• Israel Signs R&D Cooperation Agreement with Shanghai
• Noble Energy Begins Drilling Tamar 6 Well
• Morocco & US to Boost Renewable Energy Cooperation
• Jordan & China to Take Economic Ties to Higher Levels
• Greece Raises €1.6 Billion Euros In Debt Sale; Demand Solid
• Merck Serono Initiates Strategic Israel Bioincubator Fund
• EGYPT: Business Forecast Report Q2 2011
  

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Shareholder Representative Services Opens Office in Israel
2.2 Mirs & Xfone Win Wireless Tender
2.3 Align Technology to Acquire Cadent For $190 Million
2.4 Noble Energy Begins Drilling Tamar 6 Well
2.5 ICL Acquires Fuentes, Spain's Leading Specialty Fertilizers Company
2.6 Altair Semiconductor Raises $26 Million Round of Financing

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Swiss Miss Out As Arab Capital Flies to UK
3.2 DoubleTree by Hilton Opens First Hotel in the Middle East; Debut in Jordan
3.3 General Motors Says Mideast Sales Up 16% in First Quarter
3.4 GCC $1 Billion Arab Infrastructure Development Fund
3.5 US Fast Food Chain Sees UAE Sales Up 6% in 2011

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Tel Aviv Ranked Israel's Greenest City
4.2 Government Plans Tel Aviv Congestion Charge
4.3 Shams 1 Solar Power Project Ushers In New Era of Renewable Energy in Arabian Gulf
4.4 Saudi Arabia to Develop Renewable & Nuclear Energy to Cut Domestic Oil Demand
4.5 Morocco & US to Boost Renewable Energy Cooperation

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Brazil Exports $ 175m Wheat to Arab World
5.2 King's Agenda - Comprehensive Reform Developing Jordan
5.3 Jordan's Debt Exceeds $16.2 Billion
5.4 Jordan & China to Take Economic Ties to Higher Levels
5.5 Jordanian Suspected Corruption Case Involving Military Fund Referred To Court
5.6 Bahrain Fights to Save Business Reputation
5.7 Qatar Fourth Quarter Nominal GDP Rose 28.7%
5.8 Qatar on Track to Spend Around $86.5 Billion on Infrastructure Developments
5.9 UAE 2010 Non-Oil Trade Rises 14% on Global Recovery
5.10 Dubai Economy May Grow Up To 4% In 2011
5.11 Egypt's Foreign Reserves Fall To Lowest Level Since 2007
5.12 Egypt's Suez Canal Revenues Reach $413.5 Million in March 2011
5.13 Egypt Allocates E£100 Million Toward Employment of Libyan Returnees
5.14 Egypt's Annual Headline Inflation Accelerates to 11.5% in March 2011
5.15 Egypt Mulls Amendments to Banking Oversight & Governance Laws
5.16 Egypt's General Attorney Investigates Privatization of Public Sector Entities
5.17 Egypt's Hotel Occupancy Down By 65% After Revolution
5.18 Central Bank of Egypt Planning to Develop Banking Sector
5.19 FDI Inflows in Egypt Are Expected to Drop by Over 40% in FY10/11
5.20 Libya Crisis Jeopardizes Fragile Tunisian Economy
5.21 Morocco - US Trade Exchange Exceeds $ 2.5 Billion
5.22 Morocco Joins OECD Development Center

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 IMF Says Turkey to Grow By 4.6% This Year
6.2 Cyprus Inflation Steady in March But Petroleum Prices Rising By 27%
6.3 Greece Raises €1.6 Billion Euros In Debt Sale; Demand Solid
6.4 Number of Bulgarians Slumps By Half Million Since 2001
6.5 20% of Bulgarians Live Below Poverty Line

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Passover Observance Will Begin on 18 April
7.2 Cows, Chickens and Fish Eat Kosher for Passover Long Before Humans

*REGIONAL:

7.3 Lebanon's Cabinet Formation Enters Critical Phase
7.4 Kuwaiti Cabinet Resigns in New Political Crisis
7.5 UAE Population Surges to 8.26 Million
7.6 Egypt Lays Out Election Calendar

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Merck Serono Initiates Strategic Israel Bioincubator Fund
8.2 Oral Laquinimod for Multiple Sclerosis Treatment Significantly Reduced Disease Activity

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 LucidLogix Virtu Solution on Select Genuine Intel Desktop Boards With Intel Chipsets
9.2 Orckit-Corrigent Packet Network Solution Selected by 3 New Service Providers
9.3 High Safe Technologies & BitDefender Partner to Protect From Internet Attacks
9.4 Neebula Introduces the First Cloud-Enabled Business Service Management Solution
9.5 Laserdenta Enhances Compatibility With Objet's 3D Printing Systems
9.6 RADVISION Announces Significant New Video Conferencing Capabilities for Apple Devices
9.7 Orbotech Receives Acceptances for Its New Gen 8 EVision FPD-AOI System

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10: ISRAEL ECONOMIC STATISTICS

10.1 Strong Shekel Hits Matza Exports
10.2 Israeli Hotel Spend $25 Million to Convert to Passover; 88% of Israelis Participate in Seder
10.3 Israel Arms Exports Surpassed $7.3 Billion in 2010

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11: IN DEPTH

11.1 ARAB WORLD: Gallup Makes Case for Investment In Young People Across The Arab World
11.2 LEBANON: Civil Society Mobilized For Equal Rights
11.3 KUWAIT: Plan in Motion
11.4 QATAR: Gas-Fired Growth
11.5 UAE: Fitch Affirms Ras al Khaimah at 'A'; Stable Outlook Ratings
11.6 OMAN: Promise in Bond Programs
11.7 SAUDI ARABIA: Fitch Affirms Saudi Arabia at 'AA-'; Outlook Stable Ratings
11.8 EGYPT: Business Forecast Report Q2 2011
11.9 TUNISIA: Obstacles on the Path of Tunisia's Democratic Transformation
11.10 TUNISIA: Investing in the Future
11.11 ALGERIA: Home on the Farm
11.12 MOROCCO: Super Market

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Knesset Passes Oil, Gas Taxation Law

On 30 March, the Knesset passed into law the recommendations of the Sheshinski committee on taxation of oil and gas discoveries in Israel. The law raises the state's take from profits on oil and gas discoveries to 52-62%, compared with the current 30%. The bill passed by a majority of 78 to 2. The new law provides that royalties on hydrocarbon discoveries will remain at 12.5%, while taxation of profits will begin only after the developers have reached payback on their investment plus a return. The levy will be 20% after a payback of 150% on the investment, and will rise gradually, reaching 50% after a return of 230% on the investment. The maximum take by the state will therefore be 62.5% - royalties plus the levy. The most important change to the original recommendations of the Sheshinski committee is that the law mandates the setting up of a fund to which taxes collected under it will be transferred. The fund will be used for social and economic purposes. Another change is that any change in the rate of companies tax will trigger a corresponding change in the levy. (Globes 30.03)

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1.2 Israel Signs R&D Cooperation Agreement with Shanghai

On 11 April, Minister of Industry, Trade & Labor Simhon signed an industrial R&D cooperation agreement with the chairman of the Shanghai Municipal Science and Technology Commission. The agreement followed two years of negotiations between the Office of the Chief Scientist and the Shanghai Municipal Science and Technology Commission. Under the agreement, collaborating Israeli and Shanghai companies will be eligible for grants: Israeli companies can receive grants for up to 50% of a project's R&D costs from the Office of the Chief Scientist, and the Shanghai Municipality will provide a similar level for the Chinese companies. The Ministry of Industry said that the agreement will expose companies from the countries to the needs of different markets, while the governments will provide financial support. In future, the current agreement with the Shanghai Municipality may be upgraded to the status of a bilateral fund, similar to Israeli agreements with national governments. The Ministry of Industry plans to establish a commercial attaché in Shanghai by the end of the year to foster business relations. The Shanghai Municipality has marked several industries that it wants to promote through increased R&D activity in the coming years, including chemicals, equipment manufacturing, metals, and shipbuilding. The Ministry of Industry said that this approach would create opportunities for many Israeli companies seeking to enter China. (Globes 11.04)

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1.3 Jerusalem Approves New Banknotes Images

On 10 April, the Netanyahu government approved the images that will appear on a new series of Bank of Israel currency notes. Poetess Rachel will appear on the NIS 20 note, poet Shaul Tchernichovsky's picture will appear on the NIS 50 note, poetess Leah Goldberg will appear on the NIS 100 note and the NIS 200 note has been reserved for poet Nathan Alterman. The decision over who would be commemorated on each of the notes was determined by chronological order based on the date of their demise: Rachel Bluwstein passed away in April 1939, Tchernichovsky died in October 1943, Goldberg in January 1970 and Alterman in March 1970. The decision proposal presented to the government noted that Governor of the Bank of Israel Stanley Fischer chose "figures that are counted among the most prominent artists in the field of poetry and literature whose life stories, works and activities are interwoven with the story of the State of Israel's national and cultural history. The governor noted that he believes that commemorating these individuals on the State's currency would bestow their art and cultural contribution to future generations." The decision to choose two men and two women was made in order to maintain the principle of equality. The final shape of the notes will be decided on at a later date and will be brought before the government for approval. The new series will be issued in three years. (Ynet 10.04)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Shareholder Representative Services Opens Office in Israel

The market need for professional post-closing management for private target M&A transactions continues to grow globally. Israel, a hotbed of innovation and venture capital activity, continues to produce highly attractive targets for acquisition. To address the needs of the Israeli investor community, San Francisco's SRS | Shareholder Representative Services has opened its first international office in Israel. SRS | Shareholder Representative Services is the leading expert in professionally managing the post-closing process to safeguard the selling shareholders' interests in private company M&A transactions. As the shareholder representative, SRS manages all post-closing matters, including working capital and other purchase price adjustments, tax reviews, the handling of claims, disputes and litigation, communications with acquirers and selling shareholders and management and distribution of escrow and expense funds. On deals valued in aggregate in excess of $16 billion, SRS has represented more than 400 venture capital and private equity firms and over 19,000 shareholders in 44 countries. (SRS 12.04)

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2.2 Mirs & Xfone Win Wireless Tender

Mirs Communications and 018 Xfone have won the Ministry of Communications tender for two wireless frequency bands. Mirs will pay NIS 710 million and 018 Xfone NIS 705 million, after beating Golan Telecom and Select Communications in a tough pricing process that lasted from 10:00 until well into the evening. The winning bids exceed all expectations. The bidders were allowed to improve their bids by NIS 5 million every ten minutes. The tender is the most important step the Ministry of Communications has undertaken under Minister Kahlon. The state offered two frequency bands for two new wireless carriers using third generation technology. (Globes 11.04)

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2.3 Align Technology to Acquire Cadent For $190 Million

San Jose, California's Align Technology signed a definitive agreement to acquire privately-held Cadent Holdings. Cadent strengthens Align's ability to drive adoption of Invisalign by integrating Invisalign treatment more fully with mainstream tools and procedures in doctors' practices. The combination of the two companies will help accelerate the use of intra-oral scanning in the dental industry by leveraging Align's global sales reach, extensive professional and consumer marketing capabilities and base of over 55,000 users. The acquisition of Cadent extends Align's strategic leverage by demonstrating the value of applications at chairside that dramatically simplify and streamline treatment, and make the entire Invisalign procedure easier on the patient and more efficient for the practice. In addition, the use of digital technologies for restorative dentistry such as CAD/CAM or in-office restorations has also been growing rapidly and intra-oral scanning is required to enable this essential part of dental practices. The acquisition of Cadent positions Align as a leader in one of the best growth opportunities in dentistry and medical devices today. Under the terms of the agreement, Align will pay approximately $190 million in cash in exchange for all shares of Cadent. The acquisition is subject to various standard closing conditions.

Or Yehuda's Cadent (http://www.cadentinc.com) is the leading provider of 3-D digital CAD/CAM solutions for the orthodontic and dental industries. The Company services thousands of cases per day for a rapidly expanding customer base. Cadent's offerings, including Cadent iTero, iOC powered by iTero, OrthoCAD iCast and iQ, improve the efficiency and effectiveness of orthodontic and dental treatments while increasing the revenue of dental healthcare providers. The Company is backed by a syndicate of leading venture capital investors including Fortissimo Capital, Apax Partners, Panorama Capital (JPMorgan Partners), IBT, STAR Ventures and SV Life Sciences. (Cadent 29.03)

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2.4 Noble Energy Begins Drilling Tamar 6 Well

Tamar well operator Noble Energy has notified its Israeli partners in the license that the Sedco Express rig began drilling the Tamar 6 well on 10 April. The drilling will be in three stages. In the first stages, the Tamar 6, Tamar 5, Tamar 4, and the Tamar 3 will be drilling in that order, to an initial depth of 2,500 meters (including the depth of the water). In the second stage, these wells will be dug to a planned final depth of 5,200 meters. In the third stage, the wells will be prepared for production, to be followed by the Tamar 2 well, originally drilled as an exploratory well in 2009. Noble Energy estimates that this work will take about one year. The Tamar natural gas field is scheduled to come on line by the end of 2012. (Globes 11.04)

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2.5 ICL Acquires Fuentes, Spain's Leading Specialty Fertilizers Company

ICL (Israel Chemicals) announced that it acquired Grupo Empresarial Agromediterraneo, the holding company of Antonio Fuentes Mendez, (Fuentes), Spain's largest producer of specialty fertilizers, for an undisclosed sum. The purchase includes Fuentes' line of proprietary liquid and soluble fertilizers and bulk blends, its production facilities located in Totana and Cartagena, Spain, as well as warehouses, port facilities and logistics centers located throughout southern and eastern Spain. Fuentes' 2010 revenues were approximately €113 million. Following the acquisition, Fuentes and its wholly-owned operating subsidiaries become a part of ICL Specialty Fertilizers, a business unit of ICL Fertilizers. ICL financed the acquisition from its own resources. The acquisition of Fuentes establishes ICL as the leading supplier of specialty fertilizers in the rapidly-growing Spanish market. Fuentes markets a broad line of branded high-quality liquid and water soluble fertilizers (WSF) and bulk blends. It sells its products primarily in southern and eastern Spain, which accounts for 75% of the Spanish market for specialty fertilizers. In these regions, sales of WSF fertilizers are growing by 8% to 12% per annum, compared to relatively flat growth for traditional fertilizers. Fuentes also possesses strong R&D capabilities in the liquid and soluble fertilizers areas.

