• Israel's Budget Deficit Under Forecast
• California Pizza Kitchen Expands Persian Gulf Franchise Deal
• Jordan's Medical Tourism Revenues Reach JD 1 Billion in 2009
• Bulgaria's Eurozone Quest Will Begin In January
• Abu Ghosh Secures Guinness World Record for Largest Dish Of Hummus
• Israeli Scientist Makes Safe Pesticide from Killer Scorpion Venom
• Israel's Inflation Zero in December – Annual Inflation at 3.9%
• EGYPT: The ElBaradei Effect on Egyptian Politics
  

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 CVI Melles Griot Selects MDE Optics as Exclusive Sales Representative in Israel
2.2 Lantiq Acquires IP & Assets from Metalink
2.3 ECI Telecom Receives 2009 Cable.TMCnet.com Product of the Year Award
2.4 DVTel Acquires Analytics Leader ioimage
2.5 Port of Haifa to Replace Its 20-Year-Old Terminal Operating System With Navis SPARCS N4
2.6 Siano Gears Up for Steep Growth & Raises $24 Million in Round D Funding
2.7 ECtel Completes All-Cash Merger Transaction with cVidya Networks
2.8 CIC & Shadow Computers Partner to Deliver Electronic Signature Solutions in Israel

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Middle East Ground Handling & Maintenance Companies Set For Growth
3.2 Jordan Information Ministry & Ingres Sign Deal On Open Source
3.3 ATCi Integrates 3 Fly Away Broadcast Systems for Large Iraqi Broadcaster
3.4 California Pizza Kitchen Expands Persian Gulf Franchise Deal
3.5 Costa Eyes More Than 100 UAE Outlets by 2014
3.6 Rotana Group to Expand to 68 Hotels By 2012
3.7 Misonix Announces New Distribution Agreement for Kingdom of Saudi Arabia
3.8 Dresser Roots Helps to Meet Urgent Need for Clean Drinking Water in Rural Egyptian Villages
3.9 Doubletree by Hilton Arrives in Turkey
3.10 Doubletree by Hilton Expands to Greece
3.11 HairDX Genetic Hair Loss Tests Available In Greece Through International Distribution Agreement

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Sunday Energy To Build Solar Facility On Water Reservoir

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan's Medical Tourism Revenues Reach JD 1 Billion in 2009
5.2 Jordan Trade Deficit Narrows
5.3 Half of Jordan's Imports Come From Six Countries
5.4 Unemployment in Jordan Rises
5.5 Iraq Moves A Step Closer To Nabucco
5.6 Kuwait Parliament Approves $23 Billion Debt Bailout Bill
5.7 Kuwait & Areva Sign Nuclear Cooperation Deal
5.8 Qatar to See Big Increase in Hotel Rooms in 2010
5.9 Dubai Economy Seen Contracting in 2010
5.10 Dubai Sees 2010 Budget Deficit of $1.6 Billion
5.11 Oman Inflation Eases to Lowest Level In Five Years
5.12 Oman's GDP Falls By 27% to End of 2009's Third Quarter
5.13 Goldman Sachs Says Saudi Economy to Grow by 4.5% in 2010
5.14 Saudi Arabia & China Plan To Boost Trade Volumes to $60 billion by 2015
5.15 Saudi Tourism Sector Seen Growing 6.5% to 2013
5.16 Egypt's Core Inflation Up While Annual Inflation Steady
5.17 Egypt Launches New Campaign To Lure Tourists
5.18 Egypt to Grow Wheat in Uganda
5.19 Pakistan's Soft Drinks Sales to Increase 39.8% to $233 Million by 2014

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Fitch Rates Turkey's $2 Billion 2040 Eurobond 'BB+'
6.2 Turkish Pharmaceutical Market Outlook to 2014
6.3 EU Issues Stern Message to Greece
6.4 Greece's Inflation Picks Up To 2.6% In December
6.5 Cyprus' December 2009 Inflation Rises to 2%
6.6 Cyprus' 2009 Inflation Rate Lowest For 44 Years
6.7 Cyprus Tourism Down 10.9% in 2009
6.8 Greek Construction Activity Down 17% in October
6.9 Bulgaria's Eurozone Quest Will Begin In January

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israeli Aid Effort in Haiti
7.2 Tu B'Shevat Observed on 29/30 January
7.3 Joint German-Israeli Cabinet Meeting
7.4 Abu Ghosh Secures Guinness World Record for Largest Dish Of Hummus

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*REGIONAL:

7.5 Jordan Moved From ‘Partly Free' To ‘Not Free' Category
7.6 Israeli Government Minister Officially Visits Abu Dhabi
7.7 Ankara Delays New Constitution & Instead Focuses on EU Reforms
7.8 Bulgaria PM Borisov Finally Leads Own GERB Party

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Israeli Medical Research Offers New Hope for Treating Childhood Leukemia
8.2 Israeli Scientist Makes Safe Pesticide from Killer Scorpion Venom
8.3 Pluristem Therapeutics Announces Interim Results from PLX-PAD Clinical Trials
8.4 Japan Approves First Non-Invasive Technology for Treatment of Uterine Fibroids
8.5 Moody's Upgrades Teva Rating to A3

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Discretix Announces Embedded Security Solutions for Media Phones
9.2 Celeno Announces 2nd Generation CL1800 Beam Forming 802.11n Chipset
9.3 Lucid Highly Anticipated HYDRA Now Available on MSI's Big Bang Fuzion Motherboard
9.4 Cable &Wireless Selects ClickSoftware for Optimized Mobile Workforce Management
9.5 MediaTek Selects RADVISION Technology for Mobile Handset SoC
9.6 PineApp New MASA Solution - Email Security &Archive Security in One Product
9.7 BroadLight & Realtek Deliver GPON and Active Ethernet Reference Design
9.8 Voltaire Scale-Out InfiniBand Fabric Accelerates South Africa's Largest Supercomputer

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Inflation Zero in December – Annual Inflation at 3.9%
10.2 Israel Trade Deficit Hits 19 Year Low
10.3 Foreign Residents Buy Fewer Apartments In 2009

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11: In Depth

11.1 MIDDLE EAST: Bouncing Back from the Brink
11.2 ISRAEL: Summary of Israeli High-Tech Company Capital Raising - 2009
11.3 LEBANON: Health Boost
11.4 JORDAN: A Year In Review - 2009
11.5 KUWAIT: A Year in Review 2009
11.6 BAHRAIN: Strength in Diversity
11.7 BAHRAIN: Building Momentum
11.8 UAE: Abu Dhabi's Year in Review 2009
11.9 UAE: RAK's Year In Review 2009
11.10 OMAN: Year in Review 2009
11.11 OMAN: Aviation Lift-Off
11.12 SAUDI ARABIA: Fitch Affirms Saudi Arabia at 'AA-'; Outlook Stable Ratings
11.13 EGYPT: The ElBaradei Effect on Egyptian Politics
11.14 TUNISIA: Exporting Health Care
11.15 TURKEY: A Year in Review 2009
11.16 TURKEY: Moody's Upgrades Government Ratings to Ba2/Stable
11.17 BULGARIA: EU Debt Crisis Imperils Bulgaria's Euro-Zone Bid

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Israel's Budget Deficit Under Forecast

Israel's Ministry of Finance announced on 13 January that the budget deficit will total NIS 39.3b in 2009, 5.15% of GDP, compared with the forecast deficit of 6% of GDP. The difference is about NIS 6.5b. The calculation assumes a GDP of NIS 763b. The Ministry of Finance noted that the budget deficit, as a proportion of GDP, ratio fell for four successive years from 5.4% in 2003 to zero in 2007, before climbing again to 3.1% in 2008 and 5.15% in 2009. In November-December 2009, the growth in the deficit that had characterized the preceding 12 months ended. The Ministry of Finance believes that the positive turnaround in the deficit will continue in 2010. The Ministry of Finance attributes the lower than expected budget deficit to higher than expected tax revenues, lower than expected interest payments, and a higher than expected GDP.

