• AVG Technologies to Acquire DroidSecurity
• US Quiznos Chain Signs Deal for Kuwait
• Egyptian 2010 Tourist Arrivals Reaches 14 Million by October
• Greek Parliament Ratifies 2011 Budget
• Israel Ranks 15th in Human Development Index
• RedHill Biopharma Raises over $10 Million – 3 Times More Than Originally Planned
• UAE: Fastest Growing Market for Coffee in the World
  

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 AVG Technologies to Acquire DroidSecurity
2.2 SodaStream Announces Pricing of Initial Public Offering
2.3 Javier Simorra Opens First Store in Israel
2.4 Aldec-Israel Established, Appoints AST and Sital Technologies
2.5 San Fernando Valley's Largest Law Firm Opens Office in Tel Aviv, Israel

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 US Quiznos Chain Signs Deal for Kuwait
3.2 Boeing & Saudi Arabian Airlines Announce Order for 12 Boeing 777-300ERs
3.3 Saudi Picks Varian to Develop Radiotherapy Unit
3.4 Egypt IT Report For 2010's Fourth Quarter
3.5 One Billion Dollars to Stay With Local Purchases in Turkish Army
3.6 Henry Schein Enters Fast-Growing Dental Market in Turkey
3.7 Energy Recovery Curbs Energy Usage Cyprus for Fresh & Affordable Drinking Water

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Ten Firms at Government's Ashelim PV Solar Presentation
4.2 Nevada Geothermal Power & Ormat Nevada to Develop the Crumo Geyser Geothermal Area
4.3 Haifa Mayor & Environmentalists Win Train Battle

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Moody's Assigns Ba2 Rating to Jordan Bond
5.2 Jordan Sees 2011 Deficit Fall to 5% of GDP
5.3 Jordanian Oil Market to Be Liberalized Within 5 Years
5.4 Jordan Exempts Exports from Income Tax
5.5 Arabian Gulf's Non-Oil GDP to Surge
5.6 IMF & Kuwait Establish an IMF-Middle East Center for Economics and Finance
5.7 Kuwait September CPI Hits 18 Month High on Food & Housing
5.8 UAE Annual Inflation Accelerates to 1.15% in September 2010
5.9 UAE Announces New Visa Rules For Canadians
5.10 Saudi Annual Inflation Drops to 5.8% in October
5.11 Egyptian 2010 Tourist Arrivals Reaches 14 Million by October
5.12 Transparency International Alleges Corruption Endemic in Algeria
5.13 Morocco Mining Sector Sees Mergers & Privatization

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkish October Inflation Slows to 8.6 %
6.2 Cyprus to Step Up Fiscal Austerity Measures With Three-Year Plan
6.3 Cyprus Inflation Moderates in October
6.4 Moody's Does Not See Greek Default
6.5 Greek Parliament Ratifies 2011 Budget
6.6 Tougher To Do Business in Greece
6.7 Bulgaria Budget Gap Stays Flat At 2.1%
6.8 Bulgaria Solid at 51st Spot In Global 'Doing Business' Index

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel Ranks 15th in Human Development Index
7.2 US Army Vets Surprised to Find Israel a 'Beautiful Country'
7.3 Eid Al-Adha - Feast of the Sacrifice to Begin on 16 November

*REGIONAL:

7.4 Dubai 2010 Population Estimated At 1.87 Million But Received with Skepticism
7.5 Ruler of Ras Al Khaimah Dies
7.6 RSF Study Shows North African Press Freedom Deteriorating
7.7 'Faith in Islam' to Top Turkish School Reform
7.8 Alevis Demand End to Turkish Mandatory Religious Classes
7.9 Cyprus' Population Crosses 800,000 Mark
7.10 Papandreou Rules Out Early Elections In Greece & Stays In Power To Continue Reforms

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Compugen Licenses Novel Oncology Target to Seattle Genetics
8.2 Teva Acquires Theramex, Merck KGaA's European Based Women's Health Business
8.3 BioControl Has IDE Approval for INOVATE-HF Study of CardioFit System for Heart Failure
8.4 Tikcro Announces Results of BioCancell's US FDA Phase I/IIa Pancreatic Cancer Trial
8.5 Cheetah's NICOM Noninvasive Hemodynamic Monitoring Effective to ID Acute Heart Failure
8.6 RedHill Biopharma Raises over $10 Million – 3 Times More Than Originally Planned

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Answers.com Hits 10 Millionth Answer Milestone
9.2 KeyOn Selects Alvarion as 4G Wireless Last Mile Equipment Vendor for $10.2 Million Stimulus Award
9.3 MSI Fuzion Motherboards Gain Momentum and Garner Awards With PC Gaming Community
9.4 Chicago Board Options Exchange Selects Correlix RaceTeam to Provide Latency Transparency
9.5 Mocambique Cellular Chooses Celtro for 2G & 3G Unified Backhauling

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli Housing Demand Falls
10.2 Poverty Report Finds 123,500 Join Israel's Poor

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11: IN DEPTH

11.1 ISRAEL: Computer Hardware Market Projected at $2.2 Billion in 2010
11.2 ISRAEL: NanoIsrael 2010: Israel Becoming Leading Nano–Technology Nation
11.3 LEBANON: Balancing Act On Debt
11.4 BAHRAIN: Water Report for Fourth Quarter of 2010
11.5 UAE: Fastest Growing Market for Coffee in the World
11.6 SAUDI ARABIA: Seeking Alternatives
11.7 EGYPT: Enviable Growth
11.8 EGYPT: Food and Drink Report Q4 2010
11.9 LIBYA: 2010 Article IV Consultation, Preliminary Conclusions of the Mission
11.10 PAKISTAN: Defense and Security Report Q4 2010
11.11 PAKISTAN: Power Report Q4 2010 - Gas is the Dominant Fuel in Pakistan
11.12 TURKEY: Business as Usual with Iran
11.13 BULGARIA: Turning a Corner

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 New Program To Revolutionize Israeli Roads

Some $7.5 billion is to be invested over the next five years in the construction of tunnels, intersections, the paving of new roads and the expansion of existing roads, as part of a National Road Company program. Seventy-five intersections, bridges and tunnels will be constructed as part of the program between 2011 and 2015. About 250 kilometers will be added to existing roads and 70 km of new roads will be paved. The investment amount will be added to the $3 billion allocated to the program earlier this year to revamp roads in the Negev and the Galilee regions of Israel. The new, expanded plan was revealed during a National Roads Company conference, in which hundreds of architects and engineers participated. The program, which is still awaiting approval from the Transportation and Finance Ministries, will raise the speed limit on many three-lane highways to 110 (68 miles) an hour. The program will focus on adding lanes to major highways and placing safety dividers between the lanes. The highway upgrades are expected to relieve traffic jams and reduce the number of fatal head-on collisions, officials said. (JP 09.11)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 AVG Technologies to Acquire DroidSecurity

AVG Technologies, the world's leading provider of free Consumer security solutions, announced the acquisition of Tel Aviv-based DroidSecurity, a pioneer in cloud-based mobile security, from its founders and investors. DroidSecurity is the only company of its scale exclusively focused on protecting smartphones, tablets and other devices running on the Google's Android operating system. The acquisition enables AVG's Mobile Solutions Team (MST) to extend its security offerings for its more than 110 million consumers and small businesses in 170 countries to include the rapidly expanding mobile security arena. In October 2010, DroidSecurity's mobile security app, antivirus free, surpassed the 4.5 million download milestone, making it one the most popular security applications on the Android platform. This milestone reflects important trends taking place in the mobile security arena, including the security consciousness of Android users, the explosive growth of the Android marketplace, and an exceptionally strong user demand for mobile security. Android smartphone devices and applications continue to proliferate at an astonishing pace, making it the world's fastest-growing mobile platform. This strong momentum for Android is being witnessed directly by DroidSecurity and is evidenced in the company's user stats. Of the 100,000+ apps currently available on the Android market, DroidSecurity antivirus free consistently ranks in the top 50 of most popular apps. According to company estimates, over 4.5 million Android mobile devices have downloaded DroidSecurity, making DroidSecurity among the largest and fastest growing providers of anti-virus apps for the Android market and among the fastest growing apps today. Upon completion of the transaction, DroidSecurity will become a wholly-owned subsidiary of AVG and will continue to be headquartered in Tel Aviv, Israel.

Tel Aviv's DroidSecurity (http://www.droidsecurity.com), makers of the first full-featured Android anti-malware application DroidSecurity mobile Security Suite, was founded in 2009. DroidSecurity Internet Security Suite is the first Android application to leverage the Dalvik Virtual Machine technology. This powerful application provides a wide-range of protection against viruses/malware and SMS/text spam, plus enables users to track lost smartphones and remotely wipe data for enhanced security and control. (AVG 09.11)

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2.2 SodaStream Announces Pricing of Initial Public Offering

SodaStream International announced the pricing of its initial public offering of 5,447,368 ordinary shares at a price to the public of $20.00 per share. J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. are acting as the joint bookrunning managers for the offering. In addition, certain shareholders of the Company have granted the underwriters a 30-day option to purchase an additional 817,105 ordinary shares solely to cover overallotments. SodaStream's ordinary shares began trading on the NASDAQ Global Select Market under the ticker symbol "SODA" on 3November 2010. Airport City's SodaStream (http://www.sodastream.com) manufactures home beverage carbonation systems, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water. Soda makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks and sparkling water. Their products are environmentally friendly, cost effective, promote health and wellness and are customizable and fun to use. In addition, their products offer convenience by eliminating the need to carry bottles home from the supermarket, to store bottles at home or to regularly dispose of empty bottles. (SodaStream 02.11)

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2.3 Javier Simorra Opens First Store in Israel

Spanish fashion chain Javier Simorra opened its first store in Israel recently, at Tel Aviv's Ramat Aviv Mall. Some $410,000 was invested in the flagship store, which measures 60 square meters (645 square feet) in size and was designed according to the brand's global concept. The chain, which is named after Spanish fashion designer Javier Simorra and specializes in luxury clothing for women, generates some €100 million (about $140 million) a year and is active in 13 countries. The chain's franchiser in Israel plans to open 10 stores in luxury areas across the country. (Ynet 07.11)

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2.4 Aldec-Israel Established, Appoints AST and Sital Technologies

Henderson, Nevada's Aldec, a leader in mixed RTL simulation and hardware assisted verification, announced the opening of Aldec-Israel. Aldec appointed AST for distribution of hardware verification products and Sital Technologies for distribution of software verification products. Aldec is now positioned to better serve its growing design and verification engineering customers and partner network in Israel. The office will be focused on sales, marketing and technical support for Aldec's products in Israel. AST will distribute Aldec h/w based products (HES (h/w assisted verification), DO-254 CTS, Actel prototyping boards). Sital Technologies will distribute Aldec s/w based verification products (Active-HDL, ALINT and Riviera-PRO). (Aldec 08.11)

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2.5 San Fernando Valley's Largest Law Firm Opens Office in Tel Aviv, Israel

Wasserman, Comden, Casselman & Esensten (WCC&E), a full service law firm headquartered in Los Angeles, California, announces the opening of an office in Tel Aviv, Israel. WCC&E's new office has been established to meet the needs of existing U.S.-based clients expanding their business presence into Israel and Europe, as well as to provide a broader range of legal services to Israeli clients seeking to do business or purchase real estate in the United States. Among its many activities in Israel, WCC&E is working closely with the Israeli-America Chamber of Commerce to form the Chamber's real estate division which will serve as a platform to gather and disseminate information with regard to taxation, regulation and other key issues relevant to Israel-based investors. Wasserman, Comden, Casselman & Esensten, LLP is a full service law firm with offices in Southern California, and international locations in China and Israel. The firm represents a sophisticated array of clients in a myriad of industries in matters related to business litigation, consumer class action litigation, real estate, intellectual property, labor, employment and international business. (WCC&E 28.10)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 US Quiznos Chain Signs Deal for Kuwait

Denver-based Quiznos, the American sandwich chain, signed a master franchise agreement to open 15 outlets in Kuwait. The company signed the agreement with FoodCo Inc, a firm established with an unnamed local partner specifically to introduce US brands into the Gulf country. Over the next two years, Quiznos plans to grow the brand's international footprint to more than 40 countries and territories. Quiznos, a subsidiary of QIP Holder LLC, has nearly 4,000 restaurants. (AB 03.11)

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3.2 Boeing & Saudi Arabian Airlines Announce Order for 12 Boeing 777-300ERs

Boeing and Saudi Arabian Airlines announced an order for 12 Boeing 777-300ERs (extended range), with an option for 10 more. This order previously was attributed to an unidentified customer on Boeing's orders and deliveries website. The order is valued at $3.3 billion at average list prices. Saudi Arabian Airlines also announced an order for eight Boeing 787 Dreamliners for its long haul fleet. The airline completed an arrangement with Boeing and Kuwait-based leasing company ALAFCO to transfer orders for the eight Dreamliners from ALAFCO to Saudi Arabian Airlines. The 777-300ER is the world's largest long-range twin-engine jetliner, and is capable of carrying up to 365 passengers up to 7,930 nautical miles (14,685 km). Saudi Arabian currently owns and operates 23 Boeing 777-200ERs. Saudi Arabian Airlines took delivery of its first 777, a 777-200ER in December 1997 and since then has deployed the 777 on a number of short-, medium- and long-haul routes. (Boeing 08.11)

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3.3 Saudi Picks Varian to Develop Radiotherapy Unit

Saudi Arabian National Guard Health Affairs (NGHA) has signed up California-based Varian Medical Systems and IMRIS, a leader in providing image guided therapy solutions, to develop its magnetic resonance-guided radiation therapy facility. Varian is a world leading manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. Under the agreement, Varian and IMRIS will supply a cancer treatment solution that combines IMRIS' unique movable magnetic resonance imaging (MRI) technology with Varian's latest linear accelerator technology, the TrueBeam system. (TradeArabia 03.11)

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3.4 Egypt IT Report For 2010's Fourth Quarter

Research and Markets (http://www.researchandmarkets.com) "Egypt Information Technology Report Q4 2010" says Egypt's IT spending is expected to increase from $1.4b in 2010 to $2.6b by 2014. BMI forecasts Egyptian IT market growth will remain below pre-economic crisis levels in 2010. Growth is expected to bounce back in FY2010/11 as the external and public sectors lift the Egyptian economy, but unemployment and the threat of inflation could inhibit spending. Egypt's computer hardware sales are projected at $862m in 2010 and are forecast to reach $1.6b in 2014. Computer penetration is forecast to rise from 10% now to 19% in 2014, and annual computer sales could increase to nearly 470,000 by the end of BMI's forecast period. Hardware accounted for an estimated 61% of Egypt's IT spending last year. Households are responsible for 20-25% of unit sales, with 1.0-1.5m households said to possess a computer at present.