Beer Sheva's ICL (http://www.iclfertilizers.com) is one of the world's leading fertilizer and specialty chemicals companies. For a world challenged by population growth and scarce resources, ICL makes products that increase global food and water supplies and improve industrial materials and processes. ICL is the world's number one producer of elemental bromine and organophosphorus flame retardants, and is the 6th largest potash producer in the world. ICL is also the number one producer of PK fertilizers (compound potash & phosphate), a leading supplier of fertilizers in Europe and a major player in specialty fertilizer market segments. One of the world's most integrated manufacturers and suppliers of phosphate products, ICL is also the world's leading provider of pure phosphoric acid and specialty phosphates. (ICL 11.04)

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2.6 Altair Semiconductor Raises $26 Million Round of Financing

Altair Semiconductor has completed a $26 million round of funding, led by Jerusalem Venture Partners (JVP). All of Altair's existing investors, including BRM, Bessemer Venture Partners, Giza Venture Capital and Pacific Technology participated in the round. Altair will use the capital to expand its worldwide sales and customer support activities as well as advance the development of its market-leading LTE solutions. Over the last year, Altair launched the first commercial LTE product in Poland, the world's first Band 12 LTE solution and the first Digital Dividend LTE router in Germany. Having completed rigorous interoperability testing with numerous tier-one infrastructure vendors around the world, and with an LTE platform that is one of the world's only solutions that offers both TDD and FDD capabilities, Altair is poised to extend its market leadership position in several key markets around the world, including India, China, Japan, Europe and the United States.

Hod Hasharon's Altair Semiconductor (http://www.altair-semi.com) is the world's leading developer of ultra-low power, small footprint and high performance 4G semiconductors. The company's products provide device manufacturers integrating 4G LTE technology into their products with a highly power-optimized, robust and cost-effective solution. Altair's comprehensive product portfolio includes baseband processors, multi-band RF transceivers for both FDD and TDD bands, and a range of reference hardware and product level protocol stack software. (Altair 12.04)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Swiss Miss Out As Arab Capital Flies to UK

London is gaining in the battle for rich Middle Eastern families seeking shelter from political unrest at home, as its private banks and top end property sector tempt them away from Switzerland. Money is moving out of the Middle East and a larger share is heading to London, wealth managers in both countries say, mostly speaking on condition of anonymity because of the sensitivity of discussing their clients. Switzerland is well-established home to a large chunk of Middle Eastern wealth, and some of the unwillingness to put money in the country's $2 trillion offshore wealth industry is due to an erosion of its fabled banking secrecy. Concerns have long been growing that efforts to appease tax authorities in the United States and elsewhere have eroded its competitive edge over other jurisdictions, said one manager at a London wealth boutique.

During the first days of turmoil alone, Bahrain's rich and powerful shifted 15 – 20% of their locally-held assets abroad. Some bankers also point to recent moves by the Swiss to quickly freeze assets of people linked to ruling families in Libya, Tunisia and Egypt as spooking would-be clients. The fear among some families is they may be subjected to intrusive scrutiny or unfairly caught up in a Swiss catch-all probe into assets held by the regimes. Some Swiss bankers are starting to show signs of irritation, saying they have been quicker than others to target the assets of deposed or embattled leaders like Tunisia's Ben Ali or the Gaddafi entourage. (GN 01.04)

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3.2 DoubleTree by Hilton Opens First Hotel in the Middle East; Debut in Jordan

Hilton Worldwide announced the debut of its first hotel in Jordan with the opening of the first DoubleTree by Hilton hotel in the Middle East. Overlooking the Red Sea, the DoubleTree by Hilton Aqaba is located in the central business district of Jordan's southernmost and only coastal city, within walking distance of popular seashore attractions and all major shopping areas. The newly built, 173-room hotel has been designed to welcome guests with contemporary style, an array of upscale amenities and warm Arabian hospitality. The DoubleTree by Hilton Aqaba, influenced by modern Italian design, boasts spacious guest rooms and suites with Red Sea views, 32-inch LCD TVs, generous work surfaces, luxurious baths, high-speed internet access, 24-hour in-room dining and the ultra-comfortable Sweet Dreams by DoubleTree Sleep Experience. For on-site recreation and fitness, the hotel features a semi-covered, infinity-style swimming pool; two whirlpools; a sauna and steam room; and a fully-equipped fitness center, with the latest in cardiovascular and weight training equipment.

Named by the Arab Tourism Ministers Council as the Arab Tourism Capital for 2011, Aqaba is particularly well known for its resort lifestyle amongst intra-regional travellers, as well as European holidaymakers, who often stay while also visiting cultural and eco-adventure destinations such as Wadi Rum, Petra and the Red Sea. Furthermore, as Jordan's sole coastal city and seaport, the destination benefits from commercial activity and business travel. (Hilton 01.04)

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3.3 General Motors Says Mideast Sales Up 16% in First Quarter

General Motors said on 10 April that its sales across the Chevrolet, Cadillac and GMC in the Middle East in March were 13% higher than a year earlier. Dealers reported total sales of 11,651 vehicles in the month, the fourth consecutive month of double-digit growth. Total sales for Q1/11 were 29,870 vehicles - up 16% compared to a year earlier. Retail sales - purchases made by individual customers - in March soared 50% and increased 40% during the first quarter. Combined sales for GM's newly launched vehicles - the Chevrolet Cruze, Malibu, Camaro and Traverse; and Cadillac SRX and CTS Coupe - increased 39% during March and were up 13% for the first three months of the year.

In March, the Dubai Chamber of Commerce & Industry predicted the UAE automotive market would grow by around 8% annually over the next four years. But fewer sales may be seen in the luxury market, traditionally a popular choice in the UAE, as customers put more emphasis on energy efficiency and value for money. It said car sales in the country, which were badly hit during the global slump, would see a compound annual growth rate (CAGR) of 8% to 2014, while total re-exports are expected to increase at a CAGR of 5% in the same period. (AB 10.04)

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3.4 GCC $1 Billion Arab Infrastructure Development Fund

A new infrastructure-financing facility was set-up by the World Bank, the IFC and the Islamic Development Bank as potential anchor investors in the fund that targets projects in the Arab region. The fund, dubbed Arab Financing Facility for Infrastructure (AFFI), intends to raise up to $1 billion helping to leverage infrastructure investment in Arab countries and catalyze financing for the $40 billion annual funding gap. The fund is expected to support both conventional and Sharia-compliant investments in infrastructure, as well as grant financing for technical assistance and policy coordination. (Various 07.04)

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3.5 US Fast Food Chain Sees UAE Sales Up 6% in 2011

US fast food specialist Subway is planning to double the number of outlets it has in the UAE in the next five years. The company is looking to increase its shops in the country from 105 to 130 in 2011 and has further plans to expand. The company said that sales of fast food were recovering and seeing a slump during and after the global financial crisis. Sales at Subway outlets in the UAE had rose by 6% during the current year. The franchise chief told the paper that despite the added costs associated with rising global food prices, landlords in the UAE had refused to cut rents for Subway shops, despite the declines seen in residential rents. Subway restaurants in the UAE have expansion plans would see more branches in 2011 with outlets doubling by 2015. In addition to shops in the UAE, Subway also operates 43 restaurants in Saudi Arabia, 16 in Qatar, 9 in Oman, 41 in Kuwait and 10 in Bahrain. (AB 31.03)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Tel Aviv Ranked Israel's Greenest City

The Heschel Center for Environmental Learning and Leadership (http://www.heschel.org.il/eng) ranks Tel Aviv as Israel's greenest city, followed by Kfar Saba and Ra'anana. Givatayim is ranked last. The Heshel Center ranks the cities on the basis of ten variables. The Heschel Center examined several cities' commitment to environmental issues and activities to foster them. It rated cities that participated in Earth Hour. Variables include energy, public participation, environmental management, social and environmental justice, open spaces, educational programs, water, waste separation, use of bicycles, and the local economy. (Globes 11.04)

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4.2 Government Plans Tel Aviv Congestion Charge

The Ministry of Finance and the Ministry of Transport are planning to levy a congestion charge on drivers entering Tel Aviv, according to a tender published on the website of Ayalon Highways Ltd., which operates Road 20, the Ayalon Highway in Tel Aviv. The plan proposes a charge of between NIS 0.10 and NIS 1 per kilometer of travel inside the city, based on traffic congestion. The ministries are planning a pilot program with 1,200 drivers and Ayalon Highways in a few months. The proposal is part of the government's plan to reform vehicle taxes to gradually reduce the purchase tax on new motor vehicles and raise use fees. Under the congestion charge pilot, participating cars will have GPS transponders installed, which will measure several factors, such as travel time, location and distance in order to determine the amount of the congestion charge. A motor vehicle that does not travel during rush hour and whose congestion charge does not exceed NIS 100, will receive a NIS 250 credit. The owner of participating vehicles will receive NIS 500 for participating in the pilot. This fee will not be paid to a driver who disconnects the system. (Globes 10.04)

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4.3 Shams 1 Solar Power Project Ushers In New Era of Renewable Energy in Arabian Gulf

The signing of the Shams 1 solar power project financing in the United Arab Emirates earlier this month has opened the way for a burgeoning in renewable energy in the Gulf, said Standard & Poor's Ratings Services in a new report titled "Q&A: Shams 1 Solar Power Project Financing Shines A Light On Renewable Energy In The Gulf." Three companies, France's Total, Spain's Abengoa and Abu Dhabi-based Masdar gained a $600 million bank loan to build the solar plant, named Shams 1, which will have a 100 MW capacity and would qualify for carbon credits under the United Nation's Clean Development Mechanism (CDM). (BI-ME 30.03)

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4.4 Saudi Arabia to Develop Renewable & Nuclear Energy To Cut Domestic Oil Demand

Saudi Arabia, with 20% of world oil reserves, aims to develop renewable energy and nuclear power to cut by half the crude and natural gas it burns to generate electricity. The country is seeking to develop a more sustainable mix of energy supply as growth in power demand is set to triple over the next two decades, Khalid Al Sulaiman, vice president for Renewable Energy at King Abdullah City for Atomic and Renewable Energy, said at a conference in Riyadh. Saudi Arabia's energy mix is made up almost exclusively of fossil fuels now, Al Sulaiman said. Energy that's not derived from fossil fuels such as oil and gas will make up more than half of the kingdom's supply mix by 2030, he said. That mix will include solar and wind power and nuclear plants, he said. Saudi Arabia, the largest producer in OPEC, uses crude and refined products as fuel for power stations because it doesn't have enough gas to generate all the power it needs and also supply industry. Liquid fuels generate about half of the country's power now, with the rest coming from gas, according to the state-run utility Saudi Electricity Co. (SECO). The country's generating capacity is about 45,000 MW with peak power demand also reaching that level, according to Saudi Electricity. (BI-ME 03.04)

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4.5 Morocco & US to Boost Renewable Energy Cooperation

Morocco and the United States discussed means to promote cooperation at a meeting between Assistant Secretary of Commerce for Trade Promotion Kumar and Chairman of the General Confederation of Moroccan Enterprises (CGEM) Hourani. The meeting was an opportunity to assess Moroccan-US partnership especially in the fields of renewable energy, information technology, basic infrastructure and transport. Hourani stressed the importance of promoting trade between the two countries, which are linked by deep friendly relations for decades. He also highlighted investment and partnership opportunities in Morocco in several sectors, including agriculture, fisheries, infrastructure, industry, handicrafts and Communications and Information Technology. The political stability that Morocco enjoys is the basis for reinforcing the Moroccan-American economic relations, said Assistant Secretary Kumar. He said that Morocco, with its large-scale economic potentialities, is a market which "we trust and encourage collaborating with it." (MAP 01.04)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Brazil Exports $ 175m Wheat to Arab World

Revenues from exports of Brazilian wheat to the Arab countries reached $ 175m in the first two months this year. In the whole of last year, revenues totaled $ 37m, according to the Brazilian Ministry of Development, Industry and Foreign Trade. The hike in wheat prices influenced the increase in sales to the region. This year, the commodity is selling for 35% to 40% more than in 2010. Out of all the Brazilian wheat sold to the Arab market, $ 93m were shipped to the region in February and the remainder in January. The top buyer in the Arab world was Algeria, which spent $ 80.7m , followed by Libya, which spent $ 22m, Tunisia, $ 20m, Egypt, $ 18m, and Sudan, $ 9m. Syria, Morocco, the UAE and Yemen have also purchased Brazilian wheat. (GAN 16.03)
5.2 King's Agenda - Comprehensive Reform Developing Jordan

Jordan's King Abdullah II said on 30 March that comprehensive reforms and developing Jordan are "his agenda", adding Jordan will press ahead with efforts to increase accomplishments, achieve development as well as aspirations of Jordanians for a better future. At a meeting with the Professional Associations Council, the King urged presidents of these associations to support all forms of constructive dialogue, democracy and confront whatever harms national unity. During the meeting, the second of with the council in less than two months, King Abdullah said that presidents of the associations shoulder a major responsibility in supporting comprehensive political, economic and social reforms and ensuring the participation of citizens in decision making and building the future of Jordan. Jordan, King Abdullah said is serious in moving towards economic and political reforms, adding that it has a golden opportunity to develop Jordan. (Petra 30.03)

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5.3 Jordan's Debt Exceeds $16.2 Billion

Jordan's outstanding public debt rose by 18.6% in 2010, according to figures published by the Ministry of Finance on 30 March. The figures showed that the outstanding external and internal public debt in 2010 stood at $16.20b compared to $ 13.7b in 2009. The net internal public debt also rose by 18.3% to JD6.852m compared to JD5.791m in the same period. According to the figures, the net external public debt also rose by 19.1% standing at JD4.611m compared to JD3.869m. Jordan's economy is among the smallest in the Middle East, with insufficient supplies of water, oil, and other natural resources, underlying the government's heavy reliance on foreign assistance. Other economic challenges for the government include chronic high rates of poverty, unemployment, inflation, and a large budget deficit. Since assuming the throne in 1999, King Abdullah has implemented significant economic reforms, such as opening the trade regime, privatizing state-owned companies and eliminating most fuel subsidies, which in the past few years have spurred economic growth by attracting foreign investment and creating some jobs. The global economic slowdown, however, has depressed Jordan's GDP growth.

Export-oriented sectors such as manufacturing, mining and the transport of re-exports have been hit the hardest. The Government approved two supplementary budgets in 2010, but sweeping tax cuts planned for 2010 did not materialize because of Amman's need for additional revenue to cover excess spending. The budget deficit is likely to remain high, at 5-6% of GDP, and Amman likely will continue to depend heavily on foreign assistance to finance the deficit in 2011. Jordan's financial sector has been relatively isolated from the international financial crisis because of its limited exposure to overseas capital markets. Jordan is currently exploring nuclear power generation to forestall energy shortfalls. (GAN 16.03)

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5.4 Jordan & China to Take Economic Ties to Higher Levels

Representatives of Jordanian trade and industry sectors and the China Council for the Promotion of International Trade CCPIT agreed to work jointly to take Sino-Jordanian economic ties to higher levels. The business and industry leaders urged the Chinese side to increase Chinese investment in the Kingdom and "seize opportunities available in strategic sectors and extend bridges for cooperation", stressing a joint interest in cementing relations. In a meeting organized by the Jordan Chambers of Commerce and Industry and the Jordan Investment Board, the two sides stressed the importance of raising the trade volume between Jordan and China and called for taking down barriers to the free flow of goods. They also agreed that the Chinese private sector turn Jordan into a launch pad for entry to regional markets, namely Iraq. (Petra 04.04)

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5.5 Jordanian Suspected Corruption Case Involving Military Fund Referred To Court

Jordanian Prime Minister Bakhit on 28 March referred a suspected corruption case to the State Security Court (SSC), responding to a recommendation by the Anti-Corruption Commission (ACC) that has investigated the allegation. The commission found that there is enough evidence of corruption in the file of a feasibility study of the Disi Water Conveyance Project, which was managed and conducted by the Development and Investment Projects (DIP) Fund affiliated with the Jordan Armed Forces and “security agencies”. The 2005 case started when the Cabinet entrusted the fund with preparing a study in order to implement the project if proved feasible. For that purpose, the commissioner general of the DIP Fund signed a contract with a British Virgin Islands-registered company calling itself Corp Securities. The deal covered two stages: the conducting of the study at $1,950,000 and the supervising of the project's funding at $60 million.

