TOP STORIES

• Israel Sends First Economic Attaché to Cambodia
• El Al Starts Nonstop Flights to Brazil
• Subway Chain To Return To Israel
• Boeing and Turkish Airlines Finalize Deal for Five 777-300ERs
• Jordan Receives $18 Million Grant From Japan
• Trade Delegations to Visit American States to Boost Turkish Exports

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Budget Vote Pending at Press Time – Possible Rise in VAT and Cuts in Education
1.2 Fischer Warns Against Large Deficits
1.3 Israeli Court Cuts Class Size, Orders State to Pay
1.4 Israel Sends First Economic Attaché to Cambodia

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 NuLens Selected as Winner of the Red Herring 100 Europe 2009
2.2 El Al Starts Nonstop Flights to Brazil
2.3 Zion Oil Announces that Drilling Operations have Commenced
2.4 Grayling & S.P.R. Communications Announce New Strategic Alliance in Israel
2.5 Subway Chain To Return To Israel
2.6 OpTier Selected as a Finalist for 2009 Red Herring 100

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 BAE Systems Awarded Contract to Upgrade Jordanian Armored Vehicles
3.2 Emirates Start Daily Flights to Los Angeles & San Francisco on 1 May
3.3 Geospatial Holdings Smart Probe/DuctRunner Technology Utilized on Dubai's Palm Islands
3.4 TAQA Selects BravoSolution For Spend Management
3.5 Prime Development to Invest $1.5 Billion in Turkey Malls
3.6 Boeing and Turkish Airlines Finalize Deal for Five 777-300ERs

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Transport Minister Plans Nationwide Rail Network
4.2 Environment Ministry to Fund Land Recycling Projects
4.3 French Firms Seek Renewed Tel Aviv Light Rail Bid

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Intra-Middle East Trade Up 28% From 2000 to 2007
5.2 Jordan Receives $18 Million Grant From Japan
5.3 Dubai Considering Cancellation of 27 Real Estate Projects
5.4 Riyadh Chosen as GCC Regional Central Bank Headquarters
5.5 Qatar Launches New Consumer Price Index
5.6 UBS Says Saudi Economy To Grow Just 3.1% Next Year
5.7 Young Saudi Men Go Wild Over Notorious Blue Pill
5.8 Mubarak Concerned About Egyptian Economy
5.9 Egyptian Inflation Falls To 11.7% in April
5.10 Pakistan Food & Drink Report Q2 2009

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 US - Turkey Trade Following the Obama Visit
6.2 Erdogan Says Turkey Will Not Accept IMF Demands To Curb Spending
6.3 Turkey's GDP Contraction May Reach Double Digits in First Quarter
6.4 Turkey & EU Agree on Nabucco
6.5 Trade Delegations to Visit American States to Boost Turkish Exports
6.6 Turkey's April Exports Decline 33.75%
6.7 Turkey Maintains Its Place On The'301 Watch List
6.8 Cyprus Annual Inflation Drops Below 1% in April
6.9 Cyprus Trade Deficit Shrinks in January - February
6.10 Cyprus Unemployment Climbs by More Than 5,000 In April
6.11 EC Sees Greek GDP at -0.9% in 2009 - Deficit at 5.1%

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Yom Yerushalayim - Jerusalem Day Celebrated
7.2 Pope Benedict XVI in Israel

*REGIONAL:

7.3 Jordan Celebrates 63rd Year of Independence
7.4 Turkey Celebrates Ataturk, Youth and Sports Day on 19 May
7.5 Turkey Announces Major Cabinet Reshuffle
7.6 President Gul Tries to Convince Party Leaders For New Constitution
7.7 Bulgaria to Hold Parliamentary Elections On July 5

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Results Shown in BioCancell Compassionate Use Trial Using BC-819 for Treatment of Renal Cancer
8.2 Kamada Announces Closing of Approximately $7 Million Private Allocation of Common Stock
8.3 NiTi Surgical Solutions Announces U.S. Launch of Revolutionary ColonRing Surgical Device
8.4 Duramed Launches LoSEASONIQUE Oral Contraceptive
8.5 Teva Announces Extension of Patent Protection for Azilect

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 CopperGate Chipsets Selected to Drive Actiontec's New HomePNA Adapters
9.2 Voltaire Unveils Scale-Out Ethernet Architecture - Improves Data Center Networking
9.3 Mellanox Advances IBM Networking Solutions With 40Gb/s InfiniBand Adapters
9.4 Crescendo Networks Reveals New Application Delivery Functionality for Cloud Computing
9.5 Wavion Selected by IT Connect to Provide Wi-Fi Coverage in Dhaka, Bangladesh
9.6 Eltek Receives $1.2 Million of Orders from US Medical Equipment Manufacturer
9.7 INSEAD Selects Ness Technologies for Global Multi-Year IT Outsourcing Assignment
9.8 Altair Semiconductor Announces LTE Product Roadmap
9.9 Leading Foundry Expands Deployment of Nova's Stand-Alone Optical CD
9.10 Elbit Systems of America Selected to Provide Soldier-Worn Computer Systems to U.S. Army
9.11 KIDO'Z v 1.0 Redefines Internet Safety for Children
9.12 VocalTec Receives First Order from Mobitel Nigeria for Next Generation Network Roll-out
9.13 BluePhoenix Awarded a $3.5M Contract for Legacy IT Modernization
9.14 CARFAX Selects Crescendo Networks to Accelerate and Optimize Web Applications
9.15 Samsung Selects Jordan Valley's JVX6200 for On-Line Thin Films Metrology
9.16 Orsus & Orad Partner to Implement Situator at Paphos International Airport in Cyprus
9.17 Mellanox Introduces ConnectX ENt - First Fully Integrated Dual-Port 10GBASE-T Adapter Card

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10: ISRAEL ECONOMIC STATISTICS

10.1 Foreign Investors Sell $150 Million in Israeli Bank Shares
10.2 Israel's April Car Sales Down 50%
10.3 Israeli Shoe Sales Drop

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11: In Depth

11.1 LEBANON: Building Still Booming
11.2 IRAQ: Economy Hard sell
11.3 QATAR: Environmental Pillar
11.4 UAE: Higher Education Initiatives
11.5 LIBYA: Fitch Rates Libya 'BBB+'; Outlook Stable
11.6 ALGERIA: Politics - As you were
11.7 TURKEY: Fitch Rates Turkey's $1.5 Billion 2019 Eurobond 'BB-'
11.8 TURKEY: Pharmaceuticals and Healthcare Report Q2 2009
11.9 TURKEY: Sales of Beverages Untouched by Crisis
11.10 GREECE: Food and Drink Report Q2 2009
11.11 BULGARIA: Fitch Affirms Bulgaria at 'BBB-'; Revises Outlook to Negative

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Budget Vote Pending at Press Time – Possible Rise in VAT and Cuts in Education

At press time, the furor surrounding Israel's 2010 budget draft was rising to a fevered pitch. Globes reported that Prime Minister Netanyahu promised Ministry of Finance officials that the aggregate two-year budget deficit in 2009-10 will be kept at 11.5% of GDP. However, under the agreement reached by the Prime Minister and advisor with Histadrut chairman Eini, Manufacturers Association president Brosh and Labor Party chairman and Minister of Defense Barak, the aggregate two-year budget deficit will reach 14% of GDP, or about NIS 17 billion more than originally planned. The budget format approved by Netanyahu sets the 2009 budget deficit at 6% of GDP and the 2010 budget deficit at 5.5% of GDP; in other words 11.5% of the aggregate GDP. He nevertheless agreed to keep some flexibility to manipulate the two. His consent means that the increase in government spending will rise from 1.7% to 3%, amounting to NIS 8 billion in additional spending in 2009-10.

Under pressure from Eini, Brosh and Barak, Netanyahu informed the Ministry of Finance that he agreed to finance the extra spending by raising VAT to 16.5% from the current 15.5%. Netanyahu also agreed to allow the Ministry of Finance to propose an across-the-board cut in ministries' budgets, except for the Ministry of Defense. The Ministry of Finance is now talking about an across-the-board cut of 7%, which will amount to NIS 1.75 billion; each 1% cut from the ministries' budgets, excluding the Ministry of Defense, amounts to NIS 250 million. The budget hike makes it possible to halve the Ministry of Finance's proposed spending cut from NIS 14 billion to NIS 7 billion. However, despite additional spending and agreed upon budget cuts, when they are added up, there still remains a NIS 1-1.5 billion budget deficit to meet the spending target. However, this is only the start of the Israeli economy's fiscal problems. The extra NIS 8 billion in spending will enable the government to meet its spending target, but it inflates the deficit target. (Various12.05)

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1.2 Fischer Warns Against Large Deficits

Israel cannot finance large deficits, and the government must maintain fiscal discipline to keep public debt in check, Bank of Israel Governor Stanley Fischer was reported as saying by the Jerusalem Post. "We need a fiscal rule that makes economic sense," he said at the Fiscal Frameworks for Israel conference in Jerusalem sponsored by the International Monetary Fund. "It is obvious that the fiscal rule of 1.7% of GDP cannot continue forever because it does not analyze public expenditure efficiently. The focus on spending constraints is not enough. The deficit is to rise significantly more than expected. Israel's debt-to-GDP is still relatively high and problematic. Therefore we need to run small deficits and let the debt-to-GDP ratio come down."

Fischer said the deficit was expected to rise to 6% of GDP. He warned that a higher deficit of 6.5% to 7% would become problematic to finance, adding that Israel could not afford a large expansionary stimulus package. "We are now running large deficits and some people are asking why we are not making them even bigger, as other countries," he said. "The answer is simply that we have no way of financing them." Fischer said the government should implement measures to encourage employment and economic activity that do not push the budget deficit higher. (JP06.05)

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1.3 Israeli Court Cuts Class Size, Orders State to Pay

On 10 May, the National Labor Court in Jerusalem accepted a plea from the National Teachers' Union to order the government to reduce class size to a maximum of 32 students per class in middle and high schools. The panel of judges ordered the state to allocate $93m towards conforming to the new class size limit. Thirty million shekels must be allocated for conforming to standards during the current school year, the court said, NIS150m during the next school year, and NIS200m for each subsequent year until the new class size protocol is implemented in all public schools. The teachers who filed suit accused the government of violating promises made in 2008 following the Secondary School Teachers' Union strike that year. The government promised then to reduce class size but is now slowing progress toward that goal as part of an attempt to trim the national budget, they said. The government is considering implementing the smaller class sizes in only 200 schools during the next academic year, after promising to implement the new standards in more than 600 schools. Union officials argued that the government has repeatedly postponed implementation of agreements with teachers and essentially has evaded attempts to force a reform in education. Government representatives responded by arguing that issues such as class size and the length of the school day are national matters that are in the jurisdiction of the current, elected government and are not subject to negotiation in the context of union demands. The Labor Court said the government must strive to fulfill its promises to the teachers. The government's actions of late leave the impression that it is attempting to shirk its obligations to fulfill previous commitments, the judges accused. (IsraelN10.05)

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1.4 Israel Sends First Economic Attaché to Cambodia

The Ministry of Industry, Trade and Labor has opened Israel's first economic mission in Cambodia's capital of Phnom Penh, under the charge of the economic attaché in Thailand. During May, the first Israeli delegation of telecommunications companies visited the Southeastern Asian country. Some 15 companies took part in the delegation, including such high profile names as ECI, Gilat and Comverse, whose representatives met with top local government officials. Simultaneously, a Cambodian agricultural delegation came to Israel recently to participate in the Agritech agricultural exhibition in Tel Aviv. Cambodia is mainly interested in Israeli companies involved in irrigation technologies, agriculture, infrastructure and medical devices. (Ynet12.05)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 NuLens Selected as Winner of the Red Herring 100 Europe 2009

NuLens was named a WINNER of the Red Herring 100 Europe, an award given to the top 100 private technology companies based in the EMEA region each year. NuLens is currently developing a new Accommodative Intraocular Lens (IOL) technology that will enhance a patient's quality of vision following traditional cataract procedures. Currently, lenses inserted during surgery have had a positive impact in correcting the opacities associated with the cataract but limited success in restoring the accommodative function; the ability to focus at all distances. NuLens IOL innovation will prove to be the first intraocular lens to provide real, comfortable and lasting accommodation for all distances – the way nature intended. It is expected that patients will not require additional procedures or corrective eyewear after the NuLens IOL is implanted. Early clinical studies have demonstrated the potential of this technology to deliver on its promise. Additionally, NuLens is evaluating the potential to restore accommodation in patients who have already undergone cataract surgery, and in patients suffering from presbyopia, an age-related deterioration in near vision. Red Herring's editorial staff rigorously evaluated several hundred private companies through a careful analysis of financial data and subjective criteria, including quality of management, execution of strategy, and dedication to research and development. Herzliya's NuLens (http://www.nu-lens.com) was established in 2002 to research, develop and market innovative technologies in ophthalmology. NuLens' first technology is an accommodative intra-ocular lens (IOL) with the potential of over 10 diopters of accommodative power. (NuLens 03.05)

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2.2 El Al Starts Nonstop Flights to Brazil

El Al Airlines has begun flying nonstop to Brazil three times a week. El Al is operating a Boeing 700-220 on the new route between Israel and Sao Paulo with connecting flights to Argentina, Bolivia, Chile, Ecuador, Peru and Uruguay. El Al said the first flight arrived in Brazil on 3 May. The Tourism Ministry said more than 31,000 Brazilians visited last year, up 55% from 2007. An estimated 200,000 South Americans travel to Israel each year. (Various 05.05)

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2.3 Zion Oil Announces that Drilling Operations have Commenced

Zion Oil & Gas announced that drilling operations have begun on its Ma'anit-Rehoboth #2 well. A 2,000 horsepower drilling rig is being used to drill Zion's Ma'anit-Rehoboth #2 well ‘directionally' to the Triassic Formation (down to a depth of 15,400 feet) and then, it is planned, to the Permian Formation (down to a depth below 18,000 feet). The rig will operate on a 24 hour basis utilizing two drilling crews on 12 hour shifts. Samples are being collected and stored and are being analyzed continuously on site for hydrocarbon content. Zion currently holds two petroleum exploration licenses, the Joseph and Asher-Menashe Licenses, between Netanya on the south and Haifa on the north, covering a total of approximately 162,000 acres. Zion has applied for a further permit area (tentatively named by Zion the Issachar-Zebulun Permit Area) and the application, if granted, will increase Zion's total license area to over 400,000 acres. Caesarea based Zion Oil & Gas (http://www.zionoil.com), a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Tel-Aviv and Haifa. (Zion04.05)

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2.4 Grayling & S.P.R. Communications Announce New Strategic Alliance in Israel

London, UK's Grayling, one of the world's leading integrated communications firms, announced a new strategic alliance in Israel with S.P.R. Communications (S.P.R.). This alliance supports Grayling's strategy to serve the Israeli market by offering a complete range of domestic as well as international support and counsel. S.P.R. Communications is one of the leading communications consultancies in Israel, focused on the areas of Public Relations, Corporate Communications, Public Affairs, Crisis Management and Investor Relations. S.P.R. has approximately 16 employees serving a wide range of local as well as internationally based clients, across market sectors. A sample list of past and current clients include: Bank of America, Barclays Bank, Bank Hapoalim, Leumi & Co, Israel Prime Minister's Office, Check Point, Clal, Heineken, Delek, Denver Investments, Hilton Hotels, I.B.I. underwriters, Midgal Capital Markets, Toshiba, Samsung, LG, among many others. Grayling is a subsidiary of London Stock Exchange-listed Huntsworth PLC. (Grayling06.05)

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2.5 Subway Chain To Return To Israel

Globes reported that the Subway Restaurant chain is returning to Israel after a hiatus of several years. The sandwich chain has reportedly rented a 130-square meter restaurant in Herzliya Pituah in a five-year lease with a five-year option to extend. Subway's previous Israeli franchisee had 21 restaurants in Israel before it closed down. The new franchisee said that he plans to open 130 Subway restaurants nationwide and was currently in talks to rent a restaurant on Rothschild Boulevard in Tel Aviv. Subway, founded in Connecticut, currently has 31,000 branches in 90 countries worldwide. (Globes 10.05)

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2.6 OpTier Selected as a Finalist for 2009 Red Herring 100

OpTier has been selected as a finalist for the "Red Herring 100 North America," a prestigious award honoring the year's most promising private technology ventures in North America. The company was chosen by the Red Herring editorial team as one of the 200 most innovative companies from a pool of 1,200 nominees. For over 10 years, the "Red Herring 100 North America" award has been given to the top 100 tech companies based upon their technological innovation, management strength, market size, investor record, customer acquisition, and financial health. OpTier's CoreFirst software for BTM enables organizations to manage IT from a business perspective using transactions. CoreFirst assures that business transactions flow smoothly within IT applications and infrastructure, without bottlenecks or outages, for improved end-user experience. BTM is a critical solution for organizations adopting virtualization, as well as service oriented and legacy architectures.