Tax revenues in 2009 were NIS 177.7b, about NIS 4.8b more than the expected NIS 172.9b. Total revenue was NIS 3.3b more than projected in the budget, while interest payments were NIS 1.8b less than planned. The higher than expected GDP contributed 0.15% to the lower than expected deficit-to-GDP ratio. Net spending was 99.3% of the spending in the original budget, while spending by ministries was 100%. Most ministries spent more than 100% of their budgets for the year, by utilizing budgeted funds left from previous years. (MoF13.01)

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1.2 Government Approves Routes for Tel Aviv-Jerusalem Fast Train

On 17 January, the cabinet approved the supplementary outline plan for the Tel Aviv-Jerusalem high-speed train. The approval clears the way for work on the section of the line through the Judean Mountains from Sha'ar Hagai, through Nahal Yitle and Emek Ha'arazim at the western entrance of Jerusalem. The National Planning & Building Commission approved the route in August 2009, after a long struggle with environmental groups, who argued that the route would cause irreversible damage to the unique ecological value of Nahal Yitle. After long delays and a NIS 4b cost overrun, the railway line is due to be completed by early 2017. The project's authorizing authority, a special body set up by the National Planning Commission, still has to submit details plans and an environmental impact statement for the section of the railway from Ben Gurion Airport to Jerusalem. This special body includes representatives of the Ministries of Interior, Transport and Environmental Protection, and professional and environmental groups. (Globes 18.01)

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1.3 Peres Presides Over Launch of Negev Development Fund

On 7 January, Israel's President Peres presided over the launch by Bank Leumi and the Koret Foundation's Koret Israel Economic Development Funds (KIEDF) of their NIS 600 million fund for the development of the Negev. The seven-year program aims to help the development of small and mid-sized businesses in the south. The US government's Overseas Private Investment Corporation will provide a $10 million secondary guarantee for the program. The Koret Foundation and the Portland Trustare provided the funding. The program will extend loans of NIS 50,000 to NIS 1.2 million. The loans will bear Prime + 1.5% interest, lower than the usual interest rate for business transactions. The equity threshold for eligible businesses is less than the level required for regular credit. (Globes 07.01)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 CVI Melles Griot Selects MDE Optics as Exclusive Sales Representative in Israel

Albuquerque, NM'S CVI Melles Griot has entered into an agreement with MDE Optics to be the exclusive CVI Melles Griot sales representative in Israel. MDE Optics has over twenty-two years of experience in the Israeli marketplace specializing in R&D, manufacturing, and business development activities in the semiconductor equipment, machine vision, automated inspection and military/aerospace markets. Located in Yavne, near Rehovot, MDE Optics will represent the entire range of CVI Melles Griot products and services, including: optical components and optical systems, vibration isolation and opto-mechanical positioning components and systems, lasers, and instruments; the industry's most comprehensive offering of optical, photonic, and laser products, from the deep ultra-violet to the far infrared spectral region. MDE Optics is an affiliate of Gal-Shvav Group, the highly respected high-tech engineering services and manufacturing company, and is co-located in the Gal-Shvav headquarters building. MDE Optics provides complete sales, technical, applications engineering and business administrative support to its valued customers. Serving semiconductor, biotech, industrial, commercial, aerospace and research industries, CVI Melles Griot is a leading global supplier of photonics products including optical components and systems, lasers, motion-control systems, laser measurement instrumentation and opto-mechanical hardware. (CVI Melles Griot 08.01)

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2.2 Lantiq Acquires IP & Assets from Metalink

Neubiberg, Germany's Lantiq, a leading company in next-generation Access and Home Networks, today announced its second acquisition shortly after becoming a stand-alone company. Lantiq acquired WLAN (Wireless Local Area Network) related assets and intellectual property (IP) from Yakum, Israel based Metalink (http://www.mtlk.com), a leading provider of high performance wireless communication silicon solutions with the capability to deliver HD- video-streams over the 802.11n standard. The transaction was signed on 6 January and closing is expected for the end of January. The purchase price is up to $16.9 million; including an $8.9 million initial payment and an up to $8 million additional payment based on future performance. Lantiq also announced the establishment of a technical competence center in Yakum, Israel, where a team of about 50 experienced engineers will drive innovation. The acquired 802.11n MIMO-technology (Multiple Input Multiple Output) features -- in contrast to today's conventional WLAN solutions -- flawless and unobstructed HD-Video streaming over Wireless-LAN without making any compromise to Quality-of-Service. Lantiq will integrate the technology in its existing roadmap and future products. In addition to reference designs, first ICs produced in 65nanometer process technology are already sampling and will be available for mass production in spring 2010. (Lantiq 06.01)

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2.3 ECI Telecom Receives 2009 Cable.TMCnet.com Product of the Year Award

The CESR 9710 Carrier Ethernet Switch/Router platform from ECI Telecom has been named a 2009 Cable.TMCnet.com Product of the Year by Technology Marketing Corporation (TMC). ECI's innovative SR9710 uses best-of-breed technology to bring the qualities of transport products to service providers, creating a scalable packet platform for the Metro core and aggregation domains. The SR9710 Carrier Ethernet Switch/Router (CESR) is a cost-effective, MEF (Metro Ethernet Forum)-certified solution that enables service providers to enjoy a broad portfolio of business and residential services such as Triple Play services, Layer 2 Virtual Private Networks (VPNs), IP VPNs and Metro Ethernet services (E-Line, E-LAN, E-Tree). The 9700 Series works in concert with the entire ECI portfolio to provide a complete solution tied together by ECI's 1Net architectural framework – a strategic approach designed to enable gradual, cost-effective transition to next generation networks and services. The 1st Annual Cable.TMCnet.com Product of the Year Award winners will be featured on the Cable.TMCnet.com Web site and published in its e-newsletter.

Petah Tikva'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. Founded in 1961, ECI has consistently delivered customer-focused networking solutions to the world's largest carriers. The Company is also a market leader in many emerging markets. ECI provides scalable broadband access, transport and data networking infrastructure that provides the foundation for the communications of tomorrow, including next-generation voice, IPTV, mobility and other business solutions. For more information, please visit. (ECI 11.01)

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2.4 DVTel Acquires Analytics Leader ioimage

Ridgefield Park, NJ's DVTel, multiple award-winning market leader in the development and delivery of intelligent security solutions over IP networks, announced that two network video surveillance industry pioneers are coming together with DVTel's acquisition of ioimage, the leader in intelligent video appliances. The decision to acquire ioimage is central to DVTel's on-going strategy to innovate end-to-end, IP-based physical security solutions so that they continue to grow to meet the changing needs of its customer base. Over the past 18 months, the company has seen a significant increase in the number of third-party analytics solutions integrated with DVTel's enterprise level systems around the globe. It increasingly made good strategic sense to offer the very best analytics capabilities as part of DVTel's own iSOC solution. By adding the ioimage product portfolio to DVTel's extensive list of IP-based offerings, the company is providing end users the ability to purchase the most in-demand products from one source, with the added benefit of true system unification, and not just integration.

