TOP STORIES

• G-30 to Meet in Israel
• Kurdistan Regional Government Signs Oil and Gas Contract with US Based Hunt Oil Company
• Iraqi Oil Flows to Turkish Export Terminal
• Yom Kippur – Holiest Day in the Jewish Calendar – Falls on 21/22 September
• KUWAIT: Weekend Changeover

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Ministers Approve Plan to Reduce Pollution By Vehicles
1.2 G-30 to Meet in Israel
1.3 Sixth Prime Minister's Conference for International Cooperation Announced

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Elbit Receives Final U.S. FMF Approval of $300 Million for Israeli Digital Army Program
2.2 Ness Technologies Completes Acquisition of Selesta in Italy
2.3 Magal Reports the Acquisition of a European Security Systems Integration Company
2.4 Ophthalmic Imaging Systems Announces Non-Binding Agreement to Acquire MediVision
2.5 Zion Oil & Gas Signs Seismic Acquisition Agreement for Asher-Menashe License Area
2.6 Cyclone to Supply Composite Structural Components for Commercial Aircraft to Spirit AeroSystems

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Jordan Steel Expands Operations By Rolling New Casting Plant
3.2 Kurdistan Regional Government Signs Oil and Gas Contract with US Based Hunt Oil Company
3.3 Istithmar Completes Acquisition of Barneys
3.4 International Power Signs MoU with Egypt & Forms Egyptian JV with Desert Blue Company
3.5 New Ruby Tuesday Franchisee to Open Restaurants in Cairo
3.6 Ubicom Expands Global Operations; Opens Research and Development Center in Turkey

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Water Starts Flowing From Palmachim Desalination Plant
4.2 Mekorot in Talks With GE for Desalination Plant
4.3 Jerusalem To Build Two Recycling Plants

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Iraqi Oil Flows to Turkish Export Terminal
5.2 Persian Gulf Is Far From Currency Union
5.3 Qatar To Keep Dollar Peg & Sees Inflation Fall
5.4 Oman Inflation Rises To 5.98%

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:

6.1 Turkish - Greek Pipeline Close To Completion

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Population On Eve Of New Year: 7.2 Million
7.2 Yom Kippur – Holiest Day in the Jewish Calendar – Falls on 21/22 September
7.3 Sukkot Observed

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*REGIONAL:

7.4 Saudi Arabian National Day on 23 September
7.5 Saudi Women To Lobby King For Driving Right
7.6 Musharraf To Take Off Uniform If Re-Elected
7.7 Morocco Conservatives Win Most Seats In Poll
7.8 Greek Prime Minister Declares Victory In General Elections

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Teva Announces Approval and Shipment of Generic Coreg Tablets
8.2 UltraShape Secures $15.1 Million in New Financing Led by Meritech Capital
8.3 Teva Announces Launch of Generic Famvir Tablets

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Dune Networks & Vitesse to Interoperate for Dense Ethernet Aggregation Applications
9.2 Metalink's WLANPlus 802.11n Chipset Selected by Pirelli Broadband Solutions
9.3 VUANCE Announces $13.8 Million Agreement for Security at European International Airport
9.4 ECtel Wins Order for the Expansion of its Revenue Assurance Solution From AT&T Mobility
9.5 Cyclone to Supply Composite Structural Components for Commercial Aircraft to Spirit AeroSystems
9.6 Orca Interactive & muvee Introduce First-Ever Automatic Movie Creation over IPTV
9.7 RADVISION's ProLab Testing Suite with End-to-End IMS Terminal & Server Support
9.8 Gilat's SkyEdge Selected for Russian Education Ministry School Network
9.9 XLoom Communications Unveils iFlame - First Multi-Channel Optical Chip
9.10 EVS Receives Orders Totaling $4.5 Million for its Aerospace & Industrial Inspection Systems
9.11 RADA Receives $860,000 Purchase Order for Production and Delivery of Digital Video Recorder Units
9.12 Magal Receives an Order of Over $8 Million to Protect Public Utility Sites in Western Asia
9.13 Voltaire Delivers InfiniBand Solutions for New HP BladeSystem c3000 Enclosure
9.14 Mellanox ConnectX IB InfiniBand Mezzanine Adapters Accelerate HP BladeSystem c3000 Enclosure
9.15 ECtel Announces Multilingual Version of RAP - First Installation Already Deployed in China
9.16 ECI Telecom's BroadGate-AccessWave Complements Optical Solutions Portfolio at the Access Level
9.17 Horizon Announces First Single Chip Dual Channel 1080/60p HD Decoder & Integrated Transcoder

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's August inflation Rises 0.7%
10.2 Israel's Trade Deficit Swelled In August
10.3 Israel's Exports Seen Rising To $70b
10.4 Fish Sales Expected Over Holidays to Reach $24.4 Million
10.5 Rishon Lezion Families Spend Most in Israel

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In Depth

11.1 KUWAIT: Weekend Changeover
11.2 BAHRAIN: 'Lost Paradise' to Bolster Tourism
11.3 OMAN: Wasted Energy
11.4 OMAN: Tourism Drain
11.5 SAUDI ARABIA: Industrial Growth
11.6 EGYPT: Expanding Oil
11.7 TURKEY: Growth Slows In Second Quarter To Lowest Since 2002
11.8 TURKEY: Ankara Moves To Reduce Dependence On Energy Imports

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Ministers Approve Plan To Reduce Pollution By Vehicles

On 9 September, the Ministerial Committee on the Environment & Hazardous Materials unanimously approved a plan to reduce vehicle pollution. The plan is considered a national priority project, and was presented by Minister of National Infrastructures Ben-Eliezer and Minister for Environmental Protection Ezra. According to the two ministers, the new plan will put Israel at the forefront of nations acting to improve environmental quality. The most dangerous form of pollution in Israel's big cities comes from vehicles, which severely threatens public health. In addition to the local health problems, the pollutants include greenhouse gases that exacerbate global warming. The plan approved is intended to significantly decrease dangerous levels of air pollution as well as decreasing fuel consumption and reducing traffic. The plan includes new, severe standards for automobile exhaust gases. It includes rules limiting pollutants from diesel vehicles as well as carbon dioxide emission levels for gasoline-powered cars. The “green police” will be allowed to remove from the roads vehicles that exceed the limits. In addition, all government and public transport will gradually switch to fuel-saving and environmentally friendly vehicles. Starting in January 2008 the Transportation Ministry and the Tel Aviv municipality will limit entry to the city's center of diesel vehicles more than five-years old, unless they have emission controls installed. Also included in the plan is the disposal of old cars in return for payments to their owners. Roadside emission tests will also be reinstated. Employees will be encouraged to travel to work on public transport. Vehicle taxes will take into account an environmental rating. (Various10.09)

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1.2 G-30 to Meet in Israel

Governor of the Bank of Israel Prof. Stanley Fischer will host the G-30 summit in May 2008, as part of the Israel's 60th independence celebrations. The G-30, established in 1978, is a private, nonprofit, international body composed of very senior representatives of the private and public sectors and academia. It aims to deepen understanding of international economic and financial issues, to explore the international repercussions of decisions taken in the public and private sectors, and to examine the choices available to market practitioners and policymakers. Fischer is a member of the G-30. The current G-30 chairman is former Governor of the Bank of Israel Jacob Frenkel. He hosted the G-30 in Israel in 1991. The G-30 meeting will be held on May-24-26. (Globes 09.09)

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1.3 Sixth Prime Minister's Conference for International Cooperation Announced

The Prime Minister's Conference for Export and International Cooperation announces the three-day program of the Conference beginning on Tuesday, October 30, with individual pre-arranged meetings (pending receipt of participant requirements through the Conference Website: http://www.pmc.co.il). The Conference then offers, on October 31, alternate tours to the Negev and Galilee Regions. Participants will find the tours to be most interesting and informative. The program will enable the Israeli and international community to gather insights from the best and brightest in their field. This important International Event culminates with a day-long Conference, which opens with the address by the President of the State of Israel and closes with the presentation by Israel's Prime Minister and includes an impressive list of business leaders as keynote speakers. Two days prior to the conference, attendees will have personal opportunities to explore viable examples of current economic-development strategies. These include pre-organized meetings for international participants with Israeli companies/business people, and introductory tours of innovative development projects in the Galilee and Negev Regions. A Festive Gala Dinner will be held on Wednesday Evening, October 31. This year's conference is organized by the Israel Export & International Cooperation Institute in cooperation with the Manufacturers' Association of Israel, the Federation of Bi-National Chambers of Commerce, the Office for the Development of the Negev & Galilee Regions, the Ministry of Industry Trade & Labor and the Ministry of Foreign Affairs. (PMC17.09)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Elbit Receives Final U.S. FMF Approval of $300 Million for Israeli Digital Army Program

Elbit Systems reported that on September 5, 2007 it received finalization of funding approval of U.S. Foreign Military Financing (FMF) in a total amount of approximately $300m for the FMF portion of the Israeli Digital Army Program (DAP). This is further to its announcement dated December 13, 2004, regarding the award to Elbit Systems of the prime contract frame agreement by the Israel Ministry of Defense (IMOD) for the DAP. The U.S. FMF portion of the DAP is an integral part of the overall program as awarded in 2004. The announcement in 2004 reported that the Program would include an additional material amount funded by U.S. FMF, and this FMF portion is reflected in the amount for which funding approval has now been obtained. Approximately $130m of this amount has already been recorded in Elbit Systems' backlog. The FMF portion of the DAP will be performed by EFW Inc., an Elbit Systems of America company, as well as other U.S. subcontractors. Elbit Systems orders for the currently funded portions of DAP will be performed over several years.

Haifa, Israel's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Elbit Systems Group, which includes the company and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Group also focuses on the upgrading of existing military platforms and developing new technologies for defense, homeland security and commercial aviation applications. (Elbit Systems 06.09)

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2.2 Ness Technologies Completes Acquisition of Selesta in Italy

Ness Technologies announced the completion of its acquisition of Selesta, a privately-held IT software distribution and systems integration company based in Italy. Selesta distributes software products developed by global independent software vendors (ISVs) to customers in Italy in the private and public sectors. The purchase price was €9m, with an additional €9m to be paid over the following two years based on the achievement of certain performance goals. Following the deal's closing, Selesta became part of NessPRO, Ness Technologies' product distribution business. NessPRO is the Ness Technologies' line of business which sells enterprise software licenses of third-party software vendors to corporate clients in geographies which are underserved or completely uncovered by the software vendors' own sales forces. NessPRO also provides a range of implementation, customization and support services around those licenses. Tel Aviv, Israel's Ness Technologies (http://www.ness.com) is a global provider of end-to-end IT services and solutions designed to help clients improve competitiveness and efficiency. Ness specializes in outsourcing and offshore, systems integration and application development, software and consulting, and quality assurance and training. Ness maintains operations in 16 countries and partners with numerous software and hardware vendors worldwide. (Ness05.09)

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2.3 Magal Reports the Acquisition of a European Security Systems Integration Company

Magal Security Systems announced the acquisition of a European company involved in the installation and integration of security systems. The consideration consists of a cash payment of €6.8m and additional consideration that will be based on performance and will be payable over the next five years. The acquired company is active in geographic areas where Magal has limited activity. This acquisition is in line with the Company's strategic plan and is expected to contribute to the Company's expansion in the integration field, particularly in countries with strong growth potential for Magal's leading security solutions. Yehud, Israel's Magal Security Systems (http://www.magal-ssl.com) is engaged in the development, manufacturing and marketing of computerized security systems, which automatically detect, locate and identify the nature of unauthorized intrusions. Magal also supplies video monitoring services through Smart Interactive Systems, Inc., a subsidiary in the U.S. The Company's products are currently used in more than 70 countries worldwide to protect national borders, airports, correctional facilities, nuclear power stations and other sensitive facilities from terrorism, theft and other threats. (Magal05.09)

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2.4 Ophthalmic Imaging Systems Announces Non-Binding Agreement to Acquire MediVision