OpTier (http://www.optier.com), with an R&D center in Ramat Gan, harnesses the power of real business transactions with its unique Business Transaction Management (BTM) software solutions. Their CoreFirst product assures that business transactions flow smoothly within IT applications and infrastructure without bottlenecks or outages, for improved end-user experience and reduced cost. Their Active Context Tracking (ACT) technology delivers end-to-end visibility - of all business transactions, across all tiers, all the time - by continuously discovering the links between IT components and business services. It also prioritizes IT transactions and processes based on business needs, for true IT optimization. (OpTier11.05)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 BAE Systems Awarded Contract to Upgrade Jordanian Armored Vehicles

Arlington, Virginia's BAE Systems received a $43.3m contract to upgrade 300 M113A1 Armored Personnel Carriers for the Jordan Armed Forces. The M113 is a fully tracked vehicle and one of the most used military vehicles around the world, with over 80,000 in existence. The contract covers the production of kits for 300 vehicles to bring them from M113A1 to M113A2Mk1 configuration. The kits upgrade the vehicle's engine and transmission, strengthen its cooling systems, improve its suspension and increase its electrical output. BAE Systems will produce the kits for the Jordan Armed Forces, as well as provide technical assistance to the Jordanians as they install the kits. The U.S. government will deliver the kits. The production and acquisition of materials for the kits will be managed out of the BAE Systems facility in Sterling Heights, Michigan with additional work being performed in York, Pennsylvania. The contract is managed by the Army's TACOM Life Cycle Management Command. (BAE12.05)

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3.2 Emirates Start Daily Flights to Los Angeles & San Francisco on 1 May

Emirates began daily non-stop service on routes from Dubai to Los Angeles and San Francisco, starting on 1 May. Having operated thrice-weekly service in both markets since late 2008 (Los Angeles commenced October 26; San Francisco, December 15), Emirates has taken additional delivery of the technologically advanced Boeing 777-200LR aircraft and now operates daily service to both cities from the airline's new Terminal 3 at Dubai International Airport. Daily flights out of Los Angeles and San Francisco will depart both cities at 4:45 p.m., arriving in Dubai at 7:40 p.m. and 7:20 p.m. (respectively) the following day (local times). The non-stop, long haul flights deliver the highest standards of comfort, as the Boeing 777-200LR is fitted with eight first class private suites, 42 lie-flat beds in business class and space for 216 passengers in economy class. Emirates currently serves over 100 destinations in more than 60 countries across the Middle East, Africa, the Indian Subcontinent, Europe, the Far East and North America. (Emirates01.05)

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3.3 Geospatial Holdings Smart Probe/DuctRunner Technology Utilized on Dubai's Palm Islands

Pittsburgh, Pennsylvania's Geospatial Holdings announced that its Smart Probe/DuctRunner Pipeline Mapping Technology was utilized to enable a unique installation via horizontal directional drilling (HDD) of several pipeline segments on Dubai's Palm Islands. The project was completed by Al Naboodah Specialist, a part of the local Al Naboodah Group of Companies and supervised by Reduct NV, licensor of the DuctRunner technology. The project included the installation of over 32,800 feet of 20-inch diameter HDPE pipeline. To install this pipeline under the ocean floor the design called for 17-degree entry and exit angles and 1,310 foot radius entry and exist curves. At the deepest point the bore would be 89 feet below the surface. To enable the exact placement of these pipelines the first task was to sink a 6 inch steel pipe on the seabed and determine its exact x, y & z co-ordinates. To accomplish this, a Smart Probe/DuctRunner was run through the pipeline to create a 3-D map of the centerline of the pipe. With the exact centerline of the pipe in hand, a wire was run through the pipeline and returned back along the ocean floor to the point of beginning. This wire was then energized, and the signal tracked by a Paratrack horizontal directional drilling guidance unit to accurately guide the drilling of the pilot bores for the pipeline installation. (Geospatial05.05)

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3.4 TAQA Selects BravoSolution For Spend Management

Malvern, Pennsylvania's BravoSolution, an international leader in supply management software and services, announced that TAQA, a global energy company, has licensed BravoSolution's Spend Management solution to identify savings opportunities and synergies following a series of mergers and acquisitions. TAQA, the Abu Dhabi National Energy Company, is an international energy conglomerate. Since its inception in 2005, the company has grown rapidly through mergers, acquisitions and joint ventures and now operates throughout the world to provide energy and related services in power generation, combined heat and water, desalination, upstream oil & gas, pipelines and gas storage. To take advantage of its new scale, TAQA has identified significant savings targets for an aggressive strategic sourcing program using a sourcing wave plan fueled with insights delivered by BravoSolution Spend Analysis. BravoSolution's spend analysis solutions will provide the visibility and decision support tools to maximize this savings potential and meet or exceed their objectives. The first phase of the project will kick off immediately with TAQA NORTH, a subsidiary of the parent company, based in Calgary, AB. The BravoSolution team will work closely with each business unit to understand historical spend and translate information across the company to find commonalities among purchasing categories and vendors. Using this master view of division wide spend, BravoSolution will assist TAQA to develop a sourcing wave plan that not only saves money by taking advantage of the company's aggregated buying power but also allows TAQA to approach its suppliers in a more transparent manner. BravoSolution's experience in delivering spend management solutions in the natural resources industry will help TAQA to quickly develop detailed, accurate insights into their spend and to develop targeted, detailed sourcing wave plans. (BravoSolution 05.05)

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3.5 Prime Development to Invest $1.5 Billion in Turkey Malls

German real estate company Prime Development said it planned to invest $1.5b in building shopping malls in Turkey. The first two investments in the southern cities of Antakya and Iskenderun, with a total value of $350m, would be completed within a year. Shopping malls have sprouted across Turkey at a dizzying pace in recent years, with foreign money attracted by Turkey's large, young and increasingly prosperous population of over 70m. Global property services provider Savills (SVS.L) said in a recent report that while Turkey was not immune to the kind of economic strain seen in Western Europe, the country remained attractive to international retailers looking to gain a foothold in the eastern European/central Asian region. Further to the arrival of key fashion brands such as C&A, Tommy Hilfiger, Accessorize, Zara, Mango and Gap, U.S. retailer Best Buy and French DIY retailer Leroy Merlin were also preparing to open their first stores. Average yields for Turkish retail real estate have increased by 25 basis points on a quarterly basis in Q1/09. Prime retail yields are at 7.75% and up to 8.75% for secondary properties. (Xing23.04)

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3.6 Boeing and Turkish Airlines Finalize Deal for Five 777-300ERs

The Boeing Company and Turkish Airlines have signed an order for five Boeing 777-300ER (Extended Range) airplanes valued at $1.36 billion at current list prices. This is the first time Turkish Airlines has purchased new 777s directly from Boeing. The airline currently operates a fleet of 65 Boeing airplanes including Next-Generation 737s and leased 777-300ERs. The Boeing 777-300ER is 19% lighter than its closest competitor, greatly reducing its fuel requirement. It produces 22% less carbon dioxide per seat and costs 20% less to operate per seat. The airplane can seat up to 365 passengers in a three-class configuration and has a maximum range of 7,930 nautical miles (14,685 km). The 777 family is the world's most successful twin-engine, twin-aisle airplane. Fifty-six customers around the world have ordered more than 1,100 777s. Turkish Airlines is one of the fastest growing and prosperous airlines in the world. It carries approximately 20 million passengers a year, with direct flights to 108 international and 33 domestic destinations. (Boeing 06.05)

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Transport Minister Plans Nationwide Rail Network

On 4 May, Minister of Transport Katz presented a plan for a nationwide railway network, to be built by 2020 at a cost of NIS 40 billion. The plan, called "Israel Routes" includes railway lines to Eilat in the south and Kiryat Shmona in the north. Other lines include the Jezreel Valley line, Acre-Karmiel, the eastern line along Road 6 (the Cross-Israel Highway), and a fourth track along the Ayalon Highway in Tel Aviv. Katz said that the intention was to formulate a proposal for the cabinet to approve as part of the 2009/10 economic arrangements bill. A ministerial committee will be formed, to be headed by Prime Minister Netanyahu, to monitor the performance of the cabinet decisions. Globes reported that Katz said that private contractors would build some of the railway lines. He said that the Ministries of Finance and Transport were initiating amendments to the Railway Law to allow private contractors to build railway lines. Katz admitted that many of the projects are not yet ready from a statutory point of view, and will be ready only after 2010. He said, however, that he and Netanyahu were determined to promote the plan. (Globes 04.05)

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4.2 Environment Ministry to Fund Land Recycling Projects

The Ministry for Environmental Protection will allocate NIS 75 million this year for infrastructures for recycling solid waste. The ministry said that the support will be given to local authorities, metropolitan regional associations, municipal companies, private entrepreneurs in order to help them promote alternative means for burying waste. Projects will be funded in: setting up treatment sites for organic and decomposing waste; detailed planning of waste treatment sites; upgrading and setting up stations for sorting refuse for recycling; separation of waste at source; educational and informational activities for promoting recycling projects; and recovery, recycling and marketing building refuse. Minister for Environmental Protection Erdan said that realizing income from dumping fees by the private sector in cooperation with local authorities will bring about a revolution in handling refuse, a significant increase in the percentage of recycling, recovery and reuse. This will position Israel in the forefront of developed countries on this topic. Erdan said that encouraging the public to recycle is high on his ministry's agenda, in order to instill values of protecting the environment into people's daily behavior. (Globes 05.05)

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4.3 French Firms Seek Renewed Tel Aviv Light Rail Bid

Three French firms (Alstom, Veolia Transportation (formerly Connex) and Vinci) recently asked the Ministry of Finance to reopen the tender for the Tel Aviv light railway's Red Line, in view of the difficulties of the tender's winner, Metro Transport Services (MTS), in securing financing. The three companies were members of the Metro Rail consortium that lost the tender in favor of MTS, the consortium headed by Africa-Israel Investments. In a statement to the Office of the Accountant General, the three French companies said that they were prepared to immediately reopen talks with the Israeli government and build the light railway line at the same terms proposed by MTS. The other members of Metro Rail were Arison Holdings unit Shikun u'Binui Holdings Ltd. (Housing and Construction), Ashtrom Properties and Zublin AG. Veolia Environnement acquired Connex and renamed it Veolia Transportation. In late 2006, Metro Rail was underbid by MTS in the tender by NIS 400m. Metro Rail proposed a government set-up grant of NIS 7.5b compared with MTS's offer of a set-up grant of NIS 7.1b. Metro Rail was liquidated six months ago, when its Israeli partners refused to extend their financial guarantees. Although, officially, the offer by Alstom, Veolia and Vinci contravenes the tender terms, it may increase the pressure on MTS in its negotiations with the Ministry of Finance on the franchise terms for the light railway. Because of the global crisis, MTS has missed the deadline for securing financing, despite three postponements since May 2008. Nevertheless, MTS and the Ministry of Finance are continuing, and a number of meetings were held last week in an effort to reach commercial understandings. MTS comprises Africa-Israel, Egged Israel Transport Cooperative Society and Siemens, China Civil Engineering Construction Corporation (CCECC), and Sociedade de Construcoes Soares da Costa SA of Portugal. (Globes 03.05)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Intra-Middle East Trade Up 28% From 2000 to 2007

Intra-regional trade in the Middle East grew 28% between 2000 and 2007 and now represents 19.3% of all trade in the region, according to a note released by the economics unit of the Dubai International Financial Centre. The report, analyzing recently released World Trade Organization trade data covering the years from 2000 to 2007, also revealed that Middle East trade was increasingly shifting toward Asia and away from the United States and was showing increased diversification toward non-oil products such as chemicals, travel and tourism. Intra-Middle East trade increased from 15.1% of total external trade in 2000 to 19.3% in 2007 but is still significantly below intra-regional trade levels in other regions such as the European Union (71.2%) and Asia (57.4%). This increase in intra-regional Middle East trade was led by a doubling in trade of agricultural products - an almost five-fold increase in fuel and mining products and a four-fold jump in manufactured goods. Given the shift in trade towards Asia, the report also said it was important for regional economies to negotiate free-trade agreements (FTAs) with emerging markets such as China and India, rather than focusing on bilateral FTAs with developed countries. The DIFC note added that the GCC single market initiative and the expected launch of the Gulf monetary union in 2010 would help the GCC strengthen regional trade and increase its influence on the global trade map. The study identifies the lack of an integrated transport infrastructure, burdensome customs procedures, non-tariff barriers to trade and lack of product diversification as the main barriers to regional Middle East trade. Manufactured imports from Asia, as a share of total world imports to the region, grew from 29.3% in 2000 to 33.9% in 2007. (GN 03.05)

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5.2 Jordan Receives $18 Million Grant From Japan

Jordan has received an $18m grant from Japan to support the balance of payments. Jordanian Minister of Planning & International Cooperation Al Ali told reporters following a meeting with Japanese Parliamentary Vice-Minister for Foreign Affairs Nishimura, that Japan has pledged to present more financial aid to help Jordan carry out pivotal water, environment and security projects. Al Ali discussed with the visiting Japanese officials ways to bolster the bilateral cooperation relations in the various domains, as well as the outcome of King Abdullah II's last visit to Japan. Al Ali valued the continued support by Japan, which helped the Kingdom continue its march of reform and development. The Japanese official, on his part, hailed ties with Jordan, expressing his country's commitment to develop and enhance its cooperation relations with Jordan. (Petra04.05)

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5.3 Dubai Considering Cancellation of 27 Real Estate Projects