Herzliya Pituah's ioimage (http://www.ioimage.com) is the market leader and pioneer in the intelligent video appliance market. It provides high-performance video encoders and cameras with built-in, self sustaining video analytics. The appliances are designed and packaged for simplicity and from the start have always offered a new approach to video security by transforming surveillance into a proactive, event-driven process. ioimage, founded in 2000, uses edge and centralized DSP-based devices for real-time detection, alert and tracking of intruders, vehicles and other threats, resulting in significantly improved safety and security for government and commercial organizations. (DVTel 12.01)

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2.5 Port of Haifa to Replace Its 20-Year-Old Terminal Operating System With Navis SPARCS N4

Oakland, California's Zebra Enterprise Solutions, a division of Zebra Technologies, announced that the Haifa Port Company in Israel will support its expected growth by replacing the company's 20-year-old container management system with Navis SPARCS N4, the industry's leading and most advanced terminal operating system (TOS). The Port of Haifa, which sits on the shores of the Bay of Haifa on northern Israel's coast in the Eastern Mediterranean Sea, will implement SPARCS N4 during the second half of 2010. The port's container terminals include the Western, Eastern, Carmel and Kishon terminals. The Carmel Container Terminal is currently being used only as a storage area, but will be fully used as the Port's newest and most advanced container terminal in 2010. The Port of Haifa, which is the main gate for Israeli trade, was established in 1933 and expanded substantially since then, to become the largest container handling port in Israel, serving the major industries in this country. In 2008, three of the Haifa port terminals – Eastern, Western and Kishon - showed total throughput of 1.25 million TEU's. The Port of Haifa is expected to increase to 2.5 million TEU's in the coming years, after the Carmel new container terminal is fully operational, Regev said. (ZT 12.01)

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2.6 Siano Gears Up for Steep Growth & Raises $24 Million in Round D Funding

Siano Mobile Silicon announced the completion of a $23.5M fourth round of funding. The round consists exclusively of all of Siano's existing investors: JVP, DFJ-Tamir-Fishman, Star Ventures, Walden Israel and Bessemer Venture Partners. Founded in late 2004, Siano are pioneers of the multi-standard approach. Their highly integrated silicon receiver chips enable high-performance, fast time-to-market mobile TV in emerging markets such as China, Brazil and Europe. This financing round marks the completion of the transition that Siano made in the last year, from a start-up company to an established volume supplier to multiple international brands such as Samsung, Motorola, ZTE, Huawei, Mio, Garmin, Dell and many others. The new funds will help Siano solidify this position, build sufficient product inventory to secure vast supply and in parallel continue to develop new products and penetrate new markets. Netanya's Siano Mobile Silicon (http://www.siano-ms.com) is the leading mobile digital TV chip maker in the world. Pioneers of the multi-standard approach, Siano's highly integrated silicon receiver chips enable high-performance, fast time-to-market mobile TV solutions for handheld device makers. Siano offers a complete family of MDTV receiver chips for the key emerging mobile TV markets in Europe, South America and China and works closely with global tier-1 PC and mobile handset manufacturers. (Siano 12.01)

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2.7 ECtel Completes All-Cash Merger Transaction with cVidya Networks

Rosh HaAyin's ECtel (http://www.ectel.com), a leading provider of Integrated Revenue Management(TM) (IRM(R)) solutions for communications service providers, has completed the sale of the Company to cVidya Networks, a global leader in telecom revenue management, risk management, and dealer management solutions, by way of a merger pursuant to the merger agreement dated October 22, 2009, in a cash transaction valued at $21 million (less transaction expenses of approximately $434,000). The merger agreement was approved by holders of approximately 99.7% out of over 70% of ECtel's outstanding shares that were voted at an extraordinary general meeting held on December 11, 2009. Tel Aviv's cVidya Networks (http://www.cvidya.com) is a global leader in telecom Revenue Management, Risk Management and Dealer Management solutions. Based on highly-advanced revenue assurance technologies, full compliance with industry standards, and market proven methodologies, cVidya`s MoneyMap platform has already helped to reduce costs and reclaim hundreds of millions of dollars in lost revenues for leading fixed, mobile and triple-play communication service providers. (Ectel13.01)

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2.8 CIC & Shadow Computers Partner to Deliver Electronic Signature Solutions in Israel

Redwood Shores, California's Communication Intelligence Corporation, a leading supplier of electronic signature solutions for business process automation in the financial industry and a leader in biometric signature verification and Shadow Computers, a leading Israeli banking and insurance software developer and consulting company specializing in implementing computer technology to automate workflow and streamline paperless business processes, have signed an agreement for integrating and reselling CIC's full suite of electronic signature solutions in Israel. Under the terms of the agreement CIC will provide its electronic signature technology for Shadow's InSure-Thesigner document platforms to enhance the form, functionality and ease-of-use of its systems as well as other software and platforms. InSure-Thesigner was designed to leverage an organization's existing IT investments to enable quick and easy deployment. CIC's eSignature capabilities can be quickly added to the existing application and can be used to sign widely accepted document formats, including Word, Excel, Adobe Acrobat and HTML. Once signed the signature is permanently embedded in the document which is streamed into the organization's existing workflow, content management and document storage systems. Tel Aviv's Shadow Computers (http://www.shadow.co.il), also known as Tsel Mahashevim Ltd., is a leading Israeli banking and insurance software developer and consulting company specializing in implementing computer technology to automate workflow and streamline paperless business processes. (CIC13.01)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Middle East Ground Handling & Maintenance Companies Set For Growth

Aircraft fleets are slated to increase in the Middle East because of airport expansion plans as well as order backlogs of commercial aircraft and business jets. However, the market for airside services across airports in the Middle East is predominantly monopolistic with challenges relating to imbalances in future demand and supply. Large-scale market consolidation and sub-contracting will shape the industry and drive overall revenues. New analysis from Frost & Sullivan (http://www.aerospace.frost.com), Middle East Airport Airside Services Market Assessment, finds that the market earned revenues of $1.92 billion in 2008 and estimates this to reach $2.83 billion in 2015. Revenues from commercial aircraft are expected to constitute a major share as a result of a growing fleet size and greater average cost of handling and maintenance. The region is projected to have 1,206 aircraft and 708 business jets that will result in the traffic growing by about 10% within the Middle East. The cumulative effect of these factors reflects in the market growth. The aircraft movement across the region's airports is anticipated to grow at a compound annual growth rate (CAGR) of 4.8% between 2008 and 2015.

The market for ground handling and maintenance is correlated to the aircraft movement, spurred by the rise in passenger traffic. The increase in aircraft movement directly translates to revenues for ground handling and maintenance companies. The focus for many companies wanting to enter the market will be on enhancing their capabilities to cater to business jets that have a greater average cost of ground handling and maintenance. However, a major challenge lies in maintaining the service quality while adhering to environmental policies. Large-scale liberalization and private participation in ground handling and maintenance at airports will ensure that the airside service market functions smoothly and grows amidst competition. (BI-ME 05.01)

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3.2 Jordan Information Ministry & Ingres Sign Deal On Open Source

The Government of Jordan and Redwood City, California's Ingres, an open source database management company, have signed an MOU to promote open source software adoption in the country. The MOU between Ingres and the Ministry of Information and Communications Technology of Jordan (MOICT), aims to increase expertise and competence around open source software, to make Jordan a regional centre for open source software. The MOU will initially focus on universities in Jordan, with the establishment of an open source laboratory in a Jordanian university, and boot camps and free training to certify individuals in open source. Arabic language training will be provided by Ingres' partner Duroob. Ingres will also work to support MOICT initiatives to promote open source through workshops, academic initiatives and local partner support. Under the MOU, the Jordanian government will make open source software an alternative in government software purchasing decisions, and will also agree to assign resources to develop new functions for Ingres' open source database. The agreement also includes an undisclosed project to develop government services, for which Ingres will train government specialists. (ACN 15.01)

