaches. (OBG03.09)

Back to Table of Contents

11.6 SAUDI ARABIA: Manufacturing the Future

Saudi Arabia, the largest economy in the Middle East, has seen a dramatic increase in foreign investments in 2006 while domestic ones continue to gain ground. The Oxford Business Group said that it is estimated that $18.3bn in foreign investments were made the kingdom last year, registering a 51% growth rate on 2005. Meanwhile, domestic investments, amounting to $33.2bn in 2006, have also seen a steady increase of 9% on the previous year. According to a report by Riyadh-based Jadwa Investment, it will be domestic demand, particularly from the petrochemicals, transport and construction sectors, that will drive the economy forward between now and 2010.

Manufacturing will lead the way as the fastest growing sector. Within manufacturing, petrochemicals, the second largest contributor to the Saudi economy, are expected to witness massive growth. Saudi Basic Industries Corp (Sabic), 70% owned by the government, dominates the petrochemicals industry and will become the world's largest ethylene glycol producer after planned expansion goes online. In conjunction with its foreign and domestic partners, Sabic expects to have three substantial petrochemical projects, Yanbu National Petrochemical, Eastern Petrochemical and Saudi Kayan Petrochemical on stream by 2009.

Meanwhile, Saudi Aramco has plans to enter the petrochemicals sector via a $10bn investment in PetroRabigh, an integrated refining-petrochemical plant. The complex, which is a joint venture between Aramco and Japan's Sumitomo Chemical, is expected to begin production around 2009. It is predicted that Saudi Arabia will account for 13% of the world's petrochemicals capacity by the time the plant starts production.

Another sector expected to benefit from the investment boom is transport. Aviation in particular will profit from recent deregulation and increasing passenger numbers. In 2006 the Middle East was by far the fastest growing aviation market in the world. According to the International Air Transport Association, passenger figures rose by more than 15%. Saudi Arabia currently accounts for more than 50% of the regional aviation industry, and an annual growth rate of 9% until 2010 is predicted.

When discussing the investment report, Brad Bourland, chief economist and head of research at Jadwa, placed particular emphasis on the importance of the construction sector and the subsequent gains to be made. "Construction will be one of the main beneficiaries of this phase of the economic boom. All of the $300 billion or so of projects that have been announced have a construction element," said Bourland.

The government alone has infrastructure and construction programs in the works that are estimated to be worth $35bn. These include building new factories and schools as well as increased electricity generation and distribution. Some 600,000 new homes are to be built in the next four years while the ministry of education has drawn up plans to build another 4000 schools across the kingdom in the next 10 years.

The Jeddah Chamber of Commerce and Industry has estimated the kingdom needs at least one million new homes in the next five years to address the burgeoning population rate.

While domestic demand may be the key dynamic for sustaining the boom, foreign direct investment has been actively sought after and welcomed. Accession to the World Trade Organization (WTO), after 12 years of negotiations, finally came to fruition in December 2005. Since then, 42 new trade laws have been created, 38 bi-lateral trade agreements made and the average tariff rate has dropped from around 12% to less than 4%.

The Saudi Arabian General Investment Authority said it hopes these reforms will help achieve its goal of drawing in one trillion US dollars in foreign direct investment over the next 20 years. There has been a notable increase in FDI since the kingdom joined the WTO two years ago. The number of FDI projects, as of November 2006, stood at 75, compared to 57 in 2005 and 31 in 2003. Bourland said he believes the fundamentals behind the boom are now in place and they will ensure solid economic growth for the future. He said, "There are risks to the healthy outlook for the Saudi economy, but nothing significant enough to alter the underlying positive developments. Much of the momentum for the years to 2010 comes from reforms that have already been enacted and cannot be reversed and an investment boom that cannot be stopped in its tracks." (OBG23.08)

Back to Table of Contents

11.7 EGYPT: Phasing Out Energy Subsidies

On August 14, the Oxford Business Group reported that Cairo announced that gas and electricity subsidies currently granted to energy intensive industries would be phased out over three years to cut inefficiencies in the market and help reduce the budget deficit. The Government may feel it has more scope to cut subsidies due to the Central Bank of Egypt's (CBE) tight monetary stance and a short-to-medium term disinflationary trend that is expected to continue to the end of the year and beyond.