Dubai is considering cancelling 27 projects, the head of its real estate regulator said on 11 May, as the emirate's property market slumps in the global downturn. A decision whether to cancel or not would be made by the end of the month, said the head of the Real Estate Regulatory Authority (RERA). Earlier this year, RERA said it believed 25% of projects will be cancelled in Dubai as a result of the global economic slowdown. Real estate prices tumbled 41% in the first three months of the year, property consultants Colliers said in a recent report. A collapse in property prices has already led to project cancellations in the region worth billions of dollars. More than half of the construction projects in the United Arab Emirates, worth $582b, have been put on hold, Dubai-based market research firm Proleads said in February. An Emirate planning committee will cancel projects based on RERA's decision whether or not they should continue, a request from developers to cancel, or through complaints to the watchdog from project investors. In February RERA said Dubai developers are likely to delay the delivery of about 20% of residential units in 2009 and 40% in 2010. (AB11.05)

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5.4 Riyadh Chosen as GCC Regional Central Bank Headquarters

GCC leaders chose the Saudi capital of Riyadh to be the headquarters for their regional central bank, the GCC secretary-general said 5 May. Details of the agreement will be released later and that no timetable had been scheduled for monetary union. While the selection of the joint central bank's HQ is a step towards a regional plan that includes a unified currency - targeted to go into effect next year - the deadline will not be met. Saudi Arabia's capital was chosen because it is the only Arab and Middle Eastern member in the G20. The UAE expressed reservations over the decision, though no specifics were given as to why the reservations had been expressed. (AB06.05)

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5.5 Qatar Launches New Consumer Price Index

Qatari consumer prices fell by 7.27% in January compared with the fourth quarter and eased another 2.6% in the following two months, according to a new index. On 4 May the Qatar Statistics Authority introduced a new consumer price index that tracks inflation on a monthly basis. The consumer price index for the world's biggest exporter of liquefied natural gas fell to 119.35 points at the end of January compared with 128.71 points in the fourth quarter. The housing component of the CPI (rent, fuel and energy) recorded the most significant decline of 13.2% between the fourth quarter of 2008 and January 2009. The index eased to 118.05 points in February and 116.24 points in March, it added. (Reuters04.05)

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5.6 UBS Says Saudi Economy To Grow Just 3.1% Next Year

The Saudi economy will grow 3.1% next year after shrinking 1.1% in 2009, UBS predicts. The Swiss bank initiated coverage of the Saudi economy with a real GDP forecast that lies below the market consensus. Saudi GDP is expected by the bank to contract 1.1% this year and post 3.1% growth in 2010. This compares with a 0.3% contraction and 3.3% growth, predicted by an average of analysts polled by newswire Reuters on March 22. The country's economy expanded by 4.2% in 2008. The forecast assumes a decline in the Brent oil price from $98.4 per barrel in 2008 to $51 per barrel in 2009, followed by $57 per barrel next year. The production of oil and liquids is expected to fall 9.3% to 9.6m barrels per day in 2009 from 10.6m barrels per day in 2008, before rising 4.2% to 10.0 million barrels per day in 2010. UBS said that although the Saudi Arabian government will support the economy through strong fiscal policy, many state owned companies are likely to add to the slowdown by slashing or delaying big investment projects. This may be due to a more cautious assessment of future capacity requirements, or because companies re-launch tenders in order to benefit from falling prices for construction and raw materials. Other projects in the kingdom to have been delayed include power and water projects by Saudi Electricity Company and Marafiq. Delays might also affect some of Saudi Arabia's Economic Cities, UBS said. (AB05.05)

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5.7 Young Saudi Men Go Wild Over Notorious Blue Pill

The Saudi kingdom has been gripped with a craze for erectile-dysfunction medications by young men - an occurrence which has many worried. A large number of married Saudi youths are flocking to pharmacies to take hold of Viagra - "the little blue pill" - or any other stimulants that will give them more satisfaction. The catchy words and obscene images that appear on online advertisements of these medications are another factor luring youth into buying packets of these stimulants. According to Saudi doctors, this phenomenon reflects the spread of a negative sexual culture among the younger generation in the Kingdom. However, agents of the pharmaceutical companies deny responsibility for this. The firms called for strict vigilance by authorities to stop the sale of counterfeit medications. Several young men said that they started taking stimulants soon after marriage. Some of these youths dared to disclose their identity while others requested anonymity. They agreed that the pills were instrumental in keeping them virile during love making. They also felt that their masculinity was directly linked to their potency. (GN30.04)

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5.8 Mubarak Concerned About Egyptian Economy

On 29 April, the Jerusalem Post reported that Egypt President Mubarak said he was "struggling" with the government to provide anticipated salary bonuses for public-sector workers, offering some of the strongest indications yet about how the global recession was affecting the Arab world's most populous nation. In an annual Labor Day speech, Mubarak said the country would be able to weather the global downturn. But he also indicated the annual bonuses would be considerably less than previous years and that his pledge to provide about half am jobs per year would probably not be met this year. The somber tone voiced by Mubarak, who has been president since 1981, was a surprisingly candid assessment of the country's difficulties even as other top officials have repeatedly stressed Egypt's ability to weather the current downturn.

Mubarak said he was "struggling" with the government to provide the roughly 6m public-sector employees with the so-called "social allowance" - essentially a salary bonus. Last year, faced with protests over surging prices, the government provided public-sector workers with a 30% pay hike. Earlier raises had ranged between 10% to 15%. Mubarak stopped short of providing an exact figure, but indicated it would be at least 5% or 6% this year. Egypt had enjoyed an average economic growth rate of about 7% for the past three years. But officials, who months ago said they were hoping for growth of 5% to 6%, are now projecting a further contraction to 4% as the country's key revenues sources - tourism, the Suez Canal, foreign investment and worker remittances - take a pounding.

Mubarak described the world economic crisis as a "tornado," saying he follows, "day by day, the decline of our exports of goods and services, the decline of the local and foreign investment, tourism revenues, the Suez canal and remittances of Egyptians living abroad." Mubarak indicated that pledges to provide half am jobs per year - seen as key for growth in a country with an expanding population - would fall short this year, noting that the declining revenues would "temporarily hurt our economy's capacity to provide the job opportunities." In an apparent bid to stave off protests similar to the unrest last year, Mubarak appealed to workers to resort to dialogue instead of walkouts. (JP30.04)

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5.9 Egyptian Inflation Falls To 11.7% in April

Egypt's statistics agency CAPMAS announced on 9 May that Egypt's urban consumer inflation fell to 11.7% in the year to April from 12.1% in the year to March. The figure is the lowest in 14 months. The nationwide figure for the 12 months to April was 12.2%, up from 11.6% in the year to March. Figures showed food prices in urban areas rose 2.5%, compared with 2.6% a month earlier. Restaurants and hotels, furniture and household equipment also increased. The Coptic Christian Easter holidays contributed to the rise in food and hotel prices. Financial consultant Beltone Financial has said it expected annual inflation would continue to decline, reaching single-digit levels by the middle of 2009 before rising in 2010 on higher commodity prices and base effects. Higher monthly inflation coupled with a decline in annual inflation might lead Egypt's central bank to cut interest rates. (Various10.05)

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5.10 Pakistan Food & Drink Report Q2 2009

Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Pakistan Food and Drink Report Q2 2009" report to their offering. Pakistan is no longer rooted to the foot of BMI's Asia Pacific Food & Drink Business Environment Ratings table for Q209, after overtaking the Philippines to move forward one place into second last position. The country's large population somewhat compensates for its weak industry dynamics and has attracted two of the world's largest food and drink manufacturers, Unilever Pakistan and Nestle Pakistan. Unilever Pakistan, one of the country's largest food and drink companies, recently reported profits after tax of $25m for the year ended December 31 2008 - a 22.22% year-on-year (y-o-y) increase. The company operates across a variety of segments including hot drinks and ice cream. However, the company's ability to get its products to the market is severely hampered by the country's undeveloped mass grocery retail (MGR) sector. Carrefour and its Middle Eastern Franchise partner Majid Al Futtaim announced plans in Q1/09 to invest in around ten hypermarkets over five years, in a move that could help address this shortcoming. Nestle Pakistan, Pakistan's other large food and drink company, posted profits of $19.53m for the year ended December 31 2008 and a y-o-y sales increase of 17%. The company has been growing its range of products and has developed a significant presence across a number of food categories, particularly dairies. Similarly to Unilever, it stands to benefit from the development of the MGR sector. (R&M01.05)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 US - Turkey Trade Following the Obama Visit

President Obama's visit to Turkey was expected to help improve trade relations as well as political and cultural ties between the two countries. Although the trade volume between the two countries reached $16b in 2008, the flow is in US favor as Turkey's imports from the US are more than double the volume of its exports to the country. Some $4.3b of that was Turkey's export to the United States. The remaining $12b of the total amount was Turkey's imports from the U.S. About 3.3% of Turkey's exports were to the United States, while the Turkey's imports from the United States were 5.9% of its total imports. The United States currently ranks eight in a list of countries Turkey exports to the most. Meanwhile, the United States follows Russia, Germany and China to make it to number four on a list of countries from where Turkey imports the most.

In 2007 Turkey's imports from the United States totaled $8.2b, while its exports to the United States totaled $4.2b. Turkey's exports to the United States for the first two months of 2009 added up to $504.3m, while its imports from the United States totaled $1.2b. Compared to 2004, Turkey's exports to the United States declined 11.7%, while Turkey's imports from the United States rose 152.3%. In 2004 Turkey's exports to the United States equaled $4.9b, while its imports from the United States were worth $4.7b.

Turkey mostly exports readymade cloths, textile products, machines, electrical and mechanical tools, jewelry, iron and steel products, vehicles, food products, tobacco, and copper products to the United States. Among the products Turkey mostly imports from the United States are iron and steel, auto parts, paper products, mineral oils, cotton, mechanic and surgical appliances, organic chemicals and pharmaceutical products. Direct foreign investment from the United States to Turkey has also been increasing. The total investment amount of 733 U.S.-capital companies operating in Turkey increased from $848 million in 2006 to $4.2b in 2007.

The total number of U.S.-capital companies operating in Turkey was 834 in 2007. Those companies helped raise the total capital inflow from the United States to Turkey to climb to $9.2b in 2007. Some 4.5% of all international firms operating in Turkey are U.S.-capital companies. The investments in Turkey by 38 U.S.-based companies totaled $203 million in March, 2008. (Hurriyet07.05)

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6.2 Erdogan Says Turkey Will Not Accept IMF Demands To Curb Spending

Turkish Prime Minister Erdogan said he cannot accept an IMF demand to rein in spending, in comments that cast fresh doubts over a major loan deal to revive Turkey's ailing economy. Ankara is in protracted talks with the International Monetary Fund on a lending pact that could be worth as much as $45b, seen as crucial to boosting investor sentiment as the economy slides into recession. But the two sides have failed to seal an accord to replace a $10b deal which expired in May 2008. Disagreements over municipal spending have surfaced previously in the talks, which are being followed closely by markets. A wide cabinet reshuffle on May 1 that included the appointment of Ali Babacan as deputy prime minister in charge of the economy was received by markets as a sign the government wants to conclude those talks. Turkish business leaders have long called for the IMF deal, citing the corporate sector debt obligations and necessity to kickstart economic reforms to restore investor confidence during the global credit crisis. An IMF mission is expected to visit Turkey shortly to discuss a loan program. (Hurriyet09.05)

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6.3 Turkey's GDP Contraction May Reach Double Digits in First Quarter

Turkish Central Bank Governor Yilmaz told a news conference on 30 April that the economy's contraction in Q1/09 may "reach double-digit figures". Earlier, Yilmaz said that he sees the local economy returning to growth in Q4/09. Turkish government projects a 3.6% GDP contraction in 2009, slashing an earlier forecast of 4% growth. The government revised down its 2009 current account deficit expectation to $11b from a current target of $50.4b, but said it expected its budget deficit to rise to TL 48b from a previous forecast of TL10.4b. (Reporter30.04)

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6.4 Turkey & EU Agree on Nabucco

Turkey and the European Union reached a "breakthrough" agreement on the Nabucco natural gas pipeline without conditions, officials said. The Czech Republic hosted a regional summit in Prague recently on the so-called Southern Corridor, a network of energy transit routes that includes the heralded Nabucco gas pipeline. Turkey would host a major portion of the 2,050-mile pipeline. Ankara said in April it was waiting for European decisions on the pipeline, with a deal expected in June. European officials told The Guardian newspaper the deal was now expected June 25. Nabucco negotiations were complicated by Turkey's efforts at joining the ranks of the EU and its demands for a portion of the gas traveling through the pipeline. European Energy Commissioner Piebalgs said, however, that Ankara's demand for 15% of the gas is gone. Europe sees Nabucco as the answer to its energy diversification efforts. The $10.7b pipeline would bring gas supplies from Central Asia and the Middle East to Europe without using Russian resources or its territory. (UPI11.05)

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6.5 Trade Delegations to Visit American States to Boost Turkish Exports

Turkish Foreign Trade Undersecretary Kayalar has said that several US states have been selected as targets for a program to boost Turkish trade with the United States that will include trade delegations being sent to New York, California, Texas, Georgia, Illinois and Florida. Kayalar noted that the US market consists of numerous markets in individual states with their own unique economic, social and legal conditions that must be taken into consideration. He explained that under the Foreign Trade Undersecretariat's strategy for improving trade and investment with the US, implemented in 2006, a state-based and sector-oriented approach has been adopted for improving exports to the US. Kayalar further indicated that they have conducted market research and identified their target sectors as textiles and ready-wear apparel, food, chemical products, non-iron metals, leather and leather products, electronic goods, machinery, automotive supply, processed natural stones, ceramic goods, furniture and jewelry. He added that they are currently planning new activities aimed at these target markets. The foreign trade undersecretary said that in order to promote their strategies to Turkish organizations operating in the US and secure their support; they have met with the Turkish associations and diplomats in New York, Chicago, Los Angeles and other US cities and developed models for cooperation. (Zaman07.05)

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6.6 Turkey's April Exports Decline 33.75%

There is not much improvement in sight when it comes to Turkey's exports. Turkey recorded exports worth $7.53b in April, which was a decline of 33.75% compared to same period last year, according to latest data Turkish Exporters' Assembly, or TIM. The country's exports for the first four months of the year totaled $28.5b. As of April, Turkey's exports for the past 12 months totaled 113.35b. The automotive industry, which has been long suffering from the negative impacts of the global economic crisis, reared up to become the export champion of the month. The industry brought in $1.24b in April. Ready-to-wear and textile industry followed automotive industry's lead with $996m. The iron and steel industry moved exports worth $959m during the period. The mining industry experienced the biggest drop in exports in April. The industry's exports dropped 42.24% in April compared to the same period last year. The industry's exports for the month totaled $169.4m, while its exports for the past four months were $591m. The mining industry's 12-month exports stood at $2.870b. Agriculture on the other hand displayed the smallest fall with 0.67%. The sector's exports fort he month totaled $1.15b. In April, industrial exports constituted 84.27% of the country's entire exports. The total worth of Turkey's industrial exports was $6.34b for the month. The country's industrial exports for the past 4 months totaled $23.83b, while the total was $97.75b for the past 12 months.