When the company, which allegedly turned to be a middleman for other companies, submitted its financial claims, it requested that the money be deposited in a Swiss bank account in the name of the Luxemburg-based Shaheen Business & Investment Group. In cooperation with financial experts, the ACC came to the conclusion that the rates were exaggerated and unreasonable. The lawsuit referred to the SSC is one of several cases of what has become known as the Mawared (the short name for National Resources Investment and Development Corporation) file that was referred to the ACC in October, in reference to suspected corruption in some of the company's subsidiaries. Abu Hamdan was also Mawared's CEO. The DIP Fund is implicated in the case, along with the Mawared.

This is one of the very rare cases that a military-run agency has been declared a corruption suspect. The Disi project, Jordan's hope for water security for almost a century, is now being implemented by GAMA, a Turkish company. (JT 29.03)

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5.6 Bahrain Fights to Save Business Reputation

Harsh economic reality has hit Bahrain's business psyche after martial law was imposed and popular unrest which has left many dead and many missing in the island kingdom, once known for openness and financial stability. Self-branded "Business Friendly Bahrain" is fighting to save its reputation as a secure and liberal Gulf financial center. That's a tough sell after a fierce army crackdown quashed weeks of pro-democracy protests led by the Shi'ite majority in the tiny Sunni-ruled state.

A state-backed newspaper headline said businesses had "thrived" in the crisis and the finance minister said the country's GDP growth would accelerate to 4.5% this year, after an estimated 4.0% in 2010. But analysts polled by Reuters in March slashed their growth forecast to 3.4% for 2011, down from 4.2% expected in December following the unrest. Authorities imposed martial law in early March and called in forces from Gulf Sunni allies Saudi Arabia and United Arab Emirates to help restore order. Small businessmen worry it is the aftermath of the crackdown that will hurt them most. Wholesale and retail make up over half of Bahrain's economy. Vendors say business plummeted 50 to 80% because hotels and restaurants are empty. Hotel occupancy rates now hover around 20%. Some economists estimate that Bahrain's $20 billion economy, with an economic output of around $80 million a day, shed a quarter its output of its during the month of unrest.

Already the recent turmoil has triggered a string of downgrades by rating agencies and sent debt insurance costs for Bahrain, where nearly $10 billion in mutual funds were parked last year, to 20-month highs. The crisis comes at a fragile moment for Bahrain, a home to $66 billion Islamic finance industry, where financial sector accounts for a quarter of its economy. With real estate prices down nearly 60% from 2008 peaks in nearby Gulf trade and business hub Dubai, wary Bahrain investors may be less hesitant to jump ship. (AB 30.03)

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5.7 Qatar Fourth Quarter Nominal GDP Rose 28.7%

Qatar's Fourth Quarter Nominal GDP rose 28.7% y-o-y to register $35.59b. On a q-o-q basis, nominal GDP increased 9.2%. The mining and quarrying sector, which accounts for 53% of GDP was estimated at QAR74.42b in the quarter, up 39.4% y-o-y and 13.9 q-o-q. Beltone said this brings the overall nominal GDP to QAR441.1b in 2010, up 23% from 2009. This comes close to their forecast of QAR425.7b in 2010. Beltone believes that the increase comes on the back of higher volumes of production of LNG as well as the rebound in the prices for crude oil and natural gas. Qatargas Train 6 (with a capacity to produce 7.8 million tonnes of LNG/year) and Qatargas train 3 (with production capacity of 3.2 million tonnes of LNG/year) both came on line in Q4/10. In addition, all maintenance works which took place during the previous quarters of the year terminated. The increase will be further felt as all 14 LNG trains came online by 1Q2011, taking total LNG export capacity to around 77 million tonnes/annum from 54 million tonnes/annum in 2009. (Beltone 02.04)

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5.8 Qatar on Track to Spend Around $86.5 Billion on Infrastructure Developments

Qatar's successful bid to host the 2022 FIFA World Cup is expected to energize the local construction sector and stimulate infrastructure investments worth around $ 100 billion through the next 12 years. $4 billion has already been allocated to build nine stadiums and upgrade three more in preparation for the country's hosting of the world's biggest football event. Aside from investments into its sports facilities, Qatar will also spend around $86.5 billion on other infrastructure developments as part of efforts to sustain national diversification efforts. The country plans to make the construction and other non-energy sectors account for 80% of the economy by 2015. The country is already undertaking some of the most ambitious projects in the Arab World, such as The Pearl Qatar, the Museum of Islamic Art and Education City, to further enhance the diversity of its construction activities. (BI-ME 30.03)

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5.9 UAE 2010 Non-Oil Trade Rises 14% On Global Recovery

The United Arab Emirates' non-oil foreign trade jumped 14% in 2010, helped by an improving global economy and trade with Asia. Non-oil foreign trade in the UAE, the world's third-largest crude exporter and key Gulf business hub, picked up strongly last year as global and local debt woes eased. The value of the OPEC member's non-oil foreign trade grew to AED754.4b ($205.4b) from AED660.4b in 2009, data from the UAE Federal Customs Authority (FCA) showed. Exports without crude jumped 27% from 2009 to AED83.1b, while re-exports grew 26%. Non-oil imports increased by 8% year-on-year to AED485.4b in 2010, the data also showed. The UAE has escaped protests that have shaken nearby Bahrain, Oman and Yemen. But its government plans to spend $1.6b on infrastructure in less developed areas. In 2010, India, China and the United States were the key exporters to the UAE. Re-exports, the bulk of the UAE trade, were led by India, Iran and Iraq. The top commodities by value were gold, diamonds, cars and telephone sets, the data showed. Dubai accounted for 76% of the UAE non-oil trade in 2010. Abu Dhabi accounts for almost all of the oil production. Dubai's non-oil exports may grow 20% in 2011 as new doors to African markets open, government officials have said. (BI-ME 03.04)

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5.10 Dubai Economy May Grow Up To 4% In 2011

Dubai's economy may grow 3.5%- 4% this year and 6% in 2012, spurred by infrastructure spending and foreign investment, according to Citigroup's chief Middle East economist. The emirate is “blessed by prime location” and there's “real appetite” for investing there, he said at a conference. Infrastructure development, foreign investment and geographical location are driving growth. Dubai's economy, the second-biggest of seven that make up the United Arab Emirates, is recovering from the credit crisis, helped by a revival in trade and tourism. Real gross domestic product grew 2.2% in 2010, the statistics bureau said on its website March 21. Growth is likely to accelerate to 4% this year, Standard Chartered said in December. While Dubai will see its recovery gain “traction” this year, it needs more counter-cyclical fiscal policies. (BI-ME 30.03)

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5.11 Egypt's Foreign Reserves Fall To Lowest Level Since 2007

Egypt's net international reserves fell for a third month in March to the lowest level in more than three years as the economy suffers from the unrest which toppled President Hosni Mubarak. Reserves fell to $30.1b from $33.3b in the previous month, the lowest since September 2007. Mubarak resigned on February 11, bowing to mass protests that demanded the end of his rule. The country's worst political crisis in three decades caused tourists to flee and companies to cut output. Concern over a possible run on the currency prompted the central bank to buy pounds February 8, though the bank hasn't said whether it repeated the action since then. During the past two months the central bank used its reserves in the currency market only to curb speculation, not to prop up the pound. The Egyptian currency has lost 2.3% against the dollar since the start of the anti-Mubarak protests on January 25. The crisis will turn Egypt's balance of payments from a surplus of $571.7m in Q4/10 to a deficit of more than $3b in the three months through March. Economic growth is unlikely to exceed 3.5% in the current fiscal year, which ends in June, compared with 5.1% in the previous 12 months, Finance Minister Radwan said on 3 April. (BI-ME 04.04)

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5.12 Egypt's Suez Canal Revenues Reach $413.5 Million in March 2011

Suez Canal revenues reached $413.5m in March 2011, increasing by 9% y-o-y. Annual revenue growth reached 9% in March 2011 compared to a peak of 15.7% in March 2010. The high annual revenue growth recorded in March 2010 was due to the base effect of low revenue levels in 2009, on account of the impact of the global financial crisis. Therefore, the slowdown in annual growth witnessed in March 2011 is not alarming. Suez Canal revenues grew m-o-m by 6.4% in March 2011, rebounding from the monthly contraction of 6.7% witnessed in February 2011, due to seasonality factors. As previously noted, traffic in the Suez Canal usually weakens every January and February, before rebounding once again in March. Suez Canal revenue and traffic data since January 2011 indicate that monthly activity in the Suez Canal has been left unaffected by the political events in Egypt, in line with expectations. The impact of the current political events in Egypt on the Suez Canal is marginal, if any, with the military and government continuing to ensure its smooth operation (which is already within a military zone) and in view of the continued flow of traffic activity. Suez Canal monthly revenues have been increasing since the beginning of the current fiscal year and are well on the way to forecast levels of $5 billion for FY2010/2011. As the global recovery is threatened by sky rocketing oil prices, and has not yet reached its new norm, the Suez Canal Authority will continue to provide incentives to attract traffic into the Canal. In relation to this, on 3 March the Suez Canal Authority announced keeping its transit fees unchanged (for the third consecutive year) until the end of 2011, as expected. (Beltone 12.04)

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5.13 Egypt Allocates E£100 Million Toward Employment of Libyan Returnees

Egypt's Ministry of Manpower and Emigration approved an additional E£100 million, targeted toward addressing employment issues of returning labor from Libya. The additional funds that will be directed to absorb the returning Egyptian labor force from Libya, will be channeled through the Social Fund for Development. The announcement was made during a meeting with the ministry and the International Labor Organization (ILO), with the purpose of implementing technical cooperation agreements between the two entities. The political events and unrest in Libya have prompted many Egyptians to quit their jobs and return back to their home country. There are approximately 1.5 million Egyptians living in Libya and the latest data released by the Egyptian government as of end of March 2011 shows that 190,000 Egyptians have actually returned to Egypt, looking for jobs and security. The move by the Egyptian government to allocate funds targeted toward absorbing returning Egyptian labor is necessary. However, it will add pressure on the fiscal budget. The impact of the political unrest that has spread across the MENA region will continue to pose a threat to Egypt's balance of payments through remittances and will continue to add pressure on unemployment, which is already too high in Egypt. Official data reports that the unemployment rate has reached 8.9% as at end of 2010, while unofficial figures point out that the unemployment rate could reach 20%. The government's current major objective is to generate employment opportunities, to absorb the discontent of the population. The government, through its current cabinet, will be focusing on SME programs, as a tool to create employment opportunities in Egypt. (Beltone 04.04)

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5.14 Egypt's Annual Headline Inflation Accelerates to 11.5% in March 2011

CAPMAS announced on 10 April that Egypt's annual headline inflation (urban) accelerated to 11.5% in March 2011 (1.4% m-o-m) from 10.7% in February 2011 on a rise in annual food price inflation. Annual food price inflation rose 20.5% (3.3% m-o-m) in March 2011 from 18.25% in February led by prices of vegetables (48.6% y-o-y and 25.5 m-o-m), fruits (8.7% y-o-y and 2.8% m-o-m) and grains & bread (26.2% y-o-y and 2.1% m-o-m). Apart from food prices, and based on the statement, there has been little change in the prices of other components of the CPI index during March 2011. Beltone said annual headline inflation came higher than their estimate of 10.8% (0.8% m-o-m) where they had expected that food price inflation would accelerate to a lower level of 18.97% (2% m-o-m) in March 2011. However, with inflation remaining to be food prices-led, Beltone maintains that CBE interest rates are likely to remain unchanged at its upcoming meeting on April 28th, as hiking rates to combat inflation that is led by food prices would have a limited effect, if any, on inflation. Meanwhile, with prices of other non-food items remaining stable and since there are no inherent inflationary pressures building up in the economy, this re-iterates further our view of unchanged rates. (Beltone 10.04)

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5.15 Egypt Mulls Amendments to Banking Oversight & Governance Laws

The Central Bank of Egypt's (CBE) board of directors have agreed to study possible amendments to Law 88 of 2003, which governs the regulatory body and the country's overall financial sector. The board saw a need to address shortcomings that have emerged over the past years as well as reconsider the CBE's goals to make it more compatible with the needs of society. The draft amendments should take four months to prepare in consultation with a group of banking experts. CBE Governor El-Okdah said that the proposed amendments would revolve around three main issues, first of which deals with governance inside the CBE itself as well as state-owned banks, addressing conflicts of interest that may exist internally. El-Okdah also said the new regulations will better define the roles and responsibilities of boards of directors, including the board of the CBE, as well as the application of good governance practices when dealing with public funds.

After Egypt's financial sector weathered the storm of the financial crisis in 2008, another blow came with the revolution that resulted in the ousting of former president Hosni Mubarak. Protests that lasted 18 days brought the whole economy to a standstill, and when banks reopened, they were closed again shortly after due to wage related workers' protests. Now the financial sector is facing allegations of corruption and mismanagement, severely hindering the momentum of progress the sector has seen in past years. Yet after a cautious rebound by the stock market and a sense of renewed confidence in the economy, many feel that the time to continue reforms is now.

