• Fischer Says Cleantech Can Be Growth Engine for Israel
• Israel Signs Accession Agreement with OECD
• Germany's Schott Solar To Expand Israel Operations
• Foreign Firms Attracted to Oman's $2 Billion Coal Power Plan
• Bulgaria to Get Azerbaijan Gas in 2011 via Georgia & Turkey
• LEBANON: Tourism Boom Puts Lebanon Back In Spotlight
  

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Steinitz Says A Loss of Budgetary Control May Lead to a European Scenario
1.2 Knesset Committee Approves Economic Court
1.3 Fischer Says Cleantech Can Be Growth Engine for Israel
1.4 Israel's Cabinet Rejects Minimum Wage Hike
1.5 Jerusalem Seeks Plans For New Airport Near Eilat

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Signs Accession Agreement with OECD
2.2 Israel is Latest Addition to American Eagle Outfitters' International Expansion Plans
2.3 FedEx Trade Networks Announces New Alliance with Fritz Companies Israel
2.4 Tryton Announces First Implants in Israel
2.5 General Mills Latest US Food Giant to Seek Partner in Israel

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 France's Fauchon Considering Middle East Food Market
3.2 Skype Confirms Plan to Open Office in Bahrain
3.3 First Hershey's Chocolate World in Middle East opens in Dubai
3.4 LaserCard Receives Follow-On Order for Secure ID Credentials for Saudi Arabia National ID Program
3.5 Orkin Expands to Turkey

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Germany's Schott Solar To Expand Israel Operations
4.2 Egypt to Issue a BOO Tender for a 1,000 MW Wind Farm
4.3 Morocco Unveils $3.5 Billion Wind Energy Project
4.4 Egypt Ups Clean Energy Cooperation with Japan-Funded Wind Farm

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan Sees $500 Million Eurobond By Early October
5.2 Iraq Awards $600 Million Monorail Contract
5.3 Qatar's Annual Inflation Fell 3.6% In May 2010
5.4 Sheikh Mohammed Says UAE to Keep Dirham's Dollar Peg
5.5 Dubai to Allow Private Investment in Power
5.6 Foreign Firms Attracted to Oman's $2 Billion Coal Power Plan
5.7 Saudi Arabia Education Forecast to 2013
5.8 Egypt May Add Poland & Romania to Its List Of Wheat Providers

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey's Inflation Slows to 8.4%, Lowest Since January
6.2 IMF Says Cypriot Economy Seen Showing Zero Growth
6.3 Cyprus Retail Trade Slips Again In April
6.4 Greece's Economic Stagnation Leads To Imports Drop Of 22,3%
6.5 Greece's External Debt Soars In 2010's First Quarter
6.6 Bulgaria's Unemployment Declines By 1% In 4 Months
6.7 Bulgaria to Get Azerbaijan Gas in 2011 via Georgia & Turkey
6.8 Sofia Moves to Revive 'Real' Bulgarian Yogurt

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Birth Rates and Immigration

*REGIONAL:

7.2 Laylat ul Isra wa Mi'raj Observed
7.3 Over 25% of Deaths in the UAE are Caused by Cardiovascular Disease
7.4 Bulgaria's 3rd Annual Gay Pride Parade

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8: ISRAEL LIFE SCIENCE NEWS

8.1 ExAblate Receives European CE Mark for Treatment of Adenomyosis
8.2 OrSense Presents Non-Invasive Hemoglobin Monitoring System for Anemia Monitoring
8.3 Teva Announces Approval of Generic Effexor XR
8.4 Chiasma Receives FDA Orphan Drug Designation for Octreolin for the Oral Treatment of Acromegaly
8.5 BSP Granted CE Mark for its HyperQ AD-100 Diagnostic Performance of Stress ECG Product
8.6 PROLOR Biotech Granted EU GMP Certification for Lead Candidate hGH-CTP
8.7 Teva Introduces First Generic Effexor XR Capsules in the United States
8.8 Compugen Protein Shown to Abolish Recurring Relapses in MS Animal Model
8.9 Circadin Approved in EU Primary Insomnia Treatment in Patients Aged 55 or Over
8.10 VisionCare's FDA Approval for Implantable Telescope for End-Stage Macular Degeneration

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Answers.com Reaches 5 Million Registered Users
9.2 Israel Launches Ofek 9 Satellite
9.3 JVS Receives $10 Million Repeat Order for its JVX6200 Metrology Production Tools
9.4 TowerJazz & Vishay Enhance Business Relationship to Include Planar MOSFET Technologies
9.5 Ness Technologies Wins $2.6 Million Contract with Israel's Ministry of Environmental Protection
9.6 RiT Technologies' SMARTen Cabling Solution to be Deployed in 100 Computing Classrooms
9.7 New Zealand Deploys RADVISION Next Generation HD Video Conferencing Solution
9.8 Wandy Introduces the Cloud Contact Center Solution for the First Time

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Unemployment Drops For 11th Straight Month
10.2 Foreign Investors Triple Tel Aviv Exchange Sales

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11: In Depth

11.1 JORDAN: Jordan's New Electoral Law Disappoints Reformers
11.2 LEBANON: Tourism Boom Puts Lebanon Back In Spotlight
11.3 BAHRAIN: In for the long haul
11.4 KUWAIT: Feeling the heat
11.5 UAE: Vehicle Sales Represent Good Recovery from 2009
11.6 UAE: Abu Dhabi's Higher Education Revamp
11.7 OMAN: Firm Foundations
11.8 LIBYA: Defense and Security Report for 2010's Third Quarter
11.9 ALGERIA: Making Moves
11.10 CYPRUS: Fitch Affirms Cyprus at 'AA-'; Outlook Stable Ratings
11.11 BULGARIA: Pharmaceutical Market Has Poor Perspectives

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Steinitz Says a Loss of Budgetary Control May Lead to a European Scenario

On 6 July, Minister of Finance Steinitz presented the biennial state budget for 2011-2012 and reiterated the need to cut the defense budget, a main target that the Ministry of Finance has set for this budget. Steinitz has been defending the need for budget cuts, saying "If we go wild and lose control we might end up like Britain or Spain, not to mention Greece - in another two years." Steinitz said that NIS 3.3 billion would be cut in 2011 and a further NIS 2.3 billion in 2012. He said, "The basic message is clear: after a dramatic increase in the defense budget of close to 30% over the past five years, we must restrain defense to worry about growth, education and higher education, in order to give a measured addition to encourage growth and strengthen the competitiveness of the Israeli economy, and mainly to abstain from painful cuts." (Globes 06.07)

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1.2 Knesset Committee Approves Economic Court

On 5 July, the Knesset Constitution, Law and Justice Committee approved a bill to establish an economic court. Israel Securities Authority chairman Goshen proposed the idea in order to set up a separate court from the Tel Aviv District Court to deal solely with clear economic cases. The Constitution Committee passed the bill unanimously. The bill will now go the Knesset plenum for its second and third readings during the current term. The bill proposes that the economic court will deal with most of the legal proceedings related to criminal, administrative and civil enforcement of the Securities Law (5768-1968) and the Companies Law (5769-1999). The economic court will have three judges who will discuss, in addition to the criminal and civil proceedings before the court, administrative petitions against rulings by Securities Authority, decisions by the Tel Aviv Stock Exchange (TASE) and decisions by the Registrar of Companies. The Securities Authority said that the economic court was one of Goshen's top three goals. The other two are administrative enforcement and supplementary enforcement. (Globes 05.07)

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1.3 Fischer Says Cleantech Can Be Growth Engine for Israel

Israel has relative advantages in cleantech sectors, including innovation, entrepreneurship, human capital, and R&D, which can help Israeli companies succeed and advance in the industry, said Governor of the Bank of Israel Prof. Stanley Fischer at the 14th CleanTech 2010 Expo in Tel Aviv. Fischer added that Israel has extensive experience in financing innovation through venture capital, and start-ups. Government incentives are important, but private sector financing should lead the industry's development. Cleantech development in Israel has many economic advantages. It can serve as a growth engine, and help diversify exports and export targets, which will reduce the economy's vulnerability to crises. Cleantech can also promote Israel's environment, reduce the country's dependence on imported fuels and help Israel's integration into the OECD. Fischer favorably cited the Chinese government's long-term planning in cleantech, which is turning the country into a leader in investment and manufacturing of renewable energy.

Commenting on the economy, Fischer said that developments in Europe would not have a material effect on global economic growth, and that the Bank of Israel's 2010 growth forecast of 3.7% and 2011 growth forecast of 4% remained valid. The shekel's appreciation against the euro will likely affect exports to Europe, but this is offset by the shekel's recent weakness against the dollar. (Globes 29.06)

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1.4 Israel's Cabinet Rejects Minimum Wage Hike

On 4 July, the Netanyahu government rejected a proposal by MK Peretz (Labor) to raise the minimum wage, after a particularly stormy cabinet meeting on the issue. The discussion on Minister of Finance Yuval Steinitz's appeal against the bill saw a tie between the positions of ministers from the Labor Party, Shas, Israel Beitenu and the Jewish Home in favor of Peretz's bill, and 14 Likud ministers and Minister of Justice Ne'eman, who opposed it. In the final vote, 20 ministers voted not to raise the minimum wage and 9 voted in favor. The cabinet decided to include applying the negative income tax (earning income tax credit) nationwide in the 2011/12 economic arrangements bill. The negative income tax is the Ministry of Finance and the Bank of Israel's preferred solution for fighting poverty. The cabinet meeting was halted several times as the bill's supporters and opponents sought to persuade each other to change their positions. Prime Minister Netanyahu put heavy pressure on Likud ministers who threatened to support the bill. (Globes 04.07)

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1.5 Jerusalem Seeks Plans for New Airport Near Eilat

On 5 July, the Netanyahu government approved a proposal by Minister of Transport Katz to begin detailed planning for a new international airport at Timna. The planning will cost NIS 56 million, and take about a year. The new airport will cost NIS 1.7 billion and take three years to build. When completed, it will replace Eilat's current airport. The Israel Airports Authority will finance the detailed plan from its own resources. The tender for the planning is scheduled to be concluded in September. While the planning is underway, the Ministry of Transport and the Ministry of Finance will select an international consultant to examine the Airports Authority's plan for the new airport, and submit its conclusions within 45 days. The Timna airport will be 18 kilometers north of Eilat. It will serve both international flights, mainly to and from Europe and Eilat, as well as domestic flights. (Globes 06.07)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Signs Accession Agreement with OECD

On 29 June, Israel and the Organization for Economic Cooperation and Development (OECD) signed the agreement for Israel's accession to the organization. OECD Secretary-General Gurria and Israel Ambassador to France Shek signed the agreement at a ceremony held at the Israel Embassy in Paris. On 10 May this year, Israel was invited by the 31 OECD member states to join the organization. Since then Israel has been a de factor member and began to attend all of the organization's meetings as full members. On 27 May, Israel was officially invited to join the OECD at a festive ceremony that was held at the organization's headquarters. PM Netanyahu and the Ministers of Finance and Industry attended the ceremony that was held under the auspices of the Secretary General and the Prime Minister of Italy. The invitation to join the OECD attests to the organization's recognition of Israel's achievements, economic strength and its ability to contribute to the organization and to the global economy. Israel's accession to the OECD will boost Israeli society and the economy and contribute to upgrading areas such as the environment, education, employment and many others. The accession process, which began three years ago, was led by the Ministry of Foreign Affairs and the Ministry of Finance, with active assistance from many other government ministries, governmental authorities, the Knesset, the Bank of Israel, the public sector, economic and social organizations, the Manufacturers' Association, the Histadrut, universities and NGOs. (MFA 28.06)

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2.2 Israel is Latest Addition to American Eagle Outfitters' International Expansion Plans

Pittsburgh's American Eagle Outfitters announced plans to further expand its international retail presence with a series of retail stores throughout Israel. The company has signed a multi-year franchise agreement with Fox-Wizel, Ltd., a leading retailer and wholesaler that operates approximately 170 FOX stores in Israel, as well as 250 FOX stores internationally. The agreement includes American Eagle Outfitters flagship stores as well as freestanding aerie stores. The first stores are slated to open in spring of 2012. American Eagle Outfitters introduced its brand in the Middle East in March of this year with stores in Dubai and Kuwait. The FOX brands include FOX men's and women's apparel, FOX kids and baby, and a launch next month of FOX home. Fox-Wizel also owns substantial interest in the personal care retailer Laline, and the upscale apparel retail and wholesale brand Sacks. The model for the Israeli stores is similar to that of AEO's other international locations, where the partner handles local operational functions, with American Eagle Outfitters assuming creative approval for assortment, marketing and store locations. American Eagle Outfitters, Inc., through its subsidiaries, offers high-quality, on-trend clothing, accessories and personal care products at affordable prices. (AEO01.07)

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2.3 FedEx Trade Networks Announces New Alliance with Fritz Companies Israel

FedEx Trade Networks, a subsidiary of FedEx Corp., has selected Fritz Companies Israel T. Ltd. (Fritz Companies Israel) as its exclusive Regional Service Provider (RSP) in Israel. Through the alliance, both companies will offer expanded international ocean and air freight forwarding services, further solidifying their commitment to superior customer service in Israel and around the world. FedEx Trade Networks looks forward to serving their customers better through the alliance with Fritz Companies Israel. Their track record of exceptional customer service and long standing knowledge of the Israeli market will allow FedEx to continue offering the most flexible and reliable freight forwarding solutions in the industry. Fritz Companies Israel is a leading international freight forwarder with state of the art distribution facilities and over 400 employees at locations throughout the country. The company has significant air and ocean volumes between Israel and many of the locations where FedEx Trade Networks operates globally with owned offices or other RSPs. The new alliance will give customers of FedEx Trade Networks unprecedented access to the Israeli market and provide customers of Fritz Companies Israel with a higher level of service and dependability. (FedEx 06.07)