Overall spending on software remains rather low, being projected at $197m in 2010. The estimated 14% share of total Egyptian IT spending accounted for by software reflects the relative immaturity of Egypt's IT market. However, the domestic software market is expected to grow at a CAGR of 11% over the forecast period until end-2014. One market driver has been a significant fall in software piracy, with the illegal software usage rate, as measured by the Business Software Association, falling a further 1% to 59% in 2008.

In 2008, Egypt continued to liberalize the telecoms market by awarding a second national fixed license. This development, which followed the award of 3G licenses to three mobile telecoms service providers in 2007, is likely to drive new opportunities for IT vendors. As well as generating additional spending on IT products and services from the telecoms sector, the spread of internet should provide a boost to the PC market over the next few years. A similar story could be told about broadband, although cost remains a major barrier to broadband subscription in Egypt. It has been well documented that private broadband subscribers often club together with two or three neighboring families to get a shared broadband subscription and Wi-Fi router. (R&M 05.11)

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3.5 One Billion Dollars to Stay With Local Purchases in Turkish Army

Turkey's recent penchant for meeting its needs through procurements from domestic producers seems to be extending to the military. Industrialists have knocked on the doors of the Turkish Armed Forces (TSK) to voice their interest in producing nearly 6,000 types of military equipment, all of which the military currently imports. As part of a project being carried out by the Ankara Chamber of Industry (ASO), Turkish manufacturers have pledged to produce the necessary military equipment at much more competitive prices. The first step to better know the military's equipment demands was taken at the 2nd TSK Supplies Exhibition in Ankara (1 – 10 October). Turkish companies capable of producing the equipment needed by the military visited the exhibition under the ASO banner and held meetings with army officials to get more involved in the procurement process. The fair included 7,400 pieces of equipment. If 6,000 of these items are produced domestically, at least $1 billion will be able to stay inside the country, ASO said. The Turkish manufacturers are even ready to offer the same quality products at better prices. For instance, a specific type of glass imported at a price of $1,500 can be acquired from local manufacturers for TL 650. Furthermore, because these locally produced items will automatically be registered in NATO inventories, Turkish companies will be able to promote their products in fairs in countries to which the Ministry of Defense and the Ministry of Foreign Affairs allow military exports. (Zaman 02.11)

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3.6 Henry Schein Enters Fast-Growing Dental Market in Turkey

Melville, NY's Henry Schein, the largest provider of health care products and services to office-based practitioners, has acquired a 50% non-consolidating interest in Guney Dis Deposu (Guney), a full-service dental distribution business headquartered in Istanbul, Turkey. The remaining 50% will be held by Ferizan Peker, whose family founded Guney in 1950. For the past 40 years Mr. Peker has managed Guney, a leader in the €90 million ($126 million) Turkish dental market. Financial terms were not disclosed. With approximately 70 team members, Guney's operations are supported from a centralized warehouse in Istanbul. Guney had sales of €17 million ($$24 million) for the past 12 months, of which approximately 60% were from dental equipment, 35% from dental consumables and 5% from technical service. There are approximately 23,000 dentists in Turkey; of which approximately 63% were in private practice in 2008. There is a growing trend in aesthetic dentistry and the government is accelerating its investment in dental and oral care. (Henry Schein 27.10)

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3.7 Energy Recovery Curbs Energy Usage Cyprus for Fresh & Affordable Drinking Water

San Leandro, California's Energy Recovery, a leader in the design and development of energy recovery devices for desalination, announced that its PX Pressure Exchanger (PX) energy recovery devices will be implemented at the seawater reverse osmosis (SWRO) desalination plant currently under construction in Limassol, the second largest city in Cyprus, by Israel's Nirosoft Industries Ltd., a worldwide solutions provider of advanced water and wastewater treatment systems. The facility will provide approximately 50,000 cubic meters (10.5 million gallons) of fresh and affordable drinking water to 120,000 people a day. Nirosoft selected Energy Recovery's PX-260 PX Pressure Exchanger energy recovery devices for the Cyprus desalination plant to greatly curb energy usage and operational costs at the Limassol facility. Cyprus hopes to fully meet its water needs through desalination by 2011. In addition to the Limassol facility, the highly reliable and efficient PX devices are in the majority of desalination plants throughout the country, helping deliver more than 140,000 cubic meters (37 million gallons) per day to the region. (ERI 03.11)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Ten Firms at Government's Ashelim PV Solar Presentation

Ten Israeli and foreign companies attended the presentation on 29 October by the Ministry of Finance for the photovoltaic power plant at Ashelim. The Israeli participants included Minrav Holdings, Supergas, Clal Energy, Shikun u'Binui Holdings and Paz Solar. Foreign participants included Germany's Siemens and France's EDF. The Ashelim photovoltaic power plant is a NIS 450 million BOT (build, operate, transfer) project for a 30 MW plant, which will be built alongside two 110 MW thermo-solar power plants. The estimated cost of the thermo-solar plants is $1.5 billion. The government published the tenders for the thermo-solar plants two months ago and so far only three consortia have submitted bids, after the consortium of Ormat Industries and Germany's Solar Millennium dismantled their partnership. The Ministry of Finance therefore believes that the photovoltaic power station tender will move forward more smoothly and quickly. The Ashelim solar power project is Israel's largest solar energy tender and one of the largest of its kind in the world. (Globes 31.10)

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4.2 Nevada Geothermal Power & Ormat Nevada to Develop the Crumo Geyser Geothermal Area

Nevada Geothermal Power and Ormat Nevada, a wholly-owned subsidiary of Ormat Technologies, signed a letter agreement under which they have agreed to jointly develop, construct, own and operate one or more geothermal power plants at the Crump Geyser Project Area located in Lake County, Oregon. The parties will form a limited liability company, Crump Geothermal Company (CGC), for such purpose that will be owned by Nevada Geothermal Power Company, a wholly-owned subsidiary of Nevada Geothermal Power and Ormat Nevada on a 50:50 basis. The parties plan to start construction and drill at least one development well for the first power plant with an expected generation capacity of up to 30 MW in 2010 and to place the plant in service before the end of 2013 so as to qualify for the Treasury Cash Grant under Section 1603 of the American Recovery and Reinvestment Act (ARRA). Under the Agreement between NGP and Ormat, NGP will contribute its title and interest in Crump Geyser Project geothermal leases, technical and engineering data, existing permits and the benefit from the on-going Department of Energy (DOE) cost-share grant for exploration in relation to the Crump Geyser area. Ormat will fund 100% of the initial development activities of CGC in the amount of $15 million and pay NGP $2.5 million in installments over a three year period.

Yavne, Israel's Ormat Technologies (http://www.ormat.com) is the only vertically-integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, owns and operates geothermal and recovered energy-based power plants around the world. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power-generating equipment, and provides related services. The Company has more than four decades of experience in the development of environmentally-sound power, primarily in geothermal and recovered-energy generation. (Ormat 01.11)

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4.3 Haifa Mayor & Environmentalists Win Train Battle

Haifa Mayor Yahav and environmental organizations have won a victory over Israel Railways. The National Planning and Building Commission's Coastal Protection Committee has forbidden Israel Railways from building overhead electrical wires along a stretch of rail considered sensitive because of its proximity to the sea. The committee forbade the placing of electric poles for the railway because of the severe aesthetic damage it would cause the coastal vista. Israel Railways said that the decision was liable to delay the railway electrification program throughout the country, and that it also jeopardized the electrification of the Akko-Carmiel line, which is due to begin operating in 2015. A 20-kilometer stretch of track runs through Haifa, including seven kilometers along the sensitive Mediterranean shoreline. The electrified Akko-Carmiel railway line is part of the government's 420-kilometer nationwide train electrification program. Israel Railways hopes to publish the first engineering planning tenders for the project within weeks. The train electrification program will cost an estimated €1.2 billion. (Globes 31.10)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Moody's Assigns Ba2 Rating to Jordan Bond

On 1 November, Moody's Investors Service assigned a Ba2 rating to a new five year, senior unsecured, fixed rate, dollar denominated bond to be issued by the government of Jordan. The value of the bond is expected to be of benchmark size - at least $500 million. The bond's Ba2 rating is in line with the government of Jordan's Ba2 foreign currency issuer rating. Moody's sovereign ratings of Jordan take into account the following factors. Credit strengths for Jordan include a comfortable level of external liquidity, a history of external donor support, a stable domestic political environment and strong international relations. Credit challenges for Jordan include wide fiscal and current account deficits, a sizeable public debt, and the potential risk of contagion from the region's volatile politics. The previous rating action on Jordan was implemented on January 8, 2007 when Moody's changed the sovereign ratings outlook from negative to stable. (Moody's 01.11)

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5.2 Jordan Sees 2011 Deficit Fall to 5% of GDP

Jordan will increase state spending in 2011 by 6.2% from this year and forecasts a 2011 budget deficit of JD1.06 billion or 5% of gross domestic product, Finance Minister Abu Hammour said. He expected the budget deficit this year would be 5.3% of GDP, lower than a previous estimate of 6.3% of GDP due to fiscal consolidation, higher grants and better revenues as the economy recovers from the impact of the global downturn. He forecast economic growth of 5% next year, 5.5% in 2012 and 6% in 2013. The finance minister projected state expenditure next year would be $8.79 billion, up from this year's 5.875 billion readjusted expenditure estimate. Total state revenues, including foreign aid, was forecast to reach 24.7% of GDP with an estimated JD 290 million of foreign grants. Improved revenue estimates were underpinned by signs of an economic recovery and growth in several key sectors, Abu Hammour said. He added that growth was expected to pick up as regional Arabian Gulf economies which are closely tied to Jordan regain confidence, along with higher foreign direct investment, helped by corporate tax cuts and streamlined investment laws to enhance an investor-friendly business climate. Exports were expected to remain resilient at growth rates of between 8% and 10% annually in the next three years. Inflation was expected to reach 4% this year with an increase in the oil import bill and commodities but should fall to around 3% in 2012 and 3.5% in 2013. Last year, Jordan posted a record deficit of 1.45 billion dinars ($2 billion) or 9% of GDP, which it blamed on years of big spending by previous governments during a boom period that saw high aid levels and an investment and real estate bubble. (Various 07.11)

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5.3 Jordanian Oil Market to Be Liberalized Within 5 Years

Jordan's oil sector will be completely liberalized within the next five years. In accordance with a Cabinet decision taken on 26 October, the government will completely open the oil market by 2015, Minister of Energy and Mineral Resources and Minister of Environment Irani said at a press conference. The decision will officially end the monopoly held by the Jordan Petroleum Refinery Company (JPRC), which had an exclusive 50-year concession from 1958 - 2008. The move comes as part of the ministry's plan to overhaul the energy sector. Jordan's National Energy Strategy calls for competition to enhance the quality and quantity of oil derivatives. In the first phase, four companies will be granted a 25% share of the market, with the JPRC retaining the remaining portion. Prior to liberalizing the market, a three- to five-year period will be used to establish pricing mechanisms and sort out logistical issues. Each fuel company will be required to amass and maintain a 60-day strategic reserve. As part of the move, the government will float a tender for the four companies to import fuel, which will be required to abide by national emissions standards, in line with Euro 4 specifications. (JT 28.10)

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5.4 Jordan Exempts Exports from Income Tax

Jordanian Minister of Finance Abu Hammour said the Jordanian cabinet has approved a bill to exempt profits on exported goods and services of certain categories from the income tax. The minister explained that some goods and services with a national origin could be exempted, totally or partially, from the income tax. The bill comes as part of the new income tax law in which taxes on citizens and on different economic sectors have been lowered as a means to flourish the investment climate in the country, and increase the competitive advantage of Jordanian companies internationally. The exemption is to be implemented once published in the national gazette, Abu Hammour said. (Petra 31.10)

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5.5 Arabian Gulf's Non-Oil GDP to Surge

Conscious diversification of Arabian Gulf economies away from oil will see the region's collective gross domestic product (GDP) doubling from the current $1.04 trillion to $2.3 trillion by 2020, according to the Economist Intelligence Unit (EIU). As a share of nominal GDP, the oil and gas sector is forecast to decline from an average of 40% of GDP in 2001-10 to 32% in 2011-20. After peaking at 49% in 2009, it is likely to decline to about 27% of GDP by 2020. In a recent report, the IMF advised the Gulf countries to work on efforts to create jobs while looking at opportunities to exit the massive fiscal stimulus packages implemented following the financial crisis. The EIU report suggested that the region needs to focus on industries in which it has competitive advantage, such as the energy-intensive manufacturing of petrochemicals, plastics and aluminum. Apart from these, mining and mineral-based industries, trade and logistics, tourism, hospitality and aviation were the other sectors that have potential for employment creation. (Various 31.10)

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5.6 IMF & Kuwait Establish an IMF-Middle East Center for Economics and Finance

The International Monetary Fund (IMF) and the Kuwait Minister of Finance signed a Memorandum of Understanding to establish an IMF-Middle East Center for Economics and Finance (CEF) in Kuwait. The CEF, which will be inaugurated in May 2011, will play an important role in building capacity for economic decision-making and policy implementation in all Arab League member countries. Training events at the CEF will target government officials from Arab League countries involved in the formulation and implementation of macroeconomic and financial policies. Courses and seminars at the CEF will cover macroeconomic adjustment policies and financial programming, public finance, trade and exchange rate policies, bank supervision, financial sectoral issues, the interaction between finance and macroeconomics, and statistics. The center will also invite other international and regional organizations to provide training at the CEF in their respective areas of expertise, thereby expanding the range of courses and seminars offered. The center, which is hosted and financed by the Kuwaiti authorities, will have an open membership architecture, allowing for joint sponsorship by other countries and institutions in the region. (IMF 06.11)

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5.7 Kuwait September CPI Hits 18 Month High on Food & Housing

Kuwait inflation climbed to an 18 month high of 5.3% year-on-year in September, mainly driven by soaring food and housing costs. Inflation in the world's fourth largest oil exporter has risen over the past months from a low of 1.6% in November 2009 as the oil reliant economy recovers from last year's sharp contraction. The September rate is the second highest in the Gulf after Saudi Arabia but is still well below a record high of 11.6% seen in August 2008. Consumer price growth stood at 4.4% in August. On the month, prices in the OPEC member jumped 1.1% following a 0.4% rise in the previous month, data from the Central Statistical Office showed. Food prices, which account for 18% of the Kuwaiti basket, soared by 2.6% month-on-month in September, after a 1.2% rise in August. Prices usually rise during the holy month of Ramadan, which ended in mid-September, as families enjoy larger and more elaborate evening meals after the daylight fasting. Housing prices, which have the largest weight of 27%, rose 1.1% in September, after remaining unchanged in August. Transport costs, the third biggest component, were flat for the second month in a row. Unlike its fellow Gulf Arab oil producers, Kuwait abandoned a dollar peg in favor of a currency basket in 2007 to counter a sharp spike in inflation. Annual inflation in the UAE edged up to a 16 month high of 1.2% in September, but pressures remain more benign there due to the impact of Dubai debt restructuring. (AB 03.11)

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5.8 UAE Annual Inflation Accelerates to 1.15% in September 2010

Annual inflation in the UAE has accelerated in September 2010, registering 1.15% from 0.90% in August 2010 on the back of higher food and transport costs. The annual change in food prices hit its highest level this year, advancing 7.10% in September 2010 from 4.23% in August 2010. Similarly, annual transport costs accelerated 8.11% in September 2010 from 5.74% in August 2010. Meanwhile, the annual change in the housing component, which is led predominantly by changes in rental costs, and has the highest weighting in the UAE CPI, saw its widest annual fall in 2010 as it contracted -1.58% in September 2010 from -1.31% in August 2010. On a monthly basis, higher food prices (+2.72% m-o-m in September from 1.97% in August) and transport costs (+1.58% m-o-m in September from 0.61% in August) also fuelled overall inflation, which reached its highest monthly change in 2010 of 0.86% in September 2010 from 0.53% in August 2010. Housing costs, though contracting on an annual basis as indicated earlier, saw a positive monthly incremental increase of 0.16% in September from 0.01% in August 2010. This was led mainly by higher monthly water and electricity costs as rental costs remained almost flat in September 2010.