The second of the proposed amendments is the facilitation of regulations and legal issues regarding debt and bankruptcy to prevent banks from being negatively affected by long legal disputes with debtors. This would encourage the judicial and economic legal system to move faster in resolving these issues by immediately referring cases of bankruptcy to court without necessary approval by the CBE, which was the case before. The third point represents a review of the Central Bank's authority over banks and how to have more effective control. There are many ways to do this but that the CBE can start by easing regulations for SMEs to access financing, providing incentives for banks by using credit policies and cooperation with the Social Fund for Development. (DNE 31.03)

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5.16 Egypt's General Attorney Investigates Privatization of Public Sector Entities

Egypt's General Attorney decided to continue investigations into the privatization of public sector entities by previous government officials. Privatization deals undertaken by ex-Prime Minister Atef Ebeid, ex-Minister of Public Enterprise Mokhtar Khatab and Ex-Minister of Investment Mahmoud Moheieldin, will all be investigated separately by specialized committees, to be formed by Prime Minister Sharaf. Privatization deals are claimed to have illegally profited certain government officials and businessmen and have caused Egypt big losses. The specialized committees will comprise economists, industry specialists, financiers and other monitoring authorities. The selection criteria of state-owned enterprises that have undergone privatization and other regulations outlined in Egypt's asset management program that should have been followed in order to privatize a public sector enterprise, will be checked during the investigations. (Various 06.04)

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5.17 Egypt's Hotel Occupancy Down By 65% After Revolution

Egypt's hotel occupancy decreased by 64.7% after the 25 January revolution compared to the same period last year, according to statistics released by Egypt's tourism ministry. Hotel occupancy rates stood at 33% in Cairo, 36.5 in Alexandria, 33.5 in South Sinai, 30% at the Red Sea, 23% in Luxor, 16% in Aswan and 23.1% at floating hotels. Clearly the instability in the country caused a decrease in the number of tourist arrivals. Former President Hosni Mubarak's current residence in Sharm el-Sheikh has changed from a sign of the resort's security to a counter-propaganda symbol. Calls to stage protests in Sharm el-Sheikh have made tourists and tour coordinators concerned. Sharm al-Sheikh's present hotel occupancy stands at 33%, far less than the year before. The head of the Egyptian Tourism Federation (ETF) said that tourists are now leaving Egyptian destinations, opting instead for Turkey in the spring. (Al-Masry Al-Youm 12.04)

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5.18 Central Bank of Egypt Planning to Develop Banking Sector

Following a meeting with Prime Minister of the caretaker government Essam Sharaf, Central Bank of Egypt's Deputy Governor Ramez revealed that the CBE had a long-term plan for developing the banking sector that helped reduce the negative impacts of the recent political unrest on the economy. Ramaz said the meeting focused on how to attract investments and developing the currency market which is a necessity to lure investors. The CBE official said that Egypt had lost $16b during the global financial crisis, but its successful foreign exchange policy, helped the economy restore its losses. Ramaz disclosed he has also briefed Sharaf on what is implemented of the banking sector's development plan during the period from 2004 to 2010. The plan also includes the CBE's estimation of the current situation and its impact on the whole economy as well as its futuristic vision for developing the banking sector, he added. CBE senior official pointed out this plans and the measures that had been taken in the past helped reduce the negative impacts of the recent political unrest particularly on the foreign exchange market. The Egyptian pound has lost only 1% of its value during this period, far lesser the forecasts of even the optimistic economists. Economists and observers had expected that the pound would lose nearly 25% of its value. (Various 04.04)

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5.19 FDI Inflows in Egypt Are Expected to Drop by Over 40% in FY10/11

Foreign direct investment inflows in Egypt are expected to drop by over 40% in FY10/11, General Authority for Investment and Free Zone (GAFI) Chairman Saleh said in a statement. Egypt's government had targeted foreign direct investments of $7 billion in FY10/11 before the political events unfolded, but now the government is expecting FDI inflows to reach around $4 billion in FY10/11. Saleh said that officials are focusing on attracting Gulf Arab money, in part because GCC countries already have a solid investment base in the country. As Egypt's political events unfolded, Beltone had estimated FDI inflows to stand at around $4.5 billion in FY10/11, and most recently they lowered their estimates to around $3.5 billion, as the balance of payment data was released for the 1HFY10/11, signaling a drop in FDI inflows by 14% y-o-y to reach $2.2 billion during 1HFY10/11. GAFI's direction toward tapping Gulf countries' investments has been a common theme in other ministries such as the Ministry of Finance, where it is planning on tapping GCC sovereign wealth funds to finance Egypt's expenditure and debt. Kuwait is the biggest GCC investor in Egypt and it has previously announced that it will continue its investments in Egypt, as it believes in Egypt's strong economic fundamentals. (Beltone 07.04)

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5.20 Libya Crisis Jeopardizes Fragile Tunisian Economy

Tunisian businesses operating in Libya were hit hard when the war broke out, forcing many companies to pull out employees and halt projects. The fallout from the Libya crisis is now endangering Tunisia's already weakened economy. Despite the heavy losses sustained as a result of events in Libya, pundits believe that it is only a temporary crisis and won't last for long because of the strong economic ties between the two countries. There are more than 40 Tunisian companies operating in Libya in areas ranging from contracting and construction to food industries. There are also 1,300 Tunisian companies that export items to Libya, which is Tunisia's largest trade partner in Africa and fifth largest globally. According to the trade ministry, Tunisian exports to Libya dropped by 22.5% in the first two months of 2011. The conflict has seriously impacted the Libyan economy as well, where nearly 1.5 million Tunisians used to go shopping. Many Tunisian enterprises with branches in Libya and those depending on Tunisian labor have stopped working, leading to an increase in unemployment. The number of jobless people in Tunisia is expected to increase from 520,000 to 700,000 by the end of the current year. Unemployment hit 19% in 2011, partly due to thousands of Tunisians returning from Libya. Business owners operating in Libya are growing increasingly concerned about the future of their investments in light of the deteriorating security situation. (Magharebia.com 05.04)

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5.21 Morocco - US Trade Exchange Exceeds $ 2.5 Billion

Trade exchange between Morocco and the United States, which are bound by a free trade agreement (FTA), stood at more than $2.6b in 2010, with Morocco's exports to the US market rising by 54% since the entry into force of the agreement in 2006. Bilateral trade has markedly risen in 2010 from a year earlier when it had stood at $2.1b. Moroccan exports to the United States reached $685m in the year under review, posting a 46% over 2009. The two countries' officials say the USA-Morocco free trade agreement, the unique such agreement signed by the USA in the entire Africa, attests to the excellent, special bilateral relations. (MAP27.03)

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5.22 Morocco Joins OECD Development Center

Morocco becomes a Bureau member of the Development Center of the Organization for Economic Cooperation and Development (OECD). The OECD Development Center Bureau, an executive body, includes four members of the Organization, namely Germany, Mexico, Korea and Greece and non-member countries such as Brazil, Indonesia and South Africa. Under the agreement Morocco and the development Center decide to cooperate in order to organize in Morocco two preparatory meetings at the World Forum on “Statistics, Knowledge and Policy” held in New Delhi in autumn 2012. (MAP 30.03)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 IMF Says Turkey to Grow By 4.6% This Year

Turkey's gross domestic product, which grew 8.2% in 2010, is expected to register a 4.6% growth rate this year, according to a recent report from the International Monetary Fund, or IMF. The 2011 World Economic Outlook report of the IMF read that the global economy will grow by 4.4% this year and by 4.5% in 2012. The economic outlook report expects Turkey's GDP to grow by 4.6% this year and 4.5% in 2012. Rapid economic recovery in Turkey is forecasted to continue according to the economic outlook report of the IMF. The consumer price index, which grew by 8.6% in annual basis last year, is expected to show a 5.7% increase in 2011 and 6% in 2012. According to the IMF report, while Turkey's proportion of current account balance to GDP was minus 6.5%, this ratio is forecasted to be minus 8% in 2011 and minus 8.2% in 2012. The IMF report predicts Turkey's unemployment rate, which was 11.9% last year, to be 11.4% in 2011 and 11% in 2012. The report highlighted that even though the economic growth follows a low level in developed economies, unemployment rates remain high. However in developing economies, there seems to be a strong growth rate and low unemployment rate, the report read. In developed economies the annual economic growth rate is expected to be 2.4% this year and 2.6% in 2012. In the developing countries, this figure is expected to be 6.5%. (ANA 11.04)

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6.2 Cyprus Inflation Steady in March But Petroleum Prices Rising By 27%

Cyprus' annual inflation rate was steady in March, with consumer prices rising by 2.8% compared with the same month of 2010. This was the same rate as recorded for February. For the period January-March 2011, the CPI rose by 2.8% compared with the corresponding period of 2010. Compared with the previous month, the index rose by 0.98% to 115.12, from 114.00 in February 2011. The Statistical Service Cystat said that this was mainly owing to increases in the prices of certain clothing items, petroleum products and fresh fruit, as well as an increase in water rates and electricity while there was a drop in the prices of certain fresh vegetables. Since most electricity is produced in Cyprus by burning oil, electricity prices are influenced by global oil prices. Imported petroleum prices rose in Cyprus by 27% year on year in the first two months of 2011. (FM 10.04)

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6.3 Greece Raises €1.6 Billion Euros In Debt Sale; Demand Solid

Greece raised €1.625 billion in a sale of six-month treasury bills on 12 April that was met by solid demand as the interest rate moved marginally higher than in a similar debt auction last month. The Public Debt Management Agency (PDMA) said the yield had risen to 4.8% from 4.75% offered in the last six-month bill sale in March. Total bids reached €4.758 billion and the amount finally accepted was €1.625 billion. The auction had originally aimed to raise €1.25 billion euros. Foreign investors snapped up about 40% of the government paper sold. The issue came as the Greek government is laboring to keep a draconian overhaul of the recession-hit economy on track, under pressure from the EU and the IMF which last year bailed out Athens with a €110 billion loan. The government had hoped progress on slashing the runaway Greek deficit would restore confidence in the economy and enable a return to borrowing markets with longer-term bonds later this year. But the spread, or gap, between 10-year Greek bonds and German equivalents is still around 10%. (eKathimerini 12.04)

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6.4 Number of Bulgarians Slumps By Half Million Since 2001

Bulgaria's population has decreased by over half million people (581,750) since the 2001 Census, according to data from the National Statistics Institute, NSI. NSI announced the first official express results from the 2011 Census in Bulgaria. Bulgarians in the country are now 7,351,234. Of them nearly 73% (5,357,633) live in cities and towns and 27% (1,993,602) live in villages. From 1992 until 2011, the population went down by 773,784 over the negative natural growth while 410,472 have emigrated. The largest population decrease has been registered in 2002 – by 46,118 people. Between 2001 and 2011, the number of the residents of the capital Sofia grew by 185,532. Currently 1,359,520 people live in Sofia. The Census further registered 2,826,740 households in the country or an average of 2.6 people per household; there were 3,898,688 residencies with an average of 1.9 people inhabiting them. By February 1, 2011, women in Bulgaria were 3,770,897 or 51%, while men were 3,580,337 or 49% meaning there are 1,053 women for 1,000 men compared to 1,052 to 1,000 in 2001. Children, ages 0 to 17 number 1,172,208 (16%); people ages 18 to 64 number 4,789,967 while those over 65 are 1,389,059. (SMN 06.04)

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6.5 20% of Bulgarians Live Below Poverty Line

Every fifth household in Bulgaria remains affected by the economic crisis while two thirds of the households have a hard time making the ends meet. The data comes from a joint research of the Open Society Institute and the World Bank. Compared to 2010, 5% more Bulgarians have said they expect to have a better live by the end of the year. However, the authors of the study say this moderate optimism has no sound economic ground and the burden of the crisis is to stay for a while longer than the end of 2011. Every second household has been affected by it at one moment or another and Bulgarians continue to limit their consumption, with 50% saving even on food and another 20% skipping meals. According to the authors, precisely these 20% of Bulgarians live below the poverty line while another two thirds of the population earn only what they must spend for basic necessities. The number of the layoffs still surpasses the number of the newly-hired, the study shows. (SM 12.04)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Passover Observance Will Begin on 18 April

On Monday night, 18 April, Israel and world Jewry will begin the week long celebration of the Passover (Pesach) holiday. Passover celebrates the liberation of the Jewish People from slavery in Egypt by the hand of G-d. It is central to Jewish identity and Jewish practice, since the Exodus and life in the wilderness led to the true birth of the Jews as a distinct entity. Jacob and Josef came to Egypt numbering 70 souls and Moses led 600,000 out after the defeat of Pharaoh. Probably the most significant observance related to Pesach involves the removal of chametz (or leaven) from Jewish homes and businesses. This commemorates the fact that the Jews leaving Egypt were in a hurry and did not have time to let their bread rise. Even converts to Judaism relate to the Exodus as their own ancestors as having left Egypt. It is also a symbolic way of removing the "puffiness" (arrogance, pride) from our souls. Instead, special non-leavened bread called matzah is consumed, among a myriad of other special holiday dishes.

On the first night of Pesach (first two nights for Jews outside of Israel), there is a special family meal filled with ritual to remind Jews of the significance of the holiday. This meal is called a seder, from a Hebrew root word meaning "order," because there is a specific set of information that must be discussed in a specific order. The seder is full of symbolism, all pointing to one salient point: that Jews all remember that G-d took us out of slavery in Egypt to freedom to observe his Torah. Pesach lasts for seven days (eight days outside of Israel). The first and last days of the holiday (first two and last two outside of Israel) are days on which no work is permitted. Work is permitted on the intermediate days. These intermediate days on which work is permitted are referred to as Chol Ha-Mo'ed, as are the intermediate days of Sukkot. Though work is permitted, many take vacations and a full work environment returns only after the holiday. Passover ends on 25 April in Israel, 26 April in the Diaspora.

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7.2 Cows, Chickens and Fish Eat Kosher for Passover Long Before Humans

Israel's farms and fisheries have been feeding their animals and fish with kosher feed since Purim – 30 days before Passover holiday – in order to ensure the highest levels of being kosher during the holiday. Dairy farmers make certain that the feed given to cows has none of the grains which are not kosher for Passover ensuring that milk marketed at Passover will be completely kosher. Dairy farmers say they even change the hay during the Passover to assure that it does not come from grains. Because cows have delicate stomachs, the transition is done gradually. Fisheries also change over to a chametz (leaven) free meal that is given to fish raised in the ponds. The factories that supply the mix are scrupulously cleaned and prepared for Passover and the meal was exchanged for one that does not contain grains. The Poultry Farmers Association has also assured the authorities that all chicken products being sold ahead of the Passover have had feed that was certified kosher for Passover. Some 2,800 tons of fish are expected to be sold ahead of the holiday reflecting a 17% increase over last year. The majority of the demand is for carp which are bred in pools. The Agriculture Ministry says that average egg consumption in Israel goes up from 20 eggs a months to 22. Of that number, 90% are locally raised with 10% coming from Turkey. Israel is the world's fourth largest consumer of eggs – after Japan, France and the US. (KTN 12.04)

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*REGIONAL:

7.3 Lebanon's Cabinet Formation Enters Critical Phase

Lebanese Prime Minister-designate Najib Mikati will hold “significant contacts” in the next few days that could accelerate the formation of a new government. As part of his intensified consultations with the main parties to break the two-month-long Cabinet stalemate, Mikati met separately with representatives from the Progressive Socialist Party (PSP), caretaker Economy Minister Mohammad Safadi and a political aide to Parliament Speaker Nabih Berri. This is in addition to Mikati's unannounced contacts with other parties. After the main parties have approved Mikati's draft 30-member Cabinet lineup, discussion is now centered on the distribution of portfolios and names of candidates who will join the Cabinet. Under Mikati's latest Cabinet proposal, 11 portfolios will be allotted to President Michel Sleiman, Mikati and Walid Jumblatt's bloc, and the remaining 19 portfolios will be shared by Aoun's (Free Patriotic Movement (FPM) leader MP Michel Aoun) bloc, Hezbollah and Amal. Aoun's tough demands for the lion's share of Christian participation, including the key Interior Ministry portfolio, have largely been blamed for the Cabinet impasse. Mikati, who is backed by the Hezbollah-led March 8 alliance, was appointed on 25 January to form a new government to replace caretaker Prime Minister Saad Hariri's toppled Cabinet. (TDS 12.04)

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7.4 Kuwaiti Cabinet Resigns in New Political Crisis

On 31 March, Kuwait's government resigned, sparking a fresh crisis in an oil-rich Gulf state prone to political volatility, as opposition MPs stepped up calls for a change of prime minister. The development, unrelated to revolts in the Arab world, marked the sixth cabinet led by Prime Minister Nasser Mohammed al-Ahmad Al-Sabah to resign since he was named five years ago. Three parliaments have been dissolved in the emirate over the same period.