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3.3 ATCi Integrates 3 Fly Away Broadcast Systems for Large Iraqi Broadcaster

Phoenix' Antenna Technology Communications, a provider of commercial satellite communications systems, has integrated 3 complete Fly Away Broadcast Systems for a major Iraqi broadcaster. ATCi provided 3 fully redundant, state-of-the-art Fly Away systems that this broadcaster will use to transmit news, sports and video throughout Iraq and surrounding countries. ATCi customized these 3 packages to meet this broadcaster's unique applications and budgetary requirements. The systems are completely agile with extreme flexibility for broadcast and IP requirements. Training for the systems took place at the customer site and was included in the packaged price. ATCi enhances its customers' opportunity for profit by providing custom global, ground-based satellite communications systems and broadband services. (ATCi13.01)

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3.4 California Pizza Kitchen Expands Persian Gulf Franchise Deal

Los Angeles' California Pizza Kitchen, Inc. announced the expansion of their original agreement with Gourmet Gulf Company, an existing franchise partner. Under the new agreement, Gourmet Gulf Company will develop 19 restaurants throughout the Persian Gulf over the next 10 years. During the term of the agreement at least one California Pizza Kitchen restaurant is planned to open in each of the following Persian Gulf countries: United Arab Emirates, Kuwait, Oman, Saudi Arabia, Qatar and Bahrain. Under the original agreement, Gourmet Gulf Company was to open a minimum of three California Pizza Kitchen restaurants over a two year period in the United Arab Emirates (UAE). The first restaurant opened in Dubai Mall in January of 2009. Headquartered in Dubai, UAE, Gourmet Gulf Company is a joint venture between Daud Arabian Trading Co. and Itihad International Investment Company. It is a leading regional restaurant holding group that owns and manages concept brands such as Gourmet Burger Kitchen, Morelli's Gelato and Yo! Sushi. (CPK13.01)

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3.5 Costa Eyes More Than 100 UAE Outlets by 2014

UK based Costa Coffee in the UAE is planning to open 10 new outlets in 2010, including a focus on Abu Dhabi. The company's UAE general manager said Costa Coffee was committed to the country and was capable of operating in excess of 100 stores in the UAE over the next three to five years. Since 1999, the brand has opened 70 stores in the UAE and in the past five years Costa had seen growth on average of 27%. Costa has just celebrated the 10-year anniversary of its first international store, which was opened in Dubai. A large UK expatriate community was already established, in the UAE and Dubai in particular, many of whom would have already experienced Costa coffee in the UK. So it made sense to look at expanding into the region. The competitor environment had changed enormously in the last 10 years. From a handful of branded coffee shops there are now 260 in the UAE, of which 200 are in Dubai alone. (AB05.01)

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3.6 Rotana Group to Expand to 68 Hotels By 2012

Abu Dhabi based Middle Eastern hotelier Rotana has announced that it plans to expand its portfolio of properties to 68 by 2012 and is aiming to have a presence in every major city in the Middle East and North Africa. The hotel management company has signed new management agreements for properties in Cairo, Jordan, Oman, Iraq, Qatar, the UAE and Saudi Arabia. Over the next four years, Rotana will open ten hotels per year. By 2012 the group aims to open eight properties in Abu Dhabi, one in Al Ain, two in Amman, one in Bahrain, one in Baghdad, one in Beirut, three in Dubai, two in Doha, five in Egypt, one in Erbil, one in Fujairah, one in Homs, one in Ras Al Khaimah, one in Salalah, two in Sharjah, one in Sohar and 17 in Saudi Arabia. (AB29.12)

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3.7 Misonix Announces New Distribution Agreement for Kingdom of Saudi Arabia

Farmingdale, NY's Misonix, a developer of minimally invasive ultrasonic medical device technology, which in Europe is used for the ablation of tumors and worldwide for other acute health conditions, has entered into a new, three year distribution agreement with Thimar Al Jazirah Health Care, based in Riyadh, Saudi Arabia. Thimar will distribute the SonaStar Ultrasonic Surgical Aspirator and the BoneScalpel Ultrasonic Bone Cutter. The agreement provides Thimar with the exclusive rights to sell in Saudi Arabia and includes minimum purchase requirements. Thimar is recognized for successfully introducing state-of-the-art medical devices and capital equipment to the Saudi Arabian surgical marketplace and has a particular expertise in Neuro, Spine and Orthopedic surgery. Training of their personnel will be accomplished at a late January sales meeting in Dubai. (Misonix 07.01)

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3.8 Dresser Roots Helps to Meet Urgent Need for Clean Drinking Water in Rural Egyptian Villages

ROOTS blowers, manufactured by Houston's Dresser, a leader in providing highly engineered products for global infrastructure projects, have been specified for a project that is making potable water available to villages in Upper Egypt where it is desperately needed. The project deploys portable, turnkey water treatment plants to rural villages to purify local water and prevent outbreaks of waterborne illnesses. Typically these plants produce 100 m3 (approximately 26,500 gallons) of clean water per hour. The Dresser Roots Egyptian distributor, Tartoussieh Engineering of Cairo, supplied 249 of the ROOTS Universal RAI blower packages to the three contractors – Veolia, Pharoahs Engineering and Aircraft Factory Helwan – who were selected to provide the water treatment plants. ROOTS blowers were chosen for the project because of their rugged construction and flexible configuration to meet a wide variety of installation specifications. (Dresser13.01)

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3.9 Doubletree by Hilton Arrives in Turkey

Hilton Worldwide announced the signing of two franchise agreements for Doubletree by Hilton hotels in Turkey. One of the new hotels will be located in Istanbul and a second in Cappadocia and are anticipated to open in mid 2010. This latest announcement marks Doubletree by Hilton's entry into the Turkish market, the continued growth of Hilton Worldwide in Europe, and the further development success of the upscale, full-service Doubletree by Hilton brand. With these latest signings, Hilton Worldwide now has a total of 15 hotels in the pipeline, across its portfolio of brands in Turkey. The company has its sights set on continued strategic growth in the country. Doubletree by Hilton, Avanos-Cappadocia - owned by Ata Turizm Isletmecilik Tasimacilik, will offer 126 bedrooms, meeting facilities, a restaurant, bars, indoor and outdoor swimming pools and a spa. This hotel conversion will see a freshly refurbished hotel provide internationally recognized and branded accommodation in one of the world's greatest historical sites, which is famous for its ancient carvings, traditional Cappadocia dwellings and outstanding natural beauty. Doubletree by Hilton, Istanbul-Old City - owned by Erpet Turizm Insaat Taahhut, will offer 172 bedrooms, meeting facilities, restaurant, lobby and rooftop bars, fitness and Turkish sauna facilities. Located in the Old Peninsula area of Istanbul, the new build hotel will be in the heart of the city's historic, cultural and commercial district and will be located close to major tourism destinations such as the Grand Bazaar, Sultanahmet, the Blue Mosque, Hagia Sophia, Topkapi Palace and the historic Istanbul University building. (Hilton 15.01)

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3.10 Doubletree by Hilton Expands to Greece

Hilton Worldwide signed a franchise license agreement with Akti Helona to operate a Doubletree by Hilton Resort on the island of Kos in Greece. Scheduled to open in May 2010, the Doubletree by Hilton Resort, Kos – Helona will be Hilton Worldwide's second property in Greece and the country's first Doubletree by Hilton, marking further growth of this upscale, full-service brand across Europe. Hilton Worldwide currently operates one hotel in Greece, the Hilton Athens in the capital's city centre. Doubletree by Hilton Resort, Kos – Helona is on the south-eastern coast line of Kos Island. The hotel, which originally opened as an independent hotel in June 2009, will offer 238 rooms including 15 suites and three villas, two restaurants and bars, a spa and fitness area, a private beach as well as 800 square meters of meeting space, including a room able to accommodate up to 700 people. Doubletree by Hilton is an upscale full-service brand that has seen remarkable growth since its first introduction in Europe in spring 2008. Ten properties are now open across Europe in the UK, Italy and Slovakia, with development projects confirmed in Russia and Romania. (Hilton 07.01)