According to Rachid Mohamed Rachid, the trade and industry minister, most of the deficit is attributable to the subsidies. At present, subsidies are continuing to grow, with the 2007/2008 budget including $11.36bn in subsidies, up from $8.98bn in the previous budget. By reducing subsidies, the government hopes to save $2.64bn over the next three years. A ministry statement said, “After the abolition of subsidies, the price of gas and electricity will vary according to a formula linked to cost and world market prices. However, price rises will be limited to a maximum of 15% per year.”

The government also said that subsidies to non-energy intensive industries will be maintained for six years. Many economists have welcomed the move, arguing that subsidies distort the market and create inefficiencies.

However, the CBE warned that Egypt's fast economic growth, expected to be around 6.7% in real terms this year, and further subsidy cuts, likely to be announced in the next three to four months, according to Finance Minister Toussef Boutros Ghali, were likely to generate underlying inflationary pressure. Headline inflation reached a peak in March, when it hit 12.8%. The March peak was partly attributable to a supply shock caused by a foot-and-mouth disease scare. But the cutting of government subsidies leading to a 30% increase in fuel prices was perhaps the most significant factor.

To ease the pain to consumers and prevent the repetition of such inflationary spikes, the government has opted for a gradual elimination of subsidies. The rise in prices to industries rather than end customers may also ease the inflation pressure, as the industries will bear some of the cost where consumer demand is relatively price elastic. Since March, headline inflation has fallen for four consecutive months to 8% by the end of July, aided by the central bank's currently tight monetary policy. Though declining, inflation remains above the 6.4% registered at the end of June 2006. The government inflation target is 6-8%, which is most likely to be achieved this year according to the CBE governor, Farouk El-Okdah, who said he expected inflation to sink to 7% in August, and still lower by the end of this year.

On August 17, the CBE announced its key interest rate would remain at 8.75% for deposits and 10.75% for lending, continuing a seven-month freeze. Bankers had widely predicted that the interest rate freeze would be extended. Rates have been kept at the same level since a 25 basis point rise in December last year. Interbank overnight rates have been oscillating between 8.75% and 8.76% over the past month and a half, and between 8.75% and 8.8% since April.

The disinflationary trend in the Egyptian economy allows the government scope for phasing out its costly and distorting subsidy regime, by offsetting the inflationary effect of such a move. While previous subsidy cuts have let to inflationary spikes, these have so far proved temporary and have been exacerbated by other factors. While the government's plotted course ahead of disinflation and subsidy reduction is a difficult one, the phased nature of the latter, should prevent strong supply shocks. (OBG27.08)

Back to Table of Contents

11.8 TUNISIA: The Stability Payoff

Morgan Stanley's Serhan Cevik (http://www.morganstanley.com) commented that Tunisia's small economy has become an example to the rest of the continent. Not many people follow what happens in Tunisia, but this small country has turned itself into an example of how prudent policies and structural reforms could deliver faster growth on a sustained basis without creating imbalances in the economy. Following a brief slump in 2002, real GDP growth accelerated to an average of 5.3% in the last four years and is now running at around 6.5% this year. On the other hand, even with higher growth across the whole economy, consumer price inflation eased from an average of 4.5% in 2006 to 2.4% so far this year, while the current account deficit (excluding official transfers) narrowed from 3.5% of GDP in 2002 to 2.2% last year and, on our estimates, 1.8% in the current year. No wonder, Tunisia is one of few countries in the region that has an investment grade credit rating as well as a leading position in socio-economic indicators. In our opinion, the building block of Tunisia's improving performance is structural adjustment and fiscal consolidation. For example, the budget deficit narrowed from the peak of 7.6% of GDP in 1997 to an average of 3.1% in the last seven years, freeing up resources for private sector-led growth.