The notable increase seen in September 2010, on annual and monthly bases, in part, also reflects the increase in domestic demand for food items during the month of Ramadan, which ended around mid-September and were driven primarily by a spurt in the prices of fruits and vegetables. As the UAE imports most of its food items and as their prices pick up globally, it is expected to see continued upward pressure from the latter on UAE's inflation, going forward. However, the impact food price increases will have on overall inflation is expected to be muted by the continued weakness in the UAE property sector, primarily Dubai-led, which is reflected in falls in rental costs. The monthly positive incremental increase in housing costs seen in UAE September inflation was mainly led by Abu Dhabi. The significant increase in transport costs reflects the second round of retail fuel price increase. (Various 31.10)

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5.9 UAE Announces New Visa Rules For Canadians

The UAE will require Canadian visitors to apply for visas from January 2, 2011, the UAE Embassy in Ottawa announced. The decision, which reverses the current agreement that allows Canadians to enter the Gulf state without a visa, follows a recent political row between the two countries sparked by Canada's refusal to grant UAE national carriers additional landing rights. Canada last month said it would not offer flagship carriers Emirates Airlines and Etihad Airways additional landing slots, despite years of requests from the UAE. Dubai retaliated by ordering the evacuation of Canada's Camp Mirage, based near the emirate, which had played a key role in supporting missions in Afghanistan. The stand-off took a personal turn after a flight carrying Canada's Defense Minister MacKay was denied permission to use UAE airspace, forcing it to take a long detour. An estimated 27,000 Canadians are currently resident in the UAE. The Gulf state is Canada's largest trade partner in the Middle East and North Africa region. (Various 09.11)

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5.10 Saudi Annual Inflation Drops to 5.8% in October

Saudi Arabia announced it annual inflation rate slowed slightly to 5.8% in October, but monthly inflation stayed at 0.5% for the third month in a row. Annual inflation eased from 5.9% in September, continuing its decline from an 18 month high of 6.1% in August. Food prices, which have the largest 26% weighting in the consumer price basket, jumped 1.6% month on month in October, while housing costs rose 0.6%. Saudi Arabia's economy is seen expanding by 3.8% this year, following a mere 0.6% expansion in 2009, helped by recovery in crude prices and generous government spending. (Various 06.11)

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5.11 Egyptian 2010 Tourist Arrivals Reaches 14 Million by October

The number of tourist arrivals in Egypt has reached 14 million year-to-date in 2010 and the tourism sector is expected to see annual growth of not less than 18% by the end of 2010, according to Tourism Minister Garanah. There are currently 240,000 operating hotel rooms with around 212,000 additional rooms under construction, Garanah said, adding that the total number of tourist nights has increased to 140 million. Garanah highlighted the importance of tourist arrivals in creating job opportunities, saying that for each one million tourists; around 200,000 job opportunities in Egypt are created. In 2010 alone, the tourism sector managed to add 600,000 additional jobs. The tourism sector has seen a strong rebound over the fiscal year ending June 2010, with annual growth in tourism receipts rising 10.5% to $11.5 billion in FY2009/10 after contracting -3.1% in FY2008/9 and total tourist arrivals rising to 13.8 million in FY09/10 from 12.3 million in FY08/09. While revenues from tourism may constitute around 5 to 6% of GDP, its importance lies in the sector's contribution to the increasing level of liquidity in the economy and, thus, its knock-on effect on consumer spending and private consumption, which is key for real GDP growth in Egypt. The sector is also a key employer in Egypt absorbing around 11% of total employment opportunities in Egypt. Tourism receipts are likely to reach some $12.3 billion by end of the current FY2010/11 as economic recovery gains more ground in Europe (the largest source of tourists), and incoming tourists from Middle East, particularly GCC, continue to increase. (Beltone 31.10)

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5.12 Transparency International Alleges Corruption Endemic in Algeria

For the seventh year running, Algeria finds itself at the bottom of the annual corruption ranking drawn up by Transparency International. The 2010 Corruption Perceptions Index (CPI) ranked Algeria 105th out of 178 countries surveyed. While Algeria's 2.9 rating out of 10 presents a marginal improvement from 2.8 (111th place) last year, the country is still listed as one of the most corrupt places in the world. The Algerian Anti-Corruption Association (AALC) said all the talk by the authorities has changed nothing; Algeria has been seen to adopt or announce decisions aimed at stemming the problem, but they are not being applied. Algeria falls behind Tunisia (4.3 points) and Morocco (3.4) in the rankings but is still ahead of Mauritania (2.3) and Libya (2.2). Algeria's low ranking was a result of a string of scandals which have rocked the country over the past two years. In particular, there were three major affairs: the Sonatrach scandal, the East-West Highway project and the fiscal fraud committed by Orascom Telecoms Algerie (OTA). Top officials connected to the East-West Highway project were imprisoned for engaging in corrupt practices with the Chinese. In other corruption scandals, a high-ranking official in the fisheries ministry was found guilty of orchestrating illegal business deals with foreign parties and some senior managers of Algerie Poste received prison sentences for corrupt practices. (Magharebia 05.11)

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5.13 Morocco Mining Sector Sees Mergers & Privatization

Research and Markets (http://www.researchandmarkets.com) "Morocco Mining Report Q4 2010" report says the Moroccan mining sector could be set for a boost in 2011 following the news that the country's two major conglomerates Groupe ONA and parent company Socit Nationale d'Investissement (SNI) are planning to merge, then delist from the local stock exchange and then look to divest majority stakes in key subsidiary companies. Among ONAs companies are diversified miner Managem and steel maker Sonasid. ONA and SNI delisted from the stock exchange in August 2010, when the companies bought back some $1.2bn-worth of shares.

The first companies likely to be divested are sugar maker Cosumar, food manufacturer Lesieur and dairy concern Centrale Laitiere. At present, no concrete information on future divestment plans for any mining concerns has been forthcoming. However, the intention of ONA seems to be to move away from having a hands-on management role in its subsidiary companies and to allow foreign partners to gain a stake. In 2009, ONA saw net income increase to MAD2.92bn (from MAD1.12bn in 2008), while revenues also climbed, by 1.9%. Helping the groups performance was a reduction in the losses made by mining concern Managem, which benefited from a recovery in metals prices, plus higher production levels. (R&M 02.11)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkish October Inflation Slows to 8.6 %

Turkish inflation slowed in October, reinforcing the Central Bank's decision to keep interest rates at a record low even as the economy booms. The inflation rate fell to 8.6 % from 9.2 % the month before. Central Bank Governor Yilmaz has kept the benchmark interest rate unchanged at 7 % since November 2009 even as the economy returns to growth after the global financial crisis. Annual core inflation, excluding the price of energy, food and non-alcoholic drinks, declined to 2.5 % from 3.7 % a month earlier. Food prices rose a monthly 4.5 % and clothing increased 7.6 % in the month. Turkey's inflation target for 2011 is 5.5 %. GDP expanded about 11 % in the first half of the year, as low borrowing costs spurred consumer spending and exports recovered from last year's slump. The cost of goods leaving Turkish factories and mines rose 9.9 % in the 12 months through October, compared with 8.9 % the previous month, TurkStat said. Producer prices rose 1.2 % in the month. (Hurriyet 03.11)

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6.2 Cyprus to Step Up Fiscal Austerity Measures With Three-Year Plan

Cyprus is drafting a three-year program to trim spending and plans revenue-boosting measures soon, its government announced on 8 November. Cyprus is under pressure from the European Union to cut a budget deficit set to hit 6% this year and 5.4% in 2011. Under an EU excessive deficit procedure instituted earlier this year, it must cut the shortfall to below 3% by 2012. Cyprus, which represents 0.2% of the eurozone economy and whose two main trade partners are Britain and Russia, is also feeling the heat from warnings by rating agency Standard and Poor's that it could lose its A+ rating if it does not improve its performance soon. An increase in value-added tax, now at 15%, is among several options being floated by the government to bring the deficit for 2011 down to the 4.5% of gross domestic product demanded by the European Union. (FM 09.11)

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6.3 Cyprus Inflation Moderates in October

The pace of inflation moderated in October according to the latest figures from the Cypriot Statistical Service. The consumer price index (CPI) increased by 0.80%, mainly owing to increases in the prices of certain clothing and footwear items, gas and poultry. Decreases were recorded in the prices of certain fresh fruit and vegetables. After four months of increase, the annual rate of inflation dropped in October to 3.0% compared with 3.5% in September 2010 and 3.2% in August. In October 2009 there was a negative inflation of -0.8%. In the period January-October 2010, the CPI rose by 2.6% over the corresponding period of 2009. The largest rise has been in the category of "housing, water, electricity and gas", which has been pushed up by increases in electricity tariffs. The next highest increase was in the price of education, which rose by 4.8% in the first nine months of the year compared with the same period of 2009. (FM 04.11)

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6.4 Moody's Does Not See Greek Default

The eurozone economies of Greece, Portugal and Ireland are likely to avoid sovereign bond defaults due to their strong domestic investor base of local banks and pension funds that will buy their governments' debt even in times of stress, according to ratings agency Moody's. The US rating agency says investors should not worry about losses from bond defaults in these three so-called peripheral eurozone economies, considered the weakest in the 16-nation bloc. Despite rising bond yields in the periphery in the past week because of growing fears over the health of these economies, the agency said an analysis of the 20 sovereign defaults since 1997 suggested they would ride out their problems. Critically, this is due to the size and sophistication of these countries' bond markets, which are relatively deep as they benefit from a strong base of domestic financial institutions. (Various 03.11)

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6.5 Greek Parliament Ratifies 2011 Budget

On 2 November, the Greek Parliament ratified the budget for 2011, a move once again dominated by spending cuts. It was accepted with the support of ruling PASOK, main opposition New Democracy and the Popular Orthodox Rally (LAOS). The Communist Party of Greece (KKE) voted against the budget and the other left-wing party MPs in Parliament abstained. The MPs also approved accounts of Parliament spending for 2009. Parliament President Petsalnikos said that the focus, for a second year in a row, was to restrict spending in light of efforts to reduce the fiscal debt and deficit but without affecting the quality of services provided by Parliament. Under the new 2011 budget, every MP will see his total pay reduced by €1,600 a month or a total of €20,000 annually, in addition to reductions arising from changes in the way that MP salaries are taxed. Petsalnikos said net monthly pay for Parliamentarians will not exceed €6,500 and total spending for Parliament will account for 0.38 % of the state budget. The justice ministry will soon unveil changes in the way that the assets and income of MPs were checked, with more efficient inspection of what MPs actually own, carried out by bodies where MPs are not a majority. (ANA 03.11)

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6.6 Tougher To Do Business in Greece

The Doing Business index, put together by the World Bank, showed that Greece lost ground in eight of the nine business fronts assessed in the 2011 report. The Greek government failed to complete any positive reforms in the last 12 months, according to the report, which did point out that one change had been implemented. For example, Greece made transferring property more costly by increasing the transfer tax from 1% of the property value to 10%. Following the latest drop, Greece now ranks below countries such as Ethiopia, Papua New Guinea and Bangladesh. Regarding points given for starting up a business, Greece fell to position number 149, from 140 last year, as government plans to simplify procedures failed to provide any impetus. To start up a limited liability company in Greece, 15 steps are required that require 19 days, placing the country in the last 10 nations globally. Apart from difficulties in launching business operations, Greece also scored very poorly as to the ease with which a business can shut down. The report put Greece in position number 49 when it comes to closing a firm, down from position number 43 last year. Topping the global list for the fifth straight year was Singapore, followed by Hong Kong, New Zealand and the UK. (WB 04.11)

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6.7 Bulgaria Budget Gap Stays Flat At 2.1%

Bulgaria's budget deficit stood unchanged at 2.1% of gross domestic product (GDP) in the first nine months of the year compared with the January-August gap, data showed yesterday. Revenues dropped 6.3% to 17.4 billion leva ($12.43 billion) due to a fall in imports which slashed receipts from value-added tax and excise duties, the Finance Ministry said in a statement. Spending edged down 1.1% to 18.9 billion leva as a result of the government's austerity measures, including cutting funds for almost all ministries and transfers to municipalities. The center-right cabinet increased its forecast for the full-year deficit earlier this year to 4.6% of GDP from its initial forecast of 0.7% after revealing hidden deficits accumulated by the previous government. It also cited delayed payments to businesses and additional spending for healthcare and infrastructure. Bulgaria's economy shrank 1.4% in the second quarter after contracting 5% in 2009 as a whole. The cabinet in September approved a budget draft for 2011 that aims to trim the fiscal deficit to 2.5% of GDP, hoping that the economy will grow by 3.6% next year on the back of improved exports. (Various 02.11)

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6.8 Bulgaria Solid at 51st Spot In Global 'Doing Business' Index

Bulgaria is ranked 51st among 183 countries in the Doing Business 2011 report, compiled by the International Finance Corp (IFC), the World Bank's private-sector lender. According to the overall ranking, Bulgaria is lagging one position behind Qatar and is one place ahead of Botswana. Bulgaria was also placed 51st in the Doing Business 2010 ranking, which indicates the business environment in the country has not changed drastically in comparison to last year. However, Bulgaria has moved up and down in comparison to other countries in 8 of the total of 9 sub-indexes. Bulgaria has improved mostly in two topics – Paying Taxes (up by 10 places to 85th) and Starting a Business (up by 7 places to 43rd). The Paying Taxes index shows that Bulgaria has improved in comparison to last year due to the employers' decreased burden in social insurance payments. Among all 9 topic rankings, Bulgaria's performance is best in Getting Credit - 6th place, with no change in comparison to 2009. Similarly to last year, Bulgaria's worst ranking is in the Dealing with Construction Permits topic, in which the country has slipped 2 places further to 119th. The Trading Across Borders and Enforcing Contracts conditions in Bulgaria, however, have improved slightly – with one position each – to 108th and 87th respectively. (SMN 05.11)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel Ranks 15th in Human Development Index

Israel has climbed 12 places in the United Nations' Development Project's Human Development Index (HDI), reaching 15th place in the newly published Index for 2010. This is the first time that Israel's has been ranked so high on the HDI, placing above Italy, Britain and Singapore. The HDI includes 169 countries worldwide. The top 10 countries in the 2010 HDI are Norway, Australia, New Zealand, the United States, Ireland, Lichtenstein, the Netherlands, Canada, Sweden and Germany. At the bottom of the rankings are Mali, Burkina Faso, Liberia, Chad, Guinea-Bissau, Mozambique, Burundi, Niger, the Democratic Republic of the Congo and in last place, Zimbabwe. The region with the fastest HDI progress in the past 40 years is East Asia, which is led by China and Indonesia. Arab countries also posted major gains, with 8 of the 20 world leaders in HDI improvement since 1970.