Meanwhile, Turkey's trade deficit narrowed in March from a year earlier, the seventh consecutive contraction, as demand for foreign imports slumped and the cost of oil fell. The trade gap contracted to $2.3b from $5.4b in the year-earlier period, the Turkish Statistical Institute (TUIK) announced. The deficit was forecast to be $1.4b. Turkish industrial production fell in February by the most since records began in 1986 as economic growth slowed and the global credit crunch forced the government to look to the International Monetary Fund for a loan. A slump in energy prices is also helping to reduce the cost of imports. The narrowing in the deficit comes after the economy declined 6.2% in Q4/08, the first economic contraction in seven years. Exports fell 28% to $8.2b in March from a year earlier, TUIK said. Imports decreased 38% to $10.5b, the agency said. Crude oil prices were around $50 a barrel in March this year, compared with $100 a barrel a year earlier. (Hurriyet03.05)

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6.7 Turkey Maintains Its Place On The'301 Watch List

A report of the US Trade Representative underscores problems in Turkey with respect to intellectual property rights and market access for innovators. The issue affects high technology, pharmaceuticals, consumer goods and media. Turkey remains on the "Watch List" in the U.S. Trade Representative's Special 301 Report this year on intellectual and industrial property rights, where it was placed during former President George W. Bush's term. The report said that although enforcement efforts including notable seizures of pirated materials have increased; however, there have been significant setbacks. It cited major problems in legislation and enforcement of intellectual property rights affecting the high-tech, pharmaceutical, publishing, fast-moving goods and other sectors. The Special 301 Report is an annual review of the global state of intellectual property rights protection and enforcement conducted by the Office of the U.S. Trade Representative and examines 77 countries. Beyond the U.S. government, the Special 301 Report is well known in the business and investment community, as it reflects the concerns of companies and others doing business and investing in that country.

According to the U.S. report, applications for marketing approvals of generic pharmaceuticals have been pending before Turkish authorities for more than two years, creating uncertainty as to the status of protection of the undisclosed test or other data generated to obtain marketing approval for the pharmaceutical products involved. It pointed out that following a July 2008 Constitutional Court ruling that effectively eliminated the criminal sanctions provisions of the Turkish trademark law, the government passed new legislation reinstating the penalties, but failed to meet the court's six-month deadline for doing so, thus nullifying sentences handed out in over 9,000 criminal trademark cases. Piracy of business and entertainment software continues to be significant. Turkey remains a significant source of counterfeit goods seized at the borders of nearby countries. (Hurriyet07.05)

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6.8 Cyprus Annual Inflation Drops Below 1% in April

Cyprus' annual consumer price inflation rate fell below 1% in April, less than a year after it had consistently recorded rates in excess of 5%. Consumer prices in April rose by 0.7% over the same month of 2008, as the fall in the international price of oil put downward pressure on transport and electricity (most of which is generated by burning oil). Transport prices fell in April by 7.0% compared with the same month of 2008, while prices of housing, water, electricity and gas fell by 3%. On the other hand, restaurants and hotels, apparently oblivious to the downturn in consumer demand and the collapse in tourism, continue to jack up prices. Hotel and restaurant prices were 7.2% higher in April 2009 than in April 2008 and 1.5% higher than the previous month. (FM07.05)

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6.9 Cyprus Trade Deficit Shrinks in January - February

The deficit on trade in goods shrank by more than a fifth in the first two months of 2009 as oil prices tumbled, compared with the same period of the previous year. According to the Statistical Service Cystat, total imports/arrivals in January-February 2009 amounted to €859.7m compared with €1,091.1m in January-February 2008. Imports/arrivals comprise imports from third countries and arrivals from other EU member states. Total exports/dispatches in January-February 2009 reached €141.4m compared with €178.9m in January-February 2008. Exports/dispatches comprise exports to third countries and dispatches to other EU member states. The trade deficit amounted to €718.3m in January-February 2009, a drop of 21.3% compared with €912.2m recorded in January-February 2008. During February 2009 alone total imports/arrivals were valued at €417.3m. Total exports/dispatches including stores and provisions in February 2009 amounted to €74.4m. Exports/dispatches of domestically produced goods, including stores and provisions, were recorded as €42.3m whilst exports/dispatches of foreign goods, including stores and provisions, amounted to €32.1m. Meanwhile, on the basis of preliminary estimates for March 2009, total imports/ arrivals reached €410.5m, of which €256.8m were arrivals from other member states of the EU and €153.7m were imports from third countries. Total exports/dispatches reached €65.9m, of which €33.0m were dispatches to other member states of the EU and €32.9m exports to third countries. The preliminary trade balance in the first three months of 2009 fell to €1.06b, compared with €1.43b in the same period of 2008. (FM11.05)

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6.10 Cyprus Unemployment Climbs by More Than 5,000 In April

The number of registered unemployed in Cyprus rose year on year by more than 5,000 in April, having risen by more than 4,000 in March. On the last day of April, the number of unemployed registered at the District Labor Offices was 16,106, compared with 10, 462 in April 2008. The main increases compared with the year earlier were recorded in the sectors of wholesale and retail trade (up 34.4% to 2,733), restaurants and hotels (up 19.5% to 3,175) and construction (up 141% to 2,172). The number of unemployed has now risen for eight months in a row. The Cypriot Statistical Service no longer publishes a registered unemployment rate. (FM07.05)

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6.11 EC Sees Greek GDP at -0.9% in 2009 - Deficit at 5.1%

The European Commission sees Greece posting negative Gross Domestic Product growth, of 0.9% in 2009, while it sees flat growth in 2010. Budget deficit is expected to widen to 5.1% this year compared to 5% in 2008. In 2010, the deficit is seen at 5.7%. Although remaining above the euro area average, economic growth will turn negative in 2009 for the first time since 1993, the Commission said in its spring report. The Commission appeared cautious on Greece's latest set of deficit reducing measures, saying that the budgetary impact of these measures is estimated at around half of a percentage point of GDP, half of which is temporary in nature. Gross debt is projected to reach 108% of GDP by 2010 from 97.6% in 2008. Moreover, unemployment is seen at 9.1% in 2009 and 9.7% in 2010. The contraction in economic activity will lead to a declining employment outlook over the forecast horizon. The decrease in unemployment observed in recent years is accordingly expected to end. Nevertheless, nominal wages in the private sector should rise faster than productivity, thus pushing unit labor cost growth above those of the euro area and other trading partners, the Commission said. (Various04.05)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Yom Yerushalayim - Jerusalem Day Celebrated

On Thursday, 21 May, Israel and the world celebrates Jerusalem Day (Hebrew: Yom Yerushalayim), an Israeli national holiday commemorating the reunification and liberation of Jerusalem's Old City in June 1967. The day is marked by state ceremonies, memorial services for soldiers who died in the battle for Jerusalem, parades through downtown Jerusalem, reciting the Hallel prayer in synagogues, lectures on Jerusalem-related topics, singing and dancing, and special television programming. Schoolchildren throughout the country learn about significance of Jerusalem, and schools in Jerusalem hold festive assemblies. The day is also marked in Jewish schools around the world. Religious Zionists in Israel regard Yom Yerushalayim as even more important than Israel Independence Day. In Jerusalem, a public reception by the mayor of Jerusalem, state ceremonies and memorial services for those who died in the Six-Day War are also held. In Israel, some people mark the occasion by traveling or even hiking to Jerusalem.

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7.2 Pope Benedict XVI in Israel

On Sunday, 10 May, Pope Benedict XVI arrived in Israel on a direct flight from neighboring Jordan, beginning a five day visit. The pope had said his visit was a personal pilgrimage. Israeli President Peres and the Pope delivered short remarks at the airport. The pope visited the President's Residence in Jerusalem. At the initiative of President Peres, the pope also met there with Noam Shalit, father of Hamas terrorist-kidnapped IDF soldier Gilad Shalit. Shalit was abducted nearly three years ago, and Hamas has released barely any sign of his life since.

After the pope visited the Yad Vashem Holocaust memorial on Monday and offered the “deep compassion” of the Roman Catholic Church for Hitler's victims, Jewish leaders expressed disappointment that the pontiff, who is German, had not mentioned Germany or the Nazis. However, in his speech, he did not mention Germany, the Nazis or his own experience as an unwilling conscript into the Hitler Youth and Hitler's army. Later, at an interfaith meeting where the pope urged greater dialogue, Sheik Taysir Tamimi, the chief justice of the Palestinian Islamic courts, veered from the program and accused Israel of taking innocent lives. The Vatican immediately condemned Sheik Tamimi's remarks. The pope left the meeting immediately.

Pursuing what he called a “journey of faith,” Pope Benedict XVI visited sites holy to Muslims and Jews on Tuesday, removing his red shoes at the Dome of the Rock and praying briefly in silence at the Western Wall. Later in the week Benedict, 82, is expected to celebrate a large open-air Mass in Nazareth. (IsraelNN10.05)

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*REGIONAL:

7.3 Jordan Celebrates 63rd Year of Independence

On 25 May, Jordan will celebrate Independence Day. On March 22, 1946 Britain signed a treaty granting independence to Jordan. The Jordanian Parliament proclaimed King Abdullah the first king of The Hashemite Kingdom of Jordan. The king proclaimed the state to be officially inaugurated and a series of ceremonies was done in the morning of 25 May in the capital of Amman. King Abdullah I established the Kingdom in 1921. He won the newly established Transjordan recognition from Great Britain in 1923. However, the country only was granted its full independence in 1946 following the formal end of the British mandate.

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7.4 Turkey Celebrates Ataturk, Youth and Sports Day on 19 May

The Commemoration of Ataturk, Youth and Sports Day, or simply Ataturk Commemoration (Atatürk'ü Anma) or Youth and Sports Day (Gençlik ve Spor Bayramı), is an annual Turkish national holiday celebrated on May 19 to memorialize the start of the Turkish War of Independence. May 19, 1919 is the day Mustafa Kemal Ataturk, then Mustafa Kemal, who would become independent Turkey's first president, landed on the main peninsula of Turkey to begin leadership of the liberation effort. In early 1920, Kemal convened the first Turkish Grand National Assembly in Ankara, and by 1922 all of Anatolia was freed from foreign rule. The independent Republic of Turkey was declared a year later. During the course of his term as president, Ataturk himself proclaimed May 19 as "Youth and Sports Day." In the aftermath of Ataturk monumental legacy the day serves to honor the country's founder.

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7.5 Turkey Announces Major Cabinet Reshuffle

On 2 May Turkish Prime Minister Erdogan said nobody is indispensable, a day after he reshuffled the bulk of his Cabinet. In the largest cabinet change since the Justice and Development Party, or AKP, first came to power in 2002, eight ministers, those of justice, finance, energy, education, housing, industry, trade and housing, lost their posts. The new Cabinet has 27 members, including the prime minister, one more than the outgoing one. One major change was the appointment of Ahmet Davutoglu, Erdogan's chief foreign policy advisor, as foreign minister, replacing Ali Babacan, who became deputy prime minister responsible for the economy. Erdogan explained that Babacan would now be responsible for all economic and financial institutions as well as state banks, stressing the need for a management by a single hand in times of economic difficulty. The cabinet reshuffle had been expected since local elections on March 29, in which the AKP won an easy victory but saw its popularity shrink for the first time since it swept to power. The AKP, which has won all four elections in the past seven years, got 38.9% of the vote, almost eight points less than its previous electoral showing in 2007. The outcome was widely seen as a warning to the government to focus on the economy and compromise with opponents. The reshuffle comes also amid the bruising effects of global financial turmoil on the Turkish economy, which shrank 6.2% in the last quarter of 2008, sending unemployment up to a record 15.5% in January. (Hurriyet03.05)

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7.6 President Gul Tries to Convince Party Leaders For New Constitution

Turkish President Gul has recently been discussing foreign policy issues and possible changes to the Constitution with the leaders of Turkey's main political parties in separate meetings. Gul hosted main opposition Republican People's Party (CHP) leader Deniz Baykal at the Cankaya presidential palace on 5 May. The two shared their views about the preparation of a new constitution. Turkey's current Constitution was written by the generals of the 1980 military coup and has long been criticized for being anti-democratic. The ruling Justice and Development Party (AK Party) rolled up its sleeves for the preparation of a more civilian and democratic constitution last year, but its efforts failed when it was taken to the Constitutional Court on charges of anti-secular activity. The CHP opposes the idea of a new constitution on the grounds that the AK Party lacks the authority to prepare a new constitution, which it argues can only be written by newly elected Parliament. Gul tried to convince Baykal about the need for extensive constitutional changes, saying that minor changes to the constitution will not bring solutions to Turkey's problems. (Zaman07.05)

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7.7 Bulgaria to Hold Parliamentary Elections On July 5

Bulgaria will hold parliamentary elections on 5 July, said Bulgarian President Parvanov, adding that he looked forward to democratic, free and fair elections with a high turnout. The opposition GERB party of Sofia mayor Boyko Borisov is expected to gain 26% of the votes, while the ruling Socialists are likely to get 16% in the European Parliament elections, says poll.

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Results Shown in BioCancell Compassionate Use Trial Using BC-819 for Treatment of Renal Cancer

Tikcro Technologies reported that BioCancell Therapeutics announced that a compassionate use trial of BC-819 was performed with a single patient in Israel suffering from TCC (Transitional Cell Carcinoma) in his renal pelvis. The patient had previously undergone nephrectomy (kidney removal) of his right kidney for similar reasons, and was a candidate for nephrectomy of his left kidney, which would have forced him to undergo dialysis for the remainder of his life. After receiving the relevant approvals, the patient received a series of six treatments for BC-819, 10mg each, injected into his renal pelvis. Since the completion of the treatment of BC-819, about four months ago, test results show that no new growths were formed in the renal pelvis. The treatment did not cause any serious adverse effects. The patient reported that he continued to function and work with a similar quality of life as previously. Tikcro holds 34% in BioCancell upon conversion and exercise of the securities it holds. Tel Aviv's Tikcro (http://www.tikcro.com) identifies potential technologies with a view to acquiring stakes in, and directing the development of, one or more operating companies in the technology area. Tikro has holdings in BioCancell Therapeutics, a clinical-stage biopharmaceutical company operating in the area of cancer treatment. Tikcro is headquartered in Tel Aviv, Israel. (Tikcro04.05)

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8.2 Kamada Announces Closing of Approximately $ 7 Million Private Allocation of Common Stock

Kamada announced that, pursuant to an agreement dated February 23, 2009, it has completed the private allocation of 2,621,723 shares of its common stock to a select group of investors, including Mr. Ralf Hahn, Chairman of the Board and one of the controlling shareholders, and UDT Med Holdings LLC, New York. The placement resulted in gross proceeds to Kamada of approximately $7 million. Ness Ziona's Kamada (http://www.kamada.com) is a public biopharmaceutical company developing, producing and marketing a line of specialty life-saving therapeutics using its proprietary chromatographic purification technologies. Licensed and marketed in more than 15 countries, several of these specialty therapeutics and are currently undergoing advanced clinical trials. The company has recently completed a Phase III clinical trial in the US with its flagship IV Alpha-1 Antitrypsin (AAT) product indicated for treating AAT deficiency and is currently in advanced stages of development of its next generation, inhaled administration AAT for the treatment of various lung diseases including cystic fibrosis and bronchiectasis. (Kamada04.05)

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8.3 NiTi Surgical Solutions Announces U.S. Launch of Revolutionary ColonRing Surgical Device

NiTi Surgical Solutions announced the U.S. commercial launch of ColonRing - its revolutionary closure technology for colorectal surgery. The ColonRing is a medical device designed to help a patient's body heal after colon surgery and represents the first major advance in this area in more than 30 years. The ColonRing with BioDynamix Anastomosis technology is a novel device intended to address the major drawbacks of circular staples. Because anastomosis (the surgical connection of two parts of a hollow organ) with the ColonRing is staple-free, there are no bowel wall punctures, no risk of staple line bleeding, and no permanent foreign bodies in the bowel. The safety and efficacy of the ColonRing device (also known as CAR 27) has been established in multiple clinical trials and in commercial use. The device received U.S. FDA clearance and CE Marking in Europe for use in colorectal and gastrointestinal surgeries. NiTi Surgical Solutions has leveraged the features of Nitinol in the ColonRing technology. In the ColonRing, the Nitinol leaf springs stretch to open the ring for placement in the bowel, and then gradually return to their original closed position, adapting to variations in tissue thickness and accommodating compressed tissue. The Nitinol leaf springs continuously apply constant force range of pressure around the full circumference of the anastomosis. As the compression progresses over several days, the tissue trapped within the ring becomes necrotic, while healthy tissue is generated along the ring's outer perimeter.