Market-oriented reforms have raised the trend rate of real GDP growth, in our view. Tunisia may still have a long list of reforms to complete, but the rationalization of public finances and greater integration with Europe has already helped to raise the economy's growth potential. As the budget deficit narrowed below 3% of GDP, the government's total debt stock declined from 61.5% of GDP in 2002 to just about 50% this year, bringing efficiency gains across the economy. Likewise, being the first African state with an associate membership to the European Union has allowed Tunisia to achieve faster and greater economic diversification compared to its neighbors and peers elsewhere. As a result, the latest World Economic Forum Global Competitiveness Report puts Tunisia on the top of the African list for economic competitiveness and even ahead of some European countries. Further, the Tunisian economy has become far more resilient against exogenous shocks like higher commodity prices and the volatility of agricultural production. Indeed, not only the rate of real GDP growth accelerated to about 6%, but also its volatility showed a marked moderation in recent years. In our view, these structural improvements will enhance economic dynamism we see today and continue attracting a sustained wave of high-quality foreign investments.

Stronger growth has not come with the usual set of economic imbalances. Growth acceleration is not unique in today's world, as almost every country has experienced a surge in economic activity in the past five years. However, what sets Tunisia apart is the lack of imbalances that usually arise along with higher growth. First, consumer inflation remains under control, easing from an annual average of 4.5% last year to 2.7% last month. Second, despite the removal of textile quotes, higher value-added production lines and the undervalued exchange rate increased exports by an annual rate of 16.5% in the last three years and 33% in H1/07. As a result, we now project the current account deficit (excluding official transfers) to be 1.8% of GDP this year, down from 3.5% in 2002. This is an impressive performance considering the burden of higher commodity prices on the economy, but not surprising in the light of structural improvements. Looking forward, the Tunisian economy is likely to enjoy robust growth and low inflation, as long as the authorities keep deepening the reform agenda.

The next challenge for Tunisia is turning macroeconomic stability into jobs. The acceleration in output growth is yet to push the rate of employment growth well beyond the continuing increase in Tunisia's working-age population. Consequently, the unemployment rate showed a small (but steady) decline from 14.9% in 2002 to 14.3% last year. The challenges faced by textile and clothing sectors have played role in the slow pace of job creation, but we believe that structural bottlenecks are far more important for the employment intensity of output growth. Therefore, the next challenge for Tunisia is turning macroeconomic stability into jobs - and that could only be achieved through greater flexibility and openness. (MS03.09)

Back to Table of Contents

11.9 TURKEY: The Ultimate Prize

They say that persistence pays off - a motto with which Turkey's former foreign minister Abdullah Gul can certainly associate. The Oxford Business Group observed that his presidential bid in April came to naught after Turkey's constitutional court ruled the vote null and void thanks to the lack of a quorum in parliament right on the back of a veiled warning from the military. Now, with the apparent backing of the electorate, Abdullah Gul has secured the highest post in Turkey.

The election process was no speedy affair, however. After failing to require the necessary 367 votes in the first two rounds of voting this month, Gul secured the absolute majority required for the presidency in the third round of parliamentary voting on August 28, netting 339 votes in a 550-seat parliament. The other two contenders were not in a position to throw down the gauntlet, with Sabahattin Cakmakoglu of the nationalist MHP and Tayfun Icli of the centre-left DSP acquiring 70 and 13 votes respectively.

The military's displeasure was apparent enough, distrustful as it is of Abdullah Gul, who, though a devout Muslim, claimed to have shed his political Islamist stripes of old, defining himself in the 2000s as a moderate and a reformist. But Turkey's generals are not convinced, evinced by their visible absence during Gul's swearing in ceremony - a move that could signal possible tensions between the prime minister / presidential axis and that of the military in the future.

This came on the back of a grim statement by chief of General Staff Gen.Yasar Buyukanit on August 27, an early Victory day speech one day before the presidential vote, warning of the Islamist threat to secularism in Turkey. Echoing an earlier statement in April, Buyukanit warned that centers of evil were trying to undermine the secular system and that these circles' insidious plans emerge in different forms - a clear reference to Gul's presidential bid. Otherwise translated, the military will scrutinize the every move of the new president and, if necessary, intervene in the interest of the secularist republic.