While the report was originally intended to help the UN gauge the countries in greatest need of UN support, it also serves world economic bodies in assessing where to make financial investments. The report is the latest in a series of international assessments that see Israel's economy as one of the world's most stable. The Governor of the Bank of Israel, Prof. Stanley Fischer, was recently designated as the number-one national bank governor in the world by British magazine EuroMoney. Fischer also received a perfect score as bank governor in a rating by the economic magazine Global Finance – for the second year in a row. (IsraelNN 5.11)

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7.2 US Army Vets Surprised to Find Israel a 'Beautiful Country'

Wounded U.S. Army veterans visiting Israel on a bike riding tour have discovered that American mainstream media give a false picture of Israel. An IDF reporter accompanied the veterans of the Wounded Warrior Project (WWP) during their tour, co-sponsored by Friends of the IDF. The tour began recently north of Tel Aviv and continued thorough Tiberias in the north and Nahariya on the northwestern Mediterranean coast. In between, the veterans who suffered injuries in battles in Iraq and Afghanistan toured Jerusalem. The veterans left Jerusalem to continue their bike tour through the IDF tank museum at Latrun, west of Jerusalem, and to Masada, overlooking the Dead Sea. They also dined with U.S. ambassador to Israel James Cunningham and visited the IDF induction center to see how new soldiers are processed. The bicycling project began in the United States at the initiative of a non-Jewish soldier who fell in love with Israel after a visit. This year is the first time the WWP has brought the veterans to Israel for a bicycling tour. (IsraelNN 03.11)

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7.3 Eid Al-Adha - Feast of the Sacrifice to Begin on 16 November

The first day of the Islamic holiday Eid al-Adha will fall on 16 November and last for three days. Eid al-Adha is a religious festival celebrated by Muslims worldwide as a commemoration of Ibrahim's willingness to sacrifice his son Ishmael for Allah. It is one of two Eid festivals that Muslims celebrate. Like Eid al-Fitr, Eid al-Adha begins with a short prayer followed by a sermon. Eid al-Adha is three days long and starts on the 10th day of the month of Dhul Hijja of the lunar Islamic calendar. This is the day after the pilgrims in Hajj, the annual pilgrimage to Mecca in Saudi Arabia by Muslims worldwide, descend from Mount Arafat. It happens to be approximately 70 days after the end of the month of Ramadan.

Men, women and children are expected to dress in their finest clothing and perform the Eid prayer in any mosque. Muslims who can afford to do so sacrifice their best domestic animals (usually sheep, but also camels, cows, and goats) as a symbol of Ibrahim's sacrifice. The sacrificed animals, called udhiya, also known as qurbani, have to meet certain age and quality standards or else the animal is considered an unacceptable sacrifice. Generally, these must be at least 4 years old. At the time of sacrifice, Allah's name is recited along with the offering statement and a supplication as Muhammad said. According to the Quran a large portion of the meat has to be given towards the poor and hungry people so they can all join in the feast which is held on Eid-al-Adha. The remainder is cooked for the family celebration meal in which relatives and friends are invited to share.

*REGIONAL:

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7.4 Dubai 2010 Population Estimated At 1.87 Million But Received with Skepticism

The Executive Director at Dubai Statistics Centre has put the Dubai's annual population growth at around 7% during the first nine months of 2010, with the number of residents estimated at 1.87 million. There is a jobless rate of 0.8%, but this is only for Emiratis. These figures have been accepted with skepticism. This estimate of population implies an annual population growth of 8.6%, thus higher than the average annual population growth level seen by Dubai during the three years leading up to the crisis in end-2008. Beltone believes this is unlikely given significant number of real estate projects that have either been put on hold or cancelled, as project data indicate, in addition to some degree of job shedding that took place in early 2009 as anecdotal evidence suggests. This would have likely led to a population fall in 2009 and thus leading a small positive recovery in population growth in 2010 as Dubai's external sectors recover. Furthermore, they have observed some differences in population growth estimates released by the Dubai Statistics Center and those released by the UAE Ministry of Economy whose last official census of UAE population dates back to 2005 (the Ministry of Economy is currently conducting the 2010 census). (Beltone 27.10)

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7.5 Ruler of Ras Al Khaimah Dies

On 27 October, the ruler of Ras Al Khaimah, the UAE's fourth largest emirate, died after several months of illness. Sheikh Saqr Al Qasimi will be succeeded by his son, the Crown Prince Sheikh Saud bin Saqr Al Qasimi. Sheikh Saqr Al Qasimi, believed to be in his 90s, ruled the northern emirate of Ras Al Khaimah for more than 60 years. Sheikh Saqr was the world's longest serving monarch, having taken office in 1948, and the last surviving ruler to have been in power at the creation of the UAE in 1971. He had been in hospital for several months. His son, His Highness Sheikh Saud bin Saqr Al Qasimi, was appointed Crown Prince and Deputy Ruler in June 2003. Ras Al Khaimah's economy is based on industries like cement, pharmaceuticals, and glass, and building a regional manufacturing and shipping hub. Its GDP accounts for 1.5% of the UAE's economy. The emirate has its own sovereign wealth fund, the Ras Al Khaimah Investment Authority (RAKIA), which has a portfolio of around $2bn.

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7.6 RSF Study Shows North African Press Freedom Deteriorating,

Tunisia, Morocco and Libya fell sharply in this year's press freedom report from Reporters Without Borders (RSF). For its 2010 Press Freedom Index, the international watchdog group assessed 178 nations for violations of journalists' independence, attacks and murders of individual reporters, censorship and presence of independent media outlets. Algeria made tangible progress, rising from 141st to 133rd. Mauritania maintains the lead at 95th place. Tunisia, however, slipped from 154th to 164th place. The country came under particular fire for a four-year imprisonment sentence against Al-Hiwar Ettounsi TV reporter Fahem Boukadous. Tunisia overtook Libya as the lowest-ranked African country in the press index. Libya also fell in the rankings, from 156th to 160th. Morocco also joined the downward trend, dropping from 127th to 135th. Meanwhile, Algeria has made substantial progress, climbing eight spots from 141st place last year. (Magharebia 03.11)

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7.7 'Faith in Islam' to Top Turkish School Reform

Values taught to Turkish students should be based on "faith in God" and imparted using Islamic terminology, a commission with the National Education Council has said, prompting concerns among educators' unions in the country. Various commissions within the council have announced reform proposals that would affect the length of compulsory education and whether boys and girls are taught together, among other topics. Though the proposals are not binding, many fear they add up to an attempt to impose an Islamic ideology over the country's educational system.

A plan to change the current system of eight years of uninterrupted primary education back to a two-part system that allowed younger students to attend imam-hatip (religious vocational) schools is among the controversial proposals. The current system of eight years of compulsory, uninterrupted primary education is a remnant of the 28 February 1997, unarmed military intervention, which led to the closure of imam-hatip schools enrolling students in the sixth, seventh and eighth grades. If passed in the National Education Council's general assembly and approved by the Education Ministry, the proposal will essentially bring back the old structure, splitting the eight years of compulsory education into grades one through five and grades six through eight, with students in each group taught in different buildings.

Ministry officials have defended the move, saying the proposal aims to eliminate problems stemming from having students of widely varying ages sharing the same physical spaces, including toilets, and to keep younger students from picking up dangerous habits from the older ones. The suggestion to create separate schools for girls and boys, an idea proposed by the ruling party-affiliated Education Personnel Labor Union, drew criticism as well. (Hurriyet 03.11)

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7.8 Alevis Demand End to Turkish Mandatory Religious Classes

On 6 November, one of Turkey's largest Alevi organizations staged a sit-down strike in Istanbul's Kadikoy Square to demand an end to mandatory religious classes, arguing that the lessons are tools of assimilation. The Pir Sultan Abdal Culture Association, or PSAKD, an Alevi organization that is demanding the classes be cancelled in contrast to other Alevi groups that are demanding better representation within the lessons, organized the protest. Alevi children have been subjected to the mandatory religion class for 30 years since the Sept. 12, 1980, military coup. The "Religious Culture and Moral Knowledge" classes have drawn frequent criticism from Alevis, who say they focus too much on Sunni Islam. Some Alevis perceive themselves as a sect of Islam, other Alevis see themselves as a different religion, while others reject the notion that Alevism is a religion at all. In addition to the religious classes, there were a number of other demands; the Religious Affairs Directorate should be abolished, cemevis [Alevi places of worship] should be granted legal status and the Madimak Hotel [the Sivas hotel in which many Alevis were killed by a mob in 1993] should become a museum. They also demanded that there be a halt to the construction of mosques in Alevi villages, as well as the call to prayer in such villages. (Hurriyet 07.11)

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7.9 Cyprus' Population Crosses 800,000 Mark

The population of Cyprus in the southern government controlled area was estimated at 803,200 at the end of 2009, recording an increase of 0.8% from the previous year. The population in the district of Lefkosia (Nicosia) was 315,400 at the end of 2009; it was 44,800 in Ammochostos (Famagusta), 134,400 in Larnaka, 230,800 in Lemesos (Limasso) and 77,800 in Pafos. Of the total, 70.2% resided in the urban areas 28.9% resided in rural areas. The population aged over 65 was 13% of the total in 2009, compared with 11% in 1992. The number of households was 263,300, compared with 189,200 in 1992. The government's estimate for the population of Turkish Cypriots (excluding any immigration) is 88,200. This figure is thought to overestimate emigration and underestimate natural increase. Deriving from the census carried out by Turkish Cypriots in 2006, there were 120,007 people born of two Cypriot parents and a further 12,628 born of one Cypriot parent. (FM 04.11)

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7.10 Papandreou Rules Out Early Elections In Greece & Stays In Power To Continue Reforms

Greek Prime Minister Papandreou ruled out calling a snap parliamentary election on 7 November after winning enough support in local polls to decide he could press ahead with a radical austerity program. The threat of an early election had unsettled markets and analysts said his decision had removed short-term uncertainties. Papandreou had threatened to dissolve parliament, barely a year after coming to power, if the first round of the regional elections failed to give him a mandate to pursue budget cuts and reforms agreed in May under a €110b EU/IMF bailout to save Greece from bankruptcy. Analysts had said Papandreou was taking an unnecessary risk by putting his comfortable majority and the EU/IMF fiscal policies on the line at a time when Greece is scrambling to meet tough year-end targets to slash a gaping budget deficit. Many were relieved by the local election results, but said a high abstention rate and a narrowing of the gap between the ruling Socialists and the opposition showed risks to Papandreou's program remained. Papandreou had played with voters' and markets' nerves by never making clear exactly how he would judge that voters had given him sufficient endorsement. In the 2009 national elections, PASOK led the vote in all 13 regions. The Socialists came to power on plans to boost welfare spending. But they were soon forced to switch to pay cuts, tax hikes and a pension freeze after a debt crisis exploded when they revealed state finances were much worse than expected. Unlike governing parties in other deficit-ridden countries such as Ireland and Portugal, PASOK enjoys a comfortable parliamentary majority. (FM 08.11)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Compugen Licenses Novel Oncology Target to Seattle Genetics

Compugen has signed a research collaboration agreement with Seattle Genetics, USA, covering a Compugen-discovered oncology target. The agreement provides Seattle Genetics with an initial evaluation period and an option for an exclusive worldwide milestone and royalty bearing license for development and commercialization of monoclonal antibody therapeutics addressing this novel target. The existence of the target, which is a previously unknown splice variant of a known oncology target, was initially predicted in silico through the use of Compugen's Monoclonal Antibody (mAb) Targets Discovery Platform. The predicted molecule's existence and overexpression in several of the most prevalent solid cancers was recently demonstrated in independent experimentally based studies. Compugen's mAb Targets Discovery Platform relies heavily on Compugen's LEADS and MED capabilities, two computational biology infrastructure platforms that serve as core components for the development of Compugen's discovery platforms. The LEADS platform provides a comprehensive view of the human transcriptome, proteome and peptidome and serves as a rich infrastructure for the discovery of novel genes, transcripts and proteins.

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) product candidate prediction and selection utilizing a broad and continuously growing infrastructure of proprietary scientific understandings and predictive platforms, algorithms, machine learning systems and other computational biology tools to address important unmet therapeutic and diagnostic needs - either for Compugen or its partners. Compugen's growing number of collaborations covering the further development and commercialization of Compugen discovered product candidates all provide Compugen with potential milestone payments and royalties on product sales or other forms of revenue sharing. (Compugen 29.10)

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8.2 Teva Acquires Theramex, Merck KGaA's European Based Women's Health Business

Teva Pharmaceutical Industries and Merck Serono, a division of Merck, have entered into a definitive agreement under which Teva will acquire Theramex and related companies from Merck Serono. Theramex offers a wide variety of women's health products sold in 50 countries worldwide and had revenues of approximately €100 million in 2009, including sales in the countries in which Teva will acquire distribution rights. A significant portion of its revenues are derived from direct sales in France and Italy, where Theramex has developed strong brand recognition and a reputation for quality among women's health specialists. As part of the agreement, Teva will also have distribution rights for Theramex' products in certain countries including Spain and Brazil. The company's pipeline includes a new oral contraceptive based on natural estrogens, NOMAC/E2, which has successfully completed phase III studies and submitted for approval in Europe. Theramex's operations are supported by an accomplished R&D team and a cost-effective API facility, which produces most of the company's API needs.