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2.4 Tryton Announces First Implants in Israel

Durham, NC's Tryton Medical, a leading developer of stents designed to definitively treat bifurcation lesions, announced that the company's TRYTON Side Branch Stent System has been used in three cases in Israel for the first time. Left main disease, an accumulation of plaque that narrows the base of the coronary tree, until recently has been treated with bypass surgery. Recent studies have demonstrated that stents may provide physicians and patients with an important alternative. The Tryton Stent System is currently in the process of obtaining regulatory approvals in Israel. The first three implants were performed under a special exemption approval by the Ministry of Health. (Tryton 23.06)

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2.5 General Mills Latest US Food Giant to Seek Partner in Israel

General Mills, one of the America's food giants, is looking for a partner in Israel, to emulate successes by other multi national food icons like Nestle, which has been steadily growing its partnership with Osem and realizing significant profits. A General Mills delegation recently visited Israel's Food Industries Association in anticipation of finding a partner in Israel. Interestingly, Pepsico which partnered with Strauss put its emphasis on growing the Sabra brand in the US. It is in the midst of a national marketing campaign to brand Sabra's hummus and other Mediterranean salads. The General Mills delegation is officially looking for “possible future cooperation,” but an Israeli food industry source told Kosher Today that their objective may very well be to “copy Nestle.” General Mills is a Fortune 500 company, and one of the world's largest food companies, with some $25 billion in sales. It owns such well known brands as Hagen Dazs, Pillsbury, Yoplait, and many well-known cereals. (KT 06.07)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 France's Fauchon Considering Middle East Food Market

Famed French fine food group Fauchon aims to boost sales in Middle East markets with tea and chocolate as big growth drivers. With sales up 10% to $179 million in the year to March 31, the group has come through the crisis mainly thanks to its catering activities - up 30% and making up 18% of the total - and sales via the internet as well as corporate gifts, which rose 40%. In 2009/10, the group reached operational break-even and aims for an operating margin of 5% within three years via an international store network and partners. To get there, consultants overhauled the group's sites and product lines to dust-off the stuffy image of the 120-year old firm and make it more in line with modern tastes. In dry goods, tea and chocolate are the main products making up 18% of sales each. Fauchon launched a new range of exclusive chocolates, "Choc made in F", with top chocolate maker Pascal Caffet. In the Middle East, Fauchon now makes 15% of sales and plans to add 20 stores in the next two years with an aim of doubling sales to 30% of the total in five years. (Various 29.06)

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3.2 Skype Confirms Plan to Open Office in Bahrain

On 28 June, Skype confirmed that it was to set up its Middle East headquarters in Bahrain, despite the service being banned in neighboring countries. At a joint press conference with the Bahrain Economic Development Board (EDB), Skype said Bahrain's liberal and advanced ICT infrastructure and policies and its geographic position providing unparalleled access to the Gulf's trillion dollar market were key reasons for establishing a regional representative office in the kingdom. Skype has been available to consumers in Bahrain for the past two-and-a-half years. It remains blocked in some other Gulf countries, like Oman and the UAE. The World Economic Forum Global Information Technology Report 2009-2010 ranked Bahrain in the top 30 economies, a climb of eight places putting the Kingdom 29 out of 133 economies worldwide. Bahrain was also ranked first in the Middle East and 13th out of 192 countries worldwide in the 2010 United Nations Global e-Government Readiness Survey. (AB 28.06)

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3.3 First Hershey's Chocolate World in Middle East opens in Dubai

The Hershey Company has appointed Retail Is Detail L.L.C. to open its first Middle East Hershey's Chocolate World store in The Dubai Mall. Retail Is Detail L.L.C. has signed exclusively with Hershey's for the expansion and franchise rights of Hershey's Chocolate World in the Middle East and South East Asia. The company intends to launch more Hershey's Chocolate World concept stores in both continents within the coming months. The store offers more than 300 Hershey's products including giant chocolate bars, Hershey memorabilia and even customized products. The Hershey's store is located on the Second Floor of The Dubai Mall. Hershey's Chocolate World Dubai is also home to the World's Largest Hershey Chocolate bar, weighing in at an extensive 5 pounds and sized at 60 centimeters by 30 centimeters. In addition, the store is also home to the World's Largest Reese's Peanut Butter Cup and World's largest KISS, never before seen in this part of the world. (BI-ME 03.07)

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3.4 LaserCard Receives Follow-On Order for Secure ID Credentials for Saudi Arabia National ID Program

Mountain View, California's LaserCard Corporation, a leading provider of secure ID solutions, has received a follow-on purchase order valued at $1.6 million for chip-ready, optical security media-based credentials for the Saudi Arabia national ID card program. Delivery is scheduled to occur in the Company's second fiscal quarter ending September 2010. The cards, which are issued to Saudi citizens nationwide, include the same tamperproof, highly counterfeit-resistant optical security media used in the U.S. Department of Homeland Security's “Green Card” program. The digital security of these sophisticated credentials has never been compromised, providing authorities with a key asset in the national security fight against counterfeiting and forgery of vital documents and illegal immigration. LaserCard's advanced ID credentials are trusted by governments worldwide to protect the personal identification of their citizens, foreign residents and government employees, and to provide official documentation such as driver licenses and vehicle registration cards. LaserCard Corporation, together with its subsidiaries, is a leading provider of secure ID solutions to governments and commercial clients worldwide. (LaserCard 01.07)

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3.5 Orkin Expands to Turkey

Atlanta, Georgia's Rollins, a US consumer services company, announced that its wholly owned subsidiary Orkin will begin providing pest control service in Turkey in H2/10. Turkey marks the sixteenth international country Orkin services. Orkin will offer primarily commercial pest control service, along with some additional residential services, throughout the country. Firat Imamzade, currently involved in the pest control and chemical distribution business, will own and operate the franchises. Rollins, Inc. is a premier North American consumer and commercial services company. Through its wholly owned subsidiaries, Orkin, PCO Services, HomeTeam Pest Defense, Western Pest Services, The Industrial Fumigant Company and Crane Pest Control, the Company provides essential pest control services and protection against termite damage, rodents and insects to over 2 million customers in the United States, Canada, Mexico, Europe, Central America, the Caribbean, the Middle East, Asia and the Mediterranean from over 500 locations. Founded in 1901, Atlanta-based Orkin is an industry leader in essential pest control services and protection against termite damage, rodents and insects in the United States, Canada, Mexico, Europe, Central America, the Middle East, the Caribbean, Asia and the Mediterranean. (Rollins 29.06)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Germany's Schott Solar To Expand Israel Operations

Germany's Schott Solar AG is expanding its operations in Israel. The company has appointed solar systems integrator Greentops Ltd. as its authorized distributor, as part of a strategic move to boost its share of the Israeli market. Schott Solar will set up a logistics center and expand its services network. Schott Solar sold $10 million worth of photovoltaic panels in Israel in 2009. The company hopes to boost turnover by 40% to $14 million this year. Schott Solar Israel said that the company considers Israel as a strategic target and expects substantial market growth in the coming year. Greentops decided to focus on Schott Solar's PV panels because they were found to be the most suited to Israel's climate conditions. Schott Solar has been manufacturing photovoltaic panels and other solar energy products for over 50 years. (Globes 22.06)

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4.2 Egypt to Issue a BOO Tender for a 1,000 MW Wind Farm

Egypt plans to issue a tender for the construction of a 1,000 MW wind farm, according to Electricity Minister Younes. The project is planned to be located in the Gulf of Suez area and will be offered on Build Own Operate (BOO) basis. Egypt has been developing wind power along its eastern Red Sea coast with wind farms at Zafarana and Hurghada and an installed capacity so far of 500 MW, but it expects to see its wind power capacity to reach 7200 MW by 2020. Egypt also aims to generate 12% of its power from wind farms out of a total of 20% from renewable sources by 2020 and is seeking to attract $110 billion in investments in its energy sector by 2027. In June 2010, the World Bank agreed to a loan of $220 million to develop infrastructure connecting wind farms to the national power grid in Egypt, and to support the development of the previously announced 250 MW Gabel el Zait wind project. (Beltone 28.06)

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4.3 Morocco Unveils $3.5 Billion Wind Energy Project

On 5 July Morocco unveiled a wind energy project worth MAD31.5 billion, which officials said will help increase the share of the country's electricity consumption from renewable sources to 42% by 2020. The project will involve building five wind farms to increase Morocco's wind generation capacity to 2,000MW in 2020 from the approximate 280MW currently from small wind farms. King Mohammed inaugurated on Monday the first wind farm in Tangier, which has a capacity of 140MW and cost MAD2.75 billion. Officials said the government had selected the other sites of the wind project in Tetouan, Taza, Layoune and Boujdour. Funding for the wind project will be from a mix of state and private capital, including from foreign investors. Morocco is the only North African country with no oil resources. It seeks to cut its dependency on imported oil and coal by expanding power generation capacity from renewable sources. Last year, it launched a solar energy project worth $9 billion, which will account for 38% of Morocco's installed power generation by 2020. (Beltone 06.07)

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4.4 Egypt Ups Clean Energy Cooperation with Japan-Funded Wind Farm

The Japanese government extended a $432 million soft loan to Egypt for a 220-MW wind farm project in the Gabal El-Zeit area on the western coast of the Gulf of Suez. The Energy & Electricity Ministry said the soft loan extended to Egypt for the wind farm has a 10-year grace period and will be paid back with around 0.3% interest over 40 years. On 4 July, Egyptian Electricity & Energy Minister Younis met with Japan's Ambassador, where he credited the Japanese government for supporting several projects, including contributing to the implementation of a 120 MW wind farm project in April last year and a 140 MW solar energy station at Koraimat. This is in addition to contributing to technical assistance in the modernization of project control centers in the south of Egypt at Naga Hammadi and a 500 kV center at Samalut. The centers were equipped with the latest technology and advanced programs to monitor and control higher voltage networks. The government has recognized that wind conditions in Egypt are favorable to building more wind farms along the Red Sea coast. (DNE 06.07)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan Sees $500 Million Eurobond By Early October

Minister of Finance Mohammad Abu Hammour announced on 5 July that Jordan aims to launch its first $500 million Eurobond by early October to capitalize on greater investor confidence and tap lower-cost funding. He said the government aimed to raise money amid signs of a recovery in Jordan's economy and political support for a tough fiscal consolidation plan. At least 10 major banks have offered to lead-manage the five-year sovereign eurobond issue, which would help Jordan diversify its borrowing sources, said Abu Hammour, adding that the lead-manager would be picked by mid-July. Jordan last month said it sought to tap international markets to capitalize on healthy global demand for sovereign issues from emerging markets. The kingdom is seeking to issue five-year paper on either a floating basis based on six- or three-month LIBOR or a fixed rate basis leaving the spread and issue price to be proposed by the banks. Even though the focus was on a Eurobond offering, banks could also propose a Sukuk, or Islamic bond, issue and even longer maturity paper if that could reduce the cost of financing and attract greater investor interest, Abu Hammour said. As Jordan is not a regular issuer, the pricing could also create a sovereign curve and pave the way for a more active secondary market in government debt paper. (Various 05.07)

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5.2 Iraq Awards $600 Million Monorail Contract

On 26 June, Iraq's city of Najaf has awarded a Canadian company a $600 million contract to build the country's first monorail. The project will be only the second of its kind in the Middle East after Dubai. The contract was awarded to TransGlobim International (Globim), a privately-owned Canadian consortium. The monorail is one of a number of large-scale infrastructure projects discussed by Iraqi officials since the fall of Saddam Hussein, including a plan for a multi-billion dollar Baghdad metro, none of which has been built. Najaf, one of Shi'ite Islam's holiest sites, hosts hundreds of thousands of pilgrims at rites several times a year, jamming its mediaeval streets.

Iraq's infrastructure has been badly decayed by decades of war, international sanctions and underinvestment. Now emerging from the sectarian warfare unleashed after the 2003 U.S.-led liberation but still suffering frequent insurgent attacks, the country is seeking ways to fix its roads, railways, ports, power plants and other basic infrastructure. The outgoing government of Prime Minister Nuri al-Maliki signed 11 deals with global oil firms to develop Iraq's vast oil reserves. Economists say Iraq must grow its non-oil sectors if it is to have a viable economy and reduce unemployment.