That Buyukanit's recent warning did not reverberate as strongly as that of April, was not surprising. The political playing field has clearly shifted in favor of the ruling party and their presidential candidate since the parliamentary elections, winning a landslide victory with 46.6% of national votes - 12% more than in 2002. The Nationalist Action Party's (MHP) decision to attend the presidential vote after winning 70 seats in the general election also meant that the AKP would have a sufficient quorum in parliament to have their president elected. That is regardless of how the MHP ultimately voted as their very presence provided the necessary number of attendees to hold the presidential vote, allowing for Gul to be elected in the third round.

That the main political opposition party, the centre-left People's Republican Party (CHP), boycotted the third round of the presidential vote in protest of Gul's candidacy, did not make the slightest difference to the election result. Unlike in May, no case could be made this time to the constitutional court that there was no quorum to hold the vote.

Yet, in a bid to heal the rift, Abdullah Gul has been at pains to reassure secularist doubters that he will act impartially and strictly in keeping with duties and responsibilities of the much-coveted post as protector of the secularist republic and -generals shudder - commander in chief of the armed forces. During his swearing in ceremony, the new president vowed to protect the tenets of the constitution that define a secularist, democratic state based on the rule of law. Gul has also promised to reach out to all Turks.

None of this of course diffuses the contentious issue of his veiled wife, which the military and the CHP say should in principle disqualify Gul from a post until now held by staunch secularists. This will be the first time in the history of the republic that Cankaya Palace hosts a covered first lady. The controversy is underlined by the fact that headscarves are banned from public offices, schools and universities in Turkey, with the troublesome cloth regarded by secularist Turks as a threat to the separation of state and religion. This is even though more than half Turkey's female population don headgear.

As such, Turkey's new first lady, Hayrunisa Gul, asked Atil Kutoglu, an Austrian couturier of Turkish descent, to refashion the headscarf design for her new post - which many interpret as a bid to help pacify secular critics. Her absence from the swearing-in ceremony, opting for watching it on television instead, also confirms the view that she will not assume a high profile during her husband's tenure as president.

Many nonetheless welcome Abdullah Gul's election, with local opinion polls showing that the majority of Turks do not in fact believe that secularism is under threat in Turkey. His exemplary record as foreign minister, the respect he has earned as a statesman and his liberal-economic outlook, concern for business and support for journalists and writers have earned him considerable kudos both at home and abroad. As a mild and moderate voice during the AKP's first term in office, Gul can also take much credit for the progress that Turkey has made in its EU-accession bid.

The local and foreign business communities are all the more heartened by the cabinet recently put forward by Prime Minister Erdogan and just recently approved by the new president on deferral by his predecessor, Ahmet Necdet Sezer. The line up includes such key figures as Ali Babacan, shifting from state minister for the economy to foreign minister and still chief negotiator for the EU, with Finance Minister Kemal Unakitan and State Minister (for foreign trade) Kursad Tuzmen retaining their posts. Stepping into Babacan's shoes is a much welcomed newcomer, former Merrill Lynch executive Mehmet Simsek. The cabinet has a decidedly reformist and pro-EU feel to it.

The next big step is for Turkey to adopt a civilian constitution - to replace the one imposed by the generals following the military coup of 1980 - as planned by Prime Minister Erdogan. While the AKP is relieved to have Gul in Cankaya, the new president has his work cut out under the close scrutiny of a distrustful military. (OBG30.08)

Back to Table of Contents

11.10 TURKEY: The Presidency of Normalization

Morgan Stanley's Serhan Cevik (http://www.morganstanley.com) observed that Abdullah Gul's presidency is one of the most revealing symbols of normalization in Turkey. It is our tradition to write an introductory note on what the new presidency stands for. When Ahmet Sezer was elected in 2000, we argued that his presidency could represent the spirit of the moment, as Turkey started introducing institutional reforms and moving closer to Europe. Indeed, although Mr. Sezer failed in a number of occasions to develop a liberal interpretation of the constitution and economic realities, he succeeded in bringing a positive rigidity of institutionalism. Likewise, we now believe that Mr. Gul's presidency is one of the most revealing symbols of political normalization and the rise of liberal democracy in Turkey. To realize the true meaning of Mr. Gul's election, we need to take a short step back and look into developments leading to the early elections. The ruling AK Party nominated its Deputy Prime Minister and Foreign Minister Abdullah Gul as its presidential candidate, expecting a swift election process. However, despite the fact that the AKP had more than enough votes to get Mr. Gul elected, the military's foray altered political dynamics. It was not an intervention in traditional - or even post-modern - sense, but the military's shadow was still enough to hinder the parliamentary process and consequently lead to early elections. This is why we argued that the voters faced a choice between the isolationist status quo and greater openness. The good news is that the election results have shown an overwhelming support for reforms and therefore we now expect further institutional rationalization and progress towards liberal democracy.