Sacramento, California's Ophthalmic Imaging Systems (OIS), a leading digital imaging company, announced that it has entered a non-binding agreement to acquire Israeli MediVision Medical Imaging, a majority shareholder in OIS. Under the terms of the proposed agreement, MediVision's outstanding shares will be converted into shares of OIS common stock at a yet to be determined ratio. Also, outstanding options and warrants to purchase MediVision shares will be converted into options or warrants to purchase shares of OIS Common Stock. Once the acquisition is completed, MediVision will operate as a wholly owned subsidiary of OIS. Yokneam's MediVision Medical Imaging (http://www.medivision-ois.com) is a leader in manufacturing innovative, clinically advanced digital imaging equipment for the eye care community. Their products also deliver worldwide connectivity, networking, archiving, and professional services through a strategic alliance with Agfa, a global leader in Image Management and Picture Archiving and Communications Systems (PACS). (OIS12.09)

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2.5 Zion Oil & Gas Signs Seismic Acquisition Agreement for Asher-Menashe License Area

Zion Oil & Gas of Dallas, Texas and Caesarea, Israel, announced that the company signed an agreement with the Geophysical Institute of Israel to conduct one of the largest and most comprehensive geophysical surveys on-shore in Israel of the past two decades. The survey, including seismics, gravimetrics and magnetics, is to be conducted in Zion's Asher-Menashe License area. The purpose of the designed 60 kilometer survey is to acquire new geological and geophysical data to assist Zion in selecting the optimal drilling site for a test well on its Ramot Menashe (Menashe Heights) prospect and to upgrade the company's Nahal Me'arot lead (nearby the Asher-Atlit No. 1 well) into a drillable prospect. The estimated cost of the survey, including processing and interpretation, if completed to its full 60 kilometer designed length, is approximately $650,000. Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel, onshore between Tel-Aviv and Haifa. It currently holds a 78,000 acre exploration license, known as the Asher-Menashe License, located between Caesarea and Haifa. Its application for the issuance of an 85,000 acre exploration license, tentatively named the Joseph License, located between Caesarea and Netanya, on which the company drilled a 15,842 foot well in 2005, is currently pending before the Israel Petroleum Commission. A decision on the application is expected during September or October 2007. (Zion17.09)

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2.6 Cyclone to Supply Composite Structural Components for Commercial Aircraft to Spirit AeroSystems

Elbit Systems subsidiary Cyclone Aviation Products was awarded a contract by Spirit AeroSystems for composite structural components for commercial aircraft. The contract is valued at approximately $30m dollars and is scheduled for delivery between 2007 and 2011. The contract involves the supply of blocker doors for the aircrafts' engines - a composite structural component - to Spirit AeroSystems. Cyclone Aviation Products (http://www.cyclone-aviation.com), located in the area of Karmiel, Israel, is a wholly-owned subsidiary of Elbit Systems. With approximately 400 employees, Cyclone's core business is manufacturing and maintenance of aircraft structures as well as engineering, manufacture, repair and upgrade of aircraft, UAVs and helicopters. Cyclone manufactures both metal and composite structural assemblies for UAVs, military aircraft such as the F-15, F-16 and F-18, and civil/commercial aircraft. Cyclone also operates the Israel Air Force's (IAF) aviation schools for Grob G-120A (Snunit) aircraft and B-206 (Saifan) helicopters. Cyclone's customer base includes the IAF, the U.S. Air Force, the U.S. Army and the U.S. Navy as well as several major aviation companies, such as Boeing, Lockheed Martin and Sikorsky. (Cyclone 05.09)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Jordan Steel Expands Operations By Rolling New Casting Plant

Jordan Steel expanded its industrial operations on 10 September by officially rolling a new casting plant, which will known as the Consolidated Jordanian Iron and Steel Company. The project, a 50-50 joint venture with a group of Palestinian investors, began in late 2004 and the firm started experimental production only last June. Jordan Steel's General Manager Badran said that the casting plant was established to lower manufacturing costs and ensure a stable quality and continued supply of raw material to the local market. He indicated that the new company sought the assistance of foreign experts to train local workers and pointed out that the factory was furnished with advanced machinery and equipment bought from Germany, Finland, Italy and other European countries. The $98.7m plant has a 250,000 ton capacity per year that can be raised to an output of 360,000 tons as all the facilities and infrastructure at the site are designed for such an increase. The casting plant will depend on the recycling of metal scrap and residuals left behind at yards around factories, construction sites in addition to car bodies. After the casting process, steel will be transported to Jordan Steel and other rolling mills where it will be manufactured into various types such as reinforcing bars, merchant steel and wire mesh. The Jordan Steel general manager stressed that metal scrap is an important national wealth that supplies raw materials to this heavy and strategic industry. Noting that Jordan's imports of steel and iron reached $380m in 2006, Badran predicted higher local demand on this commodity especially in light of the huge investments in Jordanian real estate. The plant currently employs 250 workers in different sections. (JT11.09)

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3.2 Kurdistan Regional Government Signs Oil and Gas Contract with US Based Hunt Oil Company

The Kurdistan Regional Government (KRG) together with Hunt Oil Company of the Kurdistan Region, a subsidiary of Hunt Oil Company of Dallas, Texas, and Impulse Energy Corporation (IEC) announced that they have signed a Production Sharing Contract (PSC) covering petroleum exploration activities in the Dihok area of the Kurdistan Region. Under the terms of the agreement, Hunt Oil Company of the Kurdistan Region will serve as operator. This is the first PSC to be signed by the KRG since the Oil and Gas Law of the Kurdistan Region was issued by the Kurdistan Parliament in early August, 2007. Hunt Oil Company of the Kurdistan Region will begin geological survey and seismic work by the end of 2007 and plans to be in a position to drill an exploration well in 2008. Hunt Oil Company of the Kurdistan Region is a wholly-owned affiliate of the Hunt Oil Company, Dallas, Texas. Hunt Oil Company is one of the largest privately held independent oil companies and conducts a variety of petroleum related operations in several regions of the world. (Hunt Oil Company 08.09)

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3.3 Istithmar Completes Acquisition of Barneys

Istithmar announced on 7 September the completion of its acquisition of luxury retailer Barneys New York at a purchase price of $942.3m. The company announced the closing following the signing of definitive documents on 8 August 2007 and obtaining clearance from U.S. antitrust authorities to buy the luxury retail chain. Istithmar is a private equity and alternative investment house headquartered in Dubai, UAE, with offices in Shanghai and New York. Established in 2003, it is 100% owned by Dubai World which in turn is wholly owned by the Government of Dubai. In the three years since its inception, Istithmar has invested in over 30 companies in three sectors - consumer, industrial and financial services. (Istithmar 07.09)

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3.4 International Power Signs MoU with Egypt & Forms Egyptian JV with Desert Blue Company

Florida's International Power Group, a leading provider of solid waste management and renewable energy solutions, has entered into an MoU with Egypt's Ministry of State for Environmental Affairs. The agreement will establish a system for the complete and safe management of hazardous waste in Egypt. The first phase of the protocol will involve the construction and operation of a lined hazardous waste landfill, a used oil recycling plant, a tire recycling plant and a medical waste remediation facility in the industrial city of the 10th of Ramadan. Subsequent planned phases will involve similar installations in other areas of Egypt. The agreement will be carried out by a joint venture between International Power and Desert Blue Company, a leading Saudi Arabian provider of environmental cleanup and waste recycling and recovery solutions, and the joint venture company will be named International Power Group Egypt. (IPG06.09)

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3.5 New Ruby Tuesday Franchisee to Open Restaurants in Cairo

Maryville, Tennessee's Ruby Tuesday, one of the US' leading high-quality casual dining restaurant companies, announced that its new international franchisee, United Food and Beverage Company, will develop and operate six Ruby Tuesday restaurants in Cairo, Egypt, over the next four years in high-profile locations near the Nile River. United Food and Beverage has a multi-year track record of developing American brands in Egypt and extensive experience in the hospitality industry. This latest franchise growth is an indication of the popularity of the Ruby Tuesday brand in the Middle East. There are now Ruby Tuesday restaurants in Saudi Arabia, Kuwait, Dubai and Egypt. The company has been expanding its franchise presence around the world during the past several years and continues to aggressively seek franchising opportunities both in the United States and abroad. Ruby Tuesday (Ruby Tuesday07.09)

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3.6 Ubicom Expands Global Operations; Opens Research and Development Center in Turkey

SUNNYVALE, California's Ubicom, a leading provider of communications processor and software solutions, announced the opening of its new R&D center in Gebze, Kocaeli, Turkey. Occupying an office in The Scientific and Technological Research Council of Turkey's (TUBITAK's) Marmara Research Center, engineers at Ubicom's newest facility will focus on advanced networking software development and quality assurance for the company's products. Ubicom's Turkish operations exist in one of the country's 21 free trade zones, designed to foster relationships with international organizations and attract foreign capital and technology to the country. Ubicom's dedicated software center in Turkey will help the company increase the efficiency and cost-effectiveness of its software development, allowing Ubicom faster delivery of products that address the growing concerns and challenges for managing home networks. With more applications relying on limited bandwidth, including voice over IP (VoIP), video streaming and online gaming, the “Intelligent Stream Handling” of Ubicom's StreamEngine technology, which automatically prioritizes traffic on the home network to ensure a high-quality user experience, will be essential to routers. (Ubicom17.09)

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Water Starts Flowing From Palmachim Desalination Plant

The Palmachim desalination plant was inaugurated on 6 September. At the inauguration, the Via Maris Desalination company offered to increase the amount of water purchased from the Palmachim desalination plant from 30 million cubic meters a year to 100 million cubic meters in the future. The plant is currently ready to expand production by an additional 10 million cubic meters. Should the company obtain a permit to expand production, it would also expand its adjacent power station from 30 megawatts (MW) to 50 MW, and that it would sell surplus power to the Israel Electric Corporation (IEC). Via Maris Desalination is a joint venture of Azrieli Group subsidiary Granite Hacarmel Investments, Tahal Group, Middle East Tube (METCO), Ocif Investments and Development and Oceana Advanced Industries. The Palmachim desalination plant cost $100m to build. The plant uses reverse osmosis technology to desalinate seawater for 300,000 people in the coastal plain. The water costs $0.69 per cubic meter, compared with $0.64 per cubic meter for the 100 million cubic meter Ashkelon desalination plant.