While overall security has improved, an inconclusive election in March which produced no outright winner and as yet no new government has fuelled concerns of a return to uncontrollable violence. As a result, most foreign investors outside the oil sector are still keeping to the sidelines. The Najaf monorail project will be finished in three years and be carried out in two stages. The Canadian company will build a power plant to run the train. The company said the project involved the construction of 37 km of monorail linking the three major Shi'ite mosques in Najaf - the Imam Ali, Kufa and Sahla shrines - and also linking two main bus depots. The second phase will link the new Najaf airport. (Reuters 26.06)

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5.3 Qatar's Annual Inflation Fell 3.6% In May 2010

Annual headline inflation registered - 3.6% y-o-y in May 2010, down from -3% in April 2010, due to a decline in the annual change of rents and fuel to -16% y-o-y in May, from -14% in April 2010, according to data published by the Qatar Statistics Authority. However, food and tobacco rose by 2.3% and transportation by 4% annually in May 2010. On a monthly basis, the change in CPI declined by 0.1%, down from a monthly increase of 0.3% in April 2010. Food prices registered no change in May, while rents and fuel costs declined by 1.4%, compared to a 0.6% in April. Food, rents and fuel and transportation constitute 13%, 32% and 20% respectively of the consumer price index. Annual inflation averaged 0.4% in the first five months of 2010. Inflation is expected to rise gradually in 2010, possibly averaging 3%, up from -4.9% registered in 2009, and a peak of 15.2% in 2008, as economic growth rises and prices slowly rebound from their 2009 levels. (Beltone 24.06)

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5.4 Sheikh Mohammed Says UAE to Keep Dirham's Dollar Peg

The UAE will maintain the dirham's peg to the dollar and has no plans to rejoin the planned Gulf monetary union “for the time being,” Sheikh Mohammed Bin Rashid Al Maktoum told Cable News Network. The emirates “still believe” in the peg, Sheikh Mohammed said. “The euro is in trouble and we thought of the Gulf currency and we said, well the UAE said ‘not yet' and I think they are right, until we are sure.” Last year the UAE pulled out of a planned monetary union with four other Gulf states that aims to allow the region more control over monetary policy, now tied to the US. The UAE central bank faces no currency risk from fluctuations in the euro as almost all its portfolio is in dollars. The euro has been the worst performer this year among 10 developed-nation currencies, falling 9.3%, according to the Bloomberg Correlation-Weighted Currency Indices. Dubai's economy will shrink about 0.5% this year, the IMF said last month, after real estate prices plummeted from their peak in 2008. The second- largest of the seven emirates making up the UAE, Dubai had to seek a $20 billion bailout from Abu Dhabi last year, after borrowing $109bn according to IMF estimates. (AB 25.06)

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5.5 Dubai to Allow Private Investment in Power

The Dubai government will allow private sector to invest in power projects in the future but participation will not exceed 40%, the vice chairman of the Supreme Council of Energy announced. The government is considering coal and nuclear technologies to diversify its energy resources for future demand, Saeed Mohammad Al Tayer said on 24 June. The newly created Supreme Council of Energy hired consulting firm McKinsey & Co to develop an energy strategy to explore alternative energy resources in an effort to meet future demand as power demand in Dubai increases due to strong economic growth. Al Tayer said the council will complete its study of the development of short- and long-term strategic plans for the energy sector by August. (TA 24.06)

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5.6 Foreign Firms Attracted to Oman's $2 Billion Coal Power Plan

International firms are examining Oman's $2 billion contract to build Oman's first coal-fired electricity generation plant. Oman's Public Authority for Electricity and Water has appointed Worsely Parsons and KPMG as technical and financial advisors for the 1,000 MW power station project, which will be built at Duqm in central Oman. The tender is expected in the third quarter of this year. Last year, Oman said it would privatize existing power stations and invest about $8 billion in new power projects to diversify away from its oil-based economy. Oman is developing five projects aimed to boost electricity generation, demands on which are increasing about 15 percent annually. Total consumption up to June 2009 reached 3,600 megawatts, 16% more than the same period in 2008, year on year, according to the Public Authority for Electricity. (Various 29.06)

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5.7 Saudi Arabia Education Forecast to 2013

Research and Markets' (http://www.researchandmarkets.com) "Saudi Arabia Education Forecast to 2013" says that as Saudi Arabia is the largest and most populated country in Gulf Cooperation Council (GCC), it represents the biggest education industry in the region. With more than 55% of its population below 24 years of age, the country provides the most suitable environment for its education industry to grow and prosper. The number of universities has grown manifold and a similar trend has also been witnessed in the number of student enrollments in the higher learning public institutions, which reached 850,000 in 2009. According to the Saudi Arabia Education Forecast to 2013, the population growth in the country has been averaging between 2.5%-3% during past few years, which is one of the highest globally. The fast growth in population transformed in increasing number of student enrollments in all education systems, be it elementary, intermediate, secondary or higher education. For instance, during 1993-2008, the number of high school graduates in the Kingdom increased by 443%. The surging penetration of primary education constructed a solid platform for higher education industry developments, and we anticipate that student enrollments in higher education will grow at a CAGR of 13.7% during 2009-2013. The report says that demand for technical and medical courses, such as engineering, computer science, pharmacy, medical sciences, etc., will boom in near future. Besides this, the report identifies that Saudi Arabian higher education sector offers considerable opportunities for private players to enter into the rapidly evolving higher education sector in the country. (R&M 01.07)

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5.8 Egypt May Add Poland & Romania to Its List Of Wheat Providers

Egypt, the world's biggest wheat importer, may add Romania and Poland to its list of approved providers as it seeks greater competition and lower prices for the grain. The General Authority for Supply Commodities buys wheat for the government through international tenders because local production is insufficient to meet demand. Price is the sole factor in determining the outcome of the tenders. At the latest tender on 19 June, Egypt agreed to buy 60,000 metric tonnes of Russian wheat and 60,000 tonnes of wheat from Kazakhstan at a price of $166 per tonne. Russia had the biggest share of Egypt's wheat imports so far in 2009/2010, accounting for 58.7%, followed by France and the USA with 27.2% and 7.6% respectively. GASC's total imports of the grain for the marketing year may reach between 5 million and 5.2 million tonnes. The agency may also purchase between 2.2 million and 3 million tonnes of local wheat. (Beltone 24.06)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey's Inflation Slows to 8.4%, Lowest Since January

Turkey's inflation rate fell last month to the lowest since January, supporting the Central Bank's efforts to keep interest rates at a historic low. The annual consumer inflation rate fell to 8.4% from 9.1% the month before, the Turkish Statistics Institute, or TurkStat, announced on 5 July. It was expected at 8.8%, according to the median estimate of 10 economists surveyed by Bloomberg. In the month, prices declined 0.6%. Central Bank Governor Yilmaz has kept the benchmark rate unchanged since November even as the economy returns to growth after the global financial crisis, arguing that faster inflation would prove temporary. The cost of groceries and non-alcoholic drinks fell 2.5% from a month earlier and transport prices dropped 0.4%. The measure of core inflation the Central Bank tracks, which excludes food and energy prices, slowed to 5% from 5.5% in May. Quarterly economic growth was 0.1% in the first three months of this year, slowing from 1.7% in the earlier period. The cost of goods leaving Turkish factories and mines rose an annual 7.6% in June, compared with a rise of 9.2% the previous month. Producer prices fell 0.5% in the month. (TurkStat 05.07)

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6.2 IMF Says Cypriot Economy Seen Showing Zero Growth

The economy of Cyprus, the euro area's second smallest member, is expected to have zero growth this year and may actually contract, the IMF's European Department said. Cyprus may have a “modest” recovery in 2011, while the budget deficit should be about 6% of GDP this year after the government took important first steps to cut the number of public workers The LMF said from Nicosia that the foremost policy challenge for Cyprus is to reverse the large structural fiscal deficit that has emerged in recent years and bold measures are required to achieve a government target of below 3% of GDP by 2012. The government should focus more on curbing the wages of public workers, which grew faster than salaries in the private sector in recent years, and on restructuring civil service pensions to reduce expenditure. Cyprus's budget deficit stood at 6.1% of GDP in 2009 compared with a surplus of 0.9% of GDP in 2008. (Various 06.07)

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6.3 Cyprus Retail Trade Slips Again In April

Cyprus' retail trade slipped again in April according to provisional estimates from the Statistical Service. The figures show that retail trade turnover volume fell by 2.7% over the year earlier in April 2010 and by 2.0% compared with March 2010. Revised data for March show that the index increased by 11.1% compared with March 2009 and by 16.9% compared with the previous month. For the period January-April 2010, the index is provisionally estimated to have a decreased by 0.7% over the corresponding period of 2009. In January-March, the index rose by just 0.1%. Meanwhile, the value of retail trade in April is provisionally estimated to have fallen over the year earlier by 0.2%. In March, the value index rose year on year by 13%. For the period January-April 2010 the value index is provisionally estimated to have decreased by 1.2% compared with the corresponding period of 2009. (FM 28.06)

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6.4 Greece's Economic Stagnation Leads To Imports Drop Of 22,3%

On 28 June, the Hellenic Statistical Authority announced that the trade balance deficit of commercial transactions stood at €1,546m in April, down 36.0% y-o-y (excl. oil products – down 14.3%), reflecting a decrease in imports by 22.3% (excl. oil products – down 7.2%) and an increase in exports by 5.0% (excl. oil products – up 4.1%). Over the period Jan. - Apr. 2010, the trade balance deficit of commercial transactions stood at €7,768m, down 23.0% y-o-y (excl. oil products - down 5.8%), on the back of a decrease in imports by 15.1% (excl. oil products - down 2.8%) and an increase in exports by 2.1% y-o-y (excl. petroleum products - up 3.0%) respectively. (HAS 28.06)

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6.5 Greece's External Debt Soars In 2010's First Quarter

On 2 July, the Bank of Greece announced that the external debt of the entire Greek economy soared to €413.5 billion, or 179.1% of GDP, in Q1/10. This 12% rise in the country's debt year-on-year serves to illustrate how Greece found itself shut out of the markets a few months later. Compared with Q4/09, the rise came to 1.2%. In euro terms, Greece's external (public and private sector) debt rose by €44.3 billion within one year and by €4.9 billion within three months. This rise is almost entirely due to the additional debt of the public sector, which grew by some 17.3% in Q1/10 compared with the same period of 2009, while the external debt of the private sector increased by 2.9%. The banking sector's external debt in Q1/10 was virtually the same as it was a year earlier (rising 0.8%), while, compared to the last quarter of 2009, it actually contracted by 0.2%. In practical terms, this means that banks have put the brakes on loans due to the credit crisis and indicates that Greek lenders were having a hard time securing credit from abroad.

In fact, long-term borrowing by banks dropped by as much as 10.5% in the year's first quarter from a year earlier. Greek banks were unable to secure long-term loans due to rumors of a possible Greek bankruptcy in the first quarter of the year, which would have had a dramatic effect on the local banking system too. Hence Greek lenders' short-term borrowing grew by 7.6% from January to March. In the same period, the quality of banks' loan portfolios posted a considerable decline due to the negative environment. Bank officials estimate that the nonperforming loans index came to 8% at the end of March from 7.7% at end-December. The increase in nonperforming loans will be the biggest challenge commercial banks have to deal with over the next couple of years and their efficiency on this front will go a long way toward determining their future. (eKathimerini 03.07)

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6.6 Bulgaria's Unemployment Declines By 1% In 4 Months

Bulgaria's unemployment rate in June 2010 was 9.26%, a slight reduction from the 9.53% in May. June is the fourth consecutive month in which Bulgaria has registered a decline of the number of its unemployment rate. According to official government statistics, after hitting a peak of 10.3% in February, the highest value since the beginning of the economic crisis at the end of 2008, the number of unemployed in Bulgaria has keep declining slightly over the last three months. Thus, since February, the number of the unemployed Bulgarians has dropped by 1%, or by 37 000 people. There has been an increase in the number of Bulgarians working in the so called “gray economy”. Over the past weeks, labor inspectorates around the country have found 100 cases of hiring workers without labor contracts, and have imposed fines of BGN 15 000 to each unfair employer. (SMN 02.07)

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6.7 Bulgaria to Get Azerbaijan Gas in 2011 via Georgia & Turkey

Bulgaria should receive its first natural gas supplies from Azerbaijan in 2011, as agreed by the respective presidents. Bulgarian president Parvanov went to Baku on 30 June on a two-day state visit focused precisely on gas supplies talks and energy security. He is returning a visit of his Azerbaijan counterpart that Aliyev made to Sofia in November 2009. The two presidents evaluated positively the project for the supplies of compressed natural gas from Azerbaijan to Bulgaria through Georgia, which was negotiated during their previous meetings, and agreed that the bilateral working group should speed up its activity. In April 2010, Bulgaria's northern neighbor Romania already struck a similar deal with Azerbaijan and Georgia. The new element in the Bulgaria-Azerbaijan energy relations discussed by the two heads of state Wednesday has to do with the possibility for transiting gas from the Caspian country to Bulgaria via Turkey. The new opportunity was discussed within the context of recent agreements between Azerbaijan and Turkey for the delivery and transit of natural gas.