Under the terms of the agreement, Teva will make a payment of €265 million at Closing. In addition, Merck Serono will be eligible to receive certain performance-based milestone payments. Teva will fund the acquisition from its internal resources. The transaction is subject to certain regulatory approval and is expected to close towards the end of this year or in early 2011. Israel's Teva Pharmaceutical Industries (http://www.tevapharm.com) is a leading global pharmaceutical company, committed to increasing access to high-quality healthcare by developing, producing and marketing affordable generic drugs as well as innovative and specialty pharmaceuticals and active pharmaceutical ingredients. Teva is the world's largest generic drug maker, with a global product portfolio of more than 1,250 molecules and a direct presence in approximately 60 countries. (Teva 28.10)

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8.3 BioControl Has IDE Approval for INOVATE-HF Study of CardioFit System for Heart Failure

Yehud's BioControl Medical (http://www.biocontrol-medical.com), developer of advanced implantable devices for the treatment of autonomic disorders, announced U.S. FDA conditional approval for its Investigational Device Exemption (IDE) application and pivotal clinical trial protocol to begin evaluating the CardioFit system for the treatment of Congestive Heart Failure. As a result, the company will begin enrollment in the INOVATE-HF (INcrease Of VAgal TonE in chronic Heart Failure) clinical trial. CardioFit is an investigational implantable electrical stimulator system designed to improve heart function through the controlled stimulation of the vagus nerve. A European pilot clinical study suggested there may be a therapeutic role for vagus nerve stimulation in the treatment of heart failure symptoms in patients already on standard medical therapies. The pilot study suggests that vagus nerve stimulation acts to reduce left ventricular volumes, increase ejection fraction and improve NYHA functional classification. The primary efficacy endpoint of the study is a composite of all-cause mortality or unplanned heart failure hospitalization equivalent. Secondary endpoints include symptomatic, functional and structural status as well as a review of serum biomarkers. Study investigators will collectively enroll 650 patients who meet the inclusion/exclusion criteria.

BioControl develops and markets advanced implantable devices for the treatment of autonomic disorders, conditions whereby the autonomic nervous system ceases to function properly, resulting in a disruption to the control of involuntary body processes. The devices enable controlled electrical stimulation of various nerves to achieve therapeutic results. (BioControl Medical 03.11)

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8.4 Tikcro Announces Results of BioCancell's US FDA Phase I/IIa Pancreatic Cancer Trial

Tikcro Technologies announced that BioCancell reported results from a Phase I/IIa clinical trial to establish the safety, optimal dose and preliminary efficacy of BioCancell's lead drug-candidate, BC-819, as a treatment for pancreatic cancer. The trial demonstrated a significant decrease in local pancreatic tumors and no appearance of metastatic disease in most patients treated with the higher of two dosages tested after one month and three months. Moreover, BC-819 demonstrated an excellent safety profile with no severe side effects, and no patient complaints about pain or discomfort, connected to the use of BC-819 during the trial. This Phase I/IIa clinical trial included nine patients with non-resectable (inoperable) pancreatic cancer and with no metastases. In total, 5 out of 8 patients (62.5%) tested after 3 months showed significant tumor reduction or stability, together with no appearance of metastases. The higher dosage given in the trial showed greater efficacy than the lower dosage given. In this sub group that received the higher dosage three out of five (60%) patients treated with the higher dosage had the local pancreatic tumor shrink over 30% in tumor length with no appearance of metastases, meeting the industry commonly used criteria for Partial Response.

BioCancell intends to apply to the FDA to commence a Phase IIb clinical trial of BC-819 in sequence with Gemzar for the treatment of the disease. Biocancell has been granted "orphan drug" status from the US FDA for use of BC-819 in pancreatic cancer. Tel Aviv's Tikcro (http://www.tikcro.com) holds approximately 30% of Biocancell and shares of Biocancell are traded on the Tel Aviv Stock Exchange (TASE). BioCancell (http://www.biocancell.com) is a clinical-stage biopharmaceutical company operating in the area of cancer treatment. It is currently is engaged in a number of clinical trials in Israel and in the U.S. using its leading drug candidate, BC-819. (Tikcro 02.11)

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8.5 Cheetah's NICOM Noninvasive Hemodynamic Monitoring Effective to ID Acute Heart Failure

A study performed by investigators from the Emergency Department of the Cleveland Clinic Foundation finds that Cheetah Medical's NICOM system is effective in identification of acute heart failure (AHF) and in differentiating it from other acute situations with similar clinical presentations. In this study, the Cheetah Medical NICOM Noninvasive Cardiac Output & Hemodynamic Monitoring System was able to distinguish heart failure patients from patients diagnosed with COPD, asthma and dyspnea for other reasons. This US FDA-cleared, fully non-invasive bedside test utilizes a set of four sensors applied on the patient's chest or back. In this study, the system was used to monitor patients' hemodynamics around a change in patient position, also known as "orthostatic challenge". The NICOM system captured the markedly different hemodynamic response of heart failure patents as compared to the other causes of dyspnea and to accurately differentiate between heart failure and other conditions. Tel Aviv's Cheetah Medical's (http://www.cheetah-medical.com) NICOM Noninvasive Cardiac Output and Hemodynamic Monitoring System uses the company's proprietary BIOREACTANCE Technology to deliver continuous, accurate, noninvasive cardiac output (CO) and other vital hemodynamic monitoring parameters, useful for fluid management and drug titration. The system is US FDA cleared and CE Marked, and since its commercial launch in 2008 has been adopted by a growing number of clinicians worldwide. (Cheetah Medical 04.11)

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8.6 RedHill Biopharma Raises over $10 Million – 3 Times More Than Originally Planned

RedHill Biopharma completed a private placement of more than $10 million from Israeli and foreign investors; 3 times more than originally planned. So far, RedHill has completed the acquisitions of, and rights pertaining to, 6 late clinical-stage products, including the recently reported acquisition from Sydney-based Giaconda Limited of a late clinical-stage drug for the treatment of MAP infection in Crohn's (RHB-104), and two additional gastrointestinal products. RHB-104 is planned to begin phase II and III of clinical trials in 2011 under an existing FDA IND (Investigational New Drug) status. In September 2010, RedHill announced a deal with Montreal-based IntelGenx Corp. for the joint development of a new drug formulation for the treatment of acute migraine, based on IntelGenx' proprietary VersaFilm technology. RedHill previously reported additional agreements with Seattle-based SCOLR Pharma for a new formulation of a chemotherapy induced nausea and vomiting drug based on SCOLR's CDT proprietary technology, and with Copenhagen-based Egalet, for a new formulation of a leading congestive heart failure and high blood pressure drug. The company intends to conduct several Phase II/III trials and plans to file two NDAs (New Drug Applications) for marketing approvals with the FDA during 2011. Tel Aviv's RedHill Biopharma (http://www.redhillbio.com) is a pharmaceutical company focused primarily on acquisition and development of late clinical-stage new formulations of existing drugs. (RedHill 08.11)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Answers.com Hits 10 Millionth Answer Milestone

Answers.com announced that its database of user-generated answers now tops 10 million. The record-breaking answer came in response to the question, "Who was the first Native American to play pro-football?" According to Answers.com, "Jim Thorpe was probably the first American Indian to play pro football. He played professionally with the Pine Village Pros in Indiana in 1913 and later went on to become the first president of the NFL, where he also played for the Oorang Indians (an all-American Indian team) in Ohio." The answer to this question can improve over time as people contribute their knowledge by using the site's "Improve" feature. Questions can also be discussed in Answers.com's community forum and can be shared on social networking sites, including Facebook and Twitter. Answers.com members can also follow specific questions by getting regular updates on questions and answers of interest to them.

Answers Corporation (http://www.Answers.com) owns and operates Answers.com, the leading Q&A site. Answers.com 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 Answers.com also includes content on millions of topics from over 250 licensed dictionaries and encyclopedias from leading publishers, including Houghton Mifflin, Barron's and Encyclopedia Britannica. The site supports English, French, Italian, German, Spanish and Tagalog (Filipino). (Answers.com 02.11)

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9.2 KeyOn Selects Alvarion as 4G Wireless Last Mile Equipment Vendor for $10.2 Million Stimulus Award

KeyOn Communications Holdings, one of the largest providers of wireless broadband, satellite video and VoIP services in the United States, announced that it has selected Alvarion as its next-generation, 4G wireless equipment supplier for its statewide network that will connect rural communities throughout Nevada. Initially KeyOn will be deploying over $3 million of Alvarion's BreezeMAX WiMAX equipment and expects increased purchases of equipment with the anticipated growth in subscribers due to the lack of advanced broadband services. The network will utilize the 3.65 GHz spectrum band where KeyOn holds a nationwide, non-exclusive license. KeyOn has received a $10.2 million stimulus award to provide 4G, last-mile wireless broadband access and VoIP services to approximately 93,000 people, 5,522 businesses and 849 critical community facilities in qualified rural communities throughout Nevada. KeyOn plans to offer broadband service at speeds up to 8 megabits per second (Mbps).

Tel Aviv's Alvarion (http://www.alvarion.com) is a global 4G communications leader with the industry's most extensive customer base, including hundreds of commercial 4G deployments. Alvarion's industry leading network solutions for broadband wireless technologies WiMAX, TD-LTE and WiFi, enable broadband applications for service providers and enterprises covering a variety of industries such as mobile broadband, residential and business broadband, utilities, municipalities and public safety agencies. (Alvarion 03.11)

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9.3 MSI Fuzion Motherboards Gain Momentum and Garner Awards With PC Gaming Community

LucidLogix announced a range of successes for HydraLogix-based MSI Fuzion P55a and 870a motherboards. Lucid's HydraLogix technology is redefining high graphics performance with its groundbreaking multi-GPU technology for everyone from the budget conscious PC gamer to the extreme, hard-core fanatic. Offering gamers and PC enthusiasts any number of options to configure multi-GPU systems with the integrated HydraLogix technology, Asus Crosshair and MSI Fuzion motherboards have received numerous article recognitions by top gaming and enthusiast publications. Kfar Netter's LucidLogix Technologies (http://www.lucidlogix.com) has reinvented multi-core graphics with its HydraLogix real-time distributed processing engine that improves visual computing for both business and gaming applications. A fabless SoC provider, Lucid's innovations are protected by more than 60 patents and patents pending. (Lucid 03.11)

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9.4 Chicago Board Options Exchange Selects Correlix RaceTeam to Provide Latency Transparency

Correlix announced that the Chicago Board Options Exchange (CBOE), the largest U.S. options exchange and creator of listed options, is joining the Correlix RaceTeam latency measurement service. CBOE has selected Correlix's RaceTeam to measure the latency of order execution in its infrastructure and provide this data in real time to its customers. The RaceTeam service will enable CBOE to provide real-time latency insight into its existing CBOE exchange and its new all-electronic C2 Options Exchange (C2). This latency data will enable CBOE customers to optimize their trading strategies, react more quickly to changing market conditions, manage latency performance and streamline operations. RaceTeam is an objective venue-neutral service that enables trading firms to manage and receive real-time Latency Intelligence information from various trading venues. The RaceTeam service facilitates greater trading latency insight into each transaction and leads to optimized trading strategies, improved trade execution and streamlined inter-party latency problem resolution.

Correlix (http://www.correlix.com) is headquartered in New York with R&D offices Herzliya, Israel. Correlix' RaceTeam is a leading latency management service providing real-time latency visibility for buy-side, sell-side and liquidity venues. Customers rely on Correlix to monitor, measure and minimize latency in trade execution and market data flow in real-time. This empowers users to execute a trade or deliver and act on market data in fewer microseconds. (Correlix 03.11)

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9.5 Mocambique Cellular Chooses Celtro for 2G & 3G Unified Backhauling

Celtro, a leading supplier of mobile backhaul solutions, today announced that Mocambique Cellular (mcel), Mozambique's largest mobile communications provider, has chosen Celtro solutions to facilitate the rollout of new 3G network services by using its 2G/3G unified backhaul solution. The strategic move by mcel will leverage Celtro's powerful backhaul solutions to help grow revenues - bolstering mcel's advanced data services offering. mcel was looking for a solution that would maximize backhaul capacity, thus enabling rollout of new mobile broadband services over existing network infrastructure, while still ensuring QoS. Petah Tikva's Celtro (http://www.celtro.com) provides creative mobile backhaul switching solutions that improve service delivery, increase network efficiency and facilitate smooth backhaul network evolution - helping providers enhance revenues, improve customer satisfaction, lower operational costs and streamline backhaul network investments. Already adopted by top-tier providers worldwide, Celtro's solutions focus solely on the cellular backhaul. (Celtro 04.11)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli Housing Demand Falls

Housing demand in Israel fell by 5.6% in September 2010 to 2,920 new apartments, compared with August, and by 9.5% compared with September 2009, when demand was 3,228 apartments, according to preliminary data in the housing starts survey and privately new home sales survey by the Central Bureau of Statistics, and the housing starts and publicly new home sales survey by the Ministry of Housing and Construction. Some 1,660 of the 2,920 new apartments were sold to the public, while 1,260 were not available for sale, as they were built by the owners, presold to buyers groups, built for rent, or other reasons. Housing demand was 2% lower in January-September, compared with the corresponding period and April-December of last year. Housing demand rose 128% in Beer Sheva in January-September compared with the corresponding period and rose by 105% in Kfar Saba, but fell 52% in Beer Yaakov and 38% in Netanya. (Globes 31.10)

10.2 Poverty Report Finds 123,500 Join Israel's Poor

Some 123,500 people joined the circle of poverty in Israel in 2009, according to the National Insurance Institute's Poverty and Social Gaps. A total of 850,300 children live under the poverty line, the report said, and almost two in five children are disadvantaged. According to the data, some 15,000 families – mostly large Arab and ultra-Orthodox families – joined the circle of poverty in 2009. In total, Israel has 435,000 poor families. The number of poor families rose from 19.9% in 2008 to 25% last year. The number of poor residents went up from 23.7% to 25%. The number of poor children rose from 34% in 2008 to 36.35% in 2009. A drop was recorded in the number of elderly people living under the poverty line, and 9,300 managed to emerge from the circle of poverty due to the increase in old age pensions. Meanwhile, a social resilience survey reveals that fewer Israelis believe the State will protect them and trust in the heaven's graces. In spite of violence and political corruption, most Israelis see Israel as a preferred place of residence. (Ynet 08.11)

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11: IN DEPTH

11.1 ISRAEL: Computer Hardware Market Projected at $2.2 Billion in 2010

Research and Markets (http://www.researchandmarkets.com) "Israel Information Technology Report Q4 2010" projects the Israeli IT market will have a value of $4.9b in 2010. The Israeli IT market should gain enough momentum from key sectors to expand at a CAGR of 6% over BMI's 2010-2014 forecast period, thanks to stable demand from defense and government sectors as well as opportunities in verticals like financial services and small and medium-sized enterprises (SMEs).