With the opposition calling for a change of premier on the grounds mainly of incompetence, the emir, Sheikh Sabah al-Ahmad Al-Sabah, has the sole right under Kuwaiti law to select the prime minister. Sheikh Sabah must first decide whether to accept the government's resignation, and then, if so, name Sheikh Nasser or another figure to form a new cabinet. The resignations come after MPs filed petitions to question in parliament three ministers who are senior members of Kuwait's Al-Sabah ruling family over a variety of allegations including corruption and failure to perform duty. Liberal MPs filed to question Kuwait's deputy premier for economic affairs, Sheikh Ahmad Fahad al-Sabah, over allegations of corruption in contracts worth $900 million. Earlier, other MPs applied to question the Information & Oil Minister and the Foreign Minister. Kuwait's last poll, brought forward due to an earlier political crisis, was held in May 2009. The country sits on about 10% of global crude reserves and currently pumps 2.3 million bpd.

Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, Emir of Kuwait, issued a decree re-appointing Sheikh Nasser Mohammed Al-Ahmed Al-Sabah as Kuwait's Prime Minister and delegated him to form a new government. (AFP 31.03)

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7.5 UAE Population Surges to 8.26 Million

The population of the United Arab Emirates surged exponentially to about 8.26 million by 2010, up 65% in four years due to an influx of foreign workers. As a result, the percentage of nationals has dropped to 11.47%. The UAE has seen its population surge from 5.01 million in 2006 to an estimated 8.26 million in the first half of last year, according to the National Bureau of Statistics. The leap was due to a huge influx of foreign workers during years of rapid economic growth, while the number of Emirati nationals grew only from 851,164 in 2006 to 947,997 in the first half of 2010. The estimate was based on records for foreign residents provided by the interior ministry, in addition to natural population growth, it said. Abu Dhabi, the leading member of the seven emirates that make up the UAE federation, had 42% of the national population. A nationality breakdown of the expatriates was not provided. In 2009, South Asians reportedly represented the majority of the population. Many expatriates have reportedly left the UAE after losing their jobs in the wake of the global financial crisis, which hit the UAE economy hard, mainly in former boomtown Dubai. The new statistics show net migration inflows dropped from 1.15 million in 2007 and 1.8 million in 2008 to a mere 57,793 people in 2009, when the UAE economy contracted by 2.5%. (AFP 02.04)

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7.6 Egypt Lays Out Election Calendar

On 30 March, elections for a new president in Egypt are scheduled to occur no later than November, the ruling military council in Cairo announced. The ruling Supreme Council of the Armed Forces earlier announced the country would have parliamentary elections in September. It didn't announce a date for the presidential contest. Roughly 40% of the eligible voting population in Egypt turned out to vote in a constitutional referendum meant to pave the way for parliamentary and presidential elections this year. The amendments impose term limits on the president and give the judiciary more oversight powers in an election. The military council added that an interim constitution would be the law of the land until lawmakers draw up a permanent document. Military authorities said if a president was elected before rank-and-file lawmakers, the new leader could define the structure of state institutions and act as "a new dictator." Opponents argue that having parliamentary elections first would give groups like the National Democratic Party and the Muslim Brotherhood an upper hand in Egyptian politics. The military council took control of the country after Hosni Mubarak resigned as president 11 February following weeks of anti-government protests. (UPI 30.03)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Merck Serono Initiates Strategic Israel Bioincubator Fund

Merck Serono, a division of Merck KGaA, Darmstadt, Germany, announced the Merck Serono Israel Bioincubator Fund, a strategic and corporate initiative targeting Israeli biotechnology start-ups. The bioincubator, designed to accelerate the successful development of entrepreneurial start-up companies, will offer both seed financing and the opportunity to use a dedicated part of Merck Serono's Israeli research and development center, Interlab, for their own research. Israeli biotech companies will be selected based on their potential for developing innovative technologies aligned with the company's strategy, which could enable the discovery and development of new products. Merck Serono will commit a total of €10 million in the bioincubator program during a seven-year period. The bioincubator will be launched officially towards end of 2011. Israeli companies wishing to submit proposals or receive additional information should contact the Merck Serono Israel Bioincubator Fund at: http://bioincubator.merckserono.com. (Merck Serono 30.03)

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8.2 Oral Laquinimod for Multiple Sclerosis Treatment Significantly Reduced Disease Activity

Teva Pharmaceutical Industries and Sweden's Active Biotech announced results from the two-year Phase III ALLEGRO study of laquinimod, an oral, once-daily, investigational immunomodulator for the treatment of relapsing forms of multiple sclerosis (MS). In the ALLEGRO study, laquinimod showed a statistically significant 23% reduction in annualized relapse rate (p=0.0024), the primary endpoint, along with a significant 36% reduction in the risk of confirmed disability progression, as measured by Expanded Disability Status Scale (EDSS) (p=0.0122). Treatment with laquinimod was also associated with a significant reduction in brain tissue loss, as measured by a 33% reduction in progression of brain atrophy (p<0.0001). Laquinimod was safe and well-tolerated without immunosuppressive effects. The overall frequencies of adverse events, including incidence of infections, were comparable to those observed in the placebo group. The most commonly reported adverse events were headaches, nasopharyngitis and back pain. Laquinimod is an oral, once-daily, immunomodulator with a novel mechanism of action being developed for the treatment of MS.

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. Headquartered in Israel, Teva is the world's largest generic drug maker, with a global product portfolio of more than 1,450 molecules and a direct presence in 60 countries. Teva's branded businesses focus on neurological, respiratory and women's health therapeutic areas as well as biologics. (Teva12.04)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 LucidLogix Virtu Solution on Select Genuine Intel Desktop Boards With Intel Chipsets

Marking a major customer engagement with Intel, LucidLogix that its Virtu GPU virtualization software will be integrated into various SKUs of Genuine Intel Desktop Boards based on the Intel H67 and Z68 chipsets. Virtu allows the systems to simultaneously take full advantage of both the low-power best-in-class media processing features of the 2nd generation Intel Core processor graphics and the 3D gaming performance of add-in cards with graphics processing units (GPU). Utilizing its knowledge and capabilities to serve generic graphics processors, Lucid has developed an important improvement for media and gaming PC users. Until now, once a discrete GPU was attached to a desktop computer, the integrated GPU became inaccessible. Now with Lucid's Virtu it is possible to run one or two discrete GPUs and still utilize the transcoding performance and lower power of the Intel HD graphics in the 2nd generation Intel Core processor. Intel will make Virtu available in various motherboard SKUs based on the H67 and Z68 chipsets where the Virtu brand will be featured on the board's packaging for system integrators and end users. Kfar Netter's Lucid 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 pending. (Lucid 01.04)

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9.2 Orckit-Corrigent Packet Network Solution Selected by 3 New Service Providers

Orckit Communications announced three new service providers selected its PTN solution this month for migration from their legacy SONET/SDH networks to future-proof packet based networks which enable the delivery of any mix of video and data services together with the traditional TDM services. The initial purchases placed by all three service providers for immediate deployments, two providers are based in the Caribbean and Latin America (“CALA”) region and the third in Eastern Europe, support substantial network expansion plans that hold the potential for significant follow-on orders. Orckit's PTN solution is designed to scale up the delivery of residential, business and mobile backhauling services in next-generation telecom networks. Incorporating its CM-4000 product family, Orckit's PTN solution encompasses a series of PTN switches based on MPLS and MPLS-TP technologies that offer a flexible mix of Ethernet and TDM services that facilitate the migration toward a packet based network. The global shift toward packet transport standards has gained significant momentum over the past year. Greater numbers of carriers are upgrading from TDM networks to packet based networks, enabling the convergence of emerging video and data services and legacy TDM transport services on a single network infrastructure.

Tel Aviv's Orckit (http://www.orckit.com) facilitates telecommunication providers' delivery of high capacity broadband residential, business and mobile services over wireline or wireless networks with its Orckit-Corrigent family of products. With 20 years of field experience with Tier-1 customers located around the world and sound leadership, Orckit has a firm foothold in the ever-developing world of telecommunication. Orckit-Corrigent's product portfolio includes Packet Transport Network (PTN) switches - an MPLS and MPLS-TP dual stack based portfolio enabling advanced packet as well as legacy services over packet networks with a wide set of transport features. (Orckit Communications 31.03)

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9.3 High Safe Technologies & BitDefender Partner to Protect From Internet Attacks

High Safe Technologies announced a strategic partnership with BitDefender, an award-winning provider of innovative Internet security solutions. High Safe Technologies will integrate BitDefender's Antivirus scanning engine to provide layered security protection for consumers and small businesses that regularly use the internet for online transactions and send files using web browser, instant messaging, file transfer, or other methods of sending and receiving files. High Safe Technologies plans to release its new product with BitDefender's award winning security technology later this year. Established in 2010, Kfar Saba's High Safe Technologies (http://www.highsafetech.com) is a start-up software company focused on developing highly effective security solutions for the consumer and businesses. High Safe Technologies' new security software product will deliver powerful system protection for small businesses, banks and merchants seeking to improve data security and compliance with government mandates and other security requirements, such as PCI DSS, Sarbanes-Oxley, HIPAA, FISMA and GLB. (High Safe 31.03)

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9.4 Neebula Introduces the First Cloud-Enabled Business Service Management Solution

Tel Aviv's Neebula Systems (http://www.neebula.com) released ServiceWatch 1.5, the world's first Business Service Management (BSM) solution with real-time service modeling. As enterprises migrate to dynamic IT environments they are no longer able to identify the location of resources that support business services. This eliminates the ability of existing management tools to provide true control of business service health. Neebula ServiceWatch 1.5, with its patented real-time service modeling technology, automates the initial creation of the business service model and keeps it up to date even in the most dynamic environments required for cloud computing implementations. Neebula ServiceWatch 1.5 real-time discovery is capable of modeling all elements that support business services, including applications, servers, virtualization, network and storage. Neebula aims to resolve the IT management challenges that are caused by virtualization and cloud computing. Neebula's mission is to provide a new generation of Business Service Management (BSM) tools that are built by design to support real-time dynamic environments. Neebula's BSM software utilizes a unique service modeling technology that automates the process of service modeling and keeps the model up to date in real-time dynamic environments. (Neebula Systems 30.03)

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9.5 Laserdenta Enhances Compatibility With Objet's 3D Printing Systems

Objet Geometries announced that Laserdenta GmbH, a global leader in 3D scanners and CAD/CAM software solutions for the dental industry, has enhanced their Laserdenta's OpenCAD software's compatibility with Objet's Eden line of 3D printing systems, enabling optimized fabrication and fit precision of dental crown stone models. Enhanced compatibility is provided by a series of pre-defined settings that allow dental technicians to fabricate highly accurate dental stone models directly from the digital files of 3D dental scans. Rehovot's Objet Geometries (http://www.objet.com), the innovation leader in 3D printing for rapid prototyping and additive manufacturing, provides 3-dimensional printing systems that enable manufacturers and industrial designers to reduce cost of product development and dramatically shorten time-to-market of new products. Objet's ultra-thin-layer, high-resolution 3-dimensional printing systems and materials utilize PolyJet polymer jetting technology, to print ultra-thin 16-micron layers. The market-proven Objet Eden line of 3D Printing Systems and the Objet24 and Objet30 3D desktop printers are based on Objet's patented office-friendly PolyJet Technology. The Objet Connex multi-material family is based on Objet's PolyJet Matrix Technology, which jets multiple model materials simultaneously and creates composite Digital Materials on the fly. (Objet 31.03)

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9.6 RADVISION Announces Significant New Video Conferencing Capabilities for Apple Devices

RADVISION announced SCOPIA Mobile V3, the first enterprise application for Apple iOS and Google Android devices that allows mobile users to connect with full video, audio and H.239 data collaboration to the nearly 2 million installed standards-based video conferencing and telepresence systems worldwide. SCOPIA Mobile V3 is based on RADVISION's BEEHD client framework for easily developing HD video-enabled applications across many platforms. SCOPIA Mobile users will be able to fully participate in enterprise video and telepresence conferences leveraging the latest mobile devices such as the Apple iPad 2 and iPhone 4 along with the Android-based Motorola Xoom, Samsung Galaxy Tab and HTC ThunderBolt extending enterprise video conferencing and telepresence to nearly anywhere someone goes with their mobile device.

Tel Aviv's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified Visual Communications over IP, 3G and IMS networks. With its complete set of standards-based video communications solutions and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the Unified Communications evolution by combining the power of video, voice, data and wireless – for high definition Video Conferencing Systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION 11.04

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9.7 Orbotech Receives Acceptances for Its New Gen 8 EVision FPD-AOI System

Orbotech has received initial customer acceptances for its new Generation 8 EVision FPD-AOI system. Revenues from sales of these systems that were delivered by March 31, 2011, which are estimated to total approximately $20 million in value, will be recognized during the first quarter of 2011. As previously announced, the Company expects that revenues in H1/11 will be in the range of $280 - $300 million. Of these, approximately $130 million are expected to be recorded in the first quarter. Yavne's Orbotech (http://www.orbotech.com) has been at the cutting edge of the electronics industry supply chain, as an innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products, for over 30 years. The Company is a leading provider of yield-enhancing and production solutions, primarily for manufacturers of printed circuit boards and flat panel displays; and today, virtually every electronic device is produced using Orbotech technology. The Company also applies its core expertise and resources in other advanced technology areas, including character recognition for check and forms processing and solar photovoltaic manufacturing. (Orbotech 07.4)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Strong Shekel Hits Matza Exports

The Israel Export and International Cooperation Institute reports a 20% drop in matzah exports for Passover this year compared with 2010. Most matzah exports are in January and February. Matzah exports in December-January fell to $6.7 million from $8.4 million in the corresponding months a year before. The erosion in the shekel-dollar exchange rate has resulted in higher prices for flour and the fall in the shekel-dollar exchange rate affected matzah exports to the US and the industry as a whole. According to the Export Institute, matzah exports to the US fell 31% to $7 million, accounting for 56% of total matzah exports. Matza exports to France fell 13% to $652,000, exports to Italy fell 3.4% to $1.17 million and exports to South Africa plummeted 44%. Demand for Israeli matzah in Canada and Australia is also down this year. On the other hand, matzah exports to the UK and Belgium have risen strongly, which the Export Institute attributes to retailers switching to Israeli matzah this year from Russian matzah. The Export Institute also attributes the drop in matzah exports to the US to production by two US firms, against which Israeli companies cannot compete. The price of a 2.5-kg. box of Israeli matzah has risen to $23 from $16. In 2010, Israel exported matzah to 57 countries. Matza exports included light matzah, whole wheat matzah, supervised matzah and handmade matzah. The Export Institute says that demand for Israeli matzah is very volatile: exports totaled $7 million in 2003, $10 million in 2006, $16 million in 2009 and $13 million in 2010. (Globes 12.04)

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10.2 Israeli Hotel Spend $25 Million to Convert to Passover; 88% of Israelis Participate in Seder

According to the Israel Hotel Association, it costs Israel's hotels $25 million to convert to be kosher for Passover. This includes acquisition of cleaning materials, kosher for Passover food stocks, maintenance and cleaning staff, hiring cantors and people to run the Seders on the first night. The hotel group says that preparations for Passover add 40% to the year-round overhead. Hotel rates are always more expensive during Passover than during the rest of the year in order to compensate the hotels for the huge financial outlay involved in converting the hotels to kosher for Passover. The Hotel Association is reporting occupancy for the holiday at around 80%. The Dan Hotel chain reports that their occupancy will be upwards of 85% during the holiday. Like Jews worldwide, Passover is the most widely observed holiday on the Jewish calendar. When it comes to Seder, most Israelis are Jewish no matter how secular. A Central Bureau of Statistics survey found that 88% of those who regard themselves as either traditional or secular take part in a Passover Seder. Some 48% eat only kosher for Passover foods during the week of the holiday. (KTN 11.04)

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10.3 Israel Arms Exports Surpassed $7.3 Billion in 2010

Israel's defense exports exceeded $7.3 billion in 2010, according to provisional calculations of new orders from defense companies. The final figure will probably reach $7.4 billion, the all-time high reached in 2009. The final calculation of new contracts signed by defense companies last year would be completed in April, following thorough checks by SIBAT Ministry of Defense Foreign Defense Assistance and Defense Export Organization and the Israel Export and International Cooperation Institute. Provisional calculations made in mid-March found that the value of new contracts in 2010 reached $7.3 billion, but that the amount would probably rise to reach the record set in 2009, when the calculations for support and follow-on contracts are completed.