The two presidents have set 2011 as the deadline for delivering the first Azerbaijan natural gas supplies to Bulgaria. In this respect, Azerbaijan's President Aliyev has backed a proposal of his Bulgarian counterpart for organizing a trilateral meeting of Azerbaijan, Bulgaria and Turkey in order to negotiate the specifics about such the new project to deliver Caspian gas to Bulgaria and the Balkans. Parvanov and Aliyev have affirmed the priority meaning of the EU-sponsored gas transit pipeline Nabucco for diversifying Europe's supplies as well as the future role of Azerbaijan as one of the key Nabucco suppliers. They have called for more dynamic and accelerated actions for the constructing of the pipeline. (SMN 01.07)

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6.8 Sofia Moves to Revive 'Real' Bulgarian Yogurt

Bulgaria's government is going to reintroduce the state standard for the production of “real” Bulgarian yogurt. The Bulgarian state standard will include the exact requirements for producing Bulgarian yogurt, as well as the name of the Bulgarian bacteria - Lactobacillus bulgaricus. It was abolished in 1998 with the argument that Bulgaria had to harmonize its regulations with those of the EU. Bulgaria's PM Borisov has initialized a meeting between state and non-governmental organization in order to discuss the implementation of the Bulgarian state standards (BDS) on foods. Minister Naydenov explained that BDS will not be mandatory, but rather recommendable, but its sign on a label will guarantee the consumers that the used products are real. At the meeting it was also made clear that the companies that want to follow the BDS will have to register at the Bulgarian Patent Office and pay BGN 300. However, it was not made clear how long would the registration take. The Bulgarian yogurt is the most famous Bulgarian food product. At a meeting between the Bulgarian Minister of Foods and the Japan's Ambassador to Bulgaria, Tsuneharu Takeda, in November 2009, it was made clear that the Bulgarian yogurt holds about 60% of the Japanese food market, which means that around 40 million Japanese consume the Bulgarian product. LB Bulgaricum, a state-owned Bulgarian company, holds the patent for the production of Bulgarian yogurt with the lactobacillus bulgaricus bacteria. It receives €5m annually under patent rights from the production of Bulgarian yogurt in Japan. (SMN 02.07)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Birth Rates and Immigration

A demographic study in Israel analyzing the past 15 years shows a dramatic drop in Arab births per woman, a rise in births among secular Jewish women, and a continued very high rate among religious Jewish women. The statistics were compiled by the American-Israeli Demographic Research Group and have been presented to the National Security Council, IDF Intelligence, the Knesset Foreign Affairs and Defense Committee, the Prime Minister's Office, Congress members in Washington, and countless others instrumental in shaping public policy in Israel and the U.S. The study found that the fertility gap between Arab and Jewish women dropped from six births per woman in 1969 to 0.7 in 2009. At the same time, the proportion of Jewish births has grown from 69% of total births in 1995 to 75% in 2008. Secular women now give birth to an average of 2.6 babies, as opposed to their mothers, who bore only 2.1 children each. Over the past 15 years, the number of Arab births in Israel has remained more or less steady at around 39,000, while Jewish births grew over this period from 80,000 to 120,000.

The number of Bedouin births has dropped drastically, by 30%, ever since a sharp cut in child allowance payments was introduced several years ago. Of the 20% Arab minority in Israel, 3.5% are residents of eastern Jerusalem and do not have the right to vote in national elections; 2% are Druze, who serve in the army; and 2% are Christian Arabs. Average aliyah in recent years has been 16,000 or more. The number of returning Israelis is balanced out by those leaving, about 11-12,000 of each. (IsraelNN 24.06)

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*REGIONAL:

7.2 Laylat ul Isra wal Mi'raj Observed

This coming week the Islamic holiday of Laylat ul Isra wal Mi'raj will be observed. Arabic for the “Night of the Journey and Ascension,” it usually falls on 27 Rajab. It is the night when Muhammad was, according to hadith, taken to “the furthest mosque” (location not specified) on a Buraq (a beast resembling a human faced horse with wings) and ascended to the highest level of the heavens. It is said that he negotiated with God about the number of prayers, which started at fifty a day, but on his way down he met Moses, who asked him to ask for a reduction in the number because the requirement was difficult for Muhammad's people. Muhammad returned to God and several times asked for, and was granted a reduction of five prayers, until the number was reduced to five in total, with the blessing that if they were properly performed, the performers would be credited with fifty prayers instead of five. Unlike other holidays, Isra Mi'raj is not celebrated by all Muslims. No special prayers are associated with this holiday. But the ones who do celebrate get together in mosques or at one another's homes and listen to the story of Muhammad's journey. Food, especially sweets, is shared in honor of the night.

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Oman has declared holiday on 10 July on the occasion of anniversary of Al Isra'a wal Miraj, while in Jordan and the UAE it will be celebrated on 8 July.

7.3 Over 25% of Deaths in the UAE are Caused by Cardiovascular Disease

A UAE cardiology expert has said that high cholesterol levels are a major cause of heart disease, the No 1 cause of death in the UAE. Over 25% of deaths in the UAE are caused by cardiovascular disease. Dr. Hallak, Board Member, Emirates Cardiac Society and Consultant Interventional Cardiologist/Chief Intervention Cardiology department, American Hospital in Dubai said most patients don't follow diet and exercise recommendations, despite being treated with cholesterol-lowering medication. Half of patients with high cholesterol don't achieve results either because the prescribed dose is not enough or the medicine is not the right one. (BI-ME 02.07)

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7.4 Bulgaria's 3rd Annual Gay Pride Parade

Bulgaria's 3rd annual gay parade “Sofia Pride” went without violent incidents largely thanks to the decisive actions of the 300 riot police officers guarding the rally. Some 700 people – about as many as the organizers had expected – participated in the procession which started at the National Palace of Culture and proceeded down to the Monument of the Soviet Army where the participants watched a concert dedicated to the initiative. The parade under the motto "Love equality, embrace diversity" was led by an open-platform truck with a sound system and several people dancing on it. The participants in the parade included gay, lesbian, bisexual, transgender and straight, and featured guests from the UK, Germany, Russia, France and Greece.

The precise route of the Sofia Pride gay parade was kept in secret until the very last minute. The organizers of the event published on their website recommendations to the participants how to avoid being attacked before and after the procession, including by moving in larger groups and by not displaying any posters or flags of the gay movement when they are not in the procession guarded by police. The starting point of the parade was fenced off and the participants were admitted by the police through a single checkpoint only upon showing a green bracelet provided in advance by the organizers. More than 300 riot police officers watched closely the actual gay parade and prevented several far-right extremists from assaulting the participants although the former did hurl verbal abuse. Three young men were arrested for attempting provocations but the rally went without any major incidents.

The first ever gay pride parade in Bulgaria took place in June 2008 when it attracted only about 100 participants. Those were assaulted by far-right youth hurling Molotov cocktails at them, with the police arresting several dozen extremists. The 2009 parade went without any incidents and attracted some 300 participants. It was marked by an increasingly fierce opposition on part of the Bulgarian Orthodox Church. The 2010 Sofia gay parade was also opposed by the church and a myriad of nationalist organizations but for the first time civic NGOs claiming to promote family values also joined in rather vocally to denounce the initiative. (SMN 28.06)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 ExAblate Receives European CE Mark for Treatment of Adenomyosis

InSightec announced that its ExAblate system has received an expanded CE Mark certification for "ablation of soft tissue for treatment of benign tumors, including uterine fibroids and adenomyosis" using Magnetic Resonance guided Focused Ultrasound (MRgFUS) technology. The certification was granted on the basis of clinical evidence showing that focused ultrasound is safe and effective in treating symptomatic adenomyosis, which included published data of patients with the condition. The certification body KEMA Quality agreed that treatment with InSightec's system resulted in statistically significant improvement in subjective symptoms, and significant volume reduction of the treated mass. Adenomyosis is a benign gynecologic growth characterised by the presence of ectopic endometrial glands and stroma in the myometrium and hyperplasia (excessive cell reproduction) of adjacent smooth muscles. It manifests with uterine myoma-mimicking symptoms such as heavy menstrual bleeding, pain, and diffuse uterine enlargement. Women with this condition are unlikely to conceive. ExAblate is the first system to use the MR guided focused ultrasound technology that combines MRI - to visualize the body anatomy, plan the treatment and monitor treatment outcome in real time - and high intensity focused ultrasound to thermally ablate tumors inside the body non-invasively. MR thermometry, provided uniquely by the system, allows the physician to control and adjust the treatment in real time to ensure that the targeted tumor is fully treated and surrounding tissue is spared.

Tirat Carmel's InSightec (http://www.insightec.com) is a privately-held company owned by Elbit Imaging, General Electric, MediTech Advisors and employees. It was founded in 1999 to develop the breakthrough MR guided Focused Ultrasound technology and transform it into the next generation operating room. (InSightec 23.06)

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8.2 OrSense Presents Non-Invasive Hemoglobin Monitoring System for Anemia Monitoring

OrSense announced the presentation of NBM 200, a non-invasive hemoglobin (Hb) measurement system for various hematological applications including anemia monitoring, hemorrhage detection and pre-donation screening. The Company presented results showing that Hb measurements obtained by the NBM 200 showed accurate performance compared with invasive point of care (POC) devices. Hemoglobin (Hb) measurements allow the detection of anemia and hemorrhage, and are widely used by hospital wards such as operation rooms, ICU, ER and delivery rooms. OrSense's non-invasive Hb measurement has many advantages including the prevention of pain and potential transmission of infectious diseases, a reduced need for trained personnel, short measurement time and the absence of bio-hazardous waste. NBM 200 offers a unique, breakthrough, non-invasive solution for accurate and quick Hb measurements. This portable device operates via a ring-shaped sensor that is fitted on the donor's finger and applies pressure, temporarily occluding local blood flow. During the occlusion, optical elements in the sensor perform a sensitive measurement of the light transmitted through the finger. This method, called Occlusion Spectroscopy, provides a quick, accurate and painless measurement of the donor's blood constituents, while greatly improving the donor's comfort, eliminating infection risk, and providing the medical staff with accurate readings and immediate results.

Nes Ziona's OrSense (http://www.orsense.com) is a medical device company developing non-invasive monitoring systems for measurements of oxygen saturation, hemoglobin, glucose and other blood parameters. The Company's FDA cleared NBM 200MP is a non-invasive blood oximetry monitor for use in hospitals. OrSense's non-invasive hemoglobin/hematocrit monitor was granted the CE approval and was tested on over 8,000 patients and donors at 20 sites in the U.S. and Europe. The Company's products are based on its proprietary Occlusion Spectroscopy technology, which overcomes key obstacles that hinder the performance of competing approaches. (OrSense 29.06)

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8.3 Teva Announces Approval of Generic Effexor XR

Teva Pharmaceutical Industries announced the U.S. FDA approval of Venlafaxine HCl ER Capsules, the Company's generic version of Wyeth's antidepressant Effexor XR. Shipment is expected to commence on July 1, 2010, as per the terms of the 2006 agreement with Wyeth. As the first company to file an Abbreviated New Drug Application (ANDA) containing a paragraph IV certification for this product, Teva has been awarded a 180-day period of marketing exclusivity. The brand product had annual sales of approximately $2.75 billion in the United States, based on IMS sales data. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Israel, is among the top 15 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative pharmaceuticals and active pharmaceutical ingredients. Over 80 percent of Teva's sales are in North America and Western Europe. (Teva 29.06)

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8.4 Chiasma Receives FDA Orphan Drug Designation for Octreolin for the Oral Treatment of Acromegaly

Chiasma announced that the FDA has granted orphan drug designation for Chiasma's investigational new drug, Octreolin, an oral form of octreotide acetate that uses the Company's proprietary Transient Permeability Enhancer (TPE) technology for the oral treatment of acromegaly, a hormonal disorder that results from an excess of growth hormone. If a New Drug Application (NDA) is approved, Octreolin should qualify for seven years of market exclusivity, potential tax credits and a waiver of the prescription drug user fee for the marketing application. Chiasma has successfully completed a Phase I clinical study evaluating the safety and pharmacokinetics (PK) of Octreolin, which demonstrated a PK profile similar to that of subcutaneously injected octreotide acetate. In addition, no serious adverse safety events were reported for Octreolin. The Company intends to initiate a pivotal (Phase 3) trial by the end of the year for Octreolin in acromegaly. Chiasma will submit an application for Orphan Medicinal Product Designation to the European Medicines Agency (EMA) shortly. The Company intends to submit an NDA using the "505(b)(2) regulatory pathway" in the United States and its equivalent, the "Hybrid Application," in Europe. Octreolin would provide patients with the benefit of an oral alternative to the currently approved subcutaneous and intramuscular injections. In addition, the Company is developing Octreolin as a potential treatment for patients with portal hypertension (PHT); a clinical trial to evaluate this new indication is expected to start in December of 2010.

Jerusalem's Chiasma (http://chiasmapharma.com) is evaluating its proprietary technology with approved drugs, which may enable their being switched from injectable to oral, and potentially may also result in new indications or otherwise improved labels. The Company's TPE technology promotes the delivery of drugs to the GI wall and from there to the liver. It is applicable to macromolecules that, to date, can be administered only by injection. TPE can be utilized also with small molecules that are already orally available but are poorly absorbed. (Chiasma 28.06)

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8.5 BSP Granted CE Mark for its HyperQ AD-100 Diagnostic Performance of Stress ECG Product

BSP announced that its Add-On product, the HyperQ AD-100, intended for improved diagnostic performance of Stress ECG, has been granted the European CE conformance mark. The HyperQ AD-100 product is an add-on system with the HyperQ technology which is incorporated in parallel to existing standard stress ECG systems. The integration of the HyperQ AD-100 into Stress ECG systems enables accurate and sensitive diagnosis of Ischemic Heart Disease, a leading cause of death in the world. The unique technology developed by BSP is implemented in a non invasive manner and does not involve exposure to radiation or other hazards to patients. It is highly effective in diagnosing sick people and in ruling out disease in healthy individuals. The HyperQ AD-100 enables physicians to benefit from the clinical advantages of the technology without the need to replace their existing installed Stress ECG system. CE mark was also granted to BSP's software product - the HyperQ-AN. This product enables analysis with the unique HyperQ technology and can be employed in OEM and licensing business models in existing commercial stress ECG systems, such as the company's collaboration with Schiller AG.