Netanya's NiTi Surgical Solutions (http://www.nitisurgical.com) is focused on the BioDynamix of natural healing, offering state-of-the-art medical devices to optimize surgical outcomes for patients and physicians. NiTi Surgical Solutions currently markets its novel ColonRing device - the next generation of closure technology for colorectal resection - providing surgeons with a potentially safer and more effective alternative to standard staple-dependent closure techniques. NiTi continues to expand its core competencies and innovative technology to a variety of advanced surgical products, techniques and procedures. (NiTi Surgical Solutions04.05)

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8.4 Duramed Launches LoSEASONIQUE Oral Contraceptive

Duramed Pharmaceuticals, a subsidiary of Teva Pharmaceutical Industries, announced the launch of its marketing campaign for LoSEASONIQUE (levonorgestrel/ethinyl estradiol tablets 0.10 mg/0.02 mg and ethinyl estradiol tablets 0.01 mg), a new low-dose extended-cycle oral contraceptive. It is currently available to women by prescription from their healthcare provider. LoSEASONIQUE is the latest addition to the extended-cycle oral contraceptive category introduced by Duramed in 2003, which includes Seasonique. The Duramed Contraceptive sales force will begin introducing LoSEASONIQUE to healthcare providers in April. In addition, Duramed will launch a marketing campaign to educate healthcare providers and patients about the product. On the LoSEASONIQUE extended-cycle regimen, women take combination tablets containing 0.10 mg levonorgestrel/0.02 mg of ethinyl estradiol daily for 84 consecutive days, followed by 0.01 mg ethinyl estradiol tablets for seven days. The regimen is designed to reduce the number of withdrawal bleeding periods from 13 to four per year. By contrast, the majority of oral contraceptive products currently available in the United States are based on a regimen of 21 treatment days, followed by seven days of placebo. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the world's leading generic pharmaceutical company. The Company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva30.04)

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8.5 Teva Announces Extension of Patent Protection for Azilect

Teva Pharmaceutical Industries that the U.S. Patent Office has awarded a five year patent term extension to one of Teva's Orange Book patents covering Azilect Azilect is Teva's innovative pharmaceutical product for the treatment of Parkinson's disease. The patent, which was originally scheduled to expire on 7 February 2012 will now run until 7 February 2017, extending patent protection for this important Teva product. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the world's leading generic pharmaceutical company. The Company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva06.05)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 CopperGate Chipsets Selected to Drive Actiontec's New HomePNA Adapters

CopperGate Communications announced its HomePNA chipsets have been selected by Actiontec Electronics, a leading developer of broadband connectivity and broadband-powered solutions, for its newest product, the HomePNA Ethernet-to-Coax Network Adapter. The Actiontec HomePNA Ethernet-to-coax Network Adapter connects standard Ethernet and coax cabling, to bring multimedia easily and cost-effectively to the home; it is especially suited for large rich media files like HDTV, video on demand, movies, music and photos. HomePNA technology is rapidly becoming the IPTV standard for home entertainment networking with more than 40 service providers already standardizing on HomePNA. Tel Aviv's CopperGate Communications (http://www.copper-gate.com) is the only company whose standards-based chipsets enable carrier-class distribution of broadband digital content over all three types of existing wires in the home: coax, phone and power. The company sells its technology to OEMs who build solutions for multimedia home networking and multi-dwelling unit (MDU) broadband access markets. CopperGate's chips are used in set-top boxes, residential gateways, optical network terminators and Ethernet bridges deployed by four of the top five telcos in North America who are deploying IPTV. (CopperGate04.05)

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9.2 Voltaire Unveils Scale-Out Ethernet Architecture - Improves Data Center Networking

Voltaire announced the company's 10 Gigabit Ethernet switching strategy designed to fundamentally improve the user experience and economics of data center networking. Based on Layer 2 core switches using Converged Enhanced Ethernet (CEE) technology that leverages many of the characteristics inherent in InfiniBand, Voltaire's scale-out Ethernet architecture enables users to benefit from a far more scalable, lower latency, and virtualized 10 Gigabit Ethernet fabric, with lower costs and power consumption and simplified management. The new 10 Gigabit Ethernet offerings are a natural extension to Voltaire's family of 20 and 40 Gb/s InfiniBand switching platforms and software and enable customers to choose the underlying data center fabric, based on their application requirements and individual technology practices. Ra'anana's Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire's family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. (Voltaire04.05)

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9.3 Mellanox Advances IBM Networking Solutions With 40Gb/s InfiniBand Adapters

Mellanox Technologies announced that its single-port and dual-port ConnectX 40Gb/s (QDR) InfiniBand Host Channel Adapters (HCAs) are now available directly from IBM for the company's IBM System Cluster 1350 and iDataPlex systems. Mellanox ConnectX 40Gb/s InfiniBand adapters provide IBM and its customers industry-leading throughput and the lowest latency, thereby accelerating applications and increasing productivity in High-Performance Computing (HPC) and enterprise data center (EDC) environments. A broad range of application environments will benefit from Mellanox 40Gb/s InfiniBand-connected IBM System Cluster solutions, including applications optimized for industrial design and manufacturing, financial services, life sciences, government and education. They are also an excellent choice for applications that require horizontal scaling capabilities, such as Web serving and collaboration.

Mellanox's industry-leading ConnectX 40Gb/s InfiniBand adapters are the only proven 40Gb/s InfiniBand networking solutions for high-performance clustering and blades. ConnectX enables the fastest transaction latency, as low as 1usec, and the highest transaction rate of above 40 million messages per second, making it the most scalable and suitable solution for current and future transaction-demanding applications. ConnectX adapters are part of Mellanox's full 40Gb/s end-to-end portfolio for data centers and high-performance computing systems. Mellanox 40Gb/s InfiniBand switches incorporate advanced tools that simplify networking management and installation, and provide the needed capabilities for the highest scalability and future growth. Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox04.05)

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9.4 Crescendo Networks Reveals New Application Delivery Functionality for Cloud Computing

Crescendo Networks announced new cloud computing and virtualized ADC (vADC) functionality for its AppBeat DC application delivery controller. With flexible, on-demand vADC resources and SLA-based (service level agreement) application control capabilities, Web properties, as well as private and public cloud infrastructures, can manage datacenter resources according to business needs. It also ensures end-user application service levels, and conserves server and energy costs for ultimate resource efficiency. These features are available with the Maestro™ CN-7000 Platform series, also announced today. AppBeat DC now offers virtual ADC partitioning, allowing all ADC resources to be divided into multiple, business-oriented segments. This enables ADC resources to be tailored to specific business needs, such as different applications in the same data center or multiple customers, each with different traffic and service level requirements. AppBeat DC's Elastic Resource Control maintains application service levels with the least amount of server resources. The end result is an efficient data center that consumes up to 30% less energy without sacrificing performance.

Tel Aviv's Crescendo Networks (http://www.crescendonetworks.com) is the recognized performance leader for accelerating and optimizing the delivery of business-critical, Web-enabled applications. The company's unique application delivery architecture dramatically improves the operation of today's demanding application infrastructure. The world's largest corporations and fastest growing Web properties rely on Crescendo for the application performance and efficiency needed to ensure usability, facilitate rapid business growth, lower IT costs and capture additional revenue. (Crescendo Networks04.05)

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9.5 Wavion Selected by IT Connect to Provide Wi-Fi Coverage in Dhaka, Bangladesh

Wavion and IT Connect Limited, an Internet Service Provider (ISP) in Dhaka, Bangladesh, announced the completion of a large scale Wi-Fi deployment based on Wavion WBS-2400 Base Stations in the city of Dhaka, Bangladesh. The WBS-2400 Base Stations will provide high-speed wireless (Wi-Fi) connectivity to medium and small businesses and residences in Dhaka. Wavion's WBS-2400 spatially adaptive beamforming base stations provide extended range, improved indoor penetration and better interference resilience. The WBS-2400 base stations where installed in Gulshan, Banani, Baridhara and Dhanmondi in Dhaka and provide ubiquitous coverage to the four urban areas. Yokneam Ilit's Wavion (http://www.wavionnetworks.com) is transforming the metro Wi-Fi and rural markets with a new category of spatially adaptive base stations. The company's digital beamforming and SDMA technologies are the first and only to resolve the significant performance, penetration and profitability challenges facing large scale metro and rural deployments. (Wavion04.05)

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9.6 Eltek Receives $1.2 Million of Orders from US Medical Equipment Manufacturer

Eltek has received orders valued at $1.2m from a US medical customer for flex - rigid PCBs (printed circuit boards) that will be used in the production of advanced medical equipment. The flex - rigid PCBs are expected to be delivered during the second half of 2009. The customer's new $495,000 order is in addition to a $742,000 order already received in 2009 as part of a long term contract. The company recently gained a US Department of State ITAR approval (which is a set of US government regulations that controls the export and import of defense-related material and services) to sell its circuitry solutions for use in U.S. military products, and has received its first PCB orders from defense customers. Petah-Tikva's Eltek (http://www.eltekglobal.com) is Israel's leading manufacturer of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end of PCB manufacturing, i.e., HDI, multilayered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. (Eltek04.05)

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9.7 INSEAD Selects Ness Technologies for Global Multi-Year IT Outsourcing Assignment

Ness Technologies announced a multi-year contract for outsourcing of IT services. Under terms of the agreement, Ness Technologies will provide wide-ranging IT services to assist INSEAD in optimizing operational costs & improve overall IT services in order to yield greater benefits for the school's IT investments. As part of that process, Ness will help INSEAD standardize technology across its locations in Abu Dhabi, Fontainebleau, New York, Singapore and Tel Aviv. The scope of services will include provisioning of an Operations Center and Network Services, Application Development as well as onsite support. The engagement will largely be driven out of Singapore with onsite teams in each of the locations. Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; system integration, application development and consulting; and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. (Ness Technologies04.05)

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9.8 Altair Semiconductor Announces LTE Product Roadmap

Altair Semiconductor announced its 3GPP LTE product roadmap, which includes a baseband processor, and complementing MIMO RF transceiver chips designed to support world-wide LTE bands and duplex-modes. Altair's LTE chipsets are developed using the company's proprietary and market-proven O2P(TM) software-defined 4G processor architecture, which offers extremely high performance at unmatched power consumption levels. This technology is currently deployed in Altair's FourGee-2150 for mobile WiMAX, and FourGee-4150, for XGP, both recognized as leaders in their respective markets for high performance and power efficiency. Hod Hasharon's Altair (http://www.altair-semi.com) is the world's leading developer of ultra-low power, small footprint and high performance 4G semiconductors that take broadband bandwidth beyond notebooks and USB adaptors to un-tethered, battery-operated handheld devices. The company's products provide handheld device manufacturers integrating 4G technologies into their products with a highly power-optimized, robust and cost-effective solution. (Altair Semiconductor 05.05)

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9.9 Leading Foundry Expands Deployment of Nova's Stand-Alone Optical CD

Nova Measuring Instruments announced that it will ship several NovaScan stand-alone metrology systems to a leading global foundry. Together with already deployed NovaScan systems at the foundry, the additional tools will expand the metrology solution for Back End Of Line (BEOL) Copper interconnect process control at advanced technology nodes. Coupled with NovaMARS, Nova's 3D Optical CD modeling software, the NovaScan systems can accurately measure the Copper line profile, a dominant factor highly correlated to Copper line resistivity. Rehovot's Nova Measuring Instruments (http://www.nova.co.il) develops, produces and markets advanced integrated and stand alone metrology solutions for the semiconductor manufacturing industry. (Nova 05.05)

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9.10 Elbit Systems of America Selected to Provide Soldier-Worn Computer Systems to U.S. Army

Fort Worth, Texas's Elbit Systems of America, a wholly owned subsidiary of Elbit Systems, has been selected by the U.S. Army as part of an industry team led by Rockwell Collins for the system integration and prototype phase of the Ground Soldier Ensemble (GSE) program. Elbit Systems of America and Rockwell Collins together formed "Team Spartan." The team was selected in a competition among several U.S. companies to develop the next-generation soldier-worn computer system. The system will provide situational awareness to soldiers during intense operations in a configuration that optimizes size, weight and power, and can be customized for different missions. Elbit Systems of America will leverage its global soldier systems experience and lessons learned in rugged military computing technologies and its battle-proven, soldier-worn Dominator computing system to bring required computing capability to the program. Elbit Systems of America's computing platforms support mission planning, situational awareness, target handling, and device connectivity, as well as video and map displays.

Elbit Systems of America is a leading provider of high performance products and system solutions focusing on the commercial aviation, defense, homeland security and medical instrumentation markets. Elbit Systems (http://www.elbit.co.il) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. (Elbit Systems05.05)

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9.11 KIDO'Z v 1.0 Redefines Internet Safety for Children

Tel Aviv's KIDO'Z (http://kidoz.net) discovery platform exited beta testing with v 1.0, the first internet operating system specifically designed for children ages 3-7 years. With multilingual support in 17 languages, KIDO'Z is already deployed in over 80 countries. With the utility of a simple browser, and the security of a refined, parent filtered search engine, KIDO'Z provides the ideal environment for adults to present technology and a safe Internet to their children. At the heart of KIDO'Z, is a smart content engine that can be configured to individualize content based on a wide variety of criteria: age, language, culture, nationality, gender, religion and content popularity, just to name a few possible variables. For kids, KIDO'Z is a safe, intuitive and friendly way to begin learning internet technology, and to explore content from the very best providers on the Web. Using the graphics based interface, even very young children who cannot yet read can navigate web sites approved by parents, favorite content, watch entertaining and educational video and play intelligent and interactive games. For parents KIDO'Z, through its parental interface, delivers safety, control and peace of mind. Parents are actually building the world of KIDO'Z for all children through monitoring their own children's activities, suggesting and sharing the best content, and in effect contributing to a unique user generated content system, one centered on early childhood. Built using Adobe Air, KIDO'Z is compatible with Windows, Mac and Linux operating systems. Version 1.0's parental controls include: approval or blocking of public content, adding private content, sharing and content moderation, rating content, account editing, and setting time limits. KIDO'Z has also been optimized for notebooks and touch screens for added flexibility. (KIDO'Z 05.05)

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9.12 VocalTec Receives First Order from Mobitel Nigeria for Next Generation Network Roll-out

VocalTec Communications announced that Mobitel, a Nigerian fixed line and wireless telephone operator, selected VocalTec for its next-generation-network roll-out. The current order, which amounts to $5m, includes the first phase of deployment in two major cities, as part of a larger network development plan. At the core of the deployment is VocalTec's Essentra suite of softswitch products, which offer a wide range of IP-based subscriber features over Mobitel's WiMAX access infrastructure. This also enables additional applications, including IP-to-PSTN interworking and IP-to-IP interconnection services. VocalTec will be the prime contractor for the project, and will also support Mobitel's deployment of Data, IP Core and Billing infrastructures. VocalTec, being the key partner responsible for the delivery of this comprehensive turnkey network solution, leads a consortium of leading technology companies. This eco-system of technology partners together offer a fully integrated, highly interoperable network solution, fully addressing Mobitel's service requirements, while adhering to Mobitel's business considerations and needs.