Israel consumes two billion cubic meters of fresh water a year and the current deficit is 400 million cubic meters annually. The government has decided to increase the output of seawater desalination from the current 230 million cubic meters per year to 505 million by 2013, while simultaneously increasing water conservation efforts. Israel currently produces more than 130 million cubic meters per year at Ashkelon, Palmachim, and at Sabha C in Eilat. The 100 million cubic meter Hadera desalination plant will come on line soon and two more 100 million cubic meter plants are in the planning stages. (Globes 06.09)

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4.2 Mekorot in Talks With GE for Desalination Plant

Mekorot National Water Company is negotiating with General Electric Company and the Baran Group to build a 100 million cubic meter seawater desalination plant at Ashdod. Baran and GE won the tender to build a 45 million cubic meter desalination plant for Mekorot in 2002, but it was never built because the Ministry of Finance feared cross-subsidizing by Mekorot. Several weeks ago, Mekorot completed the establishment of a new subsidiary, Mekorot Enterprises and Development Ltd., which will enable the company to participate in tenders in Israel and other countries. Mekorot said that with the establishment of Mekorot Enterprises and following the government decision to increase the capacity of the Ashdod desalination plant from 45 million cubic meters of water a year to 100 million, the company could now initiate negotiations to build it. The negotiations with GE and Baran will deal with contractual issues, because the original tender was for a turn-key project, whereas Mekorot now wants a BOO (build, own, operate) project. In addition, a new site for the plant will have to be found in the Ashdod industrial area, instead of the originally planned site owned by Eilat - Ashkelon Pipeline Company. (Globes 10.09)

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4.3 Jerusalem To Build Two Recycling Plants

The ministerial committee for Jerusalem affairs and Jerusalem Mayor Lupolianski have decided to promote an extensive $4.6m program for the recycling of building waste. The program will include the construction of two recycling plants for building waste and the cleaning up of illegal dumps, which will be turned into forests. The program will take two years. One recycling plant will be in north Jerusalem and the other in south. At the same time, enforcement of laws against illegal dumping will expanded and punishments for illegal dumping will be increased. Hebrew and Arabic educational programs will be launched in the city's schools and community centers, and volunteers will be recruited. The Jerusalem municipality will launch a campaign to explain the anti-dumping program and its goals in order to involve the city's populations in it. A 24-hour rapid-response team will be established that will cooperate with the Israel Police and the Green Patrol. The team will conduct patrols and ambushes to discover the illegal dumping of building waste. (Globes 10.09)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Iraqi Oil Flows to Turkish Export Terminal

Iraq's oil minister said that crude oil began to flow from his country's northern oil-rich Kirkuk to a Turkish export terminal in late August - for the first time since Saddam Hussein was toppled in 2003. He said between 300,000 to 400,000 barrels a day of Kirkuk crude is being pumped to the Turkish export terminal of Ceyhan. The pipeline, Iraq's main export route from Kirkuk to the Turkish Mediterranean port of Ceyhan, has been mostly closed because of constant sabotage since the U.S.- led liberation. Recently, Iraq agreed with Syria to repair and subsequently reopen another key pipeline, a 550-mile-long link connecting Kirkuk and the Syrian port of Baniyas. The Baniyas line, built in the 1950s but bombed by U.S. forces during the invasion that ousted Saddam, when reopened will allow Iraq to use two terminals on the Mediterranean Sea. Currently, Iraq exports nearly all its oil through the Persian Gulf. Iraq's current production capacity from its northern oil fields stands at 700,000 bpd, of which about 300,000 bpd are destined for a refinery in the nearby northern industrial city of Beiji for domestic use. The remainder is for export. (Various05.09)

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5.2 Persian Gulf Is Far From Currency Union

On 7 September, the Gulf central bank governors meeting in Saudi Arabia hinted at Gulf states moving towards independent monetary policies to tackle inflation, which could mean a move away from pegged currencies ultimately jeopardizing the Gulf monetary union. The Saudi Central Bank Governor Al Sayyari said monetary union among Gulf Arab states will be difficult to achieve by a 2010 deadline and the central banks have agreed to deal with the inflation problem separately. Meanwhile, the finance ministers and central bank governors in the Gulf states will meet in October to discuss the monetary union. Economists and currency market analysts see the statement as the clearest yet from a Gulf central bank governor on the future of the GCC states' monetary policies in the context of the rising inflation. Due to currency peg, Gulf central banks follow the US policies. The UAE central bank governor Sultan Al-Suwaidi did not comment on the possibility of a revaluation of dirham, while Al Sayyari said that the Gulf central banks would continue to stick to the currency peg. Bankers and analysts are speculating that after admitting the non-feasibility of achieving the monetary union by 2010, the next step by Gulf states will be to revalue their currencies. The governors of Saudi Arabia, Kuwait, Qatar, Oman, Bahrain and the United Arab Emirates agreed that inflation was a concern, although the causes were government spending and investment flows more costly imports. Recent official data showed inflation hitting a seven-year high of 3.83% in Saudi Arabia in July, a two-and-a-half year high of 5.9% in Oman in June and 12.8% in Qatar at the end of the second quarter. According to the Ministry of Economy, the UAE inflation was at 9.3% last year. (Various08.09)

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5.3 Qatar To Keep Dollar Peg & Sees Inflation Fall

On 18 September, Qatar's central bank governor said it would keep its riyal pegged to the US dollar. As well, inflation would fall to 10% within a year on measures to control rising rents and prices. Inflation in Qatar, holder of the world's third-largest natural gas reserves, rose to a record 14.81% at the end of March. Inflation in June was 12.8%. Qatar has no plans to follow Kuwait and change its policy of pegging its riyal to the dollar, Sheikh Abdullah said. Kuwait, where inflation rose to 12-year highs above 5% in March, April and May, abandoned its peg to the dollar on May 20, saying the US currency's weakness was fuelling inflation by making some imports more expensive. Kuwait pays for more than a third of its imports in euros. Qatar gets around 50% of its imports from the Euro zone. Because of the peg to the dollar, Qatar's tracks US interest rates, limiting the central bank's ability to fight inflation. (Reuters11.09)

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5.4 Oman Inflation Rises To 5.98%

Annual inflation in Oman accelerated to 5.98% in the year to July, up from 5.57% in June, as food costs and rents jumped, official data showed. The consumer price index rose to 111.6 points compared with 105.3 points in the same month last year, according to data published by the Ministry of National Economy. The cost of food, beverages and tobacco, which account for about 30% of the index, rose 11.3% in July, on par with its growth in the prior month. Rents in Oman, which have a weight of about 15%, also rose 8.5%. Oman, which pegs its rial to the dollar, relies heavily on imported food and has been hit by rising prices as the US dollar decline this year against major currencies. Oman has repeatedly ruled out revaluing the rial. (Various18.09)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:

6.1 Turkish - Greek Pipeline Close To Completion

The energy interconnection between Turkey and Greece is now complete and will become another entry gate for natural gas into this country, Greek Development minister Sioufas said late on 4 September. Minister Sioufas said the first quantities will be transmitted through the new pipeline in 15 days. The essential tests have been completed and the pipeline is ready to begin operation. Sioufas also noted that the new natural gas pipeline and the interconnection of the electricity systems of Greece and Turkey are the two most important interstate projects between the two neighboring countries. The Turkey-Greece pipeline is a 296 km long natural gas pipeline, which will connect Turkish and Greek gas grids. The pipeline begins in Karacabey in Turkey and runs to Komotini in Greece. The length of Turkish section is 210 km, of which 17 km are under the Marmara Sea. The length of Greek section is 86 km. In 2012 the capacity will be expanded to 11 bcm, of which 8 bcm will be delivered to Italy when Greece-Italy pipeline is becoming operational. Also proposed West Balkan pipeline is planned to supply by the Turkey-Greece pipeline. The agreement between Turkish gas company BOTAS and Greek gas company DEPA was signed on 28 March 2002. The intergovernmental agreement to build a natural gas pipeline between countries was signed on 23 December 2003 in Ankara. It was expected to begin operating in May 2007, but it was announced that the launch of pipeline will delay until September 2007. (Various06.09)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Population On Eve Of New Year: 7.2 Million

The Central Bureau of Statistics announced on 9 September that the population of Israel on the eve of the Jewish New Year 5768 is 7.2 million people. This figure includes 5,450,000 Jews, 1.4 million Arabs and 315,000 "others", most of who are non-Jewish immigrants who arrived in Israel under the Law of Return. There were more women, educated people, poor and urban residents this year, while social and economic gaps widened. The population grew by 55,000 people in H1/07, after growing by 126,000 people in 2006. The proportion of Jews of the total population has narrowed further to 75.7%, while the proportion of Arabs now stands at 20%. The proportion of non-Jewish immigrant residents in Israel is now 4.3%. The Jewish population grew by 39,000 people in H1/07, after growing by 90,000 in 2006. The Arab population grew by 16,000 people after growing by 36,000 in 2006. (CBS09.09)

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7.2 Yom Kippur – Holiest Day in the Jewish Calendar – Falls on 21/22 September

On the eve of 21 September and until after sunset on 22 September, Israel and world Jewry will observe Yom Kippur, or the Day of Atonement. The holiest day on the Jewish calendar, falling on the tenth of Tishri, it is a day marked by fasting, prayer and penitence for one's sins against their fellow man and G-d. Yom Kippur atones only for sins between man and G-d, not for sins against another person. To atone for sins against another person, you must first seek reconciliation with that person, righting the wrongs you committed against them if possible. That must all be done before Yom Kippur.

Yom Kippur is a complete Sabbath; no work can be performed on that day. It is a complete, 25-hour fast beginning before sunset on the evening before Yom Kippur and ending after nightfall on the day of Yom Kippur. The Talmud also specifies additional restrictions that are less well-known: washing and bathing, anointing one's body (with cosmetics, deodorants, etc.), wearing leather shoes and engaging in sexual relations are all prohibited on Yom Kippur. As always, any of these restrictions can be lifted where a threat to life or health is involved. In fact, children under the age of nine and women in childbirth (from the time labor begins until three days after birth) are not permitted to fast, even if they want to. It is customary to wear white on the holiday, which symbolizes purity and calls to mind the promise that our sins shall be made as white as snow. The day long fast is widely observed even among Israel's secular public and most of the country's Jewish population attend all or part of the day's synagogue services. The fast is concluded with a shofar blast and rejoicing.

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7.3 Sukkot Observed

The Jewish festival of Sukkot begins at sunset on Wednesday, 26 September until nightfall on 3 October 2007. The holiday begins on the Hebrew date of 15 Tishrei, the fifth day after Yom Kippur. The word "Sukkot" means "booths" and refers to the temporary dwellings that Jews are commanded to live in during this holiday. The commandment to "dwell" in a sukkah can be fulfilled by simply eating all of one's meals there or by actually living in the sukkah as much as possible, including sleeping in it. The holiday commemorates the forty-year period during which the children of Israel were wandering in the desert, living in temporary shelters. There are intermediate days during the week, which begins and ends with a holiday, referred to as Chol Ha-Mo'ed.

Another observance related to Sukkot involves what are known as the Four Species (arba minim in Hebrew) or the lulav and etrog. Jews are commanded to take these four plants and use them to "rejoice before the L-rd." The four species in question are an etrog (a citrus fruit native to Israel), a palm branch (in Hebrew, lulav), two willow branches (arava) and three myrtle branches (hadas). The six branches are bound together and referred to collectively as the lulav. The etrog is held separately. With these four species in hand, one recites a blessing and waves the species in all six directions (east, south, west, north, up and down, symbolizing the fact that G-d is everywhere).

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*REGIONAL:

7.4 Saudi Arabian National Day on 23 September

The Saudi National Day is 23rd September. National Day marks the unification of the country by the late King Abdul Aziz Bin Abdul Rahman al-Faisal al-Saud in 1932. King Abdul Aziz has used the Islamic Sharia as the constitution for the kingdom. Interestingly, 2005 was the first year the date was celebrated as a national holiday by the Saudis.

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7.5 Saudi Women To Lobby King For Driving Right

For the first time ever, a group of women in the only country that bans female drivers have formed a committee to lobby for the right to get behind the wheel, and they plan to petition King Abdullah in the next few days for the privilege. The government is unlikely to respond because the issue remains so highly sensitive and divisive. But committee members say their petition will at least highlight what many Saudis—both men and women—consider a ''stolen'' right. Committee members want to deliver their petition to the king by 23 September, Saudi Arabia's national day. The driving ban applies to all women, Saudi and foreign, and forces families to hire live-in drivers. Women whose families cannot afford $300-$400 a month for a driver must rely on male relatives to drive them to work, school, shopping or the doctor's.