Tel Aviv's BSP ((http://www.bsp.co.il) is dedicated to providing novel, risk free and highly reliable solutions for the diagnosis and monitoring of cardiovascular disease. BSP's proprietary HyperQ technology is implemented in cardiac systems that offer accurate, low-cost and risk free cardiac monitoring and allows, for the first time, an effective diagnosis of ischemic heart disease in broad populations. (BSP 29.06)

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8.6 PROLOR Biotech Granted EU GMP Certification for Lead Candidate hGH-CTP

PROLOR Biotech has received formal Good Manufacturing Practice (GMP) certification for hGH-CTP, the company's proprietary biobetter version of human growth hormone. GMP certification is required by the European Union (EU) clinical trials legislation as a precondition for conducting clinical trials in EU member countries. Article 13 of 2001/20/EC of the EU clinical trials legislation was established to ensure, prior to the initiation of a clinical trial study in any EU member country, that the drug product to be used in such clinical trial study has been manufactured in accordance with EU GMP regulations and meets the conditions of the clinical trial authorization and the product specification file. PROLOR's facilities for working with hGH-CTP, as well as those of the contract manufacturing organizations for the drug substance and drug product, were inspected and audited as part of the assessment process. hGH-CTP is PROLOR's proprietary biobetter version of human growth hormone. hGH is used for the long-term treatment of children and adults with growth hormone deficiency due to inadequate secretion of endogenous growth hormone. It is also sometimes used to counter involuntary weight loss and certain physical manifestations of aging.

Nes Ziona's PROLOR Biotech (http://www.prolor-biotech.com) is a biopharmaceutical company applying unique technologies, including its patented CTP technology, primarily to develop longer-acting, biobetter, proprietary versions of already approved therapeutic proteins that currently generate billions of dollars in annual global sales. The CTP technology is applicable to virtually all proteins, and PROLOR is currently developing long-acting versions of human growth hormone, which is in clinical development, and interferon beta, factor VII, factor IX and erythropoietin, which are in preclinical development, as well as GLP-1 and other therapeutic peptides. (PROLOR 29.06)

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8.7 Teva Introduces First Generic Effexor XR Capsules in the United States

Teva Pharmaceutical Industries has commenced commercial launch of Venlafaxine HCl ER Capsules, the Company's generic version of Wyeth's antidepressant Effexor XR. The brand product had annual sales of approximately $2.75 billion in the United States, based on IMS sales data. As the first company to file an Abbreviated New Drug Application (ANDA) containing a paragraph IV certification for this product, Teva has been awarded a 180-day period of marketing exclusivity. Israel's Teva Pharmaceutical Industries (http://www.tevapharm.com), is among the top 15 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative pharmaceuticals and active pharmaceutical ingredients. Over 80% of Teva's sales are in North America and Western Europe. (Teva 01.07)

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8.8 Compugen Protein Shown to Abolish Recurring Relapses in MS Animal Model

Compugen announced that administration of CGEN-15001 in an animal model of multiple sclerosis (MS) has been shown to completely abolish spontaneous relapses. In addition, administration of this novel molecule prior to disease onset demonstrated a pronounced delay of disease onset and a significant decrease in disease symptoms. These results, together with complementary results from earlier studies, strongly support a significant potential therapeutic utility for CGEN-15001 in the treatment of multiple sclerosis and other autoimmune diseases, such as rheumatoid arthritis, systemic lupus erythematosus, inflammatory bowel disease and type 1 diabetes. CGEN-15001 is a soluble recombinant fusion protein comprised of the extracellular region of a Compugen discovered B7/CD28 family member, designated CGEN-15001T. CGEN-15001T, which itself has potential medical utilities - such as serving as a target for antibody therapeutics - was discovered by Compugen through the use of its LEADS platform and a proprietary algorithm designed to predict novel members of known protein families. Patents have been filed for both CGEN-15001 and CGEN-15001T.

Tel Aviv's Compugen (http://www.cgen.com) is a leading drug and diagnostic product candidate discovery company. Unlike traditional high throughput trial and error experimental based discovery, Compugen's discovery efforts are based on in silico (by computer) prediction and selection utilizing a growing number of field focused proprietary discovery platforms accurately modeling biological processes at the molecular level. (Compugen 01.07)

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8.9 Circadin Approved in EU Primary Insomnia Treatment in Patients Aged 55 or Over

Neurim Pharmaceuticals confirmed that the European Commission (EC) has approved a change in treatment duration with Circadin from 3 to 13 weeks (3 months). Circadin is indicated for the treatment of primary insomnia in patients who are aged 55 or over. The approval was based primarily on data obtained in the latest SOUNDER-SLEEP Phase IV clinical study, indicating that Circadin was safe and more effective than placebo for at least 3 months. Circadin is now the only sleep medication to be approved for up to 3 months.

Circadin (http://www.Circadin.com) is an innovative sleep medication that has been approved by the European Medicines Agency (EMA), the Australian Therapeutic Goods Administration (TGA), the Swiss Agency for Therapeutic Products (SwissMedic) and the Israeli Ministry of Health (MOH) for the short-term treatment of primary insomnia, characterized by poor quality of sleep in patients who are aged 55 and over. The approval is based on clinical studies demonstrating positive effects on sleep quality, sleep induction and most importantly next day alertness and functioning. Tel Aviv's Neurim Pharmaceuticals (http://www.Neurim.com) was founded in 1991 and is focused on drug discovery and development of treatments for age-related disorders, primarily in the central nervous system (CNS). (Neurim 05.07)

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8.10 VisionCare's FDA Approval for Implantable Telescope for End-Stage Macular Degeneration

VisionCare Ophthalmic Technologies announced the U.S. FDA approved the company's Implantable Miniature Telescope to improve vision in patients with end-stage age-related macular degeneration (AMD). VisionCare's first-of-kind telescope implant is integral to a new patient care program, CentraSight, for treating patients with end-stage macular degeneration - the most advanced form of AMD in the U.S. and the leading cause of blindness in older Americans. The telescope implant is designed to improve visual acuity. The magnification provided by the implant reduces the impact of the blind spot caused by end-stage AMD. End-stage AMD causes severe to profound central vision loss in both eyes due to either wet AMD that has progressed to scarring of the macula despite drug treatments, or dry AMD that has progressed to geographic atrophy, the most advanced form of dry AMD.

The Implantable Miniature Telescope (by Dr. Isaac Lipshitz) is indicated for monocular implantation to improve vision in patients greater than or equal to 75 years of age with stable severe to profound vision impairment (best-corrected distance visual acuity 20/160 to 20/800) caused by bilateral central scotomas (blind areas) associated with end-stage AMD. This level of visual impairment constitutes statutory (legal) blindness. Smaller than a pea, the telescope is implanted in one eye in an outpatient surgical procedure. In the implanted eye, the device renders enlarged central vision images over a wide area of the retina to improve central vision, while the non-operated eye provides peripheral vision for mobility and orientation.

VisionCare Ophthalmic Technologies (http://www.visioncareinc.net), headquartered in Saratoga, CA, is a privately-held company focused on development, manufacturing, and marketing of implantable ophthalmic devices and technologies that are intended to significantly improve vision and quality of life for individuals with untreatable retinal disorders. The company's R&D and manufacturing facility is located in Petah Tikva, Israel. (VisionCare06.07)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Answers.com Reaches 5 Million Registered Users

Answers.com, creators of the leading answer engine, which includes the properties WikiAnswers and ReferenceAnswers, announced it has reached 5 million registered users. Answers.com's U.S. audience size in May 2010 was 45.4 million unique visitors, ranking the site #21 on the comScore charts. Globally, monthly unique visitors were 72 million, making Answers.com the 37th highest ranked site worldwide. Jerusalem's Answers Corporation (http://www.Answers.com) owns and operates Answers.com, the leading Q&A site, which includes WikiAnswers and ReferenceAnswers. The site supports English, French, Italian, German, Spanish and Tagalog (Filipino). WikiAnswers is a community-generated social knowledge Q&A platform, leveraging wiki-based technologies. Through the contributions of its large and growing community, answers are improved and updated over time. The award-winning ReferenceAnswers includes content on millions of topics from over 250 licensed dictionaries and encyclopedias from leading publishers, including Houghton Mifflin, Barron's and Encyclopedia Britannica. (Answers.com 29.06)

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9.2 Israel Launches Ofek 9 Satellite

On 22 June Israel launched the Ofek 9 satellite from the Palmahim base. The imaging and surveillance satellite was developed by Israel Aerospace Industries at a cost of $300 million. Within a few hours, the satellite was positioned in orbit at an altitude of 400 kilometers, and sent its first signal back to earth. Its imaging systems were developed at Elbit Systems unit Elop. The satellite was launched on top of a Shavit rocket built by Israel Aerospace Industries, with its motors coming from Israel Military Industries. Ofek 9 is Israel's sixth surveillance satellite and will replace Ofek 4, which will come to the end of its useful life within two years, after ten years in space. Ofek 9 is to move in an orbit that will give Israel pictures of the Middle East, making it a tool for monitoring armament programs in hostile countries. Ofek 9's high resolution cameras are capable of producing pictures identifying objects only tens of centimeters in size. (Globes 23.06)

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9.3 JVS Receives $10 Million Repeat Order for its JVX6200 Metrology Production Tools

Sales momentum continues as Jordan Valley Semiconductors (JVS) announced the receipt of a $10m capacity order of multiple JVX6200i Metrology tools from a tier one semiconductor manufacturer. The JVX6200i was designed for high volume production metrology with full automation, high throughput, high uptime and low COO. The JVX6200i is a multi-channel metrology tool for advanced semiconductors FEOL, BEOL and Wafer-level Packaging (WLP) applications. The popular configuration is XRF (X-ray Fluorescence) and XRR (X-Ray reflectance) for FEOL (Hi-K, Metal gate, SiON and ACL applications) and BEOL (Cu Seed Barrier, Cu CMP and UBM applications). New WAXRD (Wide Angle X-ray diffraction)configuration is targeting metrology of advanced metallization structures with in-line capabilities of monitoring grain size, texture and phase of the seed/barrier and Cu or W metal structures. Migdal HaEmek's Jordan Valley Semiconductors (http://www.jvsemi.com), the leader in X-ray metrology solutions for advanced semiconductor fabs, develops and supplies superior metrology equipment for quality control of thin films based on rapid, non-contacting and non-destructive X-ray technology. The company offers the Semiconductor Industry the most comprehensive array of tools, based on advanced XRR, XRF, HRXRD, WAXRD and other technologies, ideal for both product or blanket wafers. For the HB-LED manufacturing market, JVS offers fast and economic HRXRD tools for process quality control. (JVS24.06)

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9.4 TowerJazz & Vishay Enhance Business Relationship to Include Planar MOSFET Technologies

TowerJazz and Vishay Intertechnology are expanding their business relationship to include planar MOSFETs and Super Junction MOSFETs. Production of these products under the terms of the expanded relationship between TowerJazz and Vishay is expected to result in tens of millions of dollars in additional yearly revenue. The excellent technical capabilities and the production indices that TowerJazz has achieved during the past years with its Trench technologies motivated Vishay Siliconix to expand its business with TowerJazz. As a result of these additional opportunities, Vishay Siliconix will continue to be one of TowerJazz's top five customers. New business between the two companies will include increased production of Vishay Siliconix high-voltage power MOSFETs. In addition, TowerJazz will manufacture Vishay Siliconix Super Junction FET Power MOSFETs. These devices, with very low RDS(on), provide lower conduction losses that save energy in power factor correction (PFC) and pulsewidth modulation (PWM) applications in a wide range of electronic systems, including LCD TVs, PCs, servers, switch mode power supplies (SMPS), and telecom systems. Vishay Intertechnology is one of the world's largest manufacturers of discrete semiconductors (diodes, rectifiers, MOSFETs, optoelectronics and selected ICs) and passive electronic components (resistors, capacitors, inductors, sensors and transducers).

Migdal HaEmek's Tower Semiconductor (http://www.towerjazz.com), the global specialty foundry leader and its fully owned U.S. subsidiary Jazz Semiconductor, operate collectively under the brand name TowerJazz, manufacturing integrated circuits with geometries ranging from 1.0 to 0.13-micron. TowerJazz provides industry leading design enablement tools to allow complex designs to be achieved quickly and more accurately and offers a broad range of customizable process technologies including SiGe, BiCMOS, Mixed-Signal and RFCMOS, CMOS Image Sensor, Power Management (BCD), and Non-Volatile Memory (NVM) as well as MEMS capabilities. (Tower 29.06)

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9.5 Ness Technologies Wins $2.6 Million Contract with Israel's Ministry of Environmental Protection

Ness Technologies announced that its outsourcing contract with Israel's Ministry of Environmental Protection has been extended for an additional three years, in a deal valued at about $2.6 million. Ness Technologies will operate and maintain the ministry's IT systems 24/7, including infrastructure systems and application development. Ness will assume overall responsibility for the Ministry's IT systems according to a service level agreement. Ness Technologies' Unified Reference and Delivery (URD) Center, Israel's largest help desk center serving outsourcing customers, will serve as the Ministry's help desk for approximately 600 users. Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; and system integration, application development, consulting and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. (Ness 28.06)

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9.6 RiT Technologies' SMARTen Cabling Solution to be Deployed in 100 Computing Classrooms

RiT Technologies announced that its cabling system will be deployed together with the 'Time To Know' teaching platform in the network infrastructure of computing classrooms throughout Israel. The selection was made after RiT submitted its design for evaluation in a competitive tender. During the first phase of the project, RiT's state-of-the-art cabling solution consisting of panels, patch cords, Category 6A STP cabling and outlets, will be deployed in 10 schools in Israel. In the second stage, hundreds of additional classrooms will be established.