Mr. Gul's presidency offers an opportunity to break the isolationist status quo. For months, the discussion focused on whether Turkey faces a ‘clash between religion and secularism' and the risk of sliding towards a regime based on religious principles. It is no doubt an appealing subject, especially in today's international milieu where strategic decisions have created chaos in Iraq and a political backlash across the world. Unfortunately, certain circles have never missed an opportunity to use this rhetoric and kept suggesting that the AK Party has a ‘hidden agenda' to change the country's political orientation. However, the data based on comprehensive and independent surveys show that the great majority of Turks value the republic's secular principles and stand firmly against political Islam. In fact, the latest election results demonstrated (better than any survey) that the party representing Islamic politics in Turkey received a mere 2% of the votes, dismissing the anti-secular threat. Hence, the support the AKP enjoys today is because of its alignment with economic and political liberalization. This is why we have always maintained the view that the struggle between the so-called ‘secular establishment' and a party like the AKP that had no strong ties with the ‘elite' actually reflects the pain of economic and institutional changes as Turkey becomes integrated with the global economy and the European Union. No wonder the so-called ‘establishment' has adopted a far more nationalistic stance against globalization in a time of economic boom and greater openness by showing resistance to structural reforms. In our view, Mr. Gul's presidency offers an opportunity to shelve unfounded fears once and for all and to accelerate the reform process in Turkey.

Political normalization would pave the way for faster convergence towards Europe. Mr. Gul may be an observant Muslim, but he will not let personal preferences dominate his presidency and shape his relations with the rest of the state hierarchy, in our view. Like Prime Minister Erdogan, Mr. Gul is aware of what the great majority of the society wants to see in the coming years, and that is political normalization and economic development. This is why in his first speech as the president he expressed an unequivocal commitment to the secular nature of the republic and promised to work for the development of liberal democracy. Turkey's transformation has long been underway, but the start of accession negotiations with the EU (in which President Gul personally played a critical role) has accelerated the pace and depth of institutional modernization. In our view, the normalization of political dynamics - as highlighted by the AKP's election victory and Mr. Gul's presidency - will reinvigorate reform efforts and pave the way for faster institutional and economic convergence towards Europe.

Institutional reforms will help turn Turkey into a trillion dollar economy. There is a curious interaction between democratization and economic development. It may be difficult to pinpoint an exact causality, but we can say that political and economic channels reinforce each other. This has worked remarkably well in many transition countries — and in Turkey in the last five years. Therefore, it is fair to assume that institutional modernization and greater openness could help improve Turkey's growth potential and turn it into a trillion dollar economy over the coming years. That leaves us with whether Prime Minister Erdogan and President Gul are up to the task. Judging from the performance in the last five years and the new government program, the answer seems unambiguously clear to us. (MS03.09)

Back to Table of Contents

- Israeli Shekel conversions done at a rate of NIS 4.10 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.5 = $1.00
- Cypriot Pound conversions done at a rate of C£ 1.00 = $1.60
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.70 = $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

This fortnightly newsletter is a free service of Atid, EDI. We are a team of economic and trade development consultants, headquartered in Jerusalem, with satellite operations in Istanbul. EDI works with an international clientele interested in identifying and researching business opportunities in the region. We also serve as the regional representative offices for a number of U.S. states and bilateral Chambers of Commerce. EDI's other services include development of feasibility studies and tailored research reports, as well as identification of potential joint ventures for commercial clients. For more information on how we may better assist you, please visit our Web site at: http:// www.atid-edi.com.