The last time the issue was raised was two years ago, when Mohammed Al Zulfa, a member of the unelected Consultative Council, asked his colleagues to think about studying the possibility of allowing women over age 35 or 40 to drive - unchaperoned on city streets but accompanied by a male guardian on highways. The suggestion touched off a fierce controversy that included calls for Al Zulfa's removal from the council and stripping him of Saudi citizenship, as well as accusations he was encouraging women to commit the double sins of discarding their veils and mixing with men. The uproar underscored the divisions in Saudi society between the guardians of its super-strict Islamic codes of behavior and those who want to usher in more liberal attitudes. (GN18.09)

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7.6 Musharraf To Take Off Uniform If Re-Elected

Pakistani President Pervez Musharraf will resign his position as army chief if he is re-elected president. He has promised to be sworn in for a new term as a civilian, his lawyer told the country's Supreme Court (SC) on 18 September. The promise to stand down as army chief removes a major objection to President Musharraf's proposed re-election by Oct. 15. President General Musharraf retained his army post after he seized power in a 1999 coup despite opposition calls to quit. The date of a presidential election is expected to be announced soon. A national election is due by mid-January. Giving up the army role would undoubtedly dilute President Musharraf's power in a country that has been ruled by generals for more than half the 60 years since it was founded. But it could also help him cement a power-sharing agreement with former prime minister Benazir Bhutto, that could enable him to overcome growing opposition to his continued rule. Benazir has said that any arrangement with President Musharraf would depend, among other things, on him becoming a civilian president. (Various18.09)

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7.7 Morocco Conservatives Win Most Seats In Poll

Morocco's conservative Istiqlal party, a member of the kingdom's ruling coalition, won most seats in parliamentary elections that opposition Islamists said were skewed by vote buying. Provisional results showed Istiqlal (Independence) won 52 seats, ahead of the Islamist Justice and Development party (PJD) with 47 seats. The PJD had been widely tipped to perform well and had aimed to become the biggest party in parliament, but scaled back its ambitions after polling closed on 7 September, accusing its opponents of foul play. The results also looked bad for the Socialist Union of Popular Forces (USFP) party, Istiqlal's main coalition partner, which dropped from first to fifth place in parliament. It had hoped voters would reward it for its part in the government's cautious social and economic reforms. The parliamentary polls were the second since King Mohammed came to the throne in 1999 and saw 33 parties vie with dozens of independents for seats in the 325-member lower house. A complex voting system makes it almost impossible for any group to win a majority, and whatever the outcome, real power will remain with the king, who is executive head of state, military chief and religious leader. The provisional figures showed a record-low turnout of 37%, an apparent snub to a political system whose leaders are widely seen as aloof and out of touch.

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7.8 Greek Prime Minister Declares Victory In General Elections

On 17 September, Greek Conservative Prime Minister Costas Karamanlis declared victory in 16 September's general elections after early results gave his ruling New Democracy party a lead of over 4% over the opposition Pasok socialists. New Democracy had gained 152 seats in the 300-seat Parliament, 13 fewer than in 2004. The conservatives gained 41.84% of the vote, which was some 3.5% less than three-and-a-half years ago. Socialist leader George Papandreou, foreign minister until 2004, had conceded defeat moments before Karamanlis spoke. The elections saw Pasok lose 15 parliamentary seats and 2.45% of the popular vote in comparison to its performance in 2004. It was Pasok's worst showing in a general election since 1977. Karamanlis' party won a second straight term despite initial concern that his government's credibility had been badly damaged by its shaky handling of the devastating forest fires which killed more than 60 people and ravaged huge swathes of forest and farm land in August. While both New Democracy (ND) and Pasok lost ground in the election, smaller parties on the left and right made significant gains. Pasok's second straight defeat opens a power struggle within the opposition party, with Papandreou's leadership placed in doubt. Papandreou said he would launch leadership procedures and stand again as a candidate. (Various16.09)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Teva Announces Approval and Shipment of Generic Coreg Tablets

Teva Pharmaceutical Industries announced that the U.S. FDA has granted final approval for the company's Abbreviated New Drug Application (ANDA) to market its Generic version of GlaxoSmithKline's cardiovascular agent Coreg (Carvedilol) Tablets, 3.125 mg, 6.25 mg, 12.5 mg and 25 mg. Shipment of this product will begin immediately. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Jerusalem, Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva06.09)

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8.2 UltraShape Secures $15.1 Million in New Financing Led by Meritech Capital

UltraShape completed a $15.1m round of funding. The financing was led by new investor Meritech Capital Partners, with participation from both of its previous institutional investors, Israel Seed Partners and Polaris Venture Partners. Yokneam, Israel's UltraShape (http://www.ultrashape.com) is redefining aesthetic medicine by developing, manufacturing and marketing innovative non-invasive technologies for body contouring. The company is dedicated to providing clinically proven safe and effective solutions that enhance the lives of patients worldwide. The UltraShape proprietary non-invasive body contouring technology is based on focused ultrasound that targets and selectively disrupts fat cells without affecting surrounding structures. The UltraShape system is not cleared by the FDA for marketing in the United States. (UltraShape05.09)

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8.3 Teva Announces Launch of Generic Famvir Tablets

Teva Pharmaceutical Industries announced that it has commenced shipment of Famciclovir Tablets, 125 mg, 250 mg and 500 mg, AB-rated to Novartis' herpes treatment Famvir Tablets. As the first company to file an Abbreviated New Drug Application (ANDA) containing a paragraph IV certification for this product, Teva has been awarded a 180-day period of marketing exclusivity. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Jerusalem, Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva07.09)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Dune Networks & Vitesse to Interoperate for Dense Ethernet Aggregation Applications

Dune Networks and Vitesse Semiconductor Corporation, a leading provider of innovative and technically advanced IC solutions for networking applications, announced their intent to have Dune's next-generation devices and Vitesse's recently introduced triple-speed Ethernet MACs interoperate using next generation XAUI interfaces. These devices are critical for driving down port costs for Gigabit Ethernet, which is the primary technology of choice for the next generation Carrier, Enterprise, and Data Center systems. Cost reductions are achieved through higher port density, lower pin-count, longer board trace lengths, and better scalability versus existing SPI-4 solutions. The next generation SERDES-based interfaces like XAUI and SPAUITM extend the standard XAUI -- by introducing channelization, packet interleaving, and refined flow control. SPAUITM combines the benefits of both XAUI and SPI4.2 standards into a single SERDES-based interface supporting MAC/Framer, NPU and Traffic Management interconnection requirements. Dune Networks (http://www.dunenetworks.com) is a leading semiconductor supplier of networking devices that facilitate building Data Center, Enterprise and Carrier Ethernet Solutions. The company's products are scalable in system capacity, port rate and service scheme, offering a standard compliant, highly integrated and resilient architecture. Founded in 2000, Dune's headquarters are located in Sunnyvale, California with an R&D center in the Europark Industrial Park at Yakum, Israel. (Dune06.09)

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9.2 Metalink's WLANPlus 802.11n Chipset Selected by Pirelli Broadband Solutions

Metalink announced that its Metalink's WLANPlus 802.11n chipset was selected by Pirelli Broadband Solutions for its family of Discus wireless video extenders. As part of its portfolio, which comprises IPTV Set-top boxes and Home Gateways, Pirelli's Discus Video Extenders enable service providers to offer consumers a solution for the wireless delivery of high-definition (HD) video without the need for any wiring. Pirelli's DEXW50N Video Extenders are a family of point to multi-point wireless devices, capable of transferring video at wireline quality, ensuring coverage throughout the home. The extenders are specifically designed for automatic configuration and user-friendly deployment. Metalink's WLANPlus 802.11n standard-compliant chipset was selected for its consumer electronics quality capabilities, and as a future-proof standardized solution demanded by service providers. WLANPlus is designed to enable high-throughput, rich-content, quality-critical applications. Yakum, Israel's Metalink (http://www.MTLK.com) is a leading provider of high performance wireless and wireline broadband communication silicon solutions. Metalink's WLAN and DSL technologies are designed to enable true broadband connectivity in every home, and its products revolutionize the broadband experience by facilitating the convergence of telecommunication, networking and entertainment. Metalink's WLANPlus is a high-throughput, 802.11n-draft-compliant wireless LAN technology optimized for the networked home entertainment environment. (Metalink

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9.3 VUANCE Announces $13.8 Million Agreement for Security at European International Airport

Vuance (formerly SuperCom) has entered into a definitive agreement with a European international airport to provide an integrated perimeter security system and a border control system for a total of $13.8m. The establishment of the security and control system will begin during Q3/07. While revenues from the contract are expected to be recognized over the next two years, Vuance has already received a substantial portion of it as an advance payment. Once the system has been implemented, there is likely to be an additional eight-year maintenance agreement that could generate an additional $750,000 in annual revenues. Kadima, Israel's Vuance (http://www.vuance.com) provides innovative incident management, active RFID, access control and credentialing solutions to public safety, commercial, institutional and government sectors. The Company's Incident Response Management System (IRMS) is the industry's most comprehensive mobile credentialing and access control system, designed to meet the needs of Homeland Security and other public initiatives. Vuance's Active RFID is a complete, cost-effective solution for the continuous tracking of assets and individuals. (Vuance05.09)

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9.4 ECtel Wins Order for the Expansion of its Revenue Assurance Solution From AT&T Mobility

ECtel announced that it has received a follow-on order for expansion of its revenue assurance solution, RAP, from AT&T Mobility, one of the leading wireless companies in the US for voice, data, and access to content. This expansion ensures financial accuracy and addresses content losses detection. RAP is ECtel's automated and configurable, revenue assurance platform that facilitates cost-effective RA processes. RAP enables the rapid resolution of critical revenue leakages in wireline, wireless, convergent and next-generation networks. Rosh Ha'Ayin, Israel's ECtel (http://www.ectel.com) is a leading global provider of Integrated Revenue Management (IRM) solutions for communications service providers. A pioneering market leader for over 15 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next-generation operators to fully manage their revenue and cost processes. ECtel IRM Product Framework features the world-leading fraud and revenue assurance products, FraudView and RAP, that minimize operator revenue leakage across networks and operations support systems (OSSs). (ECtel05.09)

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9.5 Cyclone to Supply Composite Structural Components for Commercial Aircraft to Spirit AeroSystems

Elbit Systems subsidiary Cyclone Aviation Products was awarded a contract by Spirit AeroSystems for composite structural components for commercial aircraft. The contract is valued at approximately $30m dollars and is scheduled for delivery between 2007 and 2011. The contract involves the supply of blocker doors for the aircrafts' engines - a composite structural component - to Spirit AeroSystems. Cyclone Aviation Products (http://www.cyclone-aviation.com), located in the area of Karmiel, Israel, is a wholly-owned subsidiary of Elbit Systems. With approximately 400 employees, Cyclone's core business is manufacturing and maintenance of aircraft structures as well as engineering, manufacture, repair and upgrade of aircraft, UAVs and helicopters. Cyclone manufactures both metal and composite structural assemblies for UAVs, military aircraft such as the F-15, F-16 and F-18, and civil/commercial aircraft. Cyclone also operates the Israel Air Force's (IAF) aviation schools for Grob G-120A (Snunit) aircraft and B-206 (Saifan) helicopters. Cyclone's customer base includes the IAF, the U.S. Air Force, the U.S. Army and the U.S. Navy as well as several major aviation companies, such as Boeing, Lockheed Martin and Sikorsky. (Cyclone 05.09)

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9.6 Orca Interactive & muvee Introduce First-Ever Automatic Movie Creation over IPTV

Orca Interactive and Singapore's muvee, a pioneer in instant home movies, announced an agreement to develop and market LivePhotos, the first-ever application for automatic movie-making over IPTV platforms. LivePhotos combines Orca's cutting edge user-generated content (UGC) capabilities with muvee's automatic video editing and photo movie software to produce a groundbreaking new service designed to enhance IPTV service offerings. Orca Interactive plans to offer LivePhotos with its advanced RiGHTv IPTV middleware by the end of 2007. It will be a part of a comprehensive on-demand UGC platform enabling triple-play service providers and network operators to differentiate their offerings and drive new revenues. In addition, Orca and muvee will also consider jointly marketing the new UGC application as a stand-alone solution compatible with all IPTV platform types. Powered by muvee's patented technology for automatic video editing, LivePhotos will enable subscribers to create personalized video albums from their photos and video clips, accompanied by their preferred style of music. Orca's flexible user interface (UI) adds easy-to-use functionality for creating instant home movies over IPTV, bringing the fun and magic of movie-making to the television screen. Ra'anana, Israel's Orca Interactive (http://www.orcainteractive.com), is a leading provider of middleware solution to enable xDSL and FTTx operators to offer enhanced entertainment services such as broadcast TV, video-on-demand and interactive services. Our applications deliver compelling and differentiated services to maximize the revenue stream of the operators. Orca's user-friendly, end-to-end applications enable delivery and management of VOD, TV channels, EPG, NVOD, Pay-Per-View and e-commerce for related merchandise. (Orca 07.09)