Tel Aviv's RiT (http://www.rittech.com) is a leading provider of intelligent solutions for infrastructure management, asset management, environment and security, and network utilization. RiT Enterprise solutions address datacenters, communication rooms and workspace environments, ensuring maximum utilization, reliability, decreased downtime, physical security, automated deployment, asset tracking, and troubleshooting. RiT Environment and Security solutions enable companies to effectively control their datacenters, communications rooms and remote physical sites and facilities in real-time, comprehensively and accurately. RiT Carrier solutions provide carriers with the full array of network mapping, testing and bandwidth qualification capabilities needed for access network installation and service provisioning. (RiT 29.06)

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9.7 New Zealand Deploys RADVISION Next Generation HD Video Conferencing Solution

RADVISION announced that RADVISION SCOPIA Elite MCUs have been deployed on the Kiwi Advanced Research & Education Network (KAREN) to support more than 220,000 users at over 60 New Zealand universities and higher education organizations, research institutes and government agencies. KAREN is the exclusive broadband network, linking education, research and innovation organizations in New Zealand. The KAREN video conferencing service is owned and operated by Research and Education Advanced Network New Zealand (REANNZ) for KAREN members. REANNZ deployed RADVISON's recently introduced SCOPIA Elite Conferencing Solution. SCOPIA Elite is the industry's first standards-based MCU with the combination of 1080p, 720p, and H.264 Scalable Video Coding (SVC). Utilizing the latest in DSP technology, SCOPIA Elite supports telepresence to desktop connectivity and is the centerpiece of RADVISION's comprehensive next generation conferencing solution. The solution also provides HD desktop conferencing capabilities for the KAREN community through SCOPIA Desktop, making it easy to extend conferences to remote users. This innovative solution allows users to share full voice, video and data, with traditional room systems, telepresence systems, desktops and mobile devices all in one conference.

Tel Aviv'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 communications solutions 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 23.06)

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9.8 Wandy Introduces the Cloud Contact Center Solution for the First Time

The launching Wandy's Cloud Contact Center at the 11th Annual Call Center Week in Las Vegas on June 15-17, 2010, was a huge success. The live demonstration of Wandy's wide range of advanced features was the perfect showcase for Wandy's “Simplicity-as-a-Service” statement. Many of the delegates attending the exhibition commented on the rich and innovative capabilities this solution offers and were amazed by the ingenious business model it introduces to the SMB market segment. Wandy's Cloud Contact Center solution is delivered to SMBs as-a-service, providing them with the opportunity of accessing cutting edge technology. This allows them to extremely enhance their productivity and efficiency, while presenting a new level of customer service. Azur's Wandy (http://www.wandy-saas.com) is a contact center cloud application delivered as-a-service (SaaS) to SMB customers. Wandy's unique solution is perfect for the SMB market segment. Requiring no on-site installations or large up-front capital expenditures, the method of Pay-as-you-go on a monthly basis allows for high scalability and flexibility. In addition, Wandy's Do-It-Yourself approach provides SMBs with the ability to operate their contact centers independently. Wandy also introduces significant advantages and profitable business opportunities for service providers, channels and partners by creating high marginal accumulative revenues and increasing customer loyalty and satisfaction. (Wandy 01.07)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Unemployment Drops For 11th Straight Month

On 28 June, the Israel National Employment Service announced that the number of unemployed fell by 0.6% to 191,700 in May 2010 from 192,800 in April. May was the 11th straight month in which unemployment declined. However, the rate of decline in unemployment has slowed in recent months, from 1.3% a month at the beginning of the year to 0.6% in May. Paralleling the drop in the unemployed, the number of people entering the workforce rose by 2.1% to 19,400 in May, continuing the growth of previous months. (Globes 28.06)

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10.2 Foreign Investors Triple Tel Aviv Exchange Sales

The Bank of Israel announced on 5 July that foreign investors increased their net sales of Tel Aviv Stock Exchange (TASE) listed shares in May 2010 and continued to invest in Israeli government debt instruments. Net sales of TASE-listed shares by foreign investors tripled to $790 million in May from $250 million in April and more than doubled from the $340 million in March. Net sales of TASE-listed shares by foreign investors totaled $1.38 billion over the three months. Most of the sales were of shares of chemical and communications companies, which the Bank of Israel partly attributed to Israel's reclassification as an advanced economy in the MSCI indices from May 26. At the same time, foreign investors sold in May $280 million of Israeli shares traded abroad. Foreign investors invested a net $680 million in government bonds and short-term Bank of Israel (treasury) bills on the TASE in May. Foreign investors invested a net $900 million in treasury bills, and sold a net $210 million in government bonds. Foreign investors also sold a net $230 million of government bonds traded abroad. Direct foreign net investment in Israel via the banks totaled $400 million in May. Most of the investment was in the high-tech industry.

Net overseas investment by Israelis in foreign equities totaled $30 million in May. Households and the business sector invested a net $270 million, but institutional investors sold a net $240 million of foreign shares. Direct foreign investment by Israeli totaled a net $40 million in May, most of which was invested in real estate. (Globes 05.07)

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11: In Depth

11.1 JORDAN: Jordan's New Electoral Law Disappoints Reformers

On 22 June, Dima Toukan Tabbaa wrote in the Carnegie Arab Reform Bulletin that after months of civil society advocacy, King Abdullah recently promulgated a new electoral law in preparation for fall elections to replace the parliament dissolved in November 2009. To the dismay of local reformers, the revised law maintains the controversial one-man one-vote system in which a citizen may vote for only one candidate. While the law does change the way electoral districts are formed, gerrymandering remains a major concern.

The new law raises the number of Lower House seats from 110 to 120 and maintains the one-man one-vote electoral mechanism that reformers say has produced tribal representatives with purely local concerns. The new law also renames districts “electoral zones.” Each electoral zone is divided into single-seat sub-districts, with the total number of seats for the electoral zone equivalent to the number of seats controlled by the old districts, except for the four electoral zones where seats were added. For example Amman's third district had 5 seats. Under the new law, that same district is divided into 5 sub-districts. The government says the new system is meant to curb tribalism because it does not specify geographical boundaries for the sub-districts. Voters will be registered in electoral zones and they will be able to vote for candidates running in any of their electoral zone's sub-districts. Candidates, on the other hand, must choose one sub-district in which to run and will supposedly not be able to determine who will vote in their chosen sub-district.

Some political analysts reject the government's contention that the new system will curb tribalism. Instead, they predict that with smaller sub-districts, candidates will now rely more on their tribal affiliations and campaign among a smaller pool of core familial voters than before. Meanwhile, tribes are expected to try to divide seats among themselves prior to the election, potentially inflaming tensions within and among tribes. Emboldened by the government's long-time policy of appeasement, some of these tribes have been acting as though they are above the law. Other analysts contend that the Muslim Brotherhood's Islamic Action Front, Jordan's strongest and best-organized political party, is also well positioned to work the system to its advantage.

The expanded parliament includes four additional seats for the cities of Amman, Zarqa and Irbid. The seats were not added to adjust for population changes, but to address at least in part one of the key demands set forth by reformers. Reformers have long called for adjusting the apportionment of seats, which tend to be skewed toward the most tribal, rural and lightly populated areas - where support for the government is strong - and against densely populated urban areas where Islamists and Jordanians of Palestinian origin tend to live. The increase would also set aside 6 additional seats for women; raising the level of female representation in parliament to 9%, the average level in other Arab countries.

Public reaction to the new law was muted; Jordanians remain uninformed about electoral options and the inadequacy of the current system. Moreover, even among reformers there is no consensus on the best electoral system to adopt and therefore no clear message that might be translated into awareness campaigns to educate the electorate. While the 2005 National Agenda commission mandated by the King to set reform priorities recommended a mixed system that retained district representation but introduced proportional representation and party lists, the exercise itself was limited to a group of royally appointed members of the political elite and there was no effort to educate citizens about the Agenda's content. A poll conducted by the Jordan Center for Strategic Studies in 2007 revealed the gaps in the public's understanding. While those polled gave the most favorable rating to the 1989-1993 parliament chosen through a block voting system (in which each voter cast as many votes as there were seats in the district) and the least favorable ratings to the parliaments chosen through the one-man one-vote system, they were nonetheless unable to say clearly which would be the best electoral system for Jordan.

Identity politics also played a role in shaping public reaction to the new electoral law. The traditional East Bank elite, the political base of the monarchy, is concerned that the Palestinian issue might ultimately be resolved on Jordanian soil and therefore tries to prevent reforms that might enhance the political clout of Jordanian-Palestinians and of displaced Palestinians. Just before the law was unveiled, the National Committee for Retired Servicemen (a committee elected by retired army officers) issued a statement accusing the government of succumbing to U.S. and Israeli pressure to settle Palestinians in Jordan. The timing of the statement suggests that it was intended to warn reformers not to push too hard for electoral changes. But the identity politics issue should not be exaggerated. There is neither reliable census data showing the size of various communities within Jordan nor polling on where they stand on this, yet various factions continue to try to play the demographic card.

Taking into account concerns about the role of Jordanians of Palestinian origin and Islamic activism, the government still could have done more to reform the electoral law without challenging the status quo of a docile parliament with limited legislative and oversight powers. It might have made a small concession, for example accepting reformist demands to return to a mixed electoral system. Adding even 10 seats to the parliament to be selected by proportional representation, as suggested by prominent journalist Jamil Nimri, who is planning to run in the upcoming election, would have given political parties and tribal leaders alike an incentive to work collectively on policy platforms. This change would not have altered the demographic makeup of parliament but would have been a positive step toward supporting a democratic culture and matching the government's reform rhetoric with concrete action. [Dima Toukan Tabbaa is a Jordan-based consultant.] (Carnegie ARB 22.06)

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11.2 LEBANON: Tourism Boom Puts Lebanon Back In Spotlight

Two years ago, Lebanon was reeling from a crisis which brought gun battles onto the streets of Beirut, forced its airport to shut, and threatened to pitch the tiny Mediterranean country back into civil war.

Fast forward to 2010: Soaring economic growth, relative calm on its southern border with Israel and a truce between rival politicians have given crisis-ridden Lebanon a window of stability which it is translating into a tourist boom. Tourism Minister Fadi Aboud said he expects 2.2 million tourists to visit this year, up 25% from last year's record, when the sector contributed a quarter of GDP.

Already Arab Gulf tourists fill the capital's five-star hotels, their gas-guzzling Hummers choke Beirut's narrow streets and their Asian staff struggle to carry dozens of shopping bags emblazoned with the names of top international brands. Beaches brim with bikini-clad, tanned women and come night-time, clubs host Europe's top DJs who play to audiences of thousands, many of whom are flush with cash from jobs abroad and are happy to spend hundreds of dollars on food, drink and music. Some 40 % of this year's tourists are expected to be Arabs, another 40% Europeans and the rest from other parts of the world. "People are in love with this country," Aboud said in an interview last week. "I'm expecting a very, very good summer. Probably the best in our history."

Good growth

Prime Minister Sa'ad Al Hariri's government has also pledged to implement reforms, from privatization to slashing debt, and the IMF predicts another year of economic growth of 8%. Lebanon's resilience and ability to rebound from crises is what encourages many people to visit and spurs investors to pour millions of dollars in real estate projects, one of the country's biggest money-making sectors.

Just a week after feuding Lebanese leaders sealed a political deal in 2008 to end 18 months of conflict, restaurants had re-opened, hotel bookings soared and tourists replaced gunmen on the streets of Beirut. Now its skyline is dotted with cranes working to build multi-million dollar skyscrapers and five-star hotels. The influx of cash is also apparent in lavish schemes. For $250 per person, a crane will lift you and 21 others 50 meters above ground to enjoy dinner while taking in Beirut's sights. Just want to watch the sunset? That'll be $120.

Gordon Campbell Gray, who opened the luxury Le Gray hotel in Beirut's downtown Solidere district late last year, said his occupancy rate was well above 90%. "Since the day we opened, we've been absolutely packed," he told Reuters at an economic conference. When he decided four years ago to open the hotel "everyone thought I was crazy, but it's really spectacular. "It ended up being one of the busiest hotels in our portfolio," he said, adding he was building a beach resort south of Beirut and considering another project in the mountains. (GN 26.06)

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11.3 BAHRAIN: In for the long haul

Bahrain is continuing its drive to diversify its economy and ensure future prosperity, as well as develop resistance to external shocks. This program comes at a cost to the state budget. Though Bahrain managed to sail through the global recession, with its GDP increasing by 3.1% in 2009, last year did see a marked slowdown in the financial sector, which accounts for some 25% of the economy, and downshifting by the real estate sector, which continues to be sluggish.

As a means of providing economic stimulus in the short term and to lay the foundations for economic growth in the future, Bahrain is investing heavily in infrastructure. The 2010 state budget allocated the Ministry of Works with a record $570m for infrastructure development, with the ministry also being tasked with carrying out projects worth a further $343m on behalf of other state agencies. Of these funds, some $400m is being invested in road construction and maintenance, with additional funds spent on other transport and communications infrastructure.

This increased spending is one of the reasons that the country's public debt has jumped to its highest level in at least four years. According to data released by the central bank on June 20, total public debt rose to $5bn as of the end of the first quarter of the year, representing 24.2% of GDP, well up on the 17.4% at the close of 2009.