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3.11 HairDX Genetic Hair Loss Tests Available In Greece Through International Distribution Agreement

The HairDX Genetic test for predicting the risk of male or female hair loss became available in Greece with the announcement of a distribution agreement between DERMAMED Co and Irvine, California's HairDX. DERMAMED Co. will introduce the genetic tests to Greece, and will be the first and only Greek medical company offering a complete approach to all hair loss issues. HairDX's easy to use genetic test provides an understandable genetic analysis of a man's or woman's likelihood of developing Androgenetic Alopecia, the most common type of hair loss. DERMAMED Co. deals on a regular basis with all four largest Hair Transplantation Clinics in Greece as well as many of the top practicing Dermatologists and Plastic Surgeons. The company also shares materials, products and scientific know-how is shared with the University of Athens Dermatology Clinic and numerous other Dermatological and Plastic Surgery clinics, public and private. The HairDX Genetic Test for Hair Loss is also available as a CE Marked product under the European In Vitro Diagnostic Directive. (HairDX12.01)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Sunday Energy To Build Solar Facility On Water Reservoir

Israeli solar systems integrator Sunday Energy (http://www.sundayisrael.com) signed an agreement with Kibbutz Zeelim in the Negev to install a 5-megawatt photovoltaic power facility on a water reservoir on the kibbutz's land. The project will cost an estimated NIS 100 million, and Zeelim has an option to share in the financing and own up to 50% of the facility. The Planning and Building Commission for Engineering Installations has already approved the use of the land, which means that Sunday Energy and Zeelim should be able to obtain the necessary regulatory permits quickly. This is the first project in Israel to install a solar panel array on a water reservoir. Sunday Energy says that this is the largest project of its kind in the world to date. Sunday Energy will develop and apply innovative technologies for building a photovoltaic panel array over a water surface, using either floats or another proprietary structure that will use the reservoir's water to cool the panels, which will boost electricity production. Sunday Energy said that the photovoltaic panel array will reduce evaporation from the reservoir, which falls by one centimeter a day during summer due to evaporation. (Globes 13.01)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan's Medical Tourism Revenues Reach JD 1 Billion in 2009

Jordan's revenues from medical tourism sector in 2009 reached JD1 billion ($1.4 billion), according to the Executive Director of Jordan Enterprise Development Corporation (JEDCO) Al Qudah. He said medical tourism in 2009 received a push forward when more than 210,000 medical tourists visited the Kingdom. The increase in the number of medical tourists stood for 10% compared to previous years. Al Qudah was speaking on the sidelines of a press conference held by Jordan's Private Hospitals Association and the JEDCO to announce the conclusion of a visit by medical and media delegations from Yemen, Sudan and Libya. He said that Jordan has managed to attract medical tourists from the U.S. Eastern Europe and Asia, thanks for high quality of medical services in Jordan. Jordan, he affirmed, is one of the leading countries in terms of healthcare services. The visiting delegations were briefed on the Jordanian experiment and expertise in terms of medical services and hospitals' accreditation. (Petra12.01)

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5.2 Jordan Trade Deficit Narrows

The Department of Statistics announced that Jordan's trade deficit declined by 17.9% during the first ten months of 2009 to reach JD4.979 billion, compared with JD6.063 billion in the same period of 2008. The data showed that the total value of imports decreased at the end of November 2009 by 19.3% to JD9.077 billion compared with JD11.521 billion in 2008. The report added that total value of last year's exports recorded a drop by 20.6% totaling JD3.232 billion compared with JD4.071 billion in 2008. The trade deficit is the difference between the value of imports and exports. In a recent interview, Prime Minister Rifai said the kingdom's budget requires immediate action, such as cutting deficit and carrying out an actual restructuring of public expenditure, noting that the deficit increased by 60% to reach JD1.47 billion from JD689 million. (Petra13.01)

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5.3 Half of Jordan's Imports Come From Six Countries

Imports from Saudi Arabia, China, USA, Germany, Egypt and South Korea accounted for 51.3% of the Kingdom's total imports for the first ten months of 2009 compared with 50.8% in 2008, according to statistical report released by the Central Bank of Jordan (CBJ). The total of the Kingdom's imports in the first ten months stood at JD 8.18 billion, the figures indicated, noting that about 11% of the Kingdom's imports are from China. (Petra12.01)

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5.4 Unemployment in Jordan Rises

The unemployment rate in Jordan rose by 12.9% in 2009 compared with 12.7% in 2008, the Department of Statistics announced. Joblessness among males and females were 10.3% and 24% respectively. Some 47% of the unemployed don't hold the General Certificate of Secondary Education (GCSE) while unemployment among those who have a BA or higher was 16.2%, up by 4.5% compared to 2008. As for the employed, the figures also indicated that 57.5% of employed males don't have a GCSE, compared with 16% for women. The results have also revealed that the Crude Activity Rate (the workforce in proportion to total population) in the Kingdom reached 25.5%, and the Refined Activity Rate (the workforce in proportion to population 15 years of age or above) was 64.8% for males and 15% for females. (Petra13.01)

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5.5 Iraq Moves A Step Closer To Nabucco

Natural gas deposits in Iraq could be part of a plan to develop the so-called Southern Corridor for European energy transit, the European Union said. On 19 January, the EU signed a series of agreements for oil and gas projects with Iraq at a ceremony in Baghdad. A January 2009 dispute between Moscow and Kiev forced Russian gas giant Gazprom to cut gas supplies to Ukraine. That row exposed vulnerabilities in the European energy sector as 80% of its gas from Russian travels through Soviet-era pipelines in Ukraine. The EU aims to diversify its energy sector through the Southern Corridor projects, which include the Nabucco pipeline through Turkey, the White Stream project from Georgia and the Interconnector between Greece, Turkey and Italy. The EU said a series of agreements with Baghdad strengthens Iraqi President Talabani's commitment to the Southern Corridor expressed in 2009. With vast natural gas resources and the third-largest oil reserves in the world, Iraq could become the energy bridge between the Middle East, the Mediterranean and Europe, the EU said. (UPI 19.01)

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5.6 Kuwait Parliament Approves $23 Billion Debt Bailout Bill

On 6 January, Kuwait's parliament approved a bailout bill worth up to $23 billion for its indebted citizens, despite the government's opposition. The vote represents the latest in a series of confrontations between the assembly and the government in the world's fourth-largest oil exporter. The bill calls on the government to buy up and reschedule citizens' loans, as well as write off any interest owed to banks. (AB06.01)

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5.7 Kuwait & Areva Sign Nuclear Cooperation Deal