Herzlia's VocalTec Communications (http://www.vocaltec.com) is a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers. A pioneer in VoIP technology since 1994, VocalTec provides proven VoIP trunking, VoIP peering and residential/enterprise VoIP application solutions that enable flexible deployment of next-generation networks (NGNs). (VocalTec 06.05)

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9.13 BluePhoenix Awarded a $3.5M Contract for Legacy IT Modernization

BluePhoenix Solutions signed a modernization contract with a leading international provider of relocation solutions. The value of the contract is approximately $3.5m and the project is scheduled to complete in early 2010. The modernization project consists of an extensive array of application and database modernization and platform re-hosting. Mainframe technologies, including VSAM, ADABAS, COBOL and Natural, are being modernized to the Microsoft .NET platform. The resultant benefits include reduced IT costs, improved operational efficiencies, and the ability for the business to provide its end clients with new and enhanced customer services. The new target IT architecture will accommodate modern technologies enabling quicker - and more cost effective - adaptation to rapidly changing business needs. Herzliya's BluePhoenix Solutions (http://www.bphx.com) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, re-hosting, and renewal. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime. (BluePhoenix 06.05)

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9.14 CARFAX Selects Crescendo Networks to Accelerate and Optimize Web Applications

Crescendo Networks announced that CARFAX is using AppBeat DC to ensure the performance, efficiency and availability of its Web applications for used car buyers and sellers across North America. Carfax.com is visited more than 55m times each year by used car shoppers and nearly 30,000 dealers nationwide rely on the online service to help build consumer confidence. CARFAX (http://www.carfax.com) is the most trusted provider of vehicle history information and is one of the top five websites that consumers depend on for vehicle information. CARFAX Vehicle History Reports provide valuable information that helps used car buyers and sellers make better purchasing decisions. AppBeat DC is an application delivery controller that enhances the performance, scalability, efficiency and availability of Web applications like those of CARFAX. Unlike competing solutions, it leverages the industry's only purpose-built hardware platform, uniquely designed for maximum performance and feature concurrency. By offloading servers from processing-intensive tasks and optimizing the delivery of the application to users, AppBeat DC significantly improves overall application performance, security and availability for CARFAX, while reducing data center costs.

Or Yehuda's Crescendo Networks (http://www.crescendonetworks.com) is the recognized performance leader for accelerating and optimizing the delivery of business-critical, Web-enabled applications. The company's unique application delivery architecture dramatically improves the operation of today's demanding application infrastructure. The world's largest corporations and fastest growing Web properties rely on Crescendo for the application performance and efficiency needed to ensure usability, facilitate rapid business growth, lower IT costs and capture additional revenue. (Crescendo Networks11.05)

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9.15 Samsung Selects Jordan Valley's JVX6200 for On-Line Thin Films Metrology

Jordan Valley Semiconductors announced that Korea-based Samsung Electronics has selected the JVX6200 advanced thin films, in-line metrology system for their next generation applications in the FEOL and BEOL areas. Jordan Valley's JVX6200 XRR & XRF tool demonstrated great flexibility and ease of use. Samsung's selection of the JVX6200 further enhances our position as the market leader in X-ray based metrology for the sub-50 nm processes. Jordan Valley's JVX6200 X-ray metrology tool is a multi channel, high throughput and small footprint, fully fab-automated metrology tool, specifically built for most advanced production fabs. The JVX6200 is utilized for advanced process control at the front end of line (FEOL) and back-end of line (BEOL) applications in fabs worldwide. The JVX6200 X-Ray Reflectometry (XRR) is a non-contact, non-distractive, surface-sensitive technique that delivers precise and accurate characterization of thin films and multi-layer stacks. The XRR technique measures thickness, density and roughness data by analyzing the reflection vs. angle, and interference patterns of X-rays that reflect off the interfaces. The JVX6200 XRR analyzes single and multiple thin films metal and dielectric layers from 1 to 500 nm thick. Jordan Valley's advanced XRR technology allows measurements on production wafers and offers superior throughput of over 30 WPH (17 points on 300mm wafer).

Migdal Ha'Emek's Jordan Valley Semiconductors (http://www.jvsemi.com) is a worldwide leader in the development, manufacture and selling thin films metrology tools for most advanced semiconductor manufacturing processes. They offer a comprehensive family of solutions based on advanced X-Ray Reflectivity (XRR), X-Ray Fluorescence (XRF) and High Resolution X-Ray Diffractometry (HRXRD). These tools are fully automated, production ready and ideal for both blanket and patterned wafers. (JVS 11.05)

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9.16 Orsus & Orad Partner to Implement Situator at Paphos International Airport in Cyprus

Orsus has partnered with Israeli-based systems integrator Orad to implement Situator at two airports in the Republic of Cyprus, Paphos and Larnaka International Airports. The two-part project was awarded to Orad by Bouygues Construction, one of the world's leaders in building, civil engineering, electrical contracting and maintenance, operating in over eighty countries. Orad specializes in integrated advanced security and control systems. The first project involved installing Situator at Paphos International Airport, a newly constructed facility representing the second largest airport on the Mediterranean island. As part of the project, Orad implemented the latest technology, including physical and logical biometrics-based access control systems and advanced IP-based surveillance systems. Situator brings together these security solutions and manages its new standard operating procedures and emergency scenarios at the recently opened terminal. The second phase of the project, currently in progress, involves implementing Situator at Larnaka International Airport, which is the largest airport in the Republic of Cyprus. It serves an estimated 7m passengers each year. The new airport, now under construction, is scheduled to open in November of 2009.

Kfar Saba's Orad (http://www.orad.co.il) is a leading global provider of integration services delivering proven end-to-end security, safety, traffic management, electro mechanical engineering and communications solutions to a wide range of customers. Or Yehuda's Orsus (http://www.orsus.com) is a pioneer and innovator in developing Situation Management software solutions; a comprehensive and unique approach that coordinates the interaction between people, alerting sources and responses. Orsus' flagship offering, Situator, is the leading Situation Management software platform in the market, possessing the best integration technology available. Situator enables situation planning, response and analysis for the security, safety and crisis management markets where the risk of human error can lead to financial loss, injury and damage to public image. (Orsus11.05)

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9.17 Mellanox Introduces ConnectX ENt - First Fully Integrated Dual-Port 10GBASE-T Adapter Card

Mellanox Technologies and Teranetics, a leading provider of Ethernet PHY technology, announced availability of the first fully integrated 10GBASE-T Network Interface Card (NIC). The ConnectX ENt dual-port adapter card for PCIe 2.0 (up to 5.0GT/s) delivers high-throughput, low-latency and high availability with low power to accelerate today's data center. ConnectX ENt supports leading virtualization acceleration features such as NetQueue and SR-IOV and I/O consolidation fabrics with Data Center Bridging (DCB) fabric enhancements and Fibre Channel over Ethernet (FCoE). According to Dell'Oro Group, copper-based 10GigE adapter port shipments are expected to grow from 33K in 2008 to 1.5M in 2013. Mellanox offers a complete family of ConnectX 10 Gigabit Ethernet adapters to support a wide variety of cabling options including UTP, direct-attached SFP+ and CX4 for copper and SR and LR for fiber optics. Mellanox ConnectX EN and ConnectX ENt adapters provide data centers with a rich set of availability, performance and QoS features.

Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox12.05)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Foreign Investors Sell $150 Million in Israeli Bank Shares

On 10 May the Bank of Israel announced that foreign investors sold a net $145m worth of Israeli shares during March 2009. Foreign investors sold a net $150m of bank shares, but there was net investment communications and chemical shares. Foreign investors also sold a net $210m worth of Israeli shares listed on foreign exchanges during March. The Israeli government raised $1.5b in Global-type bonds during March, of which $720m was raised from foreign investors. An Israeli energy company redeemed $500m of bonds, similar to the amount it had raised in January; $370m of the redemption was paid to foreign investors.

Direct foreign investment totaled $300m in March, less than the $450m monthly average over the preceding 12 months. Most of the investment was in high-tech industries, with some investment in the real estate and chemicals industries. In March, Israelis invested a net $670m in foreign shares, a marked increase compared with the average amount in the last few months. Institutional investors accounted for $410m of this investment. Israelis also invested $280m in foreign bonds, including $118m invested by the business sector. Israelis' director foreign investment via the banks was $50m. (Globes 10.05)

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10.2 Israel's April Car Sales Down 50%

During April 2009, 8,907 new cars were delivered in Israel, half the number delivered in April 2008. One reason for the plunge was there were fewer business days in April this year compared with last year. However, the main reason was the ongoing slump in the leasing industry as companies struggle to obtain financing for the purchase of new cars. For the January-April 2009 period, 47,560 new vehicles were delivered, 40% fewer than in the corresponding period of last year. While 39,099 cars were delivered in the four month period, also down 40%. SUV deliveries fell 28% to 4,354.

Mazda was the top-selling brand in January-April, with 7,295 deliveries, 46% fewer than during the corresponding period. Hyundai was in second place, with 5,822 deliveries, down 28%. Toyota was in third place, with 4,767 deliveries, down 42%. Ford was in fourth place, with 3,475 deliveries, down 18%. Nissan was the only brand to see an increase in deliveries, rising to fifth place with 3,089 deliveries in January-April, 63% more than in the corresponding period. Aggressive sales by some luxury car brands helped boost sales in January-April, while other brands saw sales plummet. Industry sources expect a strong recovery in May thanks to the improved economic climate and the thawing in banks' credit policies. The sources nevertheless do not expect sales to reach last year's levels. (Globes 05.05)

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10.3 Israeli Shoe Sales Drop

Domestic sales of shoes totaled $41.4m in the first quarter, 10% less than in the corresponding quarter of 2008, Teva Naot CEO Michael Ilouz, announced on 6 May. He serves as chairman of the shoes division at the Manufacturers Association of Israel. He added that Israel's shoe industry had laid off 100 employees since the global economic crisis hit Israel in September last year, and that it now employed about 2,000 people. Trends were mixed for Israel's shoe industry last year. Domestic shoe sales totaled $183.8m, 1.7% less than in 2007, however, exports rose 4% to $45m. Shoe imports rose 17% to $330m, of which $187m worth of imports came from the Far East. Ilouz added that shoe prices fell by an average of 5% during 2008. (Globes 06.05)

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11: In Depth

11.1 LEBANON: Building Still Booming

At a time when development projects are being cancelled or put on hold right across the Middle East, the Oxford Business Group said Lebanon's construction sector stands out as an exception, with strong demand for residential and commercial properties pushing the industry to new heights.

Though the IMF has predicted Lebanon's economic growth rate will ease to 3-4% this year, down from 8% in 2008 due to lower capital inflow, this level of economic expansion is still higher than many in the region. While the international credit crisis and a slowing of the global economy will have some impact on Lebanon, the domestic financial system has had virtually no direct exposure to distressed financial products or markets and remains very liquid, while the real economy continues to show considerable resilience, the IMF said in a report issued in early March.

That resilience is reflected in figures released by the Order of Engineers of Beirut and Tripoli at the end of March showing continued strong levels of activity in the building sector in the first two months of the year. This follows record highs in 2008, when there was a 77.7% increase in the number of construction permits granted for work covering a total area of 16m sq meters. Construction permits for just under 1.3m sq meters of projects were approved in January and February, a 1.7% increase over the same period in 2008, according to the industry group, cited by Bank Audi in a regular economic report.

Significantly, the bank noted that the two-month increase came against a backdrop of falling construction activity in the region. "It seems that construction activity in Lebanon was neither affected by unfavorable local political conditions in the first few months of 2008, nor by global economic downfalls in the last months of the year," Audi stated.

Another to have faith in Lebanon's construction industry is Mounir Douaidy, the general manager and chief financial officer of the country's largest real estate developer, Solidere, the company set up in 1994 by Rafik Al Hariri to rebuild central Beirut following the 1975-90 war. Though the firm's share prices have dropped to less than half the $40 they were traded for in July last year, Douaidy said Solidere's strong balance sheet and assets portfolio meant that the company had solid foundations. These foundations were built on the bedrock of high demand in the Lebanese property market, which had not been affected by the construction slowdown in the region, he said in an interview with Reuters in early April. "The element of demand basically comes to a large extent from inside Lebanon, or from Lebanese expatriates. Therefore the demand is there and permanent," Douaidy said.

With an eye to meeting that demand, Beirut-based developer Noor International Holding has announced an ambitious plan to build an artificial island shaped like a cedar tree off the Lebanese coast. If it goes ahead, the $8bn development, which would cover some 3.3 sq km, would offer luxury villas and apartments to house 40,000 people, retail and eatery outlets, parks, schools and medical facilities, along with marinas and beaches.

The development is certainly attracting interest and backers. Turkish industrial group Ihlas Holdings announced in April that it had signed a $2bn memorandum of understanding with Noor to take part in the project. According to Mohammed Saleh, Noor's chairman, the remaining funding for Cedar Island will come from other developers and investors, especially Lebanese nationals living abroad who are looking to reinvest in their homeland, the international recession not withstanding. "I am not worried about the global crisis, because my main target is Lebanese expatriates who have nostalgia for their country and would like to invest in it," Saleh said in an interview with Associated Press in late April. "Unlike foreign investors, these people are used to Lebanon's system, its ups and downs."

One of those downs might be the lengthy approval process the development will have to pass through. When announcing the project in February, Noor said it hoped to start initial work by May, though the company now says it will probably have to wait until after the June general election to have permission granted. The results of that election could have an impact on the construction industry, especially if it spawns another round of political instability such as that from November 2007 to May 2008, when the country's parliament failed to elect a new head of state and street protests brought much of central Beirut to a standstill. The sector has shrugged off that unrest, as seen by its strong showing throughout last year, and looks set to continue its expansion throughout 2009. (OBG12.05)

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11.2 IRAQ: Economy Hard sell

The Economist Intelligence Unit reported that the Iraqi prime minister, Nouri al-Maliki, and several of his senior ministers visited Europe at the start of May bearing the message that their conflict-ravaged country was open for business. A previous burst of reconstruction promotion in the immediate aftermath of the US-led liberation in 2003 was followed by bitter disappointment as Iraq was torn apart by violence. The better security conditions - albeit still punctuated by regular violent incidents - and the start of the process of withdrawing occupying forces offer the prospect of a re-launch of reconstruction. The expectations are more realistic, in tune with the more sober economic times, but there are still plenty of obstacles to realizing even these trimmed-down goals.