A recent report by the international credit rating agency Capital Intelligence predicted Bahrain's public debt could rise still further this year, before starting to fall back in 2011. Capital Intelligence reported that government debt could peak at 31% of GDP in 2010, though the agency said that this was not yet a cause for concern because the accumulated debt stock had built up from a low base. In its report, released on June 24, Capital Intelligence confirmed Bahrain's long-term foreign- and local-currency sovereign debt ratings of "A" and its short-term rating of "A1" with a stable outlook.

Though the Kingdom's GDP should expand by around 4% both this year and the next – supported by higher oil prices, a recovery in external demand and infrastructure spending – the report suggested that the government could do more to strengthen the country's economic foundations. "Bahrain's ratings continue to be constrained in particular by the lack of diversification of government revenue sources and a more limited shock-absorption capacity compared to more highly rated sovereigns," the report said. "The budget is sensitive to volatile oil prices, and the growth in public debt has added to other constraints on fiscal flexibility, which include a weak non-oil revenue base and modest fiscal reserves."

According to Sheikh Mohammed bin Essa Al Khalifa, chief executive of the Bahrain Economic Development Board, the state agency tasked with planning and overseeing economic strategy in the Kingdom and promoting an attractive investment climate, a steady and solid approach is needed to overcome these shortcomings and build for the future. "Bahrain's philosophy is we've always played the long game," he said in an interview with business magazine Forbes in late June. "We are in it for the long run and have invested in the things that matter, a well-trained local workforce, investing in education, in training, in productivity enhancement. So we'd rather grow at 5% to 6% for 20 years than 10% or 15% for three or four."

Though seeking to be a part of the global economy, Bahrain is also wary of the impact new downturns in overseas markets could have domestically. Most recently these concerns have been focused around the Mediterranean, where Greece has been on the brink of default while Spain and Portugal are also extremely weakened.

While Bahrain may not have a high level of direct trade with the three troubled members of the EU's Mediterranean basin, their woes could drag down the eurozone, slowing recovery in Europe or even returning it to recession. Such a situation would have an impact on Bahrain by undermining global business confidence and clogging financial markets, one of the Kingdom's main economic arteries. However, having seen off the storms of 2008 and 2009, Bahrain should be able to ride out any waves that ripple out from the Mediterranean as well, though a downturn in Europe could again dampen growth expectations in the Gulf. (OBG 05.07)

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11.4 KUWAIT: Feeling the heat

The Oxford Business Group said that for a country that holds around 8% of global oil reserves, it may be difficult to believe that Kuwait faces domestic power concerns. Kuwaitis have been experiencing record temperatures in June, prompting power outages in a number of residential areas and bringing to light concerns over the country's pressing need for increased power generation capacity. The nation has one of the world's highest per capita consumption rates of electricity, and during the summer months, when temperatures hover around 50°C, it is estimated that around 70% of energy is consumed by air conditioning units.

At present output levels, Kuwait is capable of producing 11,200 MW of electricity. Yet on June 13, with soaring temperatures in the low 50s, consumption reached a record 10,823 MW (98.5% of grid capacity). Analysts forecast demand to reach around 11,000 MW during the coming few months, up 13.4% from last year's peak summer demand of 9961 MW. Considering that most countries strive to operate with a spare capacity of around 15%, authorities in Kuwait have been setting up emergency meetings and working out strategies to ensure summer outages do not become a regular occurrence.

Kuwait has not built new plants since 1998 and over that period has seen an annual average growth rate in power demand of 8%. While new power plants are in the planning and construction stages, no new plants are set to come on-line until next summer at the earliest. In September 2009 the government signed a $2.7bn deal with General Electric and Hyundai Heavy Industries of South Korea to build a 2000-MW gas-fired plant at Subbiya in the north of the country. The plant is expected to be operational in June 2011 and produce 1320 MW, with an additional 680 MW to be produced by 2012.

In the meantime, it is believed that deteriorating cabling has caused up to 80% of the recent outages experienced, prompting calls for immediate efforts on maintenance and repairs. Walid K Al Hashash, the chairman of Aref Energy, told OBG, "While the government is spending billions building new power plants, for far less money and with more immediate results, they should also invest in refurbishing and improving the efficiency and output of existing ones."

Existing power and desalination plants are owned and operated by the Ministry of Electricity and Water, and many believe improvements in quality and delivery could be made through privatization. Faisal Hamad Al Ayyar, the vice-chairman of Kuwait Projects Company (KIPCO), told OBG, "Evidence shows that when a sector is opened to market competition, customer service and product delivery improve dramatically. However, unlike other economies where the primary role of privatization is to bring investment funding, what Kuwait requires is private sector expertise."

To this end, in May parliament passed a bill to allow private sector involvement in the operation of the country's power plants. The legislation allows for the establishment of shareholding companies to build new power and water desalination plants in the country, the first time private entities will have a stake in the local power sector. Under the terms of the law, up to 50% of shares in the company will be sold to nationals in an initial public offering, while the government and state institutions will hold up to 24% of newly formed companies. The remaining 26% will be sold to publicly listed Kuwaiti companies or foreign companies approved by the government.

While it is believed that investments in new power facilities and an engagement with the private sector will result in additional supply down the road, equally important from many observers' view is the need to better manage electricity demand and discourage excessive consumption. The residential sector accounts for around 60% of the total current load, with the government heavily subsidizing electricity and charging households a mere $0.07 per kilowatt hour, about half the average price in the US. In addition, many households do not pay their bills and are rarely penalized for not doing so. According to Dr Saad Akashah, an advisor the Arab Fund for Economic and Social Development, "There is huge wastage and overuse of electricity in this country, and it is harming future generations. So long as electricity is essentially free, people will not concern themselves with how much they use. We do not need to get rid of subsidies entirely, but should introduce some tiered pricing that charges people an affordable rate while at the same time making them think before they consume."

The financial implications of such high energy usage are also significant, not only for industries concerned over a steady supply of energy, but also for the government due to the high fuel bill and large capital investments. According to the Kuwait Institute for Scientific Research, if current demand trends persist, Kuwait will need to add another 14,000 MW in generating capacity by 2025, bringing overall capacity to 25,000 MW at a cost of KD7bn ($24.1bn). The accompanying fuel bill to meet this extra capacity would reach approximately KD3.8bn ($13.1bn), at current prices.

As a stop-gap measure, the government has signed deals with Shell and Vitol in 2009 and April 2010 respectively for the import of approximately 500,000 cu ft per day of liquefied natural gas to help fuel its power stations. In addition to the environmental benefits of being a cleaner-burning alternative, importing gas is considered less costly than using export-revenue-earning oil-derived fuels to generate electricity.

In the longer term, Kuwait is hoping to boost its natural gas production and has targeted levels of 5bn cu ft per year, up from current level of 1.2bn cu ft of non-associated gas from its northern gas fields. To achieve this, the government has enrolled the help of Royal Dutch Shell, signing a deal estimated at $700m in February that will entail the energy giant providing expertise and technology to help tap the complex reservoirs. (OBG 05.07)

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11.5 UAE: Vehicle Sales Represent Good Recovery from 2009

Research and Markets' (http://www.researchandmarkets.com) "United Arab Emirates Autos Report Q3 2010" report says the UAE's automotive market is showing strong signs of recovery in 2010, after a substantial dip in sales in 2009. A previously burgeoning market was trimmed by the global economic crisis, which had a particularly strong impact on Dubai, where real estate values fell and major government-backed corporations were unable to meet their debt obligations.

Vehicle sales fell to 325,274 units in 2009 from 255,177 the previous year as financing was tightened and the economy tipped into recession. However, a rebound in the oil price to a high of around $75 - 80 per barrel has helped haul the economy back into growth, with BMI forecasting a 2.8% expansion in GDP. Nonetheless, credit remains somewhat tight, and caution is the watchword for many investors. BMI therefore expects vehicle sales to reach 352,913 units in 2010, slightly below 2008 levels, but representing a good recovery from 2009.

Automotive finance in the UAE is easing after the financial crisis, but is not flowing as freely as the positive economic outlook and banking results might suggest. While the Emirates Interbank Offered Rate (EIBOR) has remained low for over a year, at around or below 2%, actual market lending has generally been at a much higher rate, as banks have looked to shore up their capital during and after the downturn. Many have also tightened their lending terms to avoid non-performing loans. The subsequent tightness of lending may mean the auto markets recovery is not as strong as it might have been. This is despite an array of moves by the central bank and government to boost liquidity and encourage lending. However, Abu Dhabi has ridden out the global economic crisis significantly more strongly than Dubai, largely owing to its lower levels of leverage and the fact that the emirate has the vast majority of the UAE's oil resources.

The UAE market as a whole sees increasing competition. Toyota Motor has traditionally been a market leader in the Middle East, even in the more affluent Gulf countries, where it makes around 6.5% of its global sales. However, the firm has apparently been losing its competitive edge in recent years, with rivals gaining on its world-leading market position. Arabian Automobiles Company, which is the exclusive dealer for Nissan Motor, Infiniti and Renault, sold 25,204 units, up 18% year-on-year (y-o-y), which generated record turnover of $68.06m. By 2010, the distributor is aiming to claim a 25% share of the UAE vehicle market, which would put its annual sales at over 80,000 units per annum.

In the medium term, the UAE may see the launch of Taiwanese brand Luxgen, which debuted at the Dubai Motor Show in December 2009. The firm is expected to seek to place itself in the market between cheaper Chinese exporters and the bigger Japanese names, leveraging on its high-tech equipment developed by Taiwanese electronics firm GTC. (R&M 05.07)

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11.6 UAE: Abu Dhabi's Higher Education Revamp

Higher education in Abu Dhabi, which is seen as integral to the success of the emirate's future economy, was given a boost recently when the Abu Dhabi Education Council (ADEC) unveiled plans to overhaul the sector. In essence the education council hopes to enhance the current environment for local universities and reduce the number of students dropping out. By the same token, it wants to improve the current number of school-leavers, quality and structure of courses, hiring and retention levels of teachers, and funding for research. Under the new strategy these issues will be top priorities. Other ideas include developing US-style community colleges, restructuring and improving special education, and producing a program to enhance the quality of university staff.

ADEC also plans to set up a framework for inspecting universities, which should be in action by next year. Moreover, regulations for higher educational institutions are set to get tougher. These are expected to include fresh criteria for the licensing of new universities. Another aspect is improving community access to knowledge. With this in mind, there will be a number of public libraries established by 2014. The figures and details behind the library initiative have yet to be decided, but committees tasked with developing an implementation plan will be set up over the summer.

Perhaps the most important reform, however, comes in the shape of large-scale investment in research and development. Under the new plan, $1.3bn will be invested into research and development by 2018. This means government expenditure on research will exceed 0.75% of the GDP in eight years. Both federal and private universities will be invited to submit proposals to win grants for research funding.

Four key sectors, which are integral to the emirate's economic strategy, have been prioritized: health, aerospace, semiconductors and renewable energy.

Given Abu Dhabi's foray into knowledge-based diversification in recent years – which includes its Masdar Initiative, a multibillion-dollar investment in alternative energy established in 2006 – the education strategy unveiled fits with its economic ambitions. The capital has set itself the goal of becoming a paragon for renewable energy and clean technologies, among other high-value industries. Of course, in order to do so it must have the graduates to meet these requirements. The same, naturally, goes for the government's investments in other technology-related areas.

For instance, Advanced Technology Investment Company (ATIC), which was set up in 2008 and is wholly owned by the government, is focused on making significant investments in the advanced technology sector. Partnering with US-based Advanced Micro Devices, the world's second-largest chipmaker, ATIC established Globalfoundries, which is a full-service semiconductor foundry. With an international presence already emerging, the organization is set to be a key part of long-term plans for the creation of an advanced technology cluster in Abu Dhabi.

At the moment, however, there is a great need to increase the number of Emirati graduates in high-tech fields to fill future positions. Home-grown institutions such as UAE University, Khalifa University of Science, Technology and Research, the Institute of Applied Technology (IAT) and the Masdar Institute of Science and Technology are already stepping up to the task. ATIC's semiconductor project alone is likely to require a much higher number of local graduates. It is for this reason that many universities are focusing their courses on engineering and technology.

"We are developing a Master's program in microelectronics and there will now be a large focus on low-power electronic systems. We believe that what ATIC is doing is very important and we, as a graduate-level-focused university, will be able to contribute to the growth of that sector," Marwan Khraisheh, the dean of engineering at the Masdar Institute of Science and Technology, told local press. While the new higher education plan lays out specific policy reforms, the general direction of Abu Dhabi's economic drive toward knowledge-based industries is clear. Increased investment, international best practices and a strong focus on research and development within higher education will go a long way in ensuring long-term economic objectives are achieved. (OBG29.06)

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11.7 OMAN: Firm Foundations

Oman's growing industrial sector is set to benefit from a number of infrastructure projects designed to enhance capacity in the Sultanate. Significant projects are under way to improve logistics, power and water capacity, particularly in the industrial zone of Sohar, which has been targeted for growth by the government. Moreover, the Oxford Business Group adds that Oman is pioneering new technology to improve the utilization and conservation of existing resources.

Recent months have seen the government invite tenders for pre-qualification for the proposed Oman National Railway, a multibillion-dollar project designed to create a freight and passenger railway linking the Sultanate's main urban and industrial centers. Phase one of the project will see the construction of a 280-km line that will link the industrial zone of Sohar with the capital Muscat. According to the Oman Observer, a total of 31 firms submitted pre-qualification bids to become project manager of the National Railway by the June 14 deadline, including Mott MacDonald, Arup Gulf and Bechtel. The contract is expected to be awarded in the first quarter of 2011.