On 14 January, Kuwait and France signed an initial agreement on nuclear cooperation that includes exchanging expertise on the field. The agreement encourages the peaceful use of atomic energy to bring in vital energy resources such as electricity. Earlier, the Kuwaiti news agency KUNA had reported that Kuwait may be interested in acquiring a stake in France's nuclear giant Areva, citing unidentified industry sources. Areva's talks are taking place with potential partners at a government-to-government level and that a number of partners were involved. In March, Deputy Prime Minister and Minister of Defense Sheikh Jaber Moubarak Al-Hamad Al-Sabah said Kuwait will cooperate with France in the field of nuclear power, hinting it could take a stake in the nuclear group Areva. The Financial Times also said in March that the French government was considering opening the share capital of Areva to Middle Eastern investment funds with a view to reinforcing its political influence and the nuclear group's prospects in the region. Exploratory talks had been held about the possibility of sovereign wealth funds buying minority stakes of 1%-5% in Areva, which is majority owned by the French government, the FT said, citing people close to the matter. Kuwait plans to appoint an international adviser to study a possible investment in Areva, which may be financed by the $1.1 billion profit made by the Kuwait Investment Authority from the sale of its stake in Citigroup last year. (BI-ME15.01)

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5.8 Qatar to See Big Increase in Hotel Rooms in 2010

Qatar is aiming to substantially increase its hotel room offering in 2010 as it embarks on a drive to turn the Gulf state into a major tourism destination. The chairman of the Qatar Tourism Authority said he expects the tourism sector to contribute generously to the country's GDP within four to five years. Qatar is currently establishing a strong tourism infrastructure, with eight new hotels to be built this year, providing up to 2,500 new rooms, bringing the total number of rooms in Qatar to more than 10,000. The QTA was cooperating with the World Tourism Organization (WTO) to establish a new system to calculate the tourism sector's revenues, which he expected to come on line within two years. The QTA will launch a European tour by the end of February which would promote the country in cities including Madrid, Munich, Milan and Paris. A similar tour will follow to cover Asian countries and a third one to target the US. (AB14.01)

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5.9 Dubai Economy Seen Contracting in 2010

The Dubai economy is forecast to remain in recession in 2010, the second year in a row that the emirate has experienced negative growth, according to research released by Shuaa Capital, a major Dubai-based investment bank. Their ‘UAE Vision 2010' report said the Dubai economy would contract by 0.4% year-on-year this year, following on from a 5% contraction last year. This was mainly due to declines in residential sale prices and the emirate's population, which have fallen by around 60% and 9% respectively. However, Shuaa expected the UAE economy as a whole to emerge from recession this year. GDP is forecast to grow 2.5%, a turnaround from the 3.5% year-on-year contraction it recorded in 2009. A recovery in oil prices will also see Abu Dhabi emerge from recession this year and register GDP growth of 1.4%, compared to a contraction of 2.7% in 2009. The report said it expected the UAE capital markets to grow by up to 25% this year. A resolution of the Dubai World debt story will be the main catalyst for this growth.

Shuaa estimated that the emirate's population shrank by 9% in 2009 and will decline by another 3.6% this year. An additional 26,650 apartments and villas are expected to enter the Dubai market in 2010, which will put more pressure on the oversupply issues that already exist. In Abu Dhabi, Shuaa expected the residential shortage to continue, despite the addition of 23,000 extra units expected to enter the market over the next two years. The capital was also unlikely to see the steep price and population drops experienced in Dubai, the report said. (AB19.01)

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5.10 Dubai Sees 2010 Budget Deficit of $1.6 Billion

The Dubai government has forecast 2010 budget deficit of $1.63 billion, or 16.9% of expenditure. Income is expected to be $8.01 billion, which is a 12% fall compared to $9.1 billion, Abdulrahman Al-Saleh, director general of Dubai's Department of Finance, announced. Spending is estimated at $9.63 billion, a fall of 6.5% from $10.3 billion a year ago. About $1.9 billion, or 30% of spending, has been set aside for investment expenditure 'to upgrade and complete infrastructure projects. The deficit is just 2% of the GDP, as Dubai has been hit hard by the global financial crisis. (TA07.01)

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5.11 Oman Inflation Eases to Lowest Level In Five Years

Omani inflation eased to 0.7% in November, the slowest pace in more than five years, the Sultanate's Economy Ministry said. The inflation rate fell from an annual 1.2% in October. Inflation in Oman has slowed from a high of 13.7% in June 2008, when oil prices reached $140 a barrel. Inflationary pressures in the region have eased as the global financial crisis saw oil prices drop below $40 a barrel, and real estate prices plummet. Growth is forecast to pick up in 2010, when rates are going to be very low and the dollar is likely to stay weak. This is likely push Omani inflation back up to a 3-5% range. (AB10.01)

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5.12 Oman's GDP Falls By 27% to End of 2009's Third Quarter

Oman's gross domestic product (GDP) at current prices declined by 27.4% as of the end Q3/09 compared to the same period in 2008, according to figures released by the National Economy Ministry. This decline was attributed to a fall in economic activity, particularly in the oil sector. Services related to oil and gas production decreased noticeably due to the fall in crude oil prices. The average price for oil was $51.85 as of the end of Q3/09 compared to $103.87 in the corresponding period in 2008, a decline of 50%. Activities in the mining and quarries industries also declined by 13% while the chemical industry fell by 43.9% and the retail and wholesale trade sector by 21.2%. Transportation, warehousing and communication industries declined by nearly 10%. However some industries showed growth, the figures showed, with the agriculture and fisheries sector growing by 5.3% and the construction activity by 5.5%. While real estate sectors across the Gulf struggled in 2009, Oman saw high growth (15%), driven by rent hikes. (AB13.01)

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5.13 Goldman Sachs Says Saudi Economy to Grow by 4.5% in 2010

A Goldman Sachs forecast said the Saudi economy will expand 4.5% this year as increased public expenditure paves the way for sustained economic recovery, according to. Strong balance sheets in the banking and household sectors should also help to ensure that the kingdom outperforms most other GCC members, Goldman said in a research note. The US bank expects a budget surplus for the current year of about SAR230 billion, with revenue at SAR860 billion and outlays at SAR630 billion. Public expenditure could approach 35% of GDP this year, a smaller share than last year, but higher than the shares for the two years prior to that. Saudi Arabia, alongside Qatar, is positioned to benefit from the ongoing cyclical recovery in the global economy and outperform its peers in the Gulf region. The IMF has forecast growth of 4% in Saudi Arabia for this year. (BI-ME 05.01)

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5.14 Saudi Arabia & China Plan To Boost Trade Volumes to $60 billion by 2015

Saudi Arabia and China, the world's second-largest energy consumer, plan to boost trade volumes by 50% by 2015 and solve disputes over issues such as dumping amicably. Saudi Arabia is China's biggest oil supplier, with Chinese crude imports rising more than 12% last year to just over 800,000 barrels per day. Saudi finance minister Ibrahim al-Assaf said he wanted to increase exports of oil and non-oil products to China and boost bilateral investments. The number of joint projects between the two countries is small with only 19 joint projects. Both countries hoped to end a conflict over anti-dumping measures imposed by China on some petrochemicals products from the kingdom and other countries. On June 24, China said it had begun an investigation into methanol imported from Saudi Arabia and three other countries to assess whether the material had been dumped on the Chinese market at below-production prices. China would take a decision after the investigation was completed, adding both sides wanted to end the dispute. (BI-ME 12.01)

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5.15 Saudi Tourism Sector Seen Growing 6.5% to 2013