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9.7 RADVISION's ProLab Testing Suite with End-to-End IMS Terminal & Server Support

RADVISION announced the release of Version 5.0 of its ProLab Testing Suite, a comprehensive testing solution for voice and video over IP, IMS and 3G networks. A pioneer in the area of media quality testing & analysis, RADVISION's ProLab Testing Suite is a leading force in the industry. The suite is deployed throughout the world at major device manufacturers, network equipment providers, testing labs and service providers. RADVISION's ProLab Testing Suite allows vendors and service providers to perform the rigorous testing and validation needed to ensure high quality, dependable product deployment. Based on RADVISION's award-winning protocol toolkits, know-how and technological expertise in IMS, multipoint video over IP, and across the board interoperability, this powerful testing tool complies with the industry's most recent standards. This most recent version of the ProLab Testing Suite comes complete with an IMS testing solution with both IMS Terminals and IMS Servers. These include terminal emulation for High Definition generation and an IMS Server for simulating IMS Core Networks. Tel Aviv, Israel's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video networking infrastructure and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the unified communications evolution by combining the power of video, voice, data and wireless – for high definition video conferencing systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION11.09)

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9.8 Gilat's SkyEdge Selected for Russian Education Ministry School Network

Gilat Satellite Networks announced that Russia's leading satellite service provider, Closed Joint-Stock Company (CJSC) Global-Teleport, is deploying a broadband satellite communications network for the Russian Ministry of Education based on Gilat's SkyEdge systems. Initiated by the Russian Government, the Education Project guarantees unlimited Internet access for Russian schools. Since the beginning of the year, Gilat has supplied approximately 3,000 SkyEdge IP VSATs to provide schools in the Siberian, Far East and other remote regions in Russia with two-way broadband internet access, multimedia applications, video-conferencing and VoIP support for future use. This will enable students in these regions to enjoy an enhanced educational experience through interactive learning programs and other Internet applications. SkyEdge provides Global-Teleport a scalable broadband communications network with space segment efficiency and low operational costs. The same SkyEdge Hub supports multiple services and applications such as rural USO projects, enterprise connectivity and Internet for schools.

Gilat's SkyEdge is a satellite communications system that delivers high-quality voice, broadband data and video services over a powerful unified system. SkyEdge represents Gilat's extensive knowledge base and field-proven product offering, acquired through two decades of experience. SkyEdge's flexible architecture and efficient space segment utilization make it an ideal platform for operators and service providers. Petah Tikva, Israel's Gilat Satellite Networks (http://www.gilat.com) is a leading provider of products and services for satellite-based communications networks. (Gilat10.09)

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9.9 XLoom Communications Unveils iFlame - First Multi-Channel Optical Chip

XLoom Communications introduced its iFlame optical chip, the first multi-channel, high-density, cost-effective, optical engine for grid computing and data center applications. iFlame, the industry's first chip-scale 4-channel optical transceiver, is aimed at data center applications running over InfiniBand, Ethernet and Fiber-Channel. The iFlame chip, implemented as an optical engine, enables high-speed, high-density, cost-effective interconnect applications such as Opto-electrical media converters, optical active connectors and cables as well as traditional transceivers such as the upcoming QSFP form factor. The iFlame, which is less than 1 square/CM in size, features an array of four state-of-the-art 850 nm VCSELs (Vertical-Cavity Surface-Emitting Lasers) and four photo-diodes for data rates of 1.25Gbps to 5Gbps per channel, for a total aggregate of up to 20Gbps. iFlame optical chips are currently sampling, with a follow up end-user product to be announced by XLoom Communications during the next month. Tel-Aviv, Israel's XLoom Communications (http://www.xloomcom.com), an industry innovator of chip-scale optoelectronic interconnects, delivers low-power, high-speed interconnect solutions for data center applications such as Ethernet, Infiniband and backplanes. XLoom's solutions enable the cost-effective alternative to copper interconnects in high-speed data center environments, where the physical limitations of copper are costly and ineffective. (XLoom10.09)

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9.10 EVS Receives Orders Totaling $4.5 Million for its Aerospace & Industrial Inspection Systems

Elbit Vision Systems (EVS) announced that it has received new and repeat orders for the inspection of aircraft bodies and jet engine discs totaling approximately $2m from leading manufacturers for its UT Aerospace inspection systems and new and repeat orders totaling approximately $2.5m from leading manufacturers for its UT Industrial inspection systems. Kadima, Israel's EVS (http://www.evs-sm.com) offers a broad portfolio of automatic in-line inspection and quality monitoring systems used to improve product quality and increase production efficiency. The Company's Industrial Division provides automatic optical inspection (AOI) and non-destructive ultrasound inspection systems for heavy manufacturing (automotive, aeronautics, steel and others). EVS maintains headquarters and manufacturing in Israel, R&D operations in Israel, and offers global sales and support coverage. (EVS11.09)

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9.11 RADA Receives $860,000 Purchase Order for Production and Delivery of Digital Video Recorder Units

RADA Electronic Industries has received a $860,000 purchase order to produce and deliver a derivative of RADA's Digital Video Recorder to an unnamed customer. The DVR is one of RADA's successful products, in production for several years. Delivery of units on order is expected to be completed until the end of Q1/08. Netanya's RADA Electronic Industries (http://www.rada.com) is an Israel based company involved in the military and commercial aerospace industries. The Company specializes in Avionics systems (Digital Video Recorders, Ground Debriefing Stations, Stores Management Systems, Flight Data Recorders, Inertial Navigation Systems), Trainers Upgrades, Avionics systems for the UAV market, and Electro optic cameras for airplanes and armored vehicles. (RADA10.09)

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9.12 Magal Receives an Order of Over $8 Million to Protect Public Utility Sites in Western Asia

Magal Security Systems announced that one of its wholly-owned subsidiaries has received an order of over $8m to install its Perimitrax buried cable intrusion detection system as part of a project to protect several public utility facilities in Western Asia. The Company will begin installations at the first site, in Q4/07. Magal Group's Perimitrax - a Buried Cable Intrusion Detection System, is a covert perimeter intrusion detection sensor that generates an electromagnetic field around buried sensor cables. If an intruder comes into contact with the field, an alarm is activated. Yehud, Israel's Magal Security Systems (http://www.magal-ssl.com) is engaged in the development, manufacturing and marketing of computerized security systems, which automatically detect, locate and identify the nature of unauthorized intrusions. Magal also supplies video monitoring services through Smart Interactive Systems, Inc., a subsidiary in the U.S. The Company's products are currently used in more than 70 countries worldwide to protect national borders, airports, correctional facilities, nuclear power stations and other sensitive facilities from terrorism, theft and other threats. (Magal10.09)

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9.13 Voltaire Delivers InfiniBand Solutions for New HP BladeSystem c3000 Enclosure

Voltaire announced that its InfiniBand solutions are available for the new HP BladeSystem c3000 enclosure. The powerful combination of Voltaire's software and InfiniBand switching capabilities bring high performance and manageability to HP's newest blade chassis, which was designed specifically to meet the needs of small IT sites including midsize customers and those with remote locations and branch offices. The HP BladeSystem c3000 enables customers to reap the power and cooling and cost benefits of a fully bladed solution while also gaining the performance, management and virtualization capabilities available through InfiniBand. The HP BladeSystem c3000 uses Voltaire GridStack software to enable applications to utilize the exceptional performance of RDMA that is inherent in InfiniBand hardware. The system also uses Voltaire's GridVision BladeFM software, which provides a comprehensive set of tools and utilities that simplify common tasks related to the configuration, management and monitoring of InfiniBand fabrics. The software enables a consolidated and managed bladed configuration without the need for external InfiniBand switches or hosts. Voltaire's InfiniBand solutions are already available for the HP BladeSystem c7000 enclosure and are an option in the HP Cluster Platform configurations for high performance computing clusters based on HP BladeSystem c-Class systems.

Headquartered in Herzliya, Israel, Voltaire (http://www.voltaire.com) designs and develops server and storage switching and software solutions that enable high-performance grid computing within the data center. Voltaire refers to its server and storage switching and software solutions as the Voltaire Grid Backbone. Voltaire's products leverage InfiniBand technology and include director-class switches, multi-service switches, fixed-port configuration switches, Ethernet and Fiber Channel routers and standards-based driver and management software. (Voltaire 12.09)

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9.14 Mellanox ConnectX IB InfiniBand Mezzanine Adapters Accelerate HP BladeSystem c3000 Enclosure

Mellanox Technologies announced that the company's 20Gb/s ConnectX IB InfiniBand mezzanine adapter cards and switch blades provide the optimal low-latency, high-performance interconnect for the new HP BladeSystem c3000 enclosure targeting midsize companies looking to realize the cost benefits of a bladed environment and the performance advantages of InfiniBand. The HP BladeSystem c3000, accelerated with Mellanox ConnectX IB InfiniBand adapters, benefits midsize business offices or branch locations that require as little as four to eight server or storage components to run enterprise-level business applications such as CRM, database, financial, manufacturing, order management, virtualization, and web services in a form better suited for them. A Mellanox ConnectX IB 20Gb/s InfiniBand mezzanine card adapter can reside on each server blade in BladeSystem c3000 and c7000 enclosures to provide high-performance connectivity to the processor through a PCI Express interface. Each ConnectX IB mezzanine card adapter supports two ports and can connect to two independent InfiniBand switch modules, which also plug into the c3000 and c7000 enclosures, for redundancy and higher aggregated bandwidth – capabilities that are useful for mission-critical and mainstream commercial clustering applications.

Mellanox Technologies (http://www.mellanox.com) is a leading supplier of semiconductor-based, high-performance, InfiniBand and Ethernet connectivity products that facilitate data transmission between servers, communications infrastructure equipment and storage systems. The company's products are an integral part of a total solution focused on computing, storage and communication applications used in enterprise data centers, high-performance computing and embedded systems. Founded in 1999, Mellanox Technologies is headquartered in Santa Clara, California and Yokneam, Israel. (Mellanox 12.09)

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9.15 ECtel Announces Multilingual Version of RAP - First Installation Already Deployed in China

ECtel announced that its new version of revenue assurance solution, RAP, supports multilingual user interface and enables complete GUI and data processing to be displayed in any local language (such as Spanish, Portuguese, German and French) including special characters and double byte (such as Chinese and Japanese). This special version enables operators in different regions such as Latin America, ASIA and Europe to work with RAP while using their local language as well as maximize the usage of data. This special version has already been implemented in a leading mobile operator in China with full support of the Chinese language. RAP is ECtel's automated and configurable, revenue assurance platform that facilitates cost-effective RA processes. RAP enables the rapid resolution of critical revenue leakages in wireline, wireless, convergent and next-generation networks. Rosh Ha'Ayin, Israel's ECtel (http://www.ectel.com) is a leading global provider of Integrated Revenue Management (IRM) solutions for communications service providers. A pioneering market leader for over 15 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next-generation operators to fully manage their revenue and cost processes. ECtel IRM Product Framework features the world-leading fraud and revenue assurance products, FraudView and RAP, that minimize operator revenue leakage across networks and operations support systems (OSSs). (ECtel12.09)

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9.16 ECI Telecom's BroadGate-AccessWave Complements Optical Solutions Portfolio at the Access Level