For two consecutive years, Israel has passed the $7 billion threshold. As in previous years, 80% of Israel defense production was exported. For a small country under constant threat, such as Israel, exports were critical for the existence of the industrial establishment, maintaining the strength of the IDF and creating diplomatic relations through arms sales and defense cooperation. Israel's defense exports have been rising for the past five years: from $3.5 billion in new orders in 2005; $4.9 billion in 2006; $5.6 billion in 2007, and $6.6 billion in 2008. (Globes 04.04)

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11: IN DEPTH

11.1 ARAB WORLD: Gallup Makes Case for Investment In Young People Across The Arab World

Leading international figures are calling for renewed impetus for finding ways to unlock the potential of young people in the Arab world. Former President of Ireland Robinson and the Nobel Peace Prize Winner and Former President of Finland Ahtisaari presented an in-depth study of the views of young people from across the Arab World which focuses on the need to more effectively integrate the group into their economies and communities.

The release of the 4th edition of The Silatech Index: Voices of Young Arabs – which covers 20 countries including Bahrain, Egypt, Libya and Tunisia - comes at a crucial time for the region.

The Index, created by The Gallup Centre for Muslim Studies, reveals fresh insight on the views of young Arabs in the Middle East and North Africa (MENA). The political upheaval in recent months has been symbolic of young people's attitudes towards their future development and wellbeing. Young men and women in the Arab world are feeling disconnected from the opportunity to effectively integrate economically in their societies.

Traditional economic measures such as GDP have indicated steady economic growth in some parts of the region. But looking at just this can be misleading, as MENA has one of the highest rates of young people's unemployment and underemployment in the world. “Reports of a booming economy do not always reflect the proper dynamics in the countries. To understand this we have to do more than scratch the surface – we need to look at what the younger generation thinks and understand how important it is to get them economically engaged ,” says Martti Ahtisaari.

Even though they are one of the healthiest and best-educated generations in the region, young Arabs still have difficulties obtaining access to employment and enterprise opportunities. The slight improvement of the region's economies after the downturn has led to increases in living costs rather than job creation. Despite this they are also full of aspirations and optimism. “The dramatic events in recent months offer the chance to do what should have been done long ago. Young Arabs feel that this is the time to invest in and listen to them and their needs. This group has huge potential and strong entrepreneurial aspirations and they can definitely contribute to bolstering their countries' economies,” says senior analyst Ahmed Younis from the Gallup Centre for Muslim Studies. “The events in the Middle East have not come as surprise if you look at the disengagement of young people.”

A growing willingness of the majority of young people (61%) to re-train for a different career if unemployed for at least six months and their strong ambitions to work underscore their insistence on being part of the solution to the challenges their countries face. Furthermore, a greater mobile phone penetration (87%) and access to the Internet (62%) create as yet untouched, opportunities to engage with this group as well as broadening possible business opportunities.

Despite being more optimistic about the direction of their local economies, with 43% saying economic conditions in their communities are improving, young Arabs feel that the current circumstances in their societies are not enabling them to reach their full potential. The group's attitudes towards their standard of living, especially regarding affordable housing, changed negatively in 2010 compared with 2009. Also their satisfaction with public transportation systems declined (11%). Moreover, young people expressed their disappointment with efforts to tackle poverty issues in their countries.

Other key findings:

• Young Arabs' reported cellular phone access has increased significantly
• Only 27% of young Egyptians have access to internet at home putting the perception of online social networks igniting the recent events in the country in a different light
• 86% of young Arabs in high-income countries in MENA say their leaders maximize on youth potential, up by 19 points
• Young Bahrainis place importance on education and the status of children. They are far more likely to express satisfaction with their schools, more than any other
• Young Bahrainis are also more likely to say that they have voiced their opinion to a public official in the past month
• Increasing religious attendance and strong social support may offset negative perceptions about Syria's economic prospects and influence young Syrians' desires to remain in their country.

The Gallup Center for Muslim Studies (http://www.gallupmuslimstudies.com) is a nonpartisan research center dedicated to providing data-driven analysis, advice and education on the views of Muslim populations around the world. It draws upon Gallup's unprecedented global research initiative, the Gallup World Poll and the Gallup Poll of the Muslim World, to enable global leaders, institutions, and the public to make more informed decisions. (Gallup 03.04)

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11.2 LEBANON: Civil Society Mobilized For Equal Rights

On 20 March, the day before the Mother's Day holiday in Lebanon, 30,000 people of all ages took the streets of Beirut chanting slogans and demanding the abolition of the country's confessional system. This was the latest in a series of demonstrations that began on 27 February with 3,000 young people committed to demonstrating each Sunday for a secular Lebanon that guarantees equal rights for all its citizens.

Their demands are clear: demonstrators want a secular state, a personal status law that guarantees women's rights, the end of Lebanon's current system which allows religious sects to apply different civil laws on issues related to divorce or heritage, and the establishment of civil marriage.

Lebanese civil society seized the momentum from popular uprisings in the region to launch a campaign for the abolition of the confessional system of power-sharing between Lebanon's different religious groups. Although the Preamble of the Lebanese Constitution stipulates that ''The abolition of political confessionalism is a basic national goal...'', due to the 1943 National Pact – an unwritten agreement – power sharing was established on a confessional basis where parliamentary seats are allocated on the basis of religion, and the highest positions are filled by people from specific sects: the president is always Maronite Christian, the prime minister always Sunni and the speaker of parliament always Shiite.

With 18 recognized religious communities, laws on personal status that deal with marriage, divorce, adoption, child custody and inheritance are handled by different religious courts run by each community. Druze, Shiite and Sunni citizens each apply different interpretations of sharia (Islamic principles of jurisprudence). The Orthodox and non-Orthodox Christian communities apply different versions of canon law. Most of these laws tend to favor the rights of men and stress patriarchal values.

This system of different courts results not only in unequal application of the law when it comes to men and women, but also amongst Lebanese women themselves. For example, Sunni and Shiite courts allow men to enter into polygamous relationships, while Druze and Christian courts do not. Divorce is prohibited in Catholic courts, whereas it is permitted in Sunni, Shiite and Druze courts.

Those who opt for civil marriages outside of Lebanon face another challenge. Many personal status laws disallow marriages if one person in a couple is from a different religious community. Because there is no civil marriage in Lebanon, many religiously mixed couples that do not believe in religious marriage or couples where one partner does not want to change his or her religion, are obliged to travel to neighboring countries like Cyprus or Turkey.

Pursuant to Article 25 of decree No. 60/1936, the couple's marriage is recognized in Lebanon but governed by the civil law of the country where it was conducted – a legal headache for Lebanese judges who must therefore be familiar with the civil code of the country where the marriage was conducted in order to resolve any legal issues.

Various attempts to institute one civil code pertaining to the status of the individual, even as an optional measure, have failed due to a political and social system based on confessional power-sharing.

However, civil society has decided to act. A vast roadside billboard campaign was launched in March by the KAFA (which means enough in Arabic) network which brings together various women's associations and organizations. The aim of this campaign is the full implementation of Article 16 of the UN Convention on the Elimination of All Forms of Discrimination against Women which clearly stipulates equality between men and women as far as marriage is concerned and at the spouse's discretion. KAFA advocates that all Lebanese people be subject to the same personal status laws, which guarantee women the same rights and obligations in marriage, inheritance, divorce, alimony and custody afforded to men under the Lebanese Constitution and gender-sensitive international agreements.

A unified civil code on personal status would put an end to existing inequalities between men and women, and among Lebanese women of different confessions, and is the first step in upholding the constitutional aim of abolishing political confessionalism. (CGNews 11.04)

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The Kuwaiti government has approved a four-year economic development plan that, if successfully implemented, could boost public and private spending and lessen the economy's dependence on oil. The National Development Plan (NDP), as the scheme is known, was unanimously approved by the Kuwaiti parliament on February 3, 2010. It calls for several hundred projects and initiatives in areas such as housing, health care and transport, with total spending projected to reach $108b.

The prime minister, Sheikh Nasser Mohammed Al Ahmed Al Sabah, held a press conference in July 2010 to outline the program. He said the plan would put the country on the path towards further economic development, and noted that government spending will likely lead to an “improvement in the state's infrastructure and improve general services”.

Some are skeptical, however, that the government will be able to meet the plan's ambitious goals. The IMF wrote in its July 2010 staff report for the Article IV consultation for Kuwait that the country's economic outlook was “broadly positive” but that downside risks included “the inability of the government to meet the development plan's spending targets”. The report also noted that “red tape and bureaucratic hurdles could discourage private sector participation”.

Government officials have acknowledged this potential obstacle. “Bureaucracy always constitutes a real bottleneck for carrying out any development project,” Sheikh Ahmad Fahd Al Sabah, the minister of state for development affairs, said during the prime minister's July press conference.

Nevertheless, the private sector is expected to account for around 50% of the spending set out in the project. At the time of the NDP's announcement in February 2010 the secretary-general for planning, Adel Al Weqayyan, told the press that the private sector would participate via joint stock companies and partnership projects between state and businesses.

Indeed, at the Kuwait Financial Forum, an event held in November 2010, the prime minster emphasized the private sector's role in the country's economic development, according to local media. In his remarks at the same event, Hamad Al Marzouq, the chairman of the Kuwait Banking Association, suggested that the government's financing strategy would help ensure the success of the program.

An increase in private and state spending will likely boost the domestic economy. Indeed, in July 2010 the IMF reported that Kuwait's non-oil real GDP was expected to grow at 2.5% during 2010, compared to 2% for the overall economy, attributing this differential to the government spending set out in the NDP. According to the IMF, the scheme “provides the needed fiscal expansion to support recovery in the immediate term”.

More recent data indicates that the economy should continue growing. The IMF has projected real GDP growth of 4.4% in 2011, compared to 2.3% in 2010, according to its “Regional Economic Outlook” report for the Middle East and Central Asia, published in October 2010. At a press conference on March 13, 2011, Sheikh Salem Abdulaziz Al Sabah, the governor of the Central Bank of Kuwait (CBK), said the IMF had forecast nominal GDP growth of 8.3% for 2011.

At the same news conference Sheikh Salem also discussed inflation, which in annual terms fell to 5.2% in January 2011, after reaching 6% in December 2010, mainly driven by higher food prices. According to Sheikh Salem, inflation will remain at around 5-6% during 2011. The government has no plans to adjust the policy interest rate, which presently stands at 2.5%. It was last changed in February 2010, when it was lowered as a means of stimulating the economy after the slowdown of 2009. The CBK called the current interest rate “suitable”, according to local press reports.

Kuwait's economy has almost certainly benefitted from the increase in oil prices since the global economic crisis of 2008-09, with the commodity trading at particularly elevated levels in early 2011 due to instability elsewhere in the region. However, if successfully realized, the spending set out in the NDP could give the economy a further boost in the short run and set the stage for longer-term growth. (OBG 11.04)

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Thanks in large part to the number of hydrocarbons expansion projects that have taken place over the past few years, Qatar is expected to see sustained economic growth for the foreseeable future. According to an economic bulletin released by Saudi Arabia's Samba Financial Group in late March, the country could see GDP growth in excess of 19% by the end of 2011. Similarly, nominal GDP is forecast to grow by 22.4%, from $122.3b at the end of 2010 to $149.7b by the end of 2011. These gains can be attributed primarily to the country's rapidly expanding energy sector, which saw growth of nearly 36% in the third quarter of 2010, due to increased production and rising oil prices.

In late 2010 Qatar wrapped up a two-year expansion project that resulted in liquefied natural gas (LNG) production and export capacity jumping to 77m tonnes. With various expansion plans in the pipeline, the firm is expected to hold on to this title for some time to come. Qatargas benefits from the country's huge deposits of natural gas, which are estimated at around 910.5trn cu ft., or 15% of the global total.

On 23 March Qatar's newest energy project, the Pearl gas-to-liquids (GTL) plant, located in Ras Laffan Industrial City in the north-east, began operations. The $19b project, which was developed as a joint venture between Qatar Petroleum and Royal Dutch Shell, will eventually produce 1.6b cu ft. of LNG per day, including 120,000 barrels per day of condensates and natural gas liquids and 140,000 barrels per day of other products, such as lubricants, oils and chemical feedstock. The plant is expected to be fully operational by the end of 2012.

Despite these recent successes, the energy sector faces a number of challenges in the coming years. Speaking at the Doha Energy Forum in the capital in early March 2011, Mohammed Saleh Al Sada, the minister of energy and industrial affairs and the chairman of Qatar Petroleum, told local press, “Ahead of us is a challenging era for world energy producers and consumers.”

The government is well aware that Qatar, like other major energy exporters around the world, will eventually run out of hydrocarbons, although in Qatar's case this is not expected to happen for nearly a century, according to some estimates. Regardless, the state is working to diversify away from reliance on the energy sector. The income the country derives from oil and LNG is being used to stimulate growth in a wide range of other sectors, including information and communications technology, health, education and the real estate market. With this in mind, the government is investing heavily in new technology in the energy sector and working to maximize production at existing facilities, to take advantage of its resources and maintain economic expansion.

The recent nuclear crisis in Japan has resulted in increased criticism of nuclear power around the world. On 23 March US energy firm ConocoPhillips said that as governments reconsider nuclear options, LNG was expected to become increasingly popular. The company, which in conjunction with Qatargas operates a large-scale LNG project at Ras Laffan, maintained that hydrocarbons – and increasingly LNG – will remain the primary source of energy for the foreseeable future, meeting as much as 80% of world demand in 2035, for example.