Religious tourism and business travel will drive growth in Saudi Arabia's tourism industry, predicted at more than 6% every year until 2013, Business Monitor International said in its Q4/09 study of the kingdom's tourism sector. Despite the limitations of strict entrance visa regulations, the industry has strong growth potential. BMI is also forecasting a rise in hotel rooms to 321,000 hotel rooms in Saudi Arabia by 2013. BMI's report predicted that tourist arrivals to the country would "remain constant" in 2009, at just over 12 million. But it added that it saw average growth of 6.5% year-on-year to the end of our forecast period in 2013. Saudi Arabia is home to two of Islam's holiest cities, Mecca and Medina, and every year millions of Muslims come to Mecca for hajj, the largest annual pilgrimage in the world. The report said that the hospitality sector would grow in tandem with tourist arrivals with BMI forecasting that there will be 321,000 hotel rooms in Saudi Arabia by 2013, up from an estimated 230,000 in 2008. In 2009 alone, a number of international chains have opened up their first hotel in the market, including Rotana, Hyatt Hotels & Resorts, Accor Group and Raffles Hotels & Resorts; while those already present in the market are expanding, BMI added. Saudi authorities have said they want to diversify away from their dependence on oil, and the tourism industry has been a focal point. As well as religious tourism, the government is also keen to develop its domestic tourism market in an effort to capture some of the capital spent by the millions of Saudi citizens that travel abroad each year. Saudi tourists mainly travel elsewhere the Middle East. The number of Saudi citizens travelling abroad increased from an estimated 6.30m in 2008 to a forecast 8.53m in 2013. (AB 03.01)

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5.16 Egypt's Core Inflation Up While Annual Inflation Steady

Although the annual headline inflation rate has remained at 13.3% for the third consecutive month, Egypt's core annual inflation rose from 6.59% to 6.85% from November to December 2009. Core inflation is computed by evaluating the weighted price movements of consumer goods and services considered representative of those most regularly purchased by Egyptian households, yet unlike headline inflation, excludes volatile items such as fruits and vegetables or goods with regulated prices such a petrol. In a move to assist monetary policy makers by reducing the “background noise” of typical price fluctuations, the government began publishing the core inflation rate in October 2009. Both the core and headline inflation rates are based on the consumer price index (CPI), computed by the Central Agency for Public Mobilization and Statistics (CAPMAS). Although core inflation is up - due to unfavorable base effects from last year, according to the Central Bank of Egypt (CBE) - it is lower than the 7% forecast by a Reuters poll. December 2008 saw inflation at 19.38%. Inflationary concerns are low, as the government target for core inflation is 6 to 8%. (DNE 11.01)

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5.17 Egypt Launches New Campaign To Lure Tourists

Egypt's Ministry of Tourism presented began a new advertising campaign to lure tourists to Egypt. The previous campaign, “The Gift of the Sun,” launched in 2006 to mixed reviews. Some criticized the fact that the campaign did not emphasize Egypt's universally known antiquities, focusing instead on the appeal of its climate and the warmth of its people. The new campaign, announced on 11 January, has the slogan “Egypt: where it all begins,” and highlights the Pyramids, Sphinx and other uniquely Egyptian attractions while not failing to mention Egypt's “aquatic paradise.” Tourism to Egypt was down 3.5% at the end of November, according to the Ministry of Tourism. Total tourists to visit Egypt as of November 2009 reached almost 11.5 million, with expectations that the number for the year will reach 12.5 to 12.8 million. November alone saw 1.23 million visitors. However, the healthier tourism figures seen at the end of 2009 are driven primarily by those seeking sun and sand at the Red Sea resorts. Visitors from Germany, Italy and Russia comprised the latest upswing, and although many do take time to tour Egypt's antiquities, many come simply for the beach. One trend observed globally is that if people choose to travel, they often decide to save money by taking shorter trips. On a tight schedule, many tourists may feel they do not have time to spare on sites like Luxor, visiting only the Pyramids and then heading for the beach.

This seems especially true of Russian tourists, one of Egypt's most promising tourist markets. Egypt expects to host more Russian tourists, as economic conditions in Russia allow more people to travel abroad. Outbound Russian tourist numbers were up 25% from 2005 to 2007. Although the economic crisis has slowed the tide, the relative strength of the Russian economy as the crisis recedes caused the World Tourism Organization to predict that by 2020 Russia will be the 10th most important country worldwide for sending tourists abroad. Recent agreements between Egypt and Russia to encourage Russian tourism means that Egypt, currently ranked third among Russians' preferred travel destinations, may soon climb to number one. (DNE29.12)

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5.18 Egypt to Grow Wheat in Uganda

Uganda has agreed to allow Egypt to cultivate wheat on Ugandan soil. Egyptian Prime Minister Nazif and Ugandan Prime Minister Nsibambi announced that an Egyptian committee to inspect Ugandan farmland will be sent to the East African nation, following several previous delegations. Egypt, the world's largest importer of wheat at approximately 7 million tons per annum, has announced several strategic partnerships to increase its food security. Akila Hamza, coordinator of the Food Security Information Center (FSIC), stated that a Food Security Policy Board has recently been set up to coordinate policy to strengthen Egypt's food security. The global food shortages in 2007/2008 prompted Egypt to partner with Sudan to grow wheat in May 2008. Agricultural Minister Abaza announced at the time that 1.3 million acres of farmland near the shared border town of Wadi Halfa would be used to cultivate wheat for both Egypt and Sudan, in an effort to help both countries rely less on external sources of the staple food. Egypt is currently experiencing less pressure from a population that relies heavily on government-subsidized bread than during the height of the shortage, which saw Egyptians rioting as the government failed to meet demand. However, the recent announcement to cultivate wheat in Uganda, a country 3,000 kilometers away reflects a global trend of establishing agricultural partnerships with distant countries. Rather than relying on agriculturally wealthy countries to simply export food products, countries across Asia and the Middle East have begun purchasing land designated exclusively for cultivation of crops that will go directly to them.

Although years of government initiatives to develop housing in desert land in order to preserve valuable arable land have moved many Egyptians off farmland, the unfulfilled demand for housing remains, forcing illegal or informal construction to continue wherever people can find space, often on former fields. Facing the reality of shrinking land resources, private companies in Egypt have followed the government's lead and begun investing in agricultural land abroad. Last February, Citadel Capital, an Egyptian private equity firm, purchased 250,000 acres of land in Sudan on a 99-year lease. Other Egyptian firms have planned similar initiatives in Sudan, with investment bank Beltone Financial investing $1 billion in agricultural products in a joint venture with Kenana Sugar Company of Sudan, according to their website. (DNE12.01)

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5.19 Pakistan's Soft Drinks Sales to Increase 39.8% to $233 Million by 2014

Research and Markets (http://www.researchandmarkets.com) announced their "Pakistan Food and Drink Report Q1 2010" report to their offering. With a population close to 165mn, Pakistan is one of the largest markets in the Asia Pacific region and potentially a highly lucrative long-term play for fast-moving consumer goods companies. Yet it continues to be weighed down by fundamental risks and is still firmly rooted to the bottom of BMI's Asia Pacific Food & Drink Business Environment Ratings table for Q1/10. Although the highly challenging business environment and the price sensitivity of the consumer base will continue to impede investments, BMI believes that Pakistan's soft drinks industry will continue to provide promising opportunities over their forecast period to 2014.

Dominated by low-cost carbonates, Pakistan's soft drinks industry benefits from key demand triggers such as the absence of a notable alcoholic drinks industry and a warm climate. Led by the core carbonate brands of Coca Cola and PepsiCo, the publisher estimates per capita soft drinks consumption in Pakistan to stand at about 20 liters per annum, which leaves significant room for growth. Owning close to 50% of Coca-Cola Beverages Pakistan, Pakistan contributes about 8% to Turkey-based Coca-Cola Icecek's (CCI) international volume sales. Taking into account the size and underdeveloped state of the industry, its importance to CCI is likely to strengthen considerably over the long-term.