ECI Telecom introduced the AccessWave, a compact, optical networking platform targeting access and edge C/DWDM (Coarse/Dense Wavelength Division Multiplexing) applications. The AccessWave, part of the BroadGate family, is the newest addition to ECI's optical access solutions portfolio, and enjoys all the advantages of these products: high capacity, multiple service support, cost effectiveness, and ease of operation in a small footprint - as small as a one rack unit. ECI's XDM and BroadGate family of products, now spanning a complete line of products from access to long-haul solutions for service providers, are all managed under a unified network management system - ECI's leading LightSoft network manager. LightSoft's unique approach provides simplified management of the optical layer, enabling end-to-end, access to long-haul provisioning with one system. With its unified graphical user interface, LightSoft improves efficiency by providing users with a clear picture of the optical channels and resources still available. Its multi-layer approach allows carriers to manage all technologies and network segments using a unified and centralized system, resulting in both capex and opex savings. Petah Tikva, Israel's ECI Telecom (http://www.ecitele.com) delivers innovative communications platforms to carriers and service providers worldwide. ECI provides efficient platforms and solutions that enable customers to rapidly deploy cost-effective, revenue-generating services. (ECI Telecom17.09)

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9.17 Horizon Announces First Single Chip Dual Channel 1080/60p HD Decoder & Integrated Transcoder

Horizon Semiconductors announced the immediate availability of the industry's first single chip multi-standard dual-channel HD Decoder with integrated Encoder/Transcoder for the Cable and Satellite Set-Top Box, Digital Video Recorder and Home Media Center markets. The Hz4120 and Hz3120 integrate real time dual HD AVC, VC-1, DV/HDV or MPEG2/4 decoder & AVC, VC1, MPEG2/4 encoder/transcoder, along with an advanced audio processor, embedded application CPU, 2D/3D graphics accelerator and multi-plane display processor into a single chip, thus enabling end-users to substantially benefit from the lower cost, smaller size and improved features of next-generation STBs and media players. Furthermore, the Hz4120 and Hz3120 embed a variety of advanced interfaces and security features targeted to meet the specific design characteristics of the Cable and Satellite markets respectively. STBs with Horizon's integrated SoC solutions will allow operators to provide current and future subscribers with advanced services including more hours of stored programs, transfer of video and audio content to portable media players, cell phones & game consoles, and location-free (place-shifting) TV at home and over the network. Herzliya, Israel's Horizon Semiconductors (http://www.horizonsemi.com) is a leading provider of highly integrated silicon solutions that enable secured video and audio compression & transmission for the consumer electronics and home entertainment markets. Using proprietary technologies and advanced design methodologies, Horizon designs, develops and supplies complete system-on-a-chip solutions and related hardware and software applications. Horizon's diverse product portfolio includes solutions for digital cable, satellite and IPTV Set-top boxes, DVD, HD-DVD and Blu-Ray players and recorders, HDTV, Digital Video Recorders and Home Media Centers. (Horizon Semiconductors 17.09)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's August inflation Rises 0.7%

Israel's Consumer Prices Index (CPI) rose by 0.7% in August. This is the largest August rise since 1995. Core inflation in August (the CPI excluding fruit and vegetables and housing) was 0.1%. The products and services that lifted inflation in August were bread, milk and milk products, and electricity, the prices of which rose steeply, as a result of government action. Fruit and vegetables prices shot up 6.1%, while housing prices rose 1.6%. Inflation for the first eight months of 2007 is 2.8%, which is 3.2% on an annual basis, above the official inflation target range of 1-3%. Core inflation so far this year is 2.2%. The CPI has risen by a total of 2.3% over the past three months. However, the final third of the year is usually characterized by negative inflation. (CBS11.09)

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10.2 Israel's Trade Deficit Swelled In August

On 11 September, the Central Bureau of Statistics announced that Israel's trade deficit totaled $1.6b in August 2007, the largest monthly deficit in several years, reports. Exports totaled $3.5b and imports totaled $5.1b. The large trade deficit was partly due to higher fuel imports, driven by rising global oil prices. The trade deficit totaled $6.4b in January-August, 28% more than the $5b in the corresponding period of 2006. At the current rate, the trade deficit will total $9.7b in 2007 as a whole. Exports totaled $29.6b in January-August, 14% more than the $25.9b in the corresponding period. Imports totaled $36b, 16% more than the $30.9b in the corresponding period. (CBS11.09)

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10.3 Israel's Exports Seen Rising To $70b

The Israel Export & International Cooperation Institute predicts that exports of goods will total $70 in 2007, 10% more than in 2006. It is also predicted that in 2008 there will be an additional 10% growth in 2008 to $77b. The Export Institute estimates the market in Japan for Israeli exports at $245b, the market in China at $230b, South Korea at $105b, Mexico at $104b, Brazil at $88b and Russia at $63b. Although growing, exports account for 45% of Israel's GDP, less than several other countries. Exports account for 90% of Belgium and Slovakia's GDP and 80% of Ireland's. Over the past decade, Israel's exports have doubled, reaching $62.5b in 2006, while exports proportion of GDP has risen from 30% to 45%. (Various05.09)

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10.4 Fish Sales Expected Over Holidays to Reach $24.4 Million

Israelis consume an average of 800 grams of fish per month, 10 kilograms per year. However, fish consumption more than doubles in September to 1.7 kg., during Rosh HaShanah (Jewish New Year) and the holidays, the Ministry of Agriculture reported. The ministry adds that Israeli's consumption of fish per capita is considerably less than the 10-20 kg. per capita in other Mediterranean countries, and the 60 kg. per capita consumed in Japan. Americans eat 6-7 kg. of fish per capita per year.

The Ministry of Agriculture estimates that fish sales will total $24.4m ahead of the holidays. The ministry says that Israelis ate 60,000 tons of fish in 2006, of which 27,000 was produced locally and the rest imported, usually frozen. Local fish production has three sources: fish farms 19,000 tons, fishing 4,500 tons, and aquaculture 3,500 tons. Israelis most preferred fish is St. Peter's Fish (7,900 tons a year), followed by carp (6,500 tons), sea bream (3,000 tons), mullet (2,400 tons), silver carp (1,600 tons), and trout and bass (500 tons each). (Globes 05.09)

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10.5 Rishon Lezion Families Spend Most in Israel

The Central Bureau of Statistics Household Expenditure Survey for 2006 shows that expenditure was highest in Rishon LeZion, with an average housing spending of NIS 13,076 per month. Bat Yam had the lowest average housing spending, at NIS 8,251. The survey covered Israel's 14 largest cities with more than 100,000 residents. Tel Aviv had the highest spending per capita, at NIS 5,737 per month, and Bnei Brak had the lowest, at NIS 2,035 per month. Tel Aviv had the second highest average housing spending, at NIS 12,456, followed by Rehovot NIS 11,742; Beer Sheva - NIS 11,249 and Ramat Gan - NIS 11,330. The bottom four cities were, in ascending order above Bat Yam: Bnei Brak - NIS 8,812; Ashkelon - NIS 9,001; Jerusalem - NIS 10,749; and Netanya - NIS 10,152.

The survey also found that Ashkelon had the highest proportion of home ownership at 80.5% of all households, while Tel Aviv had the highest proportion of rentals, at 45.7% of all households in the city. Rishon LeZion, Rehovot, and Ashdod have the largest average apartment size, at 3.8 rooms per apartment. Bnei Brak has the smallest average apartment size, at three rooms per apartment. Bnei Brak also has the highest density, with an average of 4.3 persons per apartment. Half of the households in the 14 large cities have at least two cellular telephones. Jerusalem has the lowest proportion of air conditioners, but almost every household has a clothes dryer. (CBS06.09)

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In Depth

11.1 KUWAIT: Weekend Changeover In a move designed to boost its economic profile and bring it closer in line with international markets, Kuwait shifted its official days of rest on September 1 from the traditional Thursday-Friday weekend to Friday and Saturday.

The public sector, which employs more than 90% of Kuwaiti nationals, will now follow a working week stretching from Sunday until Thursday. While the private sector is not obligated to follow the government weekend, many financial institutions, including banks and investment firms, already worked a minimum half-day on Thursdays, a testament to their need for greater overlap with Western markets. The day change brings the country in line with many of its Gulf Co-operation Council (GCC) neighbors, including the UAE, Bahrain and Qatar. Saudi Arabia and Oman still follow the traditional Thursday-Friday weekend.

The changeover is expected to boost Kuwait's energy and financial sectors, which conduct extensive business with Asian, European and North American markets, by extending the working week to better match the international standard. According to the country's minister of state for cabinet affairs, Faisal Al Haji Bukhadhour, the legislation for the new weekend was motivated almost entirely by "economic considerations" and was intended to smooth over the "numerous problems stemming from [the fact that] the Kuwaiti weekend does not coincide with the weekend in other countries around the world whose days off are Saturday and Sunday.”

Other members of government pointed out that the day change would give Kuwait a greater presence in the international financial arena, by extending trading days and facilitating an increased number of transactions on Thursdays. Speaking to local press, Member of Parliament (MP) Ahmad Lari said, "synchronizing the working week of financial services, such as the banks and the stock exchange, is very important for the country's economy".

According to civil service officials, given Kuwait's heavy reliance on international trade for such items as oil exports and domestic product imports, the need for a revised working week was clear. The secretary of the Kuwaiti Civil Service Commission, Mohammed Al Roumi, who helped advocate the new legislation, pointed out that with the traditional Thursday-Friday weekend, Kuwait was cut off from the rest of the world for two days out of the week, leaving only three days in which to conduct official business. A preliminary feasibility study conducted by the commission had shown that a change in the working week would improve communication with world markets and stock exchanges.

The legislation, finalized in May 2007, had its detractors. The most vocal opposition came from Islamist-affiliated MPs who hold around 22 of the 64 seats in the national assembly. During the months prior to the changeover, calls were repeatedly issued to delay implementation of the legislation, which the Islamist MPs labeled as "un-Islamic". One MP, Dhaifallah Buramya, collected 25 signatures of MPs to demand the reversal of the decision and threatened to introduce a counter-proposal to revoke the new law. Another representative, MP Mohammed Al Mutair stated the weekend shift would contravene tradition by imitating other religions and that there was "no need for it, since we already have Thursday as a day of rest".

In response to continued opposition against the move, the government has ordered a comprehensive impact study of the full impact of the new weekend. Political analysts, speaking with OBG on condition of anonymity, said the government was expecting to face a grilling motion, which is brought forward to interrogate government officials when there is reasonable cause to believe that misconduct or impropriety has occurred. Opposition MPs are expected to introduce it at the start of the new parliamentary term.

In spite of the ongoing political debates in Kuwait, however, the shift has prompted a raft of discussions in neighboring Saudi Arabia, where businessmen are pushing to implement similar legislation. A recent attempt to push for a Friday-Saturday weekend was blocked by its Shura Council, but the proposal is still under consideration and was recently discussed at a meeting between the local business community and the Shura Council head. Saudi Arabia has strictly adhered to the traditional Thursday-Friday weekend. (OBG14.09)

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11.2 BAHRAIN: 'Lost Paradise' to Bolster Tourism

On September 3, the Lost Paradise of Dilmun opened its doors, becoming the largest and most high-tech water park in the Middle East and strengthening Bahrain's reputation as a family-oriented tourist destination. Built at a cost of $50m, Lost Paradise is spread over an area of 77,000 sq meters and features the latest water park technology, including 14 water slides and wave pools.

The Oxford Business Group said that Lost Paradise is part of the much larger $1.3bn Al Areen Development, which is being constructed on the outskirts of Manama. The whole development, which covers some 2m sq meters, has been planned as an integrated, residential, recreational, health and resort project. The luxurious Banyan Tree Desert Spa has already been completed. The initial stage of the project will be followed by Hotel Al Areen, Al Waha Resort, Oryx Hills, Downtown Al Areen, Sarab Al Areen, and Sunset Hills along with further residential villages and entertainment facilities.

Sheikh Ahmed bin Ali Al Khalifa, Al Areen Holding's chairman, said the development would not only attract the people of the kingdom but boost tourism from the region and beyond.