Spending is expected to resume single-digit growth in 2010 after a contraction in 2009. In early 2010, there were reports of a pick-up in the flow of projects. Vendors reported a revival in demand in the key financial services vertical, where new projects included an $11m IT outsourcing tender by the First International Bank of Israel. Healthcare, the public sector and utilities also generated projects. The Israeli IT market has strong fundamentals that should keep it in positive territory during BMI's five year forecast period. Household computer penetration of around 75% offers potential for further growth. High internet penetration, including growing broadband penetration, are drivers for the retail segment, while the financial services sector accounts for about 15% of Israeli IT spending.

Industry Developments

In 2009, Israel's high-tech sector suffered as demand for high-tech exports dropped by at least 10 - 15%, with as many as 10,000 sector jobs feared to be at risk. This represented a major concern for the Israeli government given that high-tech accounted for around 10% of Israel's economy, with annual sales estimated at around $25b. Major IT firms were retrenching in Israel, including SAP, Cisco and HP. IT is viewed as an important policy tool for the Israeli government's 2008 - 2010 socioeconomic policy framework. In 2009, the National Economic Council recently submitted a policy agenda to the government, which specified two main policy tracks of reducing poverty and achieving balanced growth. The first track is expected to emerge as the main priority.

As part of its modernization agenda, the government is pressing ahead with various other strands of its e-government project. Among other initiatives, there has been spending on computers in healthcare and the nationwide paperless court initiative. The e-government program is leading to increased demand for computers, with the Israeli government reaching supply agreements with vendors like Dell and HP.

Competitive Landscape

The Israeli IT services market is competitive, with leading multinational competitors IBM and HP (following its merger with EDS) both estimated to have Israeli IT services market shares of around 10%. HP Israel's software division hosts HP's biggest research and development (R&D) centre worldwide, and the company also has significant production facilities in Israel.

Leading IT services vendors, including Israeli companies Ness Technologies and Matrix as well as IBM, experienced mixed fortunes in the Israeli market in 2009. Ness Israel reported a 17% decline in full-year 2009 revenues compared with 2008, although around one-third of this was due to foreign currency effects. Meanwhile, market leader Matrix reported wins in a number of key sectors including healthcare, financial services, defense and government.

In 2010, Microsoft Israel, which as an annual turnover of around $1b, hopes sales of its Windows 7 operating system, launched in October 2009, will boost its revenues. Microsoft anticipated support from leading PC makers would underpin success for the new system, despite some caution from businesses. Israel is also an important R&D centre for Microsoft, and in 2010 the company's Israel R&D centre launched a new unified access gateway (UAG) product.

Computer Sales

The Israeli computer hardware market, including desktops, notebooks, servers and accessories, is projected at $2.2b in 2010, up from $2.1b in 2009. The market is expected to grow at a CAGR of 5% over the forecast period to reach $2.6b in 2014. Spending is expected to resume single-digit growth in 2010, after a contraction in 2009 due to the economic slowdown and unemployment hitting consumer demand for electronics goods. Household consumption moved into negative territory in 2009, and although there was a slight recovery in H2/09, trading conditions remained tough.

Software

Israeli software spending is projected at $1.0b in 2010, up from $973m in 2009. The packaged software segment is expected to grow at a CAGR of around 7% over the forecast period. Businesses are expected to remain cautious, deferring investments or looking for 'good enough' solutions to immediate problems. However, there should still be several growth areas.

Software spending is shifting towards the SME segment, which forms the mainstay of the Israeli business sector. Spending on enterprise solutions has grown since 2007, with reviving or emerging areas of opportunity including security, customer relationship management (CRM) solutions and business intelligence. In terms of verticals, the financial sector has been a mainstay of demand, with other key opportunities including defense and healthcare.

IT Services

The IT services segment is estimated at $1.6b in 2010, and this is expected to grow at a CAGR of 7% over the forecast period to reach $2.1b in 2014. In early 2010, there were reports of a pick-up in the flow of projects, but growth is expected to reach a higher trajectory in the second half of our five-year forecast period.

Government and defense are two key sectors likely to be a continued source of opportunities, because the factors driving spending in each case are not particularly sensitive to economic vicissitudes. Another key area of opportunity is healthcare IT. Despite failing to capitalize in the past, Israel is starting to emerge as a desirable location for packaged applications and localization services.

E-Readiness

Israel's relatively high PC penetration and the growing availability of broadband access mean internet penetration is likely to continue its upward trajectory. The government has announced it intends to make a big effort to narrow the digital gaps that manifest themselves across various demographic lines. Israel's strong broadband growth has long relied on a handful of developments across the market. These include the competition between Bezeq and the cable companies, with five major internet service providers (ISPs) vying for market share from both the corporate and residential markets, which enjoy high PC penetration rates, advanced telecoms infrastructure and minimal regulatory intervention. Another development likely to stimulate growth is the introduction of local loop unbundling (LLU), which will give alternative operators access to Bezeq's network and stimulate much greater competition. (R&M 05.11)

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11.2 ISRAEL: NanoIsrael 2010: Israel Becoming Leading Nano–Technology Nation

Based on data of the Israel National Nano–Technology Initiative – INNI – which has gathered on the occasion of Nano–Technology Week: NanoIsrael 2010 Conference and Exhibition being held in Tel Aviv, during the last three years since Nano-Technology was declared an Israeli national project, it has resulted in: 52 leading scientists have immigrated to Israel, $77 million have been invested in equipment, $41 million have been invested in infrastructure, 106 success stories have been documented and 389 Academy–Industry Projects have been achieved.

During this time, 389 cooperation transactions have been established between the Israel academy and the Industry (both local and foreign), 106 "success stories" have been documented, either as new start–up companies or as authorized patents, not to mention the 422 patents that were submitted for registration.

In 2007, the Israel Nano field was defined as a project that received governmental priority, and its mission was the installation of the research and structural infrastructure in six university premises. The selected universities were those in which the research dealing with establishing the industry based on Nano–Technology was going to be performed. A plan was based on three supporting entities: governmental support (one third), university resources (one third) and contributions (one third). Six Nano centers were established in different universities (the Technion center had already been established in 2005).

According to the INNI, 249 junior scientists coming from the field (including postdoctoral researchers), 675 doctorate students and 662 masters students have participated in the plan since day one. During these three years, 3248 scientific articles were published and 536 other essays were originated in cooperation between several universities.

The "NanoIsrael 2010" conference (http://www2.kenes.com/nano/pages/home.aspx) and the accompanied exhibition will be held on November 8–10 at the Dan Panorama Hotel in Tel Aviv focusing on business innovations and opportunities in the fields of energy, water systems, environmental issues, Nano–Materials, Nano–Electronics, Nano–Photonics, Nano–Bio and Nano–Medicine. This conference is targeted at industry and business persons from around the world, and will serve as the meeting point for companies and persons involved in venture capital, private funds, institutional and organizational investors, regulation, technology and development persons, governmental decision makers, as well as academy representatives, scientists and investors. (NanoIsrael 2010 02.11)

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11.3 LEBANON: Balancing Act On Debt

The Oxford Business Group noted that Lebanon's government has been urged by a multilateral lender to strengthen its public finances, upgrade infrastructure and improve the business environment to sustain recent macroeconomic progress. However, servicing the nation's vast public debt is a constant drain on the funds needed for many of these initiatives.

In its latest assessment of the Lebanese economy, released on October 8, the International Monetary Fund (IMF) said the government needs to balance plans to boost infrastructure investment with measures to alleviate public debt, which had climbed to $51b, or 148% of GDP, by the end of 2009. "The need to periodically refinance this large stock of debt is a source of vulnerability, despite the country's dedicated and resilient investor base," said the IMF report.

Much of that investor base is represented by Lebanon's private banking sector, which is currently one of the strongest in the region. As of the end of August, commercial banks in the Lebanese market had combined assets of $124.6b, up 16% year-on-year, and private sector deposits of $102.7b.

Lebanon's debt accumulated due to fiscal disarray resulting from the 1975-1990 civil war. Reflecting political and macroeconomic uncertainties after the conflict, the country was given only limited access to international capital markets and had to resort to domestic markets to finance its budget deficit. In an attempt to restructure this public debt, however, in the late 1990s the government borrowed some $2b on international capital markets. By the end of the decade one-third of public debt was denominated in foreign currency, with this reaching more than 50% by 2007. However, in recent years this has markedly declined, with foreign currency-denominated debt falling to 41.8% of the total borrowing at the end of August, compared to 44.2% a year earlier, according to figures from Byblos Bank.

In early October, Moody's Investor Services released an updated credit opinion note on Lebanon which said that, despite the potential for political instability, the state had an excellent track record of servicing its debt and that the backing of the country's finance sector helped to maintain fiscal stability. "Lebanese commercial banks, the government's primary creditors, remain willing and able to purchase and roll over government debt given continuing growth in bank deposits," the note said.

The Moody's assessment came soon after Barclays Capital issued its own overview of Lebanon's economy, which said that one of the key challenges for Beirut was to roll over almost $4.8b of foreign currency debt in the next 16 months, $1.45b of which would fall due in November, the report said. Barclays said it is expected that the government would be able to utilize the "ample liquidity in Lebanese banks and interest from international investors in 2010". The government is also boosting its revenues by reducing tax evasion, improving tax assessments on real estate and simplifying laws and regulations to encourage more people to pay taxes owed, Finance Minister Raya Hassan told a finance conference in Beirut at the end of September. "Lebanon is faced by a great challenge and has to preserve the growth reached over the past few years without opening the way to a further increase in the public debt while increasing the national economy's resilience to any future difficulties or crises," she added. (OBG 01.11)

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11.4 BAHRAIN: Water Report for Fourth Quarter of 2010

Research and Markets (http://www.researchandmarkets.com) "Bahrain Water Report Q4 2010" says Bahrain receives groundwater by lateral under-flow from the Dammam aquifer, which is part of an extensive regional aquifer system. Excessive extraction from this aquifer has led to an increased saline content, through water coming from adjacent brackish and saline water sources.

More than half of the country's water is provided by the Hidd independent water and power plant (IWPP), with just 15% of consumption provided by ground water in 2008. Desalinated water now accounts for more than 80% of Bahrain's water provision, a proportion that is likely to increase over time. Desalinated water capacity has increased significantly since 2009 with the commissioning of the third phase of the Hidd Power Company desalination plant, which has raised output to 90mn gallons a day (g/d), an increase of 60mn g/d over its previous capacity.

The Electricity and Water Authority (EWA) is the agency responsible for the production and supply of power and water in Bahrain, working as an independent arm of the state. It has successfully pushed for the development of IWPPs, via Hidd phase three and now the award of the al Dur IWPP contract. The kingdom has also drafted a national policy for wastewater, including reuse of treated sewage effluence. A major boost to wastewater treatment capacity will come with the development of the Muharraq wastewater plant, which will have a 100,000-150,000m3 per day (m3/d) capacity. EWA has also made improvements in increasing the coverage of sanitation and sewage connection to 88% of the island's population and is on target to reach full coverage by 2015.

EWA is looking to award the consultancy contract for a water transmission development scheme before end-2010, which will add 165km of new pipelines that will hold an extra 48mn g/d of water produced from al-Dur IWPP. The government is now looking to ramp up private-led development of Bahrain's water sector, making the investment climate even more business-friendly.

The Muharraq sewage treatment plant is the first major fruit of the country's privatization effort and to ensure its success, the government has guaranteed effluent supplies and will take all the treated water. Korea's Samsung Engineer was named preferred bidder on the project in Q3/10. The kingdom's progress in bringing on stream new desalination capacity will enable it to keep a handle on water demand over the forecast period. Though groundwater output will be well down on its 2010 peak of 10.5bn gallons over the next four years, we envisage a small increase in production that will keep its contribution to overall water supplies level at just over 10%. (R&M 04.11)

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11.5 UAE: Fastest Growing Market for Coffee in the World

Euromonitor found that the United Arab Emirates represents the fastest growing market by volume for coffee in the world, despite the country falling into recession by Q4/08. Total coffee volume sales are predicted to grow by 80% from 2009 - 2014 with a return of more than 12% over that time period. This growth also comes amidst a still dominant tea drinking tradition in the country. With more than 50% of the UAE's population hailing from East Asia and the Indian Subcontinent, this expatriate population provides the appropriate consumer base for tea. Tea is usually drunk at many times during the day, often alongside or after meals. Not only is tea a traditional favorite within this community, it is also cheaper than coffee.

However, the country's recent period of great economic development helped to create several new points of entry for higher quality coffees. Once the recession began to take hold, a shift in consumer tastes had already begun, one that continues to drive coffee purchases even as overall consumer expenditure has been reigned in. Surprisingly, growth was driven primarily through the on-trade channel, which continued to reap dividends of the emerging café culture.

Café Culture

The rise of the café trend was initially set by domestic chain Gerard's in the early 1990's. The café culture began materializing with the influx of international chains that started taking place by the mid to late 1990's, amid the emergence of shopping centers, in which many cafés are located. Spending in cafes increased significantly, by 119%, between 2005 and 2008, reaching $454 million, according to Euromonitor International data.

The buoyant coffee culture prompted the emergence of local coffee chains such as Blends & Brews; however, the abundance of cafés from all corners of the world staved off the development of domestic ones. The United Arab Emirates arguably houses the presence of some of the largest international cafés in the world, including Starbucks, Costa Coffee, Coffee Bean & Tea Leaf, Seattle's Best Coffee, Barista, Hédiard, Café Nero, Café Supreme, Blenz, Second Cup, Segafredo Zanetti, Illy and Lavazza.

Such presence has so far succeeded in converting the United Arab Emirates consumer – whether national or expatriate – into a regular coffee drinker.