In London, the Iraqi delegation laid out its wares to representatives of around 150 British companies. The message from the Iraqis, keen for international expertise and particularly for capital - at a time when lower oil prices have put the brakes on their reconstruction plans - was that, while security problems and legal uncertainties remain as barriers to business, the trend is positive and the time is ripe to seize the opportunities across many undeveloped sectors.

During a series of industry sector panels, ministers and other officials highlighted some of Iraq's immediate needs that investors might look to address—10 GW of electricity capacity, 15m tonnes/year of cement, up to 3m housing units, not to mention the $50bn of investment that the oil minister, Hussein al-Shahristani, estimates is needed to triple oil production to 6m barrels/day and boost gas and refining.

Red tape

However, as the panels fielded questions from the floor, it was clear that problems remain, particularly as regards red tape. A British company explained that it had taken a year to secure the 17 permits from different government departments needed to authorize the construction of a cement plant. Another major investor complained that the interior ministry was refusing to register his equity holding in a telecoms joint-venture and that he could not get planning permission for a five-star hotel. A British company asked the minister of transport about the status of a contract they had signed some years before to design a major piece of infrastructure, but which seemed to have lapsed, the company representative said, due to an apparent lack of attention from the ministry. On the security front, an Iraqi businessman enquired about what legal (and physical) protection there was for business premises, after his industrial estate near Baghdad was leveled by the US military in 2007 to expand a base - he was assured by the National Security Advisor that such actions would not be repeated now that Iraq was in charge of its own security.

Barham Salih, the deputy prime minister, admitted that Iraq currently ranks poorly in the World Bank's Doing Business indices (it is placed 152nd out of 181), but insisted that the business environment was set to improve, including through the establishment of a National Investment Commission with branches in each province. Indeed, one British company did have a positive story to report. Maritime & Security Consultants (MUSC) signed a $200m contract in September with Iraq's Southern Oil Company to locate and dispose of unexploded ordinance in the shipping lanes. The contract only took three months to negotiate (securing a letter of credit took another two) and the chief financial officer, Barbara Still, spoke positively of the reception they had received in Basra. Three British companies, including MUSC, have signed contracts this year totaling almost $1bn, and 20 companies are tendering for a further $10bn.

Flare-Up

The largest deal to date is a joint venture to process associated gas in Basra, much of which is currently being flared, to produce natural gas and LPG for the domestic market and Iraq's first LNG for export. Royal Dutch/Shell and the state-owned Southern Gas Company (SGC) clarified that they currently only have a Heads of Agreement, signed in September 2008, and do not expect to sign a final agreement for another year. The delay is apparently not for legal reasons. (Although private sector involvement in the hydrocarbons sector is controversial in the Iraqi parliament, a 1997 Saddam-era law is being used which permits the formation of public-private joint-ventures.) Instead, the complexity of the agreement, which will eventually be put to the Iraqi cabinet for approval, is causing some delay, as is an independent valuation of the SGC's existing assets - which will determine the matching contribution Shell will make towards the joint-venture. Progress on this deal will be closely watched, as international oil companies look ahead to more substantial and profitable contracts for oil and gas field development.

Down To Earth

The tone of the conference was very different from that of the string of Iraq investment meetings held in the first year or so after the invasion. Those early events had been heavy with grandiose plans, often put forward by people who had never set foot in Iraq, and with expectations for a rapid transformation of Iraq's battered economy. Now the tone is more careful and the timescales (somewhat) more realistic but, significantly, the other change is that it is now the Iraqis who are clearly and confidently in the driving seat. The sharp fall in oil prices has forced Iraq to look to the private sector for a larger and more urgent contribution to its redevelopment, and meanwhile, the drying up of opportunities for growth elsewhere in the global economy has perhaps led some companies to judge that the balance of risks and return in doing business in Iraq may now be more worthy of serious consideration. (Economist Intelligence Unit05.05)

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11.3 QATAR: Environmental Pillar

Over the years, Qatar has worked hard to develop an attractive and diverse investment location. Now it is focusing, according to the Oxford business group, on the environment in order to sustain the economy and the future of the country.

With the exception of gas and oil, Qatar has limited natural resources, in particular water, having to rely on desalination and underground sources for the majority of its requirements. Combined with a fragile ecosystem, Qatar can ill-afford to play fast and loose when it comes to the environment.

Qatar was given a clear call to action in 2007, when the UN Development Program released a report showing that the country had the highest per-capita CO2 emissions in the world, at 79.3 tonnes per person. While a small population meant that the country was a relatively minor contributor to CO2 emissions globally, Qatari authorities responded quickly to reduce its carbon footstep and address other environmental problems.

Protection and management of the environment was made one of the four pillars enshrined in Qatar's National Vision 2030 - a blueprint for the country's strategy for the next two decades - along with human, social and economic development. The policy document, issued in October 2008, called for a balance to be met between the needs of socioeconomic development and the environment. This is to be done through promoting awareness of ecological issues across society and enacting legislation to support environmental sustainability. "The environmental pillar will be increasingly important as Qatar is forced to deal with local ecological issues, such as the impact of diminishing water and hydrocarbon resources, the effects of pollution and environmental degradation, and international issues like the potential impact of global warming on water levels in Qatar and thereby on coastal urban development," the document said.

In line with these objectives, the state has taken a number of major steps. In mid-2008, it became one of the main sponsors of a joint project between Shell, Qatar Petroleum, Imperial College London and the Qatar Science & Technology Park to develop new CO2 management plans and carbon-capture technology. In January this year, Qatar became the first member state of the Gulf Cooperation Council to join the World Bank's "Global Gas Flaring Reduction" initiative, a public-private partnership that aims to reduce or totally eliminate the release of gas produced during oil extraction into the atmosphere.

National flag carrier Qatar Airways is also doing its part to protect the environment. On May 5th it became the first Middle Eastern airline to join the Aviation Global Deal Group, a body that is working to develop a global policy for tackling aviation emissions. According to Akbar Al Baker, the CEO of Qatar Airways, joining the group demonstrated the airline's commitment to corporate social responsibility and the environment. Saying that the onus was very much on the corporate world to ensure the industry strove to achieve zero carbon emissions, thus making the world a safer and cleaner place, Al Baker said Qatar Airways was pleased to be, "working with our peers across the industry to tackle what is a serious environmental issue".

That was by no means the airline's first foray into green aviation, having made low emission levels one of the criteria of its aircraft acquisitions program. In April, the airline also signed an agreement with the International Air Transport Association to launch a global carbon offset trading scheme, with proceeds going to fund environmental projects. Under the scheme, when booking tickets for their flights, passengers will be given the option of paying a small fee to offset their carbon footprint.

Protection of the environment is also crucial to Qatar's goal of becoming a major tourism destination in the region. The country has set itself a target of attracting 1.4m tourists a year by 2010, and wants to change its current mix of 95% business tourists and 5% leisure visitors to a more balanced 70:30 ratio.

To date, ecotourism has played only a minor role in Qatar's tourism market, but that could be about to change. The Ministry of Environment and the Public Works Authority are working with the Qatar Bird Club to establish a number of new wildlife and bird sanctuaries using processed wastewater to bring life to barren lands. So far, 13 sites have been identified as potential sanctuaries and tourist attractions. Such an initiative would certainly be in tune with the tenets of National Vision 2030, assisting the development of a diverse economy while utilizing waste in a way that not only does not impair the environment but also helps sustain it. Having gained the dubious distinction of generating the largest per-capita carbon emission footprint just two years ago, Qatar is now working hard to make its mark as a protector and clean manager of the environment. (OBG11.05)

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11.4 UAE: Higher Education Initiatives

Amal Sakr writes that education has recently become a top priority in the United Arab Emirates with Abu Dhabi, the largest and richest emirate, playing the pivotal role in its development. Emirate Crown Prince Muhammad Bin Zayed Al Nahyan chairs Abu Dhabi's education council in Abu Dhabi and his brother is the Vice President. This indicates a new trend in the UAE, in which education councils are replacing ministries of education and higher education in planning.

A UAE government strategy launched in April 2007 set five objectives: 1) launching joint projects between ministries of education and education councils to improve the academic competence of high school graduates and their readiness for university, 2) reviewing curricula to ensure they meet quality standards, 3) establishing cooperative relationships with future employers so that graduates' skills meet market needs, 4) monitoring the quality of programs at private universities and community colleges, and 5) partnering with prestigious foreign universities.

A policy document issued by Abu Dhabi's local government for 2007-8 stated that the key objective was to provide students with education opportunities that exceeded in quality those offered abroad. Abu Dhabi placed even greater emphasis than the UAE on the importance of partnering with foreign universities. This has led to the opening of a branch campus in Abu Dhabi of the Sorbonne teaching humanities, arts and literature. The “2030 Economic Vision for Abu Dhabi” indicates that there will also be partnerships with INSEAD for business education, the Fletcher School of Tufts University for law and diplomacy studies, Munich Technical University and the University of Bonn for medicine and science, and New York University for social sciences. Talks with Yale University about opening a branch for fine arts, music and drama were suspended over administrative differences.

Linking education with market needs has been a common goal for federal and local governments in UAE. The motivation for higher educational reforms is the need to produce a highly qualified cadre to assume executive management and administrative positions and to provide leadership to a foreign workforce that is now recognized as an important factor in economic growth. Even though unemployment is not alarmingly high, there has been a concern that university graduates' fields of study and skills do not meet market needs. This has led to the establishment of smaller institutions that offer training programs in high demand specialties such as administration, marketing, publication relations and internet technology. One extreme example of this phenomenon was the Dubai Real Estate Institute, which was established two years ago as a quick response to the fast-growing real estate market, now greatly affected by the global financial crisis.

While the idea of linking higher education to market needs is sound, UAE reform plans raise several questions. First, how will the higher education sector be developed while pre-university education is still in a transitional stage and in need of attention? Basic education reforms have yet to produce tangible progress and some initiatives, such as the “Future Schools” project, have drawn strong criticism. What about existing universities, which receive scant mention in Abu Dhabi's strategies? Is not reforming these institutions a worthy objective? Important educational institutions, such as many technology institutes and United Arab Emirates University, need assistance but appear to be far away from the minds of ambitious policymakers. Foreign universities have their appeal, but are unlikely to constitute the principal or only solution to the education problem in the UAE. The “2030 Economic Vision for Abu Dhabi” actually goes as far as to voice a hope that foreign university campuses in the emirate will not only supply local education needs but attract students from across the Middle East. For now, that is a vision whose success is far from guaranteed.

Amal Sakr is a political science researcher residing in Dubai. (ArabReformBulletin May 2009)

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11.5 LIBYA: Fitch Rates Libya 'BBB+'; Outlook Stable

On 7 May, Fitch Ratings (http://www.fitchratings.com) assigned Libya a Long-term foreign currency Issuer Default Rating (IDR) of 'BBB+'. Fitch has also assigned Libya a Long-term local currency IDR and Country Ceiling of 'BBB+' respectively, and a Short-term foreign currency IDR of 'F2'. The Long-term IDRs have been assigned Stable Outlooks.

"Libya's 'BBB+' rating balances zero government indebtedness and a formidable external balance sheet against economic reliance on oil, the challenges of modernizing the country's economy, and political-institutional factors," said Charles Seville, Associate Director in the Sovereign group at Fitch.

Libya has re-engaged with the international community, paving the way for the restoration of diplomatic and trade ties. Fitch believes this transformation will be permanent. September 2009 will mark the fortieth year since Libya's leader, Mu'ammar Gadhafi, assumed political power following a revolution, continuing a track record of political stability. Concerns about the consistency and predictability of government decision-making, and how Libya's political system would adapt to a potential future change of leadership, weigh on the country's rating.

Libya initiated economic reforms in the late 1990s, opening opportunities for private business in an economy dominated by state-run enterprises and encouraging foreign direct investment (FDI), especially in the oil sector. The financial sector has been a recent focus of reform, and two of Libya's largest banks have been part-privatized and the payments system brought up-to-date. The government has also begun a major investment program to upgrade infrastructure.

Libya's per capita income is estimated by Fitch at $16,600 in 2008, but is forecast to fall to $10,600 in 2009 as the value of oil production shrinks. However, the country's per capita income is still well above neighboring countries such as Tunisia ('BBB') which has a per capita income of $3,400, and Algeria at $5,000, as well as the 'BBB'-ranked country median of $8,300. Labor force skills lag countries with a similar per capita income. Libya's unemployment rate is high, as elsewhere in North Africa, and Libyans remain dependent on the state for jobs, although the government has started to address this problem.

The country's per capita income reflects its small population and hydrocarbon wealth, as per capita oil output rivals that of Saudi Arabia. Oil and gas represents over half of nominal GDP. Proven oil reserves are equivalent to 50 - 60 years of production, and extraction costs are only $2-3 per barrel. Capacity is being increased and Libya plans to consolidate its position as a leading gas supplier to the EU.

Fiscal discipline, growing oil production and soaring energy prices have enabled Libya to amass very large fiscal surpluses and external assets. Public finances are well placed to ride out a period of lower oil prices, with a fiscal breakeven as low as $40/b.

A strong external balance sheet helps mitigate Libya's high dependence on oil and is a support to its ratings. The sovereign net foreign asset (SNFA) position was estimated by Fitch at 131% of GDP and 184% of current account receipts (CXR) in 2008, superior to Saudi Arabia ('AA-') whose position was estimated at 109% of GDP and 145% of CXR. Transparency of external assets, held by both the Central Bank of Libya (CBL) and the newly-established Libyan Investment Authority (LIA), compares well to Gulf Cooperation Council (GCC) countries. Contingent liabilities are low. Libya has never borrowed externally, and has no reliance on external funding, unlike similarly-rated emerging markets. Fitch considers this a credit strength although it means the country has no observable track record as a borrower on international markets.

Libya's ratings could benefit from a further strengthening of the external balance sheet, and successful handling of the challenges posed by lower oil prices. Progress on economic reforms and development of the private sector could also support Libya's ratings. A more secure legal foundation for the LIA would also be viewed positively. Downside rating risks would include a prolonged period of lower oil prices, a significant relaxation of the fiscal stance, or a political shock. (Fitch11.05)

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11.6 ALGERIA: Politics - As you were

The Economist Intelligence Unit reported that after more than two weeks of deliberations following his landslide re-election for a third presidential term, Abdelaziz Bouteflika, has appointed a new government that is identical to the outgoing one, apart from the withdrawal of the leader of a minority party, at his own request. The rollover has belied Mr. Bouteflika's election pledges to rejuvenate and "feminize" the cabinet, and is a telling reflection of the inertia of the Algerian state as the president embarks on his second decade in power.