The strong international interest generated by the National Railway project demonstrates the confident nature in which the Omani government has proceeded with its infrastructure development plans thus far. Mid-June, for example, also witnessed the opening of the region's first inland clearance depot (ICD) at Muscat Container Depot. The ICD will enable the handling of containers destined for the Oman International Container Terminal at a point closer to Muscat, effectively creating an extended gateway for the Port of Sohar, including Customs clearance. The ICD will improve logistical links between Muscat and the industrial zone at Sohar.

Further improvements to the logistical infrastructure around Sohar are also in the offing, with the announcement in the last week of June that Strabag Oman had won the contract to construct the airfield for Sohar Airport, at a cost of $71.39m. Strabag beat another strong international showing of eight bidders to win the contract, which will add to its successful bid for the $97m first phase of the airport, won last year. When it becomes operational in 2013 as a domestic airport, Sohar Airport is expected to support the growth of cargo, courier and passenger traffic to the country's northern region.

Beyond transport and logistics, industry in Oman is set to benefit from additional power and water desalination capacity thanks to a new independent power producer contract awarded at the end of May to a consortium led by GDF Suez. The $1.7bn contract will involve the construction of two greenfield gas-fired plants – Barka 3 and Sohar 2 – with a combined capacity of 1500 MW. According to media reports, the plants will also feature a combined water desalination capacity of 268,000 cu meters per day. With the Oman Power and Water Procurement Company predicting rising demand for desalinated water of 13% a year to 320.6m cu meters a year by 2016 and power demand also growing at the robust rate of 11% a year, the new plants will be vital to maintaining stable economic expansion in the Sultanate.

Finally, the Sultanate has been leading the way again recently in the use of experimental technology to improve the utilization of existing water resources. Oman's southern region of Dhofar experiences a damp season with dense fog caused by the Indian Ocean monsoon, known as the "Khareef". This unique phenomenon is a major tourist attraction for the second-largest city, Salalah, but recently officials in the Environment and Climate Affairs Ministry have formed a joint project with Mitsubishi Corporation to become the first in the region to use fog-harvesting technology to capture water and create an artificial pond.

The experimental project eventually hopes to capture 300 cu meters of water during the Khareef season, which runs from late June until September, which can be stored and used later. Whilst a modest contribution, fog-harvesting technology may one day be a low-energy method of supplementing Oman's agricultural water resources, thus preserving supplies of potable water. (OBG 01.07)

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11.8 LIBYA: Defense and Security Report for 2010's Third Quarter

Research and Markets' (http://www.researchandmarkets.com) "Libya Defense & Security Report Q3 2010" says that political risks will continue to dampen business confidence in Libya. These include ongoing divisions between reformers and conservatives within the ruling elite; uncertainty over Colonel Qadhafi's succession; Qadhafi's political whims and the unpredictable legal environment; threats to social stability from youth unemployment and social unrest; and the threat of domestic terrorism. The rift within the regime appears to run between a largely business-friendly, reform-oriented camp led by Saif Qadhafi on one side, and the old guard of conservative revolutionaries and rent-seekers on the other.

The country's overriding foreign policy objectives have been to end its international isolation, foster closer economic ties to the West and fashion a role for itself as an African peace-broker. To this end it has renounced its nuclear program and terrorism links, and compensated victims of the Lockerbie and French airliner bombings. However, such conciliatory moves are contrasted with other erratic and confrontational foreign policy decisions, such as the current diplomatic row with Switzerland. Although this dispute has lessened since March 27, when travel restrictions between Libya and the EU were mutually dropped, tensions continue. Libya's foreign minister, Mussa Kussa, has claimed that international arbitration would be required to resolve the dispute.

Such incidents make it difficult for Libya to shake off its rogue image. In addition, the vulnerability of foreign business to political whims and the unpredictable legal environment continue to overshadow attempts to make the business environment more hospitable to foreign capital.

Much of Libya's defense equipment dates back to the Soviet era and is in urgent need of upgrading and replacement. Several arms companies are undertaking feasibility studies into the possibility of developing relationships with the regime. The best example is the UK firm BAE Systems.

Russia has traditionally been the major arms supplier to Libya, going back to the Soviet era. In February 2010, Libya signed an arms deal to with Russia worth $1.8bn, which was announced by Russian Prime Minister Vladimir Putin. The contract is believed to include 20 fighter planes, at least two S-300 air defense systems, several dozen T-90C tanks and other arms.

The growth potential of Libya's defense industry is high. Libya will update and replace its obsolete Soviet equipment and arms import figures are expected to rise substantially over the next few years. Libya's economic outlook is determined primarily by the energy industry. The economy is expected to return healthy real GDP growth over the next five years. We are forecasting robust real GDP growth of 3.8% in 2010 and 4.2% in 2011. However, our positive outlook is tempered by concerns that current patterns of investment spending are not having a major impact on productive capacity, much of the investment in the non-oil sector is flowing into the real estate sector and adding little to Libya's long-term productivity.

In February, Libya's main legislative body approved a law setting up a free trade zone on the country's Mediterranean coast, with its own courts, stock exchange and a 10-year tax holiday for foreign investors. The plan is aimed at attracting investment outside the country's oil and gas sector. Real economic diversification such as this requires political will, which may increase as Libyan leader Muammar Qadhafi's son, Saif Qadhafi, takes on an increasingly prominent role in the government, and looks most likely to be the next leader when his father steps down. (R&M 06.07)

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11.9 ALGERIA: Making Moves

Algeria is looking to step up its campaign to strengthen the country's transport infrastructure, unveiling a multibillion-euro program of investments aimed at broadening the base of the economy and reducing dependency on hydrocarbons.

On May 24 the Algerian cabinet, during a meeting chaired by President Abdelaziz Bouteflika, approved a five-year, €230.8bn investment plan. Some €104.9bn of this will be used to complete projects already under way, while the balance would be used to finance new schemes. A statement issued after the cabinet meeting said that the investment program, set to run from 2010 to 2014, was to be the driving force behind government efforts to diversify the economy.

Central to the new program – and to the longer-term development of the economy as a whole – is a continuing upgrade of existing transport infrastructure alongside a raft of new transport projects. A total of €30.6bn has been allocated to the various segments of the transport sector. The lion's share will go to the rail sector, which the government considers vital to broadening the base of the Algerian economy and linking its various industrial production hubs with the expanding land and sea transport centers.

Under the development program, 6500 km of new track will be laid and a further 500 km of the existing network will be upgraded. Urban transport will also receive a major boost with the construction of light rail or tram systems in 14 cities.

Though the list of projects and investments is impressive, some of the funding has been rolled over from previous development programs. Not all of the projects are new and a number have been carried over from the prior five-year plan, which concluded in 2009.

Even before the new investment program was unveiled, the Transport Ministry awarded a joint contract to Spanish firm Fomento de Construcciones y Contratas (FCC) and Algerian firm ETRHB Haddad for the construction of a 185-km-long railway line linking Algiers to Relizane, Tiaret and Tissemsilt in the north-west. The work, which has a price tag of €1bn, involves the construction of a single, high-performance track that allows for a maximum speed of 160 km/hr.

The FCC contract is just the most recent in a series of tenders awarded in recent months, with Canadian engineering firm Dessau winning a €30.6m bid to design an electrified rail project that will connect Algiers to Constantine in north-eastern Algeria. The project involves the preliminary and final design for the construction of a 170-km-long double track to be used by both passenger and freight trains. The Dessau contract is just a small part of a €1.8bn project to be carried out through the cooperation of China Civil Engineering Construction Corporation and Ozgun Construction of Turkey.

President Bouteflika said the government would assess the country's financial situation at the end of each year in order to determine the viability of the scheduled projects. He emphasized that Algeria would not borrow overseas funds to complete the program.

With energy prices creeping higher and predictions for solid economic expansion on the horizon, Algeria should not be hard-pressed to find funds for its transport investment program. In late April, the IMF revised its forecast for Algeria's economy, raising its estimates for GDP growth from 3.9% for both this year and 2011 to 4.6% and 4.1%, respectively. The IMF also predicted Algeria would enjoy trade surpluses of 2.5% of GDP in 2010 and 3.4% of GDP in 2011.

A strengthened transport backbone is essential as Algeria seeks to promote increased investment in its economy and bolster its agriculture, manufacturing and tourism sectors. By prioritizing existing projects and fast-tracking new rail schemes, Algeria is well positioned to experience strong economic growth in the coming decade. (OBG 01.07)

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11.10 CYPRUS: Fitch Affirms Cyprus at 'AA-'; Outlook Stable Ratings

On 24 June, Fitch Ratings (http://www.fitchratings.com) affirmed the Republic of Cyprus's Long-term foreign currency Issuer Default rating (IDR) at 'AA-' and the Short-term foreign currency IDR at 'F1+'. The agency also affirmed the Long-term local currency IDR at 'AA-' and the Country Ceiling at 'AAA'. The Outlooks on the Long-term IDRs are Stable.

The Cypriot economy has withstood the recession relatively well and its public finances, though weakened, remain in reasonable shape. GDP fell 1.7% last year - amongst the smallest declines in the 'AA' category or in the EU - and is expected to be broadly flat this year. The fiscal deficit in 2009 widened to 6.1% of GDP, better than comparable EU countries such as Portugal and Spain, and gross debt remains below 60% of GDP. Its net creditor position also remains intact.

Nevertheless, there are weaknesses that could pose a longer-term threat to Cyprus's creditworthiness. In particular the banking sector - which is large in relation to GDP, constraining the government's ability to support it in a crisis - is exposed to the difficulties of Greece, which has been downgraded several times in the past year and remains on Negative Outlook. Household indebtedness is also amongst the highest in the EU after strong credit growth in 2007 and 2008. The banks are also exposed to construction and real estate risks and non-performing loans are rising. In addition, the banks hold large foreign currency (non-euro) deposits, mainly from Russia and the CIS. However, the adverse impact of a sudden withdrawal is mitigated by the 70% liquid assets requirement for Cypriot banks.

These risks are also offset by the traditional commercial retail banking model in Cyprus and conservative supervision by the central bank. Lending is mainly funded by domestic deposits with little reliance on wholesale funds. Fitch also takes some reassurance from recent stress tests conducted by its Financial Institutions group and evidence that Cypriot banks have attracted increased deposits from their Greek retail network.

Another weakness is Cyprus's 'twin' fiscal and current account deficits which would give cause for concern if there were further deterioration. However, the current account deficit narrowed sharply to 8.1% of GDP last year and both deficits seem set to shrink slightly this year, albeit remaining high. Previous episodes of fiscal consolidation lend credibility to current government measures and give comfort that the budget deficit will be reduced as planned. The slow-moving political culture can also claim a significant step forward in pension reform, which if implemented with determination can help diminish the long-term impact of ageing population on public debt. Nevertheless, there are downside risks to the fiscal outlook due to the uncertain strength of recovery and the high volatility of government revenue. The large trade and current account deficits meanwhile raise concerns about Cyprus's long-term competitiveness. (Fitch 24.06)

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11.11 BULGARIA: Pharmaceutical Market Has Poor Perspectives

A stagnating private sector and inadequate government policies provide for poor perspectives of Bulgaria's pharmaceutical market, according to a report of Business Monitor International. “BMI considers Bulgaria to be among the less attractive pharmaceutical markets in Emerging Europe, a view largely enforced by poor market dynamics and prolonged economic difficulties. In BMI's Pharmaceuticals & Healthcare Business Environment Ratings for Q310, Bulgaria ranks 16th of the 20 markets surveyed,“ the report states.

BMI points out that even though it dedicates the third highest proportion of GDP to pharmaceuticals in the region, Bulgaria's per capita spending remains below average, limiting opportunities for manufacturers of higher-priced products, and that Bulgaria's growth profile is also fairly limited in scope over the next five years. “As one of the last economies in emerging Europe to enter recession, Bulgaria will also be one of the last to exit the downturn, with a further year of decline on the way in 2010. Even though we expect a return to growth in 2011, we stress that private sector deleveraging, limited scope for fiscal expansion and weaker external demand will prevent economic growth returning to the 6% range seen at the peak of the previous cycle,” reads the BMI report.

It further points out the fact that Bulgaria's retail sales fell by 12.9% year-on-year in January 2010. Worsened consumer spending factors are seen as combined with a “persistent effort by the government to reduce prices and its poor contribution to medicine costs compared with most EU countries.”

The BMI actually raises alarm with respect to Bulgarian government's policies on medicines. “Amendments to reimbursement levels for drugs included on the country's Positive List see the removal of lower limits for groups of medicines that treat serious diseases. The re-evaluation of reimbursement eligibility and copayment requirements will be increased from twice per annum to six times. BMI considers the proposed changes as a step away from improving patients' access to innovative treatments. Bulgaria currently has the lowest per-capita government spending on pharmaceuticals in the EU, and the highest proportion of out-of-pocket spending at around 56%,” declares the report of the market analysis agency.

The BMI sees the accumulation of debt in the National Health Insurance Fund (NHIF) as an additional problem in Bulgaria. In May 2010 it was revealed that the NHIF is required to pay more than BGN 60 M to pharmacies in Bulgaria for costs incurred over the previous two months. While BMI considers this fairly minimal at present, any escalation of these debts could cause concern for drugmakers, it says. (SMN 01.07)

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- Israeli Shekel conversions done at a rate of NIS 3.80 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.60 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.40
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.67 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 82 = $1.00

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