The park takes its name, and its theme, from the ancient Dilmun civilization, which 4000 years ago occupied the lands that are now Bahrain and was famed for the springs that abounded there. The complex will be open from March to November each year, aiming to attract 300,000 visitors annually. "What makes the Lost Paradise of Dilmun unique is that in addition to the unrivalled attraction of 'Dilmun Artesian Spring', recreating the idea of Bahrain's ancient springs, the Lost Paradise has the largest wave pool in the Middle East and the only one with a sandy beach, an attraction for visitors of all ages," Muhannad Hamad, the chairman of Lost Paradise, said. Besides, the park has the added attraction of being close to the Bahrain International Circuit, venue for the annual Formula One Grand Prix.

The Al Areen project is very much in line with the tourism policy being fostered by the kingdom's government, with an emphasis being placed on family entertainment and holidays. The government has set out an ambitious program to increase the contribution of tourism to gross domestic product from the present level of between 6 and 7% to 10% within eight years.

To do this, Bahrain is seeking to carve out its own niche in the regional tourism market, promoting family tourism and creating a tourism brand name that would differentiate the kingdom from some of its neighbors. This policy included a ban announced earlier this year on none-family shows at some of the country's hotels and the restriction of alcohol sales except in certain designated areas and in five star hotels. The policy has come under criticism from those suggesting it is being driven by religious groups, a claim rejected by Mohammed bin Abdulghaffar, Bahrain's information minister. According to him, the move to support what he called clean tourism would actually serve to boost the industry. (OBG07.09)

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11.3 OMAN: Wasted Energy

Oman's electricity watchdog has issued a clarion call to the country's power sector to reduce energy losses, losses that are costing the sultanate dearly. The Oxford Business Group reported that Oman's three-year old Authority for Electricity Regulation (AER) issued its 2006 annual report at the beginning of September. While the report found there had been a significant increase in the amount of electricity delivered to clients, it found fault with the high levels of electricity that were being lost, especially in the north.

Last year saw a 10.3% increase from 2005 in the supply of electricity, with 10.5 terawatt hours (TWh) delivered through the grid in 2006, up from the 9.5 TWh of the year before. Around 18,000 new customers were added to the client lists of the country's distributors last year, an increase of 3.4%, according to the report.

However, losses through transmission and other technical and non-technical causes lit up the report. According to the AER, a full 22% of the electricity entering the Main Interconnected System (MIS) in 2006 was lost. Though this was slightly down from the 23.9% lost in the previous year, with savings of $6.9m, it still represented a massive drain on the sultanate's resources. The situation was not as dire in the country's rural and remote regions, which are served by the Rural Areas Electricity Company (RAEC). Away from built-up areas, losses in 2006 were 12%, a marginal reduction from the 12.3% that leaked away in 2005. This was somewhat offset by an increase in losses in the Dhofar Governorate with 18% of generated power in the region lost, 3% higher than 2005 results.

The AER's push to cut losses comes as Oman's demand for electricity is increasing sharply. On August 13, a report by the authority said the sultanate's power requirements would grow by 9% a year until 2013. While the rise in output, mainly spurred by the rapid, state-backed industrialization program, has been able to keep pace with this increase, further investments in generating capacity will be necessary. However, the level of funding could be reduced if losses through the grid, illegal siphoning off of power and poor metering practices were rectified.

Oman has been a regional leader in privatizing its utilities, with much of the country's electricity generating, transmission and distribution capacity now operated by private firms, usually in partnership with the state. These firms have been told by the AER to lift their games. "While some degree of technical losses is unavoidable, non-technical losses are a source of inefficiency that increase total supply costs and electricity subsidy," AER wrote in its report. "The authority hopes these problems will be addressed when the existing contracts are replaced with new and more appropriate contracts."

Among the planned remedies are modernizing electricity meters, enacting a system of fines for clients who have tampered with meters or who are illegally draining off power from the grid and employing skilled meter readers. A higher level of maintenance of distribution lines and other technical upgrades was also called for to further reduce losses.

Only days after the AER issued its report, Oman's Sultan Qaboos bin Said announced a major shake up of the cabinet and plans to set up of a number of new agencies and ministries. The reshuffle, unveiled on September 9, had a direct impact on the electricity sector, including a royal decree establishing the Public Authority for Electricity and Water, to be headed up by Mohammed bin Abdullah bin Mohammed al Mahrouqi. Previously, utilities were under the authority of the ministry of housing, electricity and water, but the overhaul of roles and responsibilities saw these two functions stripped away from the ministry, which has been left with the sole task of overseeing the sultanate's housing issues.

The new authority will conduct all state-related business with the sector and will have all the funding and assets formerly held by the ministry transferred to it. Though another decree will have to be issued to set out the system of the authority and management of its affairs, the new body will have to work with the industry to cut losses. The AER has set the objective of reducing losses by half within the next five years, announcing it will include loss-reduction targets in its new distribution and supply price controls program as of the beginning of next year. If these targets are met, Oman's electricity companies will benefit from higher returns and from state assistance to achieve these goals. If not, both the companies and the Omani economy may suffer. (OBG11.09)

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11.4 OMAN: Tourism Drain

The scarcity of water and deterioration in its quality may severely impact Oman's tourism growth, according to the Oxford Business Group, unless an integrated water management resources strategy aimed at rationalizing water consumption is implemented. Oman's government has set out the ambitious program to attract 2m foreign visitors or more by 2010, double the figure of 2001. The flip side of Oman's booming tourism industry, combined with the projected rise in the sultanate's population - which is tipped to increase from the current level of 2.45m to 2.65m in the next three years - has been the increasing strain on the country's water resources.

Oman is not alone. The booming tourism and airline industries are straining water resources throughout the entire Gulf and concentrating many minds on best conservation practices. "As part of their economical strategies, many countries in the region are promoting tourism," Zahir Bin Khalil Al Sulaiman, the director general of water resources affairs at Oman's ministry of regional municipality, environment and water resources told the local press on August 23. "The remarkable increase in demand has put pressure on the limited water resources in the region and growing tourism sector is one such factor."

It is not just a matter of quantity that Oman must face, but also of quality. In order to achieve sustainable development and improve living standards, rapid steps need to be taken to maintain a balance between supply and demand and address water shortages. "Water demand management has become inevitable particularly in view of the rapidly growing population, the widening gap between water supply and demand, the increasing levels of pollution and salinity, the climatic changes, the frequent drought periods and the high competition for available water resources," he said on August 26.

Oman is not standing still in its efforts to tackle these water challenges. In the wake of the devastating Cyclone Gonu, which struck the sultanate on June 6, the government announced a new program of dam construction to both limit the effects of flooding in the event of future disasters and to maximize water retention from similar deluges.

Desalination is the route Oman is following to ensure its future water needs are met. The sultanate is one of the regional leaders in opening up its energy and water industry to the private sector, having announced at the end of 2006 that all of the country's desalination operations would be privatized by 2009. As part of the program, new power stations will also have desalination plants linked to them. According to Mohammed bin Abdullah Al Mahrouqi, the chief executive officer of Oman's Electricity Holding Company, output of desalinated water from plants linked to power stations will increase from the 2006 figure of 86m cubic meters (mcm) to 221mcm by 2013.

A new tender for the construction of a power station and desalination plant at Salalah will be launched shortly, Al Mahrouqi said on August 8. When completed in 2009, the facility will be able to produce 68,000 cu meters of water daily, he said.

Oman has also invested heavily in treatment plants to process waste water, with plans in the pipeline for all used water to be processed and much of it reused for agricultural and industrial purposes. Among these projects is a $1bn waste water processing system for Muscat, which when completed in 2017, will serve 90% of the capital's population and the ever growing number of tourist facilities in and around the city.

Oman's government has also put in place regulations requiring environmental impact studies for new tourism developments and for new projects to ensure the most efficient use of water resources, utilizing efficient technology and recycling. The state has also launched public awareness campaigns promoting the careful use of water resources by the public. Through wide scale investments, careful planning and increased environmental protection measures, Oman hopes it will conserve one of the sultanate's most precious commodities. (OBG05.09)

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11.5 SAUDI ARABIA: Industrial Growth

The Oxford Business Group observed that as Saudi Arabia's industrial sector has grown in recent years, it has made significant contributions to the country's economy. According to a report published by the Saudi Industrial Development Fund (SIDF), the sector contributed 13% to the kingdom's GDP by the end of last year. Meanwhile the kingdom's non-oil manufacturing sector grew by 10.1% in real terms.

The findings by SIDF, a government body affiliated with the ministry of finance that grants medium- and long-term soft loans for private industrial projects, showed that the chemical products sub-sector came first in terms of growth, growing 47% in 2006. Consumer products came second, at 16%, followed by engineering products and building materials at 13.4% and 9.4%, respectively. The employment of Saudis, compared to total employment in the major industrial sectors, showed that the chemical products sector led the others at 36.5%. The engineering products sector came next (24%), followed by the building materials sector (22.6%) and the consumer products sector (19.3%).

In regards to Saudization, the government's effort for businesses to move away from employing foreign workers to hiring Saudi nationals, the report found support for the claim that the private sector is increasing its efforts in achieving the objective of escalating Saudi industrial employment levels. Saudi law requires that for any enterprise, domestic or foreign owned, the percentage of Saudi workers should be no less than 75% of the workforce and should receive 50% of the total payroll.

Saudi Arabia's industrial base has expanded enormously. Capital investment has risen since the kingdom's first oil boom in the 1970s from $2.6bn in 1975 to $74bn in 2005. During that period, the number of operating factories increased from less than 500 to 3792. This increase and the subsequent success of the industrial sector in general, have had a positive impact on the level of Saudi industrial exports, with the oil-based manufacturing sector, including the petrochemicals and fertilizers industries, achieving noteworthy success in international markets.

Saudi Arabia's non-oil exports grew by 13% annually during the past 10 years, according to the ministry of commerce and industry, which estimated the value of non-oil exports at $18.7bn last year. Abdul Rahman Al Zamil, chairman of the Saudi Export Development Centre, expects non-oil exports to exceed $20bn in 2007. However, industry experts told OBG there are many challenges, both domestically and internationally, that Saudi Arabia must address in order to facilitate mass scale industrial export.

Abdullah Al Khenaifer, president of Saudi Industrial Export Company, told OBG, "I really feel there are a number of issues that need to be focused on. More investment needs to be paid to downstream activities, the development of SMEs [small- and medium-sized enterprises] and distribution and transportation of exported goods."

At present the only Saudi-based shipping company, the National Shipping Company of Saudi Arabia, established in 1979, specifically for the transportation of crude oil, petrochemicals and general cargo, does not offer bulk container shipment services, favored by many SME industrial companies. "The fact that there is only one shipping company in Saudi Arabia is having a negative impact on the exportation of industrial products. We need more shipping companies and better distribution networks, especially if we are to exploit our World Trade Organization [WTO] accession as well as other countries have," Al Khenaifer told OBG.

WTO membership, reached in 2005 after 12 years of negotiations, has given the kingdom's export effort a huge boost, in particular by enhancing the competitive advantages enjoyed by the Saudi petrochemicals industry. The removal of trade barriers in main markets such as the EU, US and Japan resulted in Saudi petrochemicals producers being able to offer substantially lower prices for polymers such as polystyrene, PVC and polypropylene. Saudi Arabia is one of the biggest producers of polymers in the world, with Saudi Arabian Basic Industries (SABIC) annually selling about 2.6m tons of polymers, mainly in Europe.

However, Al Khenaifer said he believes Saudi Arabia should speed up and take advantage of the WTO accession. "Countries that we joined into bilateral agreements with have fared better with regards to some of the negotiation conditions. We need to utilize our agreements better to increase our industrial exportation. I believe the new export authority will help us to achieve our goal." Al Khenaifer told OBG, "The export authority [...] should focus on training local SMEs, while internationally it should work on WTO agreements and encourage the private sector to strategically invest abroad in places where the necessary raw materials are located." (OBG06.09)

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11.6 EGYPT: Expanding Oil

International oil extraction and refining firms are being drawn to Egypt as new sources of crude are being found and the government sets out plans to increase output. The Oxford Business Group reported that this past August has seen the discovery of an oilfield in a previously unexplored area, and the announcement of two major oil-sector projects, one by India's largest firm.