While coffee shops have always existed, the contemporary coffee outlet represents a social outlet where all individuals can come together. Traditionally, coffee shops were reserved for men who would gather together to chat while drinking coffee. The main appeal of such shops is the social factor, and they are increasingly popular amongst adolescents and university students. While Dubai does have an active nightlife, for religious reasons drinking and clubbing are usually frowned upon. Most adolescents don't have the option of doing much else than going to coffee shops, especially since it is often too hot for most outdoor activities. Such outlets allow for young people the opportunity to socialize with others in a surrounding that is not considered to be culturally unacceptable.

The increasing number of specialist coffee shops fed through into higher on-trade volume coffee sales, which grew by 17% in 2009 versus a lower growth of 9% for off-trade volume sales. On-trade volume sales accounted for 51% of total volume sales of coffee in 2009, a percentage which has gradually grown from 42% since 2004. Coffee shops are becoming widespread across the country's main cities such as Dubai and Abu Dhabi, with a concentration in shopping centers, high streets, educational institutions, airports and business centers.

Premium Market But Favorable Overall Pricing

In addition to this emerging café culture, a trend of premiumization also reigned in 2009, beating earlier estimates that the economic slowdown would hamper its development. In 2009, a number of premium brands were launched such as Illy, Whole Earth Organic, Lavazza Dek and Twinings Coffee Blends.

Consumers were also increasingly exposed to the various ways of preparing coffee, especially with the expanding launch of coffee pods. In May 2009, Nestlé Nespresso – the pioneer in premium portioned coffee – opened its first store in the UAE at the Dubai Mall. This store was – and will continue to be – instrumental in marketing the company's wide selection of coffee machines and coffee blends, known as Grand Crus.

Such innovations have succeeded in bringing the café experience to home or the office and hence opened a new type of premium coffee experience to consumers who might otherwise have avoided coffee altogether.

Even with this emphasis from manufacturers on premium coffee, some trading down was witnessed in 2009 and early 2010, especially among middle-income earners from standard instant brands such as Nescafé to economy brands such as Brooke Bond Bru, which is highly popular among the dominant population hailing from the Indian Subcontinent.

There was less trading down within fresh coffee. In terms of pricing, unit prices reflected the lower cost of raw materials in 2009, with the International Coffee Organization (ICO) composite average declining to $1.16.4/lb down from an annual average of $1.24.25/lb in 2008. Although such a drop should have caused a decline in coffee unit prices, suppliers and retailers did not initially factored in the global decline. This scenario prompted the Ministry of Economy to intervene during the first quarter of 2009 and control the prices of certain brands to prevent manipulators from maintaining the 2008 'high' prices.

Future Opportunities for Multinationals

Although premiumization is expected to slow down through 2011, the trend is set to continue driving the category over the next five years. Consumers' expectations of coffee they can purchase to prepare at home will rise to meet what they expect from a coffee shop, creating further space for international companies to launch premium coffees, something that will take greater time and resources for domestic manufacturers to develop on their own.

In addition, pod machines appear to be here to stay and one would expect there to be a large push for these machines during the coming few years. The prices of pod machines are expected to fall as more competition arrives in the marketplace, ushering in another wave of new popularity among consumers. Although Nestlé's Nespresso holds the first mover advantage, others are likely to follow suit.

It is clear that international coffee chains have begun to realize the potential of the UAE market and it's expected that more international players will be looking to gain a foothold. Additionally, coffee sales do not appear to have been significantly affected by the economic downturn and have continued to increase. Coffee shops are, in fact, perceived as a cheap alternative to dining out and as a venue for socializing, especially among younger people. Multinational coffee manufacturers, with established reputations for quality, will continue to find an increasingly receptive consumer audience in the UAE. (Euromonitor 07.11)

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11.6 SAUDI ARABIA: Seeking Alternatives

Although Saudi Arabia has the world's largest proven reserves of oil, the government is looking to develop alternative energy sources to fuel the nation's power plants amid rising demand for electricity. The Oxford Business Group said that due in part to the growing needs of an expanding industrial base and population, electricity demand is currently rising by around 8% a year. Oil-burning plants produce most of the country's power, with more than 1m barrels per day being consumed representing some 10% of daily production.

Moreover, as oil is sold to the power industry at around 5% of the international market rate, the cost of subsidizing domestic electricity production is considerable. According to official figures, government subsidies for power consumption amounting to approximately $13.3b per year, the equivalent of 9% of government expenditures in 2009. By reducing its reliance on oil for power generation, Saudi Arabia could free up resources for its export market. With fossil fuel sales expected to underpin the economy for the foreseeable future, the government wants to make the most of existing reserves.

Dr Adil Bushnak, the owner of several Saudi desalination and water distribution companies, has warned there could be a real impact on the country's key revenue generator if it does not find another way to fuel electricity generators, especially if demand continues to increase. "If we continue our current consumption, we will be using 50% of our [oil] production inside the country in the future," Bushnak said at the Saudi Water and Power Forum held in Jeddah on October 2.

Central to the Kingdom's future energy strategy is the development of a civilian nuclear power industry, with feasibility studies being carried out through the newly established King Abdullah City for Atomic and Renewable Energy (KACARE), located on the outskirts of Riyadh. KACARE will serve as a centre to promote energy research and oversee project development. While there are limited details on the city's opening date, a president and other officials have already been appointed.

In June, KACARE awarded a contract to Poyry, a Finnish engineering and consulting firm, to help draft a long-term strategy for the development of alternative energy sources. Poyry's work will include advising the Kingdom on the type of regulatory bodies that might be necessary, as well as identifying the international treaties that would need to be observed.

The Saudi Arabian government also approved plans for civil nuclear cooperation with Russia, the state-run Saudi Press Agency reported in late October. The draft agreement was signed by the head of the Kingdom's Center for Nuclear and Alternative Energy Technologies, Hashim Abdullah Yamani. Although Saudi Arabia should have few problems in gaining the approval of international agencies and the support of countries such as the US, the path to a successful nuclear energy program can be long. It may take time to design and construct specialized power stations adapted to Saudi Arabia's own needs and climate.

While the nuclear option does appear the preferred choice, the country is considering alternatives. Not surprisingly, solar energy is one. With a sunny climate and vast open spaces, Saudi Arabia may appear to be a likely candidate for this renewable energy source. In late October, California-based SolFocus announced it had reached a deal with the Kingdom's Vision Electro Mechanical signed an agreement to build eight solar power stations in the Kingdom, starting with a 130-kilowatt solar plant in the Bahra industrial complex near Jeddah. There are a few issues that must be addressed before any larger scale solar energy developments can be built. Potential problems include excessive dust, humidity and even heat, all of which can damage solar panels and equipment.

Meanwhile, to address rising levels of electricity consumption, Saudi Electricity Company (SEC), the state-controlled utility, plans to increase generation capacity from 50,000 MW to 70,000 MW by 2020, at a cost of approximately $80b. This expansion appears to be focused on conventional power stations, rather than alternative sources of energy, however, going forward, alternative sources may well be tapped sooner rather than later. (OBG 29.10)

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11.7 EGYPT: Enviable Growth

The Oxford Business Group said that Egyptian Minister of Economic Development Osman said on 19 October that Cairo was contemplating a new stimulus package – Egypt's fourth since 2008 – to boost domestic demand and ensure GDP growth is sustained in coming months. Five days before Osman's statement, the Ministry of Planning announced a downward revision in GDP growth figures, from 5.9% to 5.4% for the April-June quarter and from 5.3% to 5.1% for the 2009-10 fiscal year as a whole. This followed sobering reports of a slide from 70th to 81st place in the World Economic Forum's 2010-11 Global Competitive Index report and a surge in annual core inflation from 8.2% in August to 10.97% in September. However, while Egypt's growth figures seem far from the growth registered in 2004-05 to 2007-08, when it averaged 7%, the new, revised levels indicate that Egypt's economy is recovering and indeed is outstripping most of its peers.

At the height of the worldwide financial crisis, in 2008-09, Egypt's growth rate slipped to 4.7%. Other countries fared worse. Egypt's diverse economy, large domestic market, and lack of financial leveraging insulated it from the worst effects of the downturn, while its institutions were never imperiled. Egypt's slowdown was due to exogenous and temporary – rather than structural – factors: above all, by a decline in Suez Canal revenue, tourism and foreign investment.

The three stimulus packages enacted since 2008, which together injected LE34.2bn (€4.3bn) into the Egyptian economy, allowed it to do just that. Now that the worst of the crisis has passed, the sectors responsible for its downturn are starting to recover. Revenue from the Suez Canal declined slightly from $4.7bn in 2008-09 to $4.5bn in 2009-10, but that figure is deceptive: revenue actually increased by 12.5% over the first half of 2010. Beltone Financial, the Cairo-based investment bank, predicts that revenues will reach $4.9bn by the end of the current fiscal year.

Tourism, too, has staged a comeback. Whereas revenues from the sector declined by 2.1% to $10.8bn in 2009, Tourism Minister Garranah expects them to surge more than 17% this year as the world emerges from crisis. "If things go as planned as far as future reservations are concerned," he told local media in October, receipts could reach somewhere between $12.6bn and $13bn. Investment banks EFG-Hermes and CI Capital are more cautious, but still predict handsome receipts: $12.2bn and $12bn, respectively – which would indicate growth of 13% in the first case and 11% in the latter.

Foreign direct investment (FDI) appears to be following a similar pattern. According to the Egyptian Ministry of Investment, FDI dropped 16% from $8.1bn in 2008-09 to $6.8bn in 2009-10. Former investment minister Mahmoud Mohieldin, who in September became managing director at the World Bank, predicts that it will rebound to at least $8bn in 2010-11. Astrit Sulstarova of the United Nations Conference on Trade and Development's Investment Division is similarly bullish. Egypt signed 101 international investment agreements last year, he points out – one of the highest numbers in the world. It has continued to sign more this year. For example, recently it signed 22 agreements with companies in Guangdong province, China with a total value of $400m. Barring further setbacks, FDI inflow to Egypt should eventually return to its pre-crisis peak of $13bn a year, Sulstarova says.

Boosted by these trends, as well as by domestic consumption, Egypt's GDP expanded by 5.6% in the third quarter of 2010. The government expects that upward trajectory to continue; it forecasts growth of 6% for the fiscal year ending in June 2011. Beltone Financial, which is currently revising its growth estimates for 2010-11, finds that figure plausible. But it cautions that Egypt is unlikely to see a return to pre-crisis levels of growth before next year's elections, as investors wait to see how things shake out.

Even so, Egypt's growth is the envy of its region – and elsewhere. It should outpace all the Gulf States save Qatar, which is posting double-digit growth, as well as most of Africa, whose countries are expected to grow by an average of 5% in the coming year. It will surely outperform the global average of 3.5%.

The main thing holding Egypt back from faster growth is infrastructure. Spending on roads, rails, and ports – not to mention education and health – has not kept pace with population growth. However, the government is "aggressively seeking" private partners to finance and provide human resources for such efforts, according to Trade and Industry Minister Rachid Mohamed Rachid, who has predicted infrastructure projects worth some LE50bn ($8.8bn) over the next 18 months. While partners may be tough to find before the election, this is the kind of stimulus that is really needed. (OBG 05.11)

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11.8 EGYPT: Food and Drink Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Egypt Food & Drink Report Q4 2010" says Egypt remains the most promising Middle East and North Africa consumer market with significant scope for growth across the key food and drink indicators. On the demand side, a young, aspirant and rapidly growing population already close to 80m and a promising long-term macroeconomic outlook are two of the dynamics upon which our view is based. There remains huge scope across all the key food and drink industry indicators. Yet concerns remain about Egypt's regulatory environment and the uneven distribution of income, which will need addressing if the country is to capitalize on its potential.

Headline Industry Data

2010 per capita food consumption = +12.49%; forecast to 2014 = +59.08%
2010 mass grocery retail sales = +33.1%; forecast to 2014 = +258.84%
2010 carbonates volume sales = +15.33%; forecast to 2014 = +81.85%

Cutting Down Tourism Reliance in Alcohol

Heineken is to place a greater emphasis on growing its inherited wine business in Egypt. Very rarely associated with wine, Heineken bought into wine when it acquired the diversified Egyptian alcoholic drinks company Al Ahram Beverages Company for about $300m in 2002. Given some of the unique challenges Heineken faces in Egypt in comparison to almost all of its emerging markets the most notable being a strong reliance on the tourism industry for scale it feels that it needs to grow the proportional contribution of domestic sales. About 90% of Egypt's near 80 million population is Moslem and does not consume alcohol. While the consumption of alcohol outside hotels is not prohibited by the government like it is in much of the Arabian Gulf region, a number of advertising restrictions are enforced, making it difficult for Heineken to make headway.

Multinational Retail Interest Growing

In August 2010, it was announced that the UK-based retailer Marks & Spencer (M&S) was looking to open its first store in Egypt with its franchise partner Al Futtaim at the Dandy Mega Mall in Cairo by the end of 2010. The new 2,600m2 outlet would sell a selection of family fashion, beauty and home products. M&S also plans to open a 4,400m2 store at Cairo Festival City in 2012. Earlier in June 2010, it was announced that the German retail giant Metro was about to debut its first store in Egypt with plans for a further 19.

Domestic Companies Pursuing Expansion

While multinational companies are largely leading food and drink investment spending in Egypt, domestic companies are also increasingly active. In June 2010, the diversified Egyptian food and drink firm Juhayna announced it had raised about $142.5m in a 1.75 times oversubscribed private share offering. This represented 80% of new Juhayna shares up for grabs, with the remaining 20% to be available to public investors in what will be Egypt's first initial public offering since 2008.

Egypt's regulatory environment remains a concern, with the food and drink team rating it just 5/10. Infrastructure continues to misfire and internal trade systems remain weak, which contribute to Egypt being a high-cost market. (R&M 02.11)

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11.9 LIBYA: 2010 Article IV Consultation, Preliminary Conclusions of the Mission

An IMF mission visited Libya during October 17–28, 2010 to conduct discussions for the 2010 Article IV consultation.

I. Background and Recent Developments

1. The macroeconomic environment is strong, underpinned by large fiscal and external positions and continued efforts to modernize and diversify the economy. The mission commends the authorities on efforts to enhance the role of the private sector in the economy, including by passing a number of critical laws that build on the initiatives launched over the past few years to modernize the economy. These achievements have contributed to the favorable sovereign ratings assigned to the country for the second year by international rating agencies. The authorities are aware of the many challenges that remain to diversify the economy and to help create viable employment opportunities for the growing labor force.

2. The impact of the global financial crisis on Libya has been thus far limited to the decline in oil revenue. This was due to the lack of exposure of domestic banks to the global financial system, limited trade ties outside of the oil sector, and large foreign reserves held in safe assets. The Libyan Investment Authority (LIA) has come through the global financial crisis relatively unscathed. The oil sector has continued to benefit from commitments of foreign direct investment.