With increased anxiety about nuclear power and carbon emissions in markets around the world, Qatar is well situated to benefit from rising international energy demand, which is expected to see double-digit growth in the coming decades. Natural gas burns clean and safe, and remains relatively cheap compared to other options, though this is expected to change as demand continues to grow. Since the nuclear crisis in Japan began on March 11, natural gas prices have already gone up by around 10% in the EU and the US. This bodes well for Qatar's energy sector and the broader economy. (OBG 01.04)

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On 05 April, Fitch Ratings (http://www.fitchratings.com) affirmed the Emirate of Ras al Khaimah's (RAK) Long-term foreign and local currency Issuer Default Ratings (IDR) at 'A' with Stable Outlooks. The Short-term foreign currency IDR is affirmed at 'F1'. The Country Ceiling is 'AA+' (equal to the UAE Country Ceiling).

"Ras al Khaimah has significantly bolstered its creditworthiness over the past year," says Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. "The budget has moved back into surplus, debt has begun to decline and the debt maturity profile has benefited from proactive debt refinancing."

Fitch judges RAK's public finances to be a key strength of its credit profile. Figures are on a public sector-wide basis, including all major state-owned enterprises (SOEs). Budget and balance sheet data are now available quarterly, marking a significant improvement in data provision over the past year. In 2009, RAK was adversely affected by the global financial crisis, particularly via its impact on Dubai - an important market. That shock coincided with an ambitious infrastructure development program, partly financed by debt, which saw a marked increase in public debt to over 30% of GDP in 2009. Although still below 'A' category medians, this was a sharp increase compared to the figure of just over 20% when RAK was first rated in 2008. However, this period of rising debt is now over. Debt fell below 30% of GDP in 2010 and the combination of a budget surplus and asset sales, as RAK re-focuses on its core comparative advantages, will see debt fall nearer to 20% of GDP by the end of 2011, virtually half the forecast 'A' category median of 45%.

RAK has typically run a current budget surplus, i.e. excluding capital and development spending. As key infrastructure projects have been completed therefore, development spending is falling sharply and the overall budget has returned to surplus. After five years of sizeable overall deficits, peaking at 9.6% of GDP in 2009, the budget registered a surplus of 4.5% of GDP last year and this is forecast to increase to 6% of GDP this year. With debt pay down being financed from sales of non-core assets, cash balances are forecast to increase so that net debt will fall even faster than gross debt.

Public finances and macroeconomic performance are the main rating drivers for RAK. As the fourth-largest emirate within the UAE, RAK benefits from Federal Government provision of basic social and physical infrastructure, spending on which is increasing, as well as the UAE's monetary and exchange rate arrangements. The UAE Country Ceiling is 'AA+', underpinned by the external assets and oil wealth of the largest emirate, Abu Dhabi ('AA'/Stable). Like other emirates, RAK can obtain foreign currency from the UAE central bank on demand and does not need its own foreign currency reserves. RAK's external position is not a constraint on its FC IDR.

RAK has been adept at finding new markets for its products in response to the varying fortunes of key countries in the region. RAK's main markets outside the UAE are now Qatar, Saudi Arabia and Kuwait. The region's continuing infrastructure spending plays to RAK's comparative advantage in construction materials and basic manufacturing.

However, macroeconomic developments are difficult to track in RAK in the absence of quarterly GDP or other high frequency indicators. Moreover, annual national accounts data are only available with a long delay, including the volume/price split, and there is no expenditure breakdown. Inflation data are also not as frequent or timely as in other parts of the UAE. This is a weakness and improvements in data provision in these areas, to match those that have taken place in public finances, would help inform the credit picture and could be ratings positive.

Political risk has declined with the accession of H.H. Sheikh Saud to succeed his father, Sheikh Saqr, who died in October, thus removing any uncertainty over the succession process. However, as in other emirates, institutional constraints on executive power are low compared to rating peers. RAK has not seen any unrest in response to political events in other countries in the region. (Fitch 05.04)

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Several leading Omani banks have recently moved ahead with plans for large bond issues, with this underscoring the broader confidence in the banking sector at a time of sustained high oil prices and positive economic growth.

The National Bank of Oman (NBO), the Sultanate's second-largest lender in terms of assets, received shareholder approval in late March for a $600m bond program that will likely enhance its ability to tap into international markets.

NBO's move follows hot on the heels of a new $800m bond program at BankMuscat, the country's largest lender by market value, which won shareholder approval in February. Bank officials there have said the money raised from the issue will be used to help fund medium-term lending.

These new bond offerings come amidst optimistic announcements on this year's prospects by officials of Oman's central bank. Hamood Sangour Al Zadjali, executive president of the Central Bank of Oman (CBO), has predicted a 20% rise in bank profits and sound growth for the economy as a whole. On the sidelines of a Gulf central bankers' meeting in Abu Dhabi in March, Al Zadjali told news agency Reuters that he expected Oman's economy to grow by 5-6% in 2011.

A survey conducted by Reuters in March had a slightly less rosy outlook, cutting Oman's expected growth for 2011 from 4.6% to 4.1% following official moves to raise wages, increase social benefits and reshuffle the cabinet.

NBO is using a $600m Euro Medium Term Notes (EMTN) program to issue its bonds, enabling the use of private placement or public subscription in various currencies and on varying terms, the bank said in a statement. The bank's profits fell 16% in the fourth quarter of 2010, to OR5.5m ($14.m), from OR6.54m in the same period of 2009, according to Reuters.

However, Salaam Said Al Shaksy, NBO's CEO, told local media in March that 2010 was a year of consolidation and streamlining. “We re-energized our operations, our manpower, strengthened our risk management and corporate governance. Moreover, we addressed the various needs of our customers and stayed focused on their demands, established market research, as well as upgraded our technology,” he said.

Al Shaksy added that he expected to see positive growth in 2011. “We are aiming to have stronger financial results this year compared to 2010 by aggressively broadening and deepening our customer base. We will also manage our costs and improve our operational efficiency,” he said. NBO has appointed international consulting group McKinsey & Company to develop a five-year business strategy, according to Al Shaksy. NBO reported a full-year net profit of OR27.2m ($70.62m) in 2010, in a statement made to the Muscat bourse in January. Net loans and advances in 2010 were the same as the previous year, at OR1.36bn ($3.53bn), while customer deposits rose by 5.1%, the statement said.

NBO's general manager of wholesale banking, Humayun Kabir, has said that the bank's bond program is aimed at refinancing existing dollar loans and meeting the requirements of Omani companies, particularly in the area of project finance. Kabir told the local press that while there are ample riyal funds, several corporate clients in Oman are looking for dollar-denominated funds from local banks. “In order to meet these requirements, we have to raise long-term dollar funds from international markets,” Kabir said. The bank has also announced that it will consider a cash dividend payout of 15% for 2010.

Results for 2010 were also strong at BankMuscat, which last month announced a 37.8% growth in net profit at OR101.6m ($265m) for 2010, thanks to recovery in loan growth – a significant increase over the OR73.7m ($192.2m) in net earnings achieved in 2009. The bank's net loans and advances portfolio grew by OR169m ($440m), or 4.4 %, to OR4bn ($10.4bn) in 2010, up from OR3.84bn ($10bn) for the same period previous year. “We anticipate strong response to the euro bond issue,” Sheikh Abdul Malik bin Abdullah Al Khalili, chairman of BankMuscat's board of directors, told local media. “The proceeds will be utilized to meet the dollar-denominated project financing requirements. The proposed euro bond issue highlights the economic potential of Oman and the GCC region,” he added.

With government revenues likely to rise on the back of sustained high hydrocarbons prices and the CBO pegging GDP growth at 5-6% for the year, the potential of Oman's banking sector – and indeed its wider economy – looks set to be squarely on investors' radars in 2011. (OBG 07.04)

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On 08 April, Fitch Ratings (http://www.fitchratings.com) affirmed Saudi Arabia's Long-term local and foreign currency Issuer Default Ratings (IDR) at 'AA-', with Stable Outlooks. The Country Ceiling is affirmed at 'AA' and the Short-term foreign currency IDR at 'F1+'.

"Recent royal decrees in the wake of regional political unrest will increase spending, but this will not endanger Saudi Arabia's strong fiscal position and balance sheet, which underpin the ratings," says Charles Seville, Director in Fitch's sovereign team. "Moreover, while Saudi Arabia shares some features with those MENA countries which have recently suffered unrest, there are also major differences, notably the government's ability to alleviate socio-economic problems from increasing oil revenues."

The total value of commitments under the two separate packages of decrees was up to SAR450b (25% of 2011 forecast GDP), but most of the spending will be spread over several years. Spending could rise by 30% in 2011, driven in part by one-off items, but the government would still run a surplus of 7% of GDP.

Saudi Aramco has raised oil production by 10% since January to make up for the halting of Libyan exports, while Fitch assumes Brent will average $100/b in 2011, following the steep recent rise in prices. By comparison, the fiscal breakeven oil price climbs to around $80/b at present production levels, higher than in the recent past, but still comfortable.

Saudi Arabia has one of the strongest balance sheets among Fitch-rated sovereigns, mitigating vulnerability to an oil price correction. Sovereign net foreign assets were $539b (124% of GDP) as of December 2010, allowing the government to easily finance unforeseen deficits from deposits. Moreover, the sovereign has even greater financing flexibility, with a developed domestic capital market and consolidated debt below 4% of GDP. Nevertheless, the spending increase has eroded the value of government assets in terms of years of prospective government spending, a measure of fiscal resilience, to below its 2009 peak.

Real GDP growth recovered to 3.8% in 2010 and will be around 6% in 2011, driven by an increase in oil production and the impact of the government spending boost. Inflation has been on a downward trend but will likely rise, averaging over 5% in 2011, driven by commodity prices and housing costs.

Fitch notes that increasing the public sector minimum wage, introducing unemployment benefit and increasing salaries in the public sector may detract from efforts to spur Saudi nationals into taking jobs in the private sector. With unemployment at 10% - much higher among women and young people - creating jobs remains one of the most important priorities.

Political risk is a significant constraint on the rating at current levels. Succession risk is an ongoing issue. However, signs of political unrest have been limited. Fitch does not expect serious unrest in the kingdom, but will monitor the situation closely. Few citizens heeded calls to protest in March. Structural factors such as those captured in the World Bank's governance indicators remain weak compared with the 'AA' category median. (Fitch 08.04)

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11.8 EGYPT: Business Forecast Report Q2 2011

Research and Markets (http://www.researchandmarkets.com) "Egypt Business Forecast Report Q2 2011" says that Egypt has been thrown into the global spotlight after unprecedented demonstrations pushed Hosni Mubarak out of office in early February. This has forced investors to fundamentally reassess their risk perceptions not only of the country, but other states throughout the wider Middle East and North Africa region as well.

For many, the key question going forward will be the extent of the impact this political transition will have on the economy's medium-term growth outlook. For us, it is undeniable that the coming quarters will see marked changes to trade, investment, and consumption patterns, and we have downgraded our FY 2010/11 real GDP growth forecast to 3.2% (from 5.1% previously) accordingly.

The resignation of former president Hosni Mubarak on February 11 has gone a long way towards improving Egypt's short-term political risk profile, particularly as the diminution in large-scale demonstrations and widespread violence allows the country to regain a sense of normality, and economic activity is able to slowly resume. While we are encouraged that the widespread violent unrest which engulfed the country for over two weeks has now died down, we stress that Egypt's political crisis is only now beginning. A host of new questions have sprung up around the power of different political groups, the role of the military in any new government, and how domestic economic policy may change in the future. The outlook on the Egyptian pound has also been altered as a result of the unprecedented outburst in public unrest in the country since the start of 2011.

While we had become increasingly bearish on the unit heading into the year due to unexplained and somewhat erratic policy decisions from the central bank, the explosion in violent demonstrations which eventually led to the resignation of former president Hosni Mubarak has cemented our view that appreciatory pressures on the currency will be minimal this year. We now forecast the currency will average EGP5.9500/US$ in 2011, compared to EGP5.6345/US$ in 2010. Weaknesses in Egypt's underlying business environment (namely elevated corruption, uncertainty over property rights, and a rigid labor market) will not likely be addressed in 2011, as the caretaker military government focuses on preparing the country for parliamentary and presidential elections.

Indeed, we expect reform momentum to be a key victim of the political unrest, and we stress that there is no certainty that any future government will be any more business friendly or open to foreign investment. (R&M 01.04)

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Ms. Asma Nouira wrote on 30 March in the Carnegie Arab Reform Bulletin (http://carnegieendowment.org/arb) that the fact that Tunisia's revolution was spontaneous - neither planned by any leadership nor producing one - is a blessing and a curse to its transition to democracy. On one hand, the solidarity among many sectors of society and organizations such as labor unions has been a decided benefit. On the other, the lack of leadership poses difficulties in establishing the foundations of political reform and the legitimacy of representation.

Regarding the foundations of political reform, Tunisians - the people, the elite, and the government - have vacillated between constitutional legitimacy and revolutionary legitimacy. After Tunisian demonstrators forced former President Ben Ali to step down from his post, he temporarily delegated his authority to the prime minister in accordance with Article 56 of the Constitution. Then, in keeping with Article 57, the head of the lower house of parliament temporarily assumed the presidency for a period of 45-60 days, with a presidential election to follow.

Post-revolution governments also sought to carry out political reform based on constitutional legitimacy, creating a Higher Political Reform Commission tasked with amending the legal framework to ensure a free, fair, transparent, and pluralistic presidential election. Composed of independent experts in public law and political science, the council included judges and law professors and consulted closely with political parties and civil society organizations. The council outlined several possible post-revolutionary courses: prioritizing a presidential election (whereupon the president would dissolve parliament and organize legislative elections), holding presidential and legislative elections simultaneously, or forming a committee to draft a new constitution, which would be put to a referendum. Interim President Fouad al-Mebza'a announced in early March that the latter course would be adopted, setting in motion a process that will entail holding parliamentary elections July 24 and voting on an interim president until the constitution is finished.

Popular demand pushed the government to give up the idea of preparing for presidential elections, and to instead announce elections for a national constituent assembly that will in turn write a new constitution. The constitution's goal will be to reformulate the system of governance in a way that would ensure a balance of powers that was lost on the 1959 Constitution, which embedded a highly presidential system. The council will also elect from among its members a temporary president who is to hold power until the writing of a new constitution and the completion of preparations for presidential or legislative elections (based on what system is agreed upon).

Regarding the legitimacy of representation, the lack of revolutionary leadership and the late entry of the political parties into the revolution mean that there is no group able to negotiate political reforms in the revolution's name. Groups claiming to represent the people have been proliferating, yet they offer significantly different visions. Perhaps the best illustration of this was a recent incident in which two opposing groups of protesters in Tunis's main street, Habib Borguiba Avenue, simultaneously claimed to be speaking for the people. On one side of the boulevard protesters chanted “the people want a secular state” while just across the street other were saying “the people want an Islamic state.”

Although the opposition parties, political groupings from across the spectrum, and the General Union of Tunisian Workers all initially endorsed participation in the post-Ben Ali government, several of these groups preferred to remain outside the government and pressure it, which detracted from its performance and precipitated its fall. Several important groups - the General Union of Tunisian Workers, the Nahda Movement, the National Lawyers' Association, the Communist Workers' Party of Tunisia, the Association of Judges, and the Tunisian League for Human Rights - then formed the Committee to Protect the Revolution and requested that the interim president of Tunisia invest it with legislative, decision-making, and oversight authorities.