Petroleum Minister Sameh Fahmy has announced plans to increase output to 800,000 barrels of oil per day (bpd) next year, taking advantage of newly discovered fields in the Gulf of Suez and the western Sahara, as well as potential new sources in the far south of the country. Egypt produced 678,000 bpd in 2006, down almost 2.5% from the previous year's 696,000 bpd. In 1996, Egypt's production was 994,000 bpd.

Despite this decline, increases in the global oil price have seen oil revenues increase in recent years. While proven reserves have been depleted over the past two decades, from 4.5bn barrels in 1986 to 3.9bn in 1996 and 3.7bn last year, production still outstrips consumption in the country. In 2006, demand reached 612,000 bpd in 2006, down almost 1.8% from 623,000 in 2005, with the remainder exported to other countries.

Existing oil fields include the Qarun block in the south of the country, which produces 34,000 bpd; the Beni Suef IX field in Upper Egypt, producing 5000 bpd from a field thought to contain 100m barrels; the Qattara Depression in the Western Desert, producing 40,000 bpd, and the Khalda and East Bahariyya areas, which between them account for 50,000 bpd.

The government's ambitions to expand the oil sector, newly discovered sources and the fact that a large area of the country has still not been explored have drawn in major international oil and refining firms. The recent cuts in fuel subsidies, which are likely to be reduced further in the medium term, have created a more favorable market for petrol and diesel sales to the domestic market.

On September 3, United Arab Emirate-based Dana Gas announced it had discovered an oilfield 50 miles north of Aswan in the far south of the country, the first discovery of oil in that part of Egypt. A newswire reported that Canada's Centurion International, which was acquired by Dana Gas in 2006, had unearthed the field, which could contain 8m barrels of crude oil 1.3km beneath the surface. The oil field is near the town of Kom Ombo, 900km south of Cairo. Fahmy has recommended the field be tapped as soon as possible, with the crude to be piped to Assuit refineries, also in the south of the country. Fahmy said the development could herald further discoveries of oil in the "virgin region".

The news came hot on the heels on an announcement by Reliance Industries, India's largest company in terms of market capitalization, that it was looking into investing $10bn in Egypt's oil, petrochemicals and plastics sector. Of this investment, $1bn could be invested in a refinery and $7bn into various petrochemicals and plastics industries in the North African country. Prime Minister Ahmed Nazif has thrown his support behind the deal and expressed his hope the oil refinery development in particular will go ahead. Reliance made the announcement after meeting with Egyptian officials in Alexandria. Reliance has so far been reticent on details of the deal, but it has attracted widespread attention across the Middle East and North Africa region and in India.

Meanwhile, one major player looking considerably to increase its upstream activities in the country is Qarun Oil Company, the Egyptian oil wing of Texas-based Apache Corporation. Qarun drilled 42 new wells last year and said it is looking to drill between 75 and 85 wells over the next year and a half. Qarun said it plans to use the true water flood development technique of extraction, which involves pumping water into the well in order to flush the oil out.

Interest has been equally active on the refining side, as international firms look to take advantage of the increased upstream supply as well as growing domestic demand. At the end of August, Japanese trading firm Mitsui & Co announced that it would be working with South Korea's GS Engineering & Construction Corp and Egyptian Refining Company on a $1.8bn diesel oil plant project in Mostorod, north of Cairo.

The plant, to be completed in 2011, is expected to have an initial output of 1.5m tons of diesel oil per year, rising to 2.5m tons when the complex is complete, produced from residue oil from an existing refinery. The new plant will include an 80,000 bpd vacuum distillation unit and a 40,000 bpd hydrocracker, which converts low-quality residues into middle distillate products for which demand is higher.

While Egypt cannot punch on the level of its neighbors in the Middle East in terms of oil production, the government's production targets and the level of private international activity in the sector is indicative of confidence that reserves justify continued exploration, and that the market is strong for producers. (OBG05.09)

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11.7 TURKEY: Growth Slows In Second Quarter To Lowest Since 2002

Bloomberg reported that Turkey's economy lost momentum in the three months through July, expanding at its slowest pace since the first quarter of 2002 as high interest rates squeezed consumer spending. Economic growth slowed to 3.9% from a revised 6.9% in the previous three months, revealed a report by Turkish Statistical Institute (TUIK) on 10 September. The Central Bank raised interest rates 4.25% to 17.5%, the highest level in Europe, last year as it struggled to try and bring inflation down to a 4% target agreed with the International Monetary Fund. Those increases ``successfully'' curbed domestic demand and the bank is considering cutting rates in the last quarter, Central Bank Governor Durmus Yilmaz said on Sept 6. “Consumer demand was low, which confirms the Central Bank's expectation of a slowdown,” said Haluk Birimcekci, chief economist at Fortis Bank. These figures are “supportive of a Central Bank cut in interest rates.” The lira strengthened to 1.3030 to the dollar at 11:30 a.m. local time from 1.3068 before the figures were released.

Falling Inflation

Inflation has fallen from a high of 70% at the start of 2002 to a 37-year low of 6.9% in July. Record levels of exports and government spending ahead of July elections helped sustain the economy's 22nd consecutive quarter of growth. While private consumption spending contracted an annual 0.3% in the quarter, exports grew 12.7%. The economy this quarter had been expected to increase by 4%, according to the median estimate of 12 economists surveyed by Bloomberg. Exports have expanded an annual average of 24% every month this year. They rose to a record $9.1 billion in May as European economies, the destination of almost 60% of Turkish sales abroad, drew in products such as cars and refrigerators. Growth in the three months through June was also helped by government spending on water supplies and roads in the run-up to elections. Non-interest government spending increased 26% in the first six months of the year from the same period in 2006.

Public Construction

Public sector construction leaped 47% in the second quarter from the year before, TUIK said. “Public spending has increased through projects that were accelerated or carried out ahead of plan,” Birimcekci said. “That's helping to support growth before the elections, although that may turn negative in the second half if they cut spending to compensate.” The ruling Justice and Development Party won a second five-year term in the July 22 balloting. The party promises to promote growth and employment by lowering taxes and encouraging foreign investment in the European Union membership candidate. “We expect domestic demand to pick-up in the second half of the year as disappearing political tensions lead to stronger consumer and business confidence,'' Finansbank wrote. “We maintain our 2007 growth estimate at 5.2%.” The Central Bank expects growth of about 5% this year. Weaker domestic demand has slowed industrial production, which increased an average 3% in the three months through June compared with 8.5% in the previous quarter. Output rose 3.5% in July, the statistics office said yesterday. Sales of passenger cars contracted 31% in the first six months of the year from the same period in 2006 as the higher lending costs curbed demand, according to the automobile distributors' association. Second quarter earnings at Ford Otomotiv, the Turkish unit of Ford Motor Co., fell 6.9% from a year earlier as domestic sales declined. (Bloomberg11.09)

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11.8 TURKEY: Ankara Moves To Reduce Dependence On Energy Imports

The Jamestown Foundation (http://www.jamestown.org) reported that the good news in Ankara is that Turkey has one of the most dynamic economies of the Middle East, with an extraordinary GNP growth rate estimated at 6.7% for Q1/07. The bad news is that the rapid rise in oil prices over the past year to record high levels of over $78 has hobbled Turkey's growth potential, as currently around 90% of Turkey's oil supplies are imported (mainly from Saudi Arabia, Iran, Iraq, Syria, and Russia), leading to a serious hemorrhage in the country's balance of payments. In 2006 Turkey's bill for its foreign energy exports was $29b, which this year's record high prices will doubtless exceed.

Turkey's gross domestic product has expanded an average of 7% a year since Prime Minister Recep Tayyip Erdogan's AKP party was first elected in 2002. Inflation has fallen from triple digits in the early 1980s and the mid-1990s and bottomed out at 6.9% in July, the country's lowest rate since 1970, despite rising energy costs.

The country's energy shortfall has spurred Turkey to aggressively seek both additional outside sources of energy and to ramp up its indigenous production of hydrocarbons, with both policies unsettling her neighbors and allies.

Striving to lessen dependency on imports, domestic production, which in 2006 generated a mere 6% of the nation's crude oil and 1% of its natural gas needs, has risen to 8.7% and 2.6% respectively. The Turkish State Petroleum Company (TPAO), and foreign operators Royal Dutch/Shell (Shell) and ExxonMobil currently account for the majority of the country's oil production. While TPAO's efforts currently pump about 80% of Turkey's production, they remain the proverbial drop in the bucket, at about 44,000 barrels per day.

On the positive side, last month Turkish Energy and Natural Resources Minister Hilmi Guler said that Turkey would cooperate with Iraq to transfer Iraqi natural gas to Europe via Turkey after signing a memorandum of understanding with Iraqi Oil Minister Husayn al-Shahristani during his visit to Ankara. Turkey already benefits from the Iraqi-Turkish Kirkuk-Yumurtalik oil pipeline, which intermittently runs at a capacity of 400,000 barrels per day. Turkey's support for stabilizing Iraq's damaged energy infrastructure greatly contributes to the Bush administration's efforts to stabilize the country and provides much needed revenue for rebuilding.

Washington also strongly supported Turkey's bid for the Baku-Tbilisi-Ceyhan pipeline, which began operations in May 2006. BTC has proven a windfall for Turkey and now contributes more than $200m annually in transit fees to the Turkish treasury, an amount certain to increase as projected throughput of BTC is slated to rise to 200 million tons of crude flowing into Ceyhan annually. The Bush administration has also persistently championed Turkish efforts to position itself as an essential east-west energy transit corridor, a policy that undercuts both Russian and Iranian influence over burgeoning Caspian hydrocarbon exports.

Washington is much less happy with Ankara's determination to press ahead with a controversial deal signed in July with Iran to develop three gas projects in the giant South Pars offshore gas field in the Persian Gulf and build two pipelines to transport an estimated 30 billion cubic meters of Iranian and Turkmen gas annually through Turkey for resale to Europe. The Bush administration is fearful that the Turkish action could weaken, or perhaps fatally damage, its economic blockade of Iran as embodied in the 1996 Iran-Libya Sanctions Act.

Washington's unease over Turkey's energy rapprochement with Tehran, however, paled into insignificance to the outrage from Ankara when Nicosia announced in February that it would begin to grant energy exploration licenses for southern Cypriot Mediterranean waters. Ankara countered by promptly granting TPAO licenses to explore in Turkey's Mediterranean coastal waters. Farther north, TPAO reports that first gas is imminent from its East Ayazli and Ayazli fields in the Black Sea, according to TPAO's partner Stratic Energy.

In direct contrast with policies in Russia and much of the Middle East, Turkey is also opening up its domestic energy market to foreign investment. In an effort to secure much-needed foreign investment in its energy infrastructure Ankara will hold a second tender for the sale of Turkey's natural gas distribution grids before the end of the year, according to BOTAS general manager Saltuk Duzyol. The sale follows the recent passage of a new law requiring BOTAS, Turkey's state-owned pipeline company, to reduce its ownership of gas contracts to below 20% of national consumption by the end of 2009.

While Ankara's primary goal is to reduce its dependence on foreign oil and gas, its increasingly sophisticated energy policy is unlikely to completely alienate any of its allies or suppliers. With increasing exploration onshore and in the Black and Mediterranean Seas, Turkey's efforts, combined with opening up its energy sector to increased foreign investment and its growing role as a primary east-west energy transit corridor, seems certain to meet its energy requirements for the foreseeable future. It is hardly a surprise that Erdogan's AKP party, primarily responsible for the country's dynamic growth over the last five years, chose a glowing light bulb as its symbol. (JF08.09)

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- Israeli Shekel conversions done at a rate of NIS 4.10 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.5 = $1.00
- Cypriot Pound conversions done at a rate of C£ 1.00 = $1.60
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.70 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 60 = $1.00

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