3. Non-hydrocarbon growth has been solid on the backdrop of high domestic demand. Notwithstanding a noticeable fiscal contraction in 2009, non-hydrocarbon real GDP grew by an estimated 6% in 2009, mainly driven by investments in construction and in services. Meanwhile, hydrocarbon output declined significantly due to compliance with OPEC quota, resulting in a contraction of overall real GDP by an estimated 1.6%. Overall growth is projected to increase markedly to around 10% in 2010 due to a sharp increase in oil production. At the same time, non-hydrocarbon growth will also strengthen (to about 7%) as a result of large public expenditures. Inflation is expected to pick up to about 4.5% in 2010 (from 2.5% in 2009) as higher oil revenue increases domestic liquidity and international commodity prices increase.

4. After a sharp decline in 2009, the fiscal surplus is projected to increase in 2010 mainly owing to the projected recovery in oil revenue. The fiscal surplus narrowed sharply to about 7.0% of GDP in 2009 as a result of a sharp decline in oil revenue (44%) that has more than offset the reduction in public outlays (12%). The latter reflects the net effect of a decline in capital spending (23%) and a 5% increase in current outlays. The increase in current spending reflects higher subsidies due to explicitly accounting for energy subsidies and transfers to the Economic and Social Development Fund (ESDF). At the same time, current expenditure is envisaged to increase by 19%, compared to 2009, largely due to full explicit accounting of energy subsidies, and a 15% increase in the wage bill. The ongoing prioritization of investment projects would allow capital expenditure to increase by about 18%, compared to the budgeted increase of almost 60%.

5. Broad money is projected to grow by about 10%, although the assessment of monetary development has been complicated by numerous revisions. Commercial bank lending to the private sector and nonfinancial public enterprises has been constrained by lack of adequate borrower documentation, strengthening of regulation, and high liquidity at public enterprises. The latter's demand for bank services has been largely limited to letter of credits (LCs) and guarantees (LGs). Excess liquidity has remained high in the banking system, and financial intermediation is weak compared to neighboring countries. The banking system is sufficiently capitalized with a regulatory capital ratio of 16.3%. Non-performing loans have slightly increased to 15.5% as of end-June while loan provisions at over 100% have improved over the last years. LCs and LGs have flourished with domestic currency LCs increasing by almost 200% so far in 2010 and overall off-balance sheet LCs and LGs totaling 84% of overall on-balance sheet bank assets.

6. The external current account surplus is projected to increase to about 20% of GDP in 2010, after a having narrowed sharply in 2009 (16% of GDP). Export earnings are projected to rebound in line with the recovery in crude oil output and prices. Imports, while also picking up due to strong domestic demand, have been steadier and remain about a third lower than exports. Net foreign assets of the Central Bank of Libya (CBL) and the LIA have consequently continued to increase and are projected to reach $150 billion by end-2010 (the equivalent of almost 160% of GDP). (IMF 05.11)

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11.10 PAKISTAN: Defense and Security Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Pakistan Defense and Security Report Q4 2010" report says the core security issue facing Pakistan is undoubtedly the militant insurgency that was initially based in the northern tribal lands near the Afghan border but is now reaching into other, central, areas of the country. Despite gains by the Pakistan military in both the Swat Valley and South Waziristan, there seems to be an increase in terrorist attacks across the country. In all probability, Pakistan is facing a multi-year struggle against a committed enemy. The most spectacular raid was the June 7 attack on a NATO convoy just outside Islamabad. There had been attacks on convoys in the past but only by insurgents operating in their home areas in the northwest.

Pakistan is a pivotal country for global security, owing to its large population, Muslim identity, links with Islamist terrorism, adjacency to Afghanistan and its nuclear arsenal. The troubles in Pakistan are inextricably linked with the conflict in Afghanistan. Taliban forces cross into the border regions of Pakistan, which they see as a relative safe haven.

Due to its strategic importance, Pakistan's foreign allies will do everything they can to ensure its stability. As we argue in this report, while we see difficulties we do not anticipate a complete breakdown of the state or the installation of a fundamentalist Islamic regime. On the other hand another military coup cannot be ruled out if the civilian government fails to maintain control. Tensions will remain with neighboring India because, with the best will in the world, the government in Islamabad will not be able to prevent cross-border attacks into India.

At the heart of the issues facing the country is economic poverty. Pakistan's per capita GDP is very low at $1,000 and income inequalities are high, both vertically (i.e between different segments of society) and horizontally (between different provinces and regions). The recent devastating floods will only add to the misery endured by many in its surging population.

Pakistan has a well developed and quite professional military. Its industrial base produces much of the hardware needed by the Defense forces including heavy tanks, missile systems, small arms and ammunition. Its shipbuilding industry produces surface craft for the navy and assembles its submarines. Economic growth is hampered by a number of factors including the insurgency which deters capital investment, especially foreign investments, plus a chronic lack of electricity generation capacity. While GDP growth is estimated to have come in at 4.1% for the year ended June 30 2010 on the back of a recovery from the global financial crisis, we are forecasting a more subdued 2.4% for this fiscal year rising to just 2.8% in 2011/2012. Even these numbers will now be threatened by the agriculture losses caused by the recent floods. (R&M 28.10)

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11.11 PAKISTAN: Power Report Q4 2010 - Gas is the Dominant Fuel in Pakistan

Research and Markets (http://www.researchandmarkets.com) "Pakistan Power Report Q4 2010" report forecasts Pakistan will account for 1.17% of Asia Pacific regional power generation by 2014, with a theoretical generation surplus before the country's substantial transmission losses are taken into account. Pakistan's thermal generation in 2010 is an estimated 64.2TWh, or 1.05% of the regional total. By 2014, the country is expected to account for 0.91% of regional thermal generation. Gas is the dominant fuel in Pakistan, accounting for an estimated 50.9% of primary energy demand (PED) in 2010, followed by oil at 31.0%, hydroelectric energy at 9.6% and coal with a 6.9% share. Regional energy demand is forecast to reach 5,236mn toe by 2014, representing 20.6% growth from the estimated 2010 level. Pakistan's estimated 2010 market share of 1.55% is set to ease to 1.54% by 2014. The country's estimated 2.9TWh of nuclear demand in 2010 is forecast to reach 5.0TWh by 2014, with its share of the Asia Pacific nuclear market rising from an estimated 0.53% to 0.70% over the period.

Pakistan now shares sixth place with Indonesia in BMI's updated Power Business Environment Ratings, thanks to its relatively high level of renewables (mostly hydro) usage and healthy energy demand growth prospects. Several country risk factors offset the industry strength, but the country is in a good position to keep clear of Thailand and the Philippines below.

BMI now forecasts Pakistan real GDP growth averaging 3.28% a year between 2010 and 2014, with the 2010 growth assumption being 4.10%. The population is expected to expand from 173mn to 190mn, with GDP per capita increasing by 7% and electricity consumption per capita rising by 4%. Power consumption is expected to increase from an estimated 76TWh in 2010 to 87TWh by the end of the forecast period, which provides a theoretical generation surplus (before transmission losses, etc), assuming 3.0% average annual growth in electricity generation during 2010-2014. Between 2010 and 2019, we are forecasting an increase in Pakistani electricity generation of 29.7%, which is below average for the Asia Pacific region.

This equates to 15.3% in the 2014-2019 period, up from 12.6% in 2010-2014. PED growth is set to increase from 20.4% in 2010-2014 to 25.8%, representing 51.4% for the entire forecast period. An increase of 54% in hydropower use during 2010-2019 is a key element of generation growth. Thermal power generation is forecast to rise by just 3% between 2010 and 2019, with nuclear usage up 314% from a low base. More details of the long-term BMI power forecasts can be found at the end of this report. (R&M 03.11)

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11.12 TURKEY: Business as Usual with Iran

While this year has seen several stories in the Western media about Turkey's "turn east", the country's efforts to maintain positive trade relations with Iran despite recent sanctions on its nuclear program are likely more pragmatic than political. The Oxford Business Group says that Iran and Turkey have built strong business ties over the past decade, with bilateral trade volumes reaching $10b in 2009 and $5.4b in the first half of 2010, up from $1b in 2000. Prime Minister Erdogan reiterated in October that he expected to see these reach $30b per annum by 2015.

Despite Turkey's EU candidacy and military ties with the US, the country has strongly resisted pressure over bilateral economic sanctions imposed by Brussels and Washington in July. These followed a UN Security Council resolution approved a month earlier that placed financial and military restrictions on Iran's uranium enrichment plans. "Nobody can ask us to cut our economic ties with Iran," Turkey's foreign minister, Ahmet Davutoglu, told Foreign Policy magazine in September. "Turkey will maintain these ties because it is in Turkey's national interest."

Accusations in the West that some Iranian companies' activities in Turkey violate the UN sanctions have been denied by the Turkish government, which insists that its dealings with Iran are in fields not subject to the UN decision. There are some 1,300 Iranian firms currently operating in Turkey. In September, six trade and cooperation agreements were signed on customs and cross-border trade, transportation, industry and higher education. The border routes of Razi-Kapipoy and Maku-Bil Oju were also re-opened in an effort to increase the flow of goods.

These agreements followed deals earlier this year to establish an industrial estate on the nations' shared border and on housing cooperation. The latter, signed in July, includes plans for urbanization projects and the construction of new cities in Iran. It also specifically addressed assistance for the construction of 20,000 condos in the Iranian city of Parand.

New links are also hoped to boost trade. Currently, some 300,000 tonnes of trade goods travel between Turkey and Iran annually via a ferry on Van Lake that carries train wagons. However, Iranian rail capacity is some 3m tonnes per year, and new ferryboats will be constructed with a capacity of 50 wagons each to expand the trade volume to an estimated 2m tonnes per year.

There are also plans to boost cooperation in manufacturing; particularly the automotive sector is also under way. Iran was globally the 12th-largest auto manufacturer in 2009, and the carmaker Iran Khodro (IKCO) and Turkey's Hema Endustri are finalizing a $262m deal for the construction of two automotive plants. IKCO envisions a car that is brand targeted for Muslim customers and is courting the Turkish car company, the Turk Otomobil Fabrikasi Anonim Sirketi, as a possible partner, with plans for manufacturing facilities to be located at a free zone on the nations' shared border.

Energy is another burgeoning field of cooperation. Iran supplies one-third of Turkey's energy needs, primarily in the form of natural gas. The country purchases some 10b cu meters of gas from Iran per year – worth $7b in 2009 – according to a contract signed in 1996. This consumption is expected to increase, as the Turkish petroleum firm, Som Petrol, signed an agreement in July to construct a 660-km pipeline for the transport of natural gas from Iran's National Iranian Gas Export Company (NIGC). The pipeline is expected to have a capacity of between 50m and 60m cu meters per day. The €1b deal will not only increase Turkey's gas import capacity, but also enable Iran to deliver its gas to European markets. (OBG 09.11)

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11.13 BULGARIA: Turning a Corner

Bulgaria's agricultural sector is coming out of a two-decades-long rough patch and has pulled out of the recent recession more strongly than the economy as a whole, with regulatory changes and growing export potential contributing to a stronger outlook. The Oxford Business group commented that agriculture has been one of the quiet successes of the past few years. According to a 2009 report by Food Policy, a food sector journal, which noted that exports of consumer-ready foods and horticultural products have performed well since Bulgaria joined the EU in 2007. Exports of milk and dairy products grew from €43m in 2005 to €73m in 2008, while production almost doubled from €167m to €318m, according to Invest Bulgaria Agency. Growth of meat and livestock exports has been slower, from €113m in 2005 to €120m in 2008, but overall output has risen strongly, from €525m to €861m, making the segment a significant economic contributor.

It's been a long road to get to this point, however. Despite collectivization and consolidation from the 1940's on failing to boost agricultural production, Bulgaria was one of Eastern Europe's leading food exporters in the 1980's, particularly as livestock production was increased at the expense of arable crops. The use of fertilizer and pesticides on an industrial scale was promoted to boost output. Bulgaria's agricultural sector was then set back by the economic difficulties of the first two decades after the fall of communism in 1990.

The immediate post-communist years saw Bulgaria enter an economic crisis that had an acute effect on food supplies, partly due to previous policy. Capital for investment in farming was difficult to come by, the privatization of the collective farms was patchy, lack of land deeds (some destroyed by communist officials) made ownership rights uncertain and many new smallholders did not have the technical or business knowledge to extract value from their land. Bulgaria's export markets among former communist countries were also hit hard. Furthermore, considerable tracts of land were severely degraded by intensive use of fertilizers.

More recently, the presence of major international firms such as Nestle, Kraft and Papas Oil have played an important role in increasing output. While the schemes have not been free of controversy, agricultural support from the EU through programs such as the Special Accession Program for Agricultural and Rural Development (SAPARD) and the Common Agricultural Policy have provided much-needed funds and technical help for farmers. The sector clocked up real value growth of 3.8% year-on-year in the second quarter of 2010, up from 0.9% in the first, while the economy as a whole, deeply affected by the global economic crisis, shrank by 1.4%, according to a report by Raiffeisen Bank.

Legislative changes that entered into force on October 26 will also make market access easier for Bulgaria's many small farmers. Previously, little regulatory infrastructure existed to allow farmers to process and sell their farm food, including cheese, directly to retailers, restaurants and consumers, making many dairy farmers reliant on sales of milk to dairies. With milk prices low, their margins were often negligible, but within months they will be able to sell their own value-added products on the open market, giving them more cash to invest in improving their farms and diversify their farm produce, including typical food products that are an integral part of local gastronomic traditions.

"We very much hope that small farms can grow, and these reforms should be a good stimulus for farm development," Dessislava Dimitrova, the national coordinator in Bulgaria for Slow Food, an international organization that supports traditional food and farming, told OBG. "It is very important for small farmers to have the opportunity to sell produce to consumers, so the changes are a big step for them."

Dimitrova also argues that the changes will be good for consumers, by increasing choice and particularly availability of niche regional products, adding competition for the major dairy companies. Over the longer term, she also expects them to increase export potential by increasing the output of high-value specialist foods, for which there is a growing market in Europe in particular. An example regularly cited is that of Bulgarian green cheese, a unique product for which there is considerable interest abroad but for which there is no legal regulation for production in the country, meaning that producers cannot increase output.

For the foreseeable future, the main players on the Bulgarian agricultural and food markets will still be large firms, including the many internationals that have invested in the country and helped raise the level of technology and capital, boosting output considerably. But Bulgaria's many smallholders have an increasing role to play. With global food prices on the rise again, and opportunities for tapping into niche markets growing, Bulgaria's farmers big and small can stand to reap the benefits. (OBG 09.11)

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