While this request was met with rejection, ensuing negotiations resulted in the creation of the Higher Authority for the Realization of Revolutionary Objectives, Political Reform, and Democratic Transition on February 18. This 71-member advisory body (now 131 members) is composed of a committee of experts as well as representatives from across the political spectrum and civil society. The Higher Authority thus became directly responsible for the political reform process to allow a democratic transition. Its first meeting took place on March 17, during which members discussed the draft laws for parliamentary elections prepared by the Committee of Experts.

The March 17 meeting highlighted how deep the differences are within Tunisian political circles, and how badly the repression of the past, particularly under Ben Ali, has scarred political life. Participants argued about how representative each was of Tunisian society and accused the current government of deliberately marginalizing and excluding some groups, such as youth, women, and regional organizations. The discussion was dominated by demagoguery, accusations of treachery, attempts to jump on the revolutionary bandwagon, and threats to resort to street demonstrations again should some demands not be met - particularly the demand that the commission stop work until an agreement on its makeup was reached.

After negotiations between the various sides, an agreement was reached to begin considering the draft elections laws and to expand the Authority. This in fact happened, as discussions concerning a law for an Independent Higher Electoral Commission began on March 26 and 60 new members joined the March 29 session (including national figures and regional representatives). However, regardless of any expansions in size, this Authority will not represent the Tunisian people, since true representation comes through the ballot box.

Behind the tensions seen in the first two sessions of the Higher Authority is a gamble by the political parties, both old and new, that they can postpone the July 24 legislative elections date announced by the interim president on March 3. Although this date comes in response to Tunisians' aspirations for genuine change in the shortest possible time, it will not give sufficient preparation time to the parties.

The months leading up to the July elections will be fraught with challenges. If demonstrations and sit-ins remain the primary means of negotiating with various political actors, the new government might be as indecisive and vulnerable as its two predecessors. This weakness has drained authority from state institutions, allowing what are called “regional committees for protection of the revolution” to seize control of regional affairs. The growing number of new political parties will pose yet another challenge to a coherent transition, given Tunisia's underdeveloped political culture and ideas of citizenship.

Asma Nouira is a professor of political science and public law at the University of Jendouba in Tunisia and a member of the Higher Authority for the Realization of Revolutionary Objectives, Political Reform, and Democratic Transition. (CARB 30.03)

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As Tunisia continues its recovery from the global economic slowdown, efforts to drive growth in the country's industrial sector are ongoing, with these achieving some success in early 2011. Statistics from the Agency for the Promotion of Industry and Innovation (Agence de Promotion de l'Industrie et de l'Innovation, APII) revealed a 9.7% increase in industrial investments in the first two months of 2011 compared to the same period in 2010, with the total value rising from €213.27m to €233.99m.

The APII registered 266 new projects in the sector in January 2011 alone, with these expected to create 5000 new jobs in segments such as food, electronics, leather and textiles. More are on the way, too: Dutch denim manufacturer Marathon, for instance, is planning to open a new factory in Kasserine this year that will create 1,200 jobs.

In December 2010, with the six-year Industrial Modernization Program – a €50m EU-funded project to assist and support Tunisian businesses – expired, Tunisia began operating under a new €23m EU-funded scheme, the Business Competitiveness and Market Access Support Program, to increase competitiveness and improve quality. Of those funds, €10m will be devoted to providing training and technical assistance to businesses and €9.1m will go towards improving management and infrastructure.

Textiles are the country's largest manufacturing segment. It provides 44% of industrial jobs, employs 200,000 workers and accounts for around 5% of GDP. Total exports amounted to more than €2.6bn up to December 2010, and there are an estimated 1752 companies in the textiles industry manufacturing goods entirely for export.

Around 84 foreign clothing labels are made in Tunisia. Textiles firms are concentrated along the eastern coastline, from Bizerte down to Sfax. The APII announced in January that Monastir alone, which has the highest concentration of textiles firms in the country at over 300, has attracted 13 such projects since the beginning of the year. Tunisia is a leading exporter of textiles products and one of Europe's major clothing suppliers, with 97% of its textiles exports going to the EU. It is one of the EU's five top textiles suppliers, along with China, Turkey, Bangladesh and India. In 2010 sector exports were up 26% in value and 19% in volume compared to 2009. Imports of goods for the industry as a whole were up by 11.8% in value and 11.4% in volume.

The textiles trade took a hit in early 2011 due to the political turmoil, in line with other sectors, dropping 15.8% in January 2011 compared to January 2010. Company owners and workers mobilized to protect their businesses during the unrest, however, and the majority of facilities are now back working at their normal rate, with sales expected to gain momentum going forward. Benetton confirmed in early 2011 that its Kasserine factory is operating normally, and the company plans to increase production from 32m items in 2010 to 35m in 2011.

The gradual return to business as usual was reflected in figures for February, with textiles exports growing by 8.67% during the month, according to the Textiles Technical Centre (CETTEX), which is part of the Ministry of Industry and Technology.

Trade union negotiations are being held to address stagnant wages and rising prices, although this is not expected to hamper investment. Wage increases will be implemented gradually, according to the director of the Export Promotion Centre, Abdellatif Hamam, who suggested an annual increase of 3-4%. As of July 2010 the minimum wage stood at €0.75 per hour.

Tunisia is gradually recovering from the effects of the global downturn. Economic growth was up from 3.1% in 2009 to 3.8% in 2010. Total exports had fallen by 17.6% in 2009 due to a decline in demand for manufactured goods, but in 2010 exports were up by 21%. Total foreign direct investment increased by 2.9% in 2010, mainly because portfolio investments were up from €40m in 2009 to €128m in 2010, according to the Foreign Investment Promotion Authority.

Investments in industry reached €1.7b in 2010, a 17.2% increase over 2009. Outside the energy segment, Tunisia hosts 3,073 foreign industrial companies, which provide around 322,000 jobs. While it has not yet fully recovered from the twin effects off the global economic crisis and the political turmoil of early 2011, momentum is building and with continued backing from the government and a gradual improvement in economic conditions both at home and in key export markets in Europe, the country's textiles business – and indeed its broader industrial sector – looks set for a bright future. (OBG 11.04)

11.11 ALGERIA: Home on the Farm

In a bid to halt rising commodity prices and boost self-sufficiency, Algeria has introduced a number of new projects to improve the country's food security – including irrigation projects, tax benefits for local producers and support for private sector initiatives – which are increasingly meeting with success.

The government is aiming to discourage imports and raise local production to help boost self-sufficiency and limit the country's vulnerability to external commodity shocks. To help limit imports, the administration has been increasing Customs duties, with the 2010 budget raising taxes on wheat imported by private firms. In late 2010 the government decided to reintroduce duties on 36 agricultural and agro-alimentary products imported from the EU that had been suspended as part of Algeria's association agreement with the bloc, though some duties on food imports were again suspended temporarily in response to rioting over food prices in early January.

The food riots emphasized the delicacy of pursuing such a policy, as President Abdelaziz Bouteflika seeks to strike a balance between improving national food security and affordable prices, but imports are nonetheless declining. For example, while the country is the world's fourth-largest importer of wheat, purchases from abroad are falling. According to data from the Algerian Customs service's National Centre for Information and Statistics, in 2010 the country imported 5.23m tonnes of wheat, down 8.5% from 2009's 5.72m tonnes. The decline in the value of imports was even larger at 31.7%, thanks to lower prices, with imports having declined from $1.83bn in 2009 to $1.25bn in 2010. In January and February 2011 the country reportedly bought 1.85m tonnes of wheat – most of it from Algeria's main supplier, France – to secure supplies for the year ahead.

Cereal imports fell from around $5.4bn in 2009 to $5.2bn in 2010, according to Rachid Benaissa, the minister for agriculture and rural development. While this may seem to bode ill for the country's available supply given the fact that the domestic 2009/10 cereals harvest fell to 4.6m tonnes from 6.2m tonnes the previous year due to drought, there are a number of projects under way to increase domestic crop production. One measure being taken to boost local production is the expansion of irrigation systems. The government plans to increase the irrigated surface area – which accounts for just 5% of Algerian agricultural land but contributes around 40% of the total value of agricultural production – from around 400,000 ha to 1m ha by 2015.

As part of this endeavor the National Irrigation and Drainage Office announced a project in late February 2011 that will see the irrigation of around 9000 ha of land in the El Esnam plain in the Bouira province and the Sahel valley in the Bouira and Bejaia provinces using water from the nearby Tilesdit and Tichy Hafta dams. With the launch expected in early summer, the project is projected to create 8300 jobs and boost annual agricultural production from the area fourfold, from around 30,000 tonnes per year to more than 120,000 tonnes.

The milk and dairy product segments are also being targeted for increased output under the drive for improved food security. Local production currently stands at just 1.3bn liters, well behind the annual consumption of around 3.3bn liters. To get closer to meeting demand, the 2011 budget offers tax exemptions to milk producers. Government-backed projects also aim to improve productivity and efficiency in the sector through training programs.

In February the country's Technical Institute for Livestock Farming signed an agreement with French organization Bretagne International, an association that promotes international development of companies in Brittany, to provide training for farmers in rearing cows and producing milk in the provinces of Blida, Relizane and Souk Akhras. The project also aims to encourage cooperation between Algerian and French businesses. Benaissa told the press in December that the country imported 24,000 cows in 2010, up 60% on 2009 figures.

Domestic sugar production is also set to receive a boost following the announcement of plans by local company La Belle and France's Cristal Union to open a sugar refinery. The €70m development will be located in Ouled Moussa in the Boumerdes province. Cristal Union is to take a 35% stake in the project, which will have an initial annual capacity of 350,000 tonnes. This will double to 700,000 tonnes after four years, by which time a second unit will have been completed. The installation will be the country's fifth sugar refinery. Domestic firm Cevital, which is reported to have a market share of 80%, currently dominates the local sugar market. The country imported around 1m tonnes of raw sugar in 2010, at a cost of around $495m.

The government is also supporting private sector efforts to improve performance in the agricultural sector. In December 2010 Benaissa gave his backing to the launch by Algeria's Benamor Group of a network aimed at encouraging interaction between wheat farmers and flour millers. The intention of the project is to improve the quality of wheat produced domestically. The network is based on a similar one in the tomato industry, which, according to Benamor statistics, helped increase annual productivity from 15 tonnes per ha to 60 tonnes.

Should the government initiatives bear fruit, then the increased domestic production will go a long way to reducing the dependency on imports, buffering the country's economy from external commodity shocks and increasing the efficiency of the local agricultural sector. This, in turn, should help keep prices lower and shelves stocked. (OBG 07.04)

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11.12 MOROCCO: Super Market

Souks (open air markets) face increasing competition from supermarkets as private firms – both domestic and foreign – plan openings and expansions in Morocco, changing the nature of the marketplace. The Moroccan supermarket segment is currently dominated by local players, but foreign firms are showing increasing interest and appear set to help drive expansion. In March Turkish no-frills low-cost supermarket chain BIM announced plans to almost double the size of its existing store network in Morocco, from the current 45 to 80. It reportedly has plans to further expand to 150 stores by the end of 2012. The discount retailer entered Morocco in 2008 and all of its current stores are located in Casablanca and the surrounding areas, meaning there is ample room for the company to expand in Morocco.

Low-cost chains such as BIM, which sell discounted bulk items, are well-placed to succeed in Morocco, where 51% of people buy groceries in large quantities to save money, according to a survey published by Moroccan business news weekly La Vie Eco in January.

BIM's expansion plans would make it one of the largest players in the country in terms of outlets, though, given the size of its stores, not in terms of total floor space. Other major companies in the sector include the locally owned Hanouty group, which runs a chain of convenience stores, and Marjane Holding, which is currently the largest player in the supermarket segment in terms of both outlets and floor space with a network of 52 stores.

Marjane's stores include its 21 own-brand hypermarkets located on the outskirts of urban areas, which have a combined floor space of around 140,000 sq. meters and currently dominate the hypermarket segment, as well as its 31 Acima supermarkets, a chain of smaller stores usually found in town centers. While local conglomerate ONA-SNI currently has a 100% stake in Marjane Holding, it reportedly intends to reduce its interest in the firm later this year as part of plans to lower its ownership levels in some of its subsidiaries.

While there is growing foreign interest in Moroccan mass retail, local companies are also increasing their clout in the sector. In November last year, locally owned supermarket chain Label'Vie acquired the local outlets of the Metro wholesale chain from Germany's Metro Cash and Carry. Label'Vie, in addition to operating a chain of 18 stores under its own name, also operates two Carrefour-branded hypermarkets under a franchise agreement with the French retail major. The company plans to transform its newly acquired Metro stores into Carrefour-branded hypermarkets over the course of the coming two years, rebranding four this year and the remaining four in 2012.

Locally owned Aswak Assalam is another of Marjane's competitors that is expanding its supermarket and hypermarket network. The chain, which is owned by Ynna Holding currently operates 11 outlets across the country and intends to open an average of two additional stores a year.

In September it announced plans to invest €24.6m in the construction of a combined hypermarket and shopping mall complex at site of the former Casablanca wholesale market, which will be known as Aswak Assalam Belvedere. The project will include a 5000-sq-metre branch of Aswak Assalam as well as a 5500-sq-metre shopping center, spread over three floors and including restaurants and a bowling alley. The complex is due to open later this year. Meanwhile the aforementioned Hanouty, largely active in the convenience store segment, has plans to increase its supermarket presence and has already opened a 700-sq-metre facility in Marrakech.

Outside of supermarkets and hypermarkets, foreign firms – many of them French – are displaying increasing interest in opening branches and franchises in the country. For example, Galeries Lafayette is due to open a 10,000-sq-metre facility, its first in Morocco, at the Morocco Mall on Casablanca's corniche. Fnac, the French electronics, book and audio-visual retailer, will also have an outlet there. The mall was due to open earlier this year but its inauguration has been postponed until September.

In February 2011, French home improvement chain Mr. Bricolage opened its third store in Morocco, a 2800-sq-metre outlet in Tangier located adjacent to an existing Marjane hypermarket. The firm already has branches in Casablanca and Marrakech and also plans to open a fourth store in Agadir. Moroccan investors are also planning to open franchises of French organic and health food store La Vie Claire, with the first due to open in March in the California district of Casablanca and plans for two more stores in Rabat and Casablanca further down the line.

The government is supporting the pursuit of large-scale shopping facilities. The Rawaj plan, launched in 2008, aims to treble large-scale retail capacity by 2020. Some 56 large-scale retail outlets are due to open by 2012 alone, with the country boasting 600 such facilities by 2020.

While most Moroccans still head to traditional souks, markets and smaller neighborhood stores to shop, the expansion of large-scale, modern retail outlets will likely result in a gradual change in habits in the years to come. With backing from the government in the form of the Rawaj plan and growing investment from both local and foreign players alike, the country's shoppers look set to benefit from lower prices and greater choice on store shelves. (OBG 04.04)

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