The new cabinet will be headed by Ahmed Ouyahia, but in a different guise, following the redefinition of the role of prime minister as part of the constitutional amendments that were passed in November in order to allow Mr. Bouteflika to stand for a third term. According to the previous constitution, passed in 1996, Mr. Ouyahia had been designated head of government, with ministers reporting to him. The amendment has changed the name of the post to prime minister and has placed the president in sole charge of the executive branch of government, which means that Mr. Bouteflika will have control over the cabinet.

Paris first?

In the official announcement of the new government, it was stated that Mr. Bouteflika had taken account of the "international calendar as well as internal exigencies" in reaching his decision to eschew any changes other than leaving out Bougerra Soltani, the leader of the Mouvement pour la societe et la paix. (Mr. Soltani, who had been a minister of state without portfolio, has expressed his wish to focus on an internal crisis in his party, which has a moderate Islamist agenda.) This has been taken as a sign that Mr. Bouteflika may be considering changes to the government, but not just yet. His reference to the international calendar appears to refer to his scheduled visit to France in June, for which he received an official invitation after his re-election. The "internal exigencies" are thought to include the mid-year budget adjustments that the Algerian government makes - in light of the drop in oil and gas export prices, there may be a need for some retrenchment. Mr. Bouteflika may have concluded that he needs to keep the same team in place to prepare for these tasks, opening the way for a reshuffle later in the year. However, many of the ministers in the cabinet have been in post since the start of Mr. Bouteflika's first term, some even longer, and there is a suspicion that they have created their own mini-empires that even the president is reluctant to challenge.

Mr. Bouteflika himself has sent out contradictory messages. In July last year he delivered a long lament in a speech to provincial governors, saying that he had to concede that he had failed in his economic policies, for which he apportioned the blame both to incompetent ministers and to rapacious foreign investors. Since that speech, he has kept on his ministers but has pushed through a number of measures constraining the activities of foreign investors—imposing a tax on repatriated dividends, clawing back investment incentives, restricting foreign investors to minority stakes and preventing such investors from owning land. During his election campaign, which was geared to securing as high a turnout as possible in the face of threats of mass abstentions, Mr. Bouteflika promised to provide new opportunities for young people and for women, and to improve the delivery of his ambitious development goals. However, following his election (by 90% of the vote, with a turnout of 74%, according to the official count) he has reverted to advocating the benefits of continuity. (EIU28.04)

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11.7 TURKEY: Fitch Rates Turkey's $1.5 Billion 2019 Eurobond 'BB-'

On 1 May, Fitch Ratings (http://www.fitchratings.com) assigned the Republic of Turkey's forthcoming $1.5bn eurobond, due on 7 November 2019, a 'BB-' (BB minus) rating. The eurobond has a coupon rate of 7.5%, with a yield to investors of 7.6% and a spread over US Treasury Bonds of 448 basis points. The rating is in line with Turkey's Long-term foreign currency Issuer Default Rating, which has a Stable Outlook.

"Turkey's sovereign Eurobond, following the $1bn issue in January, highlights its continued international capital market access in challenging global conditions and suggests that the Treasury's 2009 Financing Program Eurobond issuance target of $3.5bn remains on track," says Edward Parker, Head of Emerging Europe in Fitch's Sovereigns team.

Nevertheless, Turkey faces a challenging outlook, with the global financial crisis and recession taking its toll on Turkey's economy and public finances. Fitch has revised its forecast for the contraction in real GDP this year to 4.5% from 3% previously, largely reflecting the depth of the recession in Q4/08 and Q1/09, while leaving its forecast for GDP growth of 2.5% for 2010 unchanged. Notwithstanding poor recent activity indicators, Turkey's relatively closed and moderately-leveraged economy, as well as terms of trade gains from lower energy prices, should add up to better near-term growth prospects than in many countries in emerging Europe.

More favorably, recent outturns show a sharp reduction in the current account deficit, which Fitch projects to narrow to just $8bn (1.5% of GDP) in 2009, from $41.6bn (5.8%) in 2008. Nonetheless, 2009 medium- and long-term amortization of $53bn (including non-resident holdings of domestic debt), plus short-term debt of $48bn represent a sizeable financing requirement. In view of the challenging economic and financial environment, Fitch believes the agreement of a new IMF loan program would reduce external financing risks.

Turkey's sovereign ratings are underpinned by its high GDP per capita, which at $10,100 (in 2008 at market exchange rates) is the highest in the 'BB' rating category. Prior to the current economic downturn, real GDP growth averaged 6.9% in the five years to 2007. Turkey's ratings are also supported by its strong banking sector, which is moderate in size, well capitalized, has a close to balanced net external debtor position, has no significant open FX position or FX lending to households and a low loan-to-deposit ratio of only 75%. Other strengths include Turkey's favorable business climate and governance, its customs union with the EU, its track record in attracting FDI, low commodity price dependence and good modern debt service record. (Fitch01.05)

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11.8 TURKEY: Pharmaceuticals and Healthcare Report Q2 2009

Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Turkey Pharmaceuticals and Healthcare Report Q2 2009" report to their offering.

Outside the BRIC (Brazil, Russia, India, China) states, Turkey is considered one of the key growth pharmaceutical markets globally. Growth has been rapid in recent years, with per capita spending reaching $159 in 2008, a similar level to other emerging countries in Eastern Europe. The country's large, ageing and increasingly urbanized population, means both demand and access to medicines should increase in the future. Over the next five years, sales of pharmaceuticals, which include prescription drugs and over-the-counter (OTC) medicines, will increase from $11.3bn to $19.5bn, representing a compound annual growth rate (CAGR) of 11.6%.

Despite positive market and environmental dynamics, Turkey ranks only fifth in the Pharmaceutical Business Environment Rankings for Q2/09. The core reasoning behind this is the still considerable risks present in operating in the country. A negative regulatory climate is a key drawback for multinationals. Delays in bringing products to market, unfavorable pricing regimes and poorly enforced intellectual property regulations are some of the problems associated with operating in Turkey at present. Furthermore, policy continuity, bureaucracy and the legal framework remain key concerns.

Legislation for the creation of a universal healthcare system was enforced in late 2008. The universal health insurance scheme includes: compulsory participation with income-based contributions; subsidies or free coverage for the disadvantaged or those under 18 years of age; the use of public/private partnerships (PPPs) for providing care; and differentiated co-payment rates between primary, secondary and tertiary care. The implementation of this throughout 2009 will give a key indicator as to the potential for increased pharmaceutical and health expenditure.

Perceived opportunities to capitalize on growing healthcare expenditure have led to multinational investment in private healthcare facilities in recent years. However, credit-driven investments - in an increasingly tight lending environment - along with caps on top-up charges for regular services, appear to have resulted in the accumulation of large levels of debt. While the longer term outlook for private hospitals is positive, up to $3bn is said to be owed by facilities, which could lead to significant difficulties for some operations in 2009.

The Burden of Disease Database (BoDD) reveals that development of the healthcare service is having a positive effect on the country's disease profile. Disability-adjusted life years (DALYs) lost to all diseases and injuries are steadily declining in the country. In 2008 Turkey was placed 66th globally in terms of per capita DALYs. The obvious trend seen by improved access to care is the decreasing burden of communicable diseases, which we forecast to fall by 46% over 2008-2030. Meanwhile as the country becomes increasingly Westernized, non-communicable diseases will continue to increase. This will be reflected in pharmaceutical sales, with cardiovascular treatments rising and anti-infectives falling through to 2013. (R&M11.05)

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11.9 TURKEY: Sales of Beverages Untouched by Crisis

Concerning the Turkish market, sales of alcoholic beverages rose 19.96% last year compared to a year earlier. The volume of alcoholic beverage sales last year surpassed 1.1 billion liters in the country, which has a population of 71.4m and was visited by 26.5m tourists last year. The volume of alcoholic beverages sold in 2006 was 880.97 million liters, according to the Tobacco Products and Alcoholic Beverages Regulatory Board, or TAPDK, data. The figure includes both import and local brands and rose to 921.24 million in 2007. Then in 2008, alcohol consumption in the country increased another 180.34 million liters to reach nearly 1.1 billion liters. Some 5.96 million liters of the booze sold in the country in 2008 was import, while 1.96 billion was domestic. Turkey exported 78.91 million liters of alcoholic beverages last year.

There was a significant increase in raki sales last year, according to TAPDK data. The sales of raki, the "national drink," displayed a fall of 3.8 million liters in 2007 compared to 2006. But that changed last year with some 44.6 million liters of raki consumed. That was 1.89 million liters more than a year earlier. Nearly 122.2 liters of raki per day was sold in the country last year.

Wine consumption in the country increased 66% in 2008 compared to a year earlier. Some 37.91 million liters of wine was sold last year. That was an increase of 15.66 million from 2007's 22.84 million liters. Champagne sales increased to 460,547 liters last year from just under 400,000 liters a year earlier. Whisky sales also rose to 1.67 million liters in 2008. Total whisky sales were 1.43 million liters a year earlier. The Turkish government recently announced its decision to cut taxes on imported whisky and other alcoholic drinks, harmonizing the regulations with those of the European Union, which it is in talks to join. The changes will cut the price of whisky and bring an increase of less than 1 Turkish Lira ($0.60) to bottles of raki. The new rates will reduce the tax on a liter of whisky by about 10 liras.

During 2008, vodka sales also rose to 8.8 million liters from 5.98 million liters a year earlier. Following a similar trend gin sales also increased to 1.23 million liters from 1.145 million liters a year earlier. The total increase in vodka, whisky and gin sales between the 2007 and 2008 were 2.83 million liters, 237,000 liters, 89,000 liters respectively. The increasing trend in beer sales also continued last year. In 2008 beer consumption rose 80.26 million liters compared to a year earlier and reached a whopping 925.02 million liters. Nearly 2.53 million liters of beer was consumed per day last year. The beer consumption per person was 120 liters in Germany and Denmark last year. In Turkey, that figure rose to 13 liters per person from 10.5 liters per person. (Hurriyet 21.04)

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11.10 GREECE: Food and Drink Report Q2 2009

Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Greece Food and Drink Report Q2 2009" report to their offering. Greece Food and Drink Report provides independent forecasts and competitive intelligence on Greece's food and drink industry.

The Greek economy has so far proven to be fairly resilient during the global economic downturn crisis. However, we expect it to be caught up in the regional downturn in 2009 and are forecasting that economic growth will come in at 1.5% in 2009. The country will be hard hit by the worldwide collapse in shipping activity we also expect the crucial tourism sector will suffer as consumers in other European countries cut back on their number of trips abroad. Domestic consumption is also expected to stagnate, and this, along with the fall in the number of tourists is expected to have a negative impact on the food and drink sector. A large tourist sector fuels consumption in a number of food and drink sectors, including soft and alcoholic drinks. A decline in tourism is likely to have a particular impact on the premium alcoholic drinks sector, where the majority of consumption can be attributed to affluent tourists. A fall in tourism can also be expected to have a severe impact on the food service sector as visits to restaurants and hotels decline. Firm's with a large exposure to these sectors can be expected to perform significantly worse than the market average during the economic downturn.

In terms of domestic consumption the downturn can be expected to put the breaks on the trend towards premium and convenience products and we are therefore expecting food consumption per capita to stagnate in 2009. Greek retailers have response by increasing their focus on private-label brands and on price promotion. In January 2009, AB Vassilopoulos, owned by Delhaize Group, announced it would invest $14.4m to maintain its current prices throughout 2009. The firm has said it believes that the long term benefits of this strategy are likely to outweigh the short-term costs.

The global economic slowdown has also had a severe impact on commodity prices which has left many Greek farmers much worse off than they were 12 months ago. In January 2009, farmers rejected the government's €500m ($649.6m) assistance package and went on strike to force the government to increase the package. This direct action continued into February with farmers setting up roadblocks across many of the country's northern borders. By the middle of February these protests were starting to subside. However, they demonstrate how the economic situation can rapidly lead to political unrest as incomes deteriorate and jobs become more scarce. Greece's farming sector accounts for around 5% of the country's GDP and around 10% of the population is employed in the agricultural sector. (R&M11.05)

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11.11 BULGARIA: Fitch Affirms Bulgaria at 'BBB-'; Revises Outlook to Negative

On 30 April, Fitch Ratings affirmed Bulgaria's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' (BBB minus) and Long-term local currency IDR at 'BBB' and revised their respective rating Outlooks to Negative from Stable. The agency has simultaneously affirmed Bulgaria's Short-term IDR at 'F3' and Country Ceiling at 'BBB+'.

"The deterioration in the global economic outlook increases the cost of implementing the economic adjustment needed to reduce the high current account deficit, adding to the downside risk for Bulgaria's ratings. External support in the form of an IMF-led package could ease the adjustment," said Andrew Colquhoun, Director in Fitch's Sovereigns Group.

Bulgaria's current account deficit (CAD) reached 25% of GDP in 2008, the highest ratio of 80 Fitch-rated emerging markets, leaving Bulgaria heavily exposed to the ongoing global financial crisis and recession, which has worsened significantly since Fitch downgraded Bulgaria in November 2008. Fitch believes that Bulgaria faces the prospect of a sharp adjustment as capital inflows weaken. Net inflows in H208 were only 70% of the comparable figure in H207. The weakening of the global economy is dampening exports, while the currency board arrangement (CBA) means Bulgaria cannot match many neighboring countries' devaluations, putting still more of the burden of adjustment on lower imports via weaker domestic demand. Fitch projects Bulgaria's economy will contract by 5.5% in 2009, helping to reduce the CAD to 12%. The evolution of the macroeconomic adjustment will be a key rating driver.

Fitch believes that maintaining the CBA is central to Bulgaria's economic and financial stability. The costs of abandoning the CBA would be high given euroization of the financial system (56% of loans were in FX by end-2008, mainly EUR). The CBA remains well-supported, with reserves equal to more than three times narrow money at end-February 2009, despite an 18% decline in reserves from the end-September 2008 peak (driven partly by a reduction of FX reserve requirements on the country's banks). But a still-high CAD and a need to service external debts that reached 102% of GDP at end-2008 could materially erode official reserves. An IMF-led support package could shore up the external finances and give breathing-room for the macroeconomic adjustment. Signs that the Bulgarian authorities were letting events drift towards a crisis would add to pressure for a downgrade. The heavily foreign-owned Bulgarian banking system will require ongoing commitment from foreign parents to maintain funding and capitalization. Evidence of a weakening commitment to the Bulgarian market by foreign parent banks would be strongly negative for the ratings.

Concerns over Bulgaria's long-term external solvency could start to exert more downwards pressure on the ratings unless current trends are corrected. Gross external debt of 102% of GDP by end-2008 was well above the 'BBB' median of 43%. Fitch will look for signs that the economy can adjust to a growth path less reliant on rapid growth in external liabilities.

Bulgaria's ratings remain supported by strong public finances. Bulgaria ran its fifth successive annual general government budget surplus (of 3% of GDP) in 2008. Savings in the Fiscal Reserve Account rose to 12.6% of GDP by end-2008, just exceeding general government debt of 12.5% of GDP. The sovereign's outstanding eurobonds mature in 2013 and 2015, further limiting near-term risk. Fitch expects this strength to be sustained, although the agency expects the budget to sink towards balance in 2009 as the downturn weighs on revenues. Furthermore, Bulgaria's credit fundamentals as captured in World Bank indicators of governance and business environment are strong for the 'BBB' range. (Fitch30.04)

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