Although health consciousness has begun to surface, the limited spending power of consumers means that it has yet to truly impact on the structural development of the industry despite a promising pick up in demand for calorie-free carbonates. Higher value segments such as bottled water and particularly functional drinks will continue to be confined mostly to the niche segments of the market. Over the publisher's forecast period to 2014, BMI expects soft drinks sales to increase 39.8% to $233mn, with carbonates likely to pick up most of the volume growth. The bottled water segment in particular is likely to be a key long-term growth segment. Taking into account the limited access the vast majority of consumers have to potable water, the segment is likely to strengthen considerably as disposable incomes rise over the long-term. A forecast 71.1% increase in per capita GDP to $1,747 to 2018 coupled with product development and capacity strengthening by existing producers should contribute to significant per capita bottled water consumption growth over the period. (R&M19.01)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Fitch Rates Turkey's $2 Billion 2040 Eurobond 'BB+'

On 06 January: Fitch Ratings (http://www.fitchratings.com) assigned the Republic of Turkey's $2bn eurobond, due on 30 May 2040, a 'BB+' rating. The eurobond has a coupon rate of 6.75%, with a yield to investors of 6.85% and a spread over US Treasury bonds of 225 basis points. The rating is in line with Turkey's Long-term foreign currency Issuer Default Rating (IDR), which has a Stable Outlook. The 30-year maturity and moderate yield on Turkey's sovereign eurobond highlights its creditworthiness and strong international capital market access. The issue realizes a substantial part of the Treasury's 2010 annual eurobond issuance target of around $5.5bn, as set out in its 2010 financing program. On 3 December 2009, Fitch upgraded Turkey's Long-term foreign currency IDR to 'BB+' from 'BB-', reflecting Turkey's relative resilience to the global financial crisis and some easing in prior acute constraints related to inflation, external finances and political risk. (Fitch 06.01)

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6.2 Turkish Pharmaceutical Market Outlook to 2014

Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "The Turkish Pharmaceutical Market Outlook to 2014: Policy Environment, Market Structure, Competitive Landscape, Growth Opportunities" report to their offering. Turkey, a 'pharmerging' market, has evolved to this status after a series of economic and healthcare reforms. The country was at the verge of financial collapse until 2001 with inflation running in near three digits. However, the economic reforms implemented by the country have turned it into a dynamic economy. The country's pharmaceutical industry has been a frontrunner in these reforms. Turkey has a growing pharmaceutical sector with around 300 pharmaceutical companies selling up to 1.3bn units of products every year. Factors that have fuelled the growth of the pharmaceutical industry in the country include economic growth, high healthcare expenditures, a young workforce and a host of companies delivering drugs to the populace. The reforms taken up by the country made the healthcare system more efficient, improving access for the population, besides bringing the system in sync with the standards of other EU nations. At the same time, the country's growing economic consistency brought in foreign investment in the sector and bolstered consumer spending on pharmaceuticals. The healthcare reforms taken up by the country included implementation of a patent legislation in 1995, creation of a generics registration law in 1996 and establishment of a reference pricing system in 2004. However, the industry continues to have some problems still, such as a protracted product registration system and a reimbursement list that is deemed incomplete and biased. (R&M 19.01)

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6.3 EU Issues Stern Message to Greece

On 18 January, as Greece's fiscal woes continued to weigh on the euro, the Greek government received a stern message over its bloated debt, while Germany and other eurozone countries said it was above all up to Athens to sort the problem out. With financial markets fretting over Greece's ability to service one of Europe's biggest sovereign debts, the message came from German Finance Minister Schaeuble and others at a Eurogroup meeting of eurozone finance ministers in Brussels. At the Brussels meeting, the ministers were updated on Greece's deficit by Finance Minister Papaconstantinou, as well as to hear the results of an information-gathering mission to Athens by officials from the European Central Bank and European Commission. Markets are awaiting the European Commission's view of the long-term deficit targets Athens has announced. A Commission spokeswoman indicated that such an announcement would not be immediate. The ministers were also due to discuss the reliability of Greek statistics after a European Commission report showed Greece had for years misreported budget deficit data because the statistics-gathering system was open to political influence. Possible bankruptcy by Greece would be on a larger scale than that of Russia and Argentina combined, warned Deutsche Bank in a report. The bank pointed out that Greek debt is more than double the estimated outstanding debt levels of Russia in 1998 (€51b) and Argentina in 2001 (€57.2b) when both countries were in financial strife. Deutsche Bank, which is believed to have significant exposure to Greek government bonds, said that if conditions get worse then Europe is in danger of entering a cycle where problems move from one state to another in a similar development to that seen in the credit industry. High debt levels in Portugal and Spain also make these countries vulnerable, it added. (EPA 19.01)

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6.4 Greece's Inflation Picks Up To 2.6% In December

Greece's headline consumer price inflation picked up to a higher-than-expected 2.6% annual pace in December, as favorable base effects from oil waned and transport costs rose, the National Statistical Service said on 11 January. Consumer inflation was up 0.2% month-on-month. The CPI index in December 2008 was up 2% year-on-year. Consumer prices in the 16-nation eurozone rose 0.9% year-on-year in December, mainly due to more expensive oil. The acceleration in inflation reflects the impact of higher energy prices, which neared about a full percentage point, as well as the increase in transport costs, medical care and telecommunications. The rise in tobacco and alcohol taxes coupled with higher oil prices should drive inflation close to 3% in the first months of 2010. (Reuters12.01)

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6.5 Cyprus' December 2009 Inflation Rises to 2%

Cyprus' inflation for December 2009 rose to 2.0% compared to 1.4% in November 2009 and 2.1% in December 2008, Cyprus' Statistical Service announced on 5 January. The Consumer Price Index (CPI) for December 2009, decreased by 0.35 units or 0.31% to 112,60 units compared to 112.95 in November 2009, a decline attributed mainly to decreases in the prices of certain fresh vegetables, potatoes and diesel for central heating. Increases have also been recorded in the prices of certain clothing items and petrol and diesel for motorcars. The rate of inflation for December 2009 rose to 2.0% compared to 1.4% in November 2009 and 2.1% in December 2008. For the period January-December 2009, the CPI recorded an increase of 0.3% compared to the corresponding period of 2008, which is the lowest annual inflation rate since 1965. (CSS05.01)

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6.6 Cyprus' 2009 Inflation Rate Lowest For 44 Years

On 5 January, the Cyprus Statistical Service announced that the consumer price index in January-December 2009 rose by 0.3% compared to the corresponding period of 2008. This is the lowest annual inflation rate since 1965, the Statistical Service said. The average annual inflation rate in 2008 was 4.7%. Prices in 2009 were depressed mainly by a fall in international oil prices, which affected the cost of transport, fuel and electricity, which is oil-generated, as well as weaker food-price inflation. The consumer price index for December 2009 decreased by 0.31% to 112.60 points. This was mainly owing to decreases in the prices of certain fresh vegetables, potatoes and diesel for central heating. Increases were recorded in the prices of certain clothing items and petrol and diesel for motor-cars. Compared with December 2008, the rate of inflation was 2.0%, compared with 1.4% in November 2009 and 2.1% in December 2008. (CSS05.01)

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6.7 Cyprus Tourism Down 10.9% in 2009

Arrivals of tourists in Cyprus dropped by 10.9% in 2009, marking their worst performance since 2002, when the 11 September Islamic terrorist attacks led to a sharp drop in global tourism. Total arrivals reached 2,141,193 compared with 2,403,750 in 2008. In December alone, arrivals fell by 8.2% to 66,201, compared with 72,127 in December 2008. The UK remained the largest market in 2009, with its 1,069,910 arrivals accounting for 50.0% of all tourists. However, this was less than in 2008, when the UK accounted for 51.7%. With three consecutive years in the second spot, Russia is now indisputably the second largest tourism market for Cyprus, with 148,734 arrivals. This is despite the fact that Russian arrivals fell by 17.8%. Greece was the third largest market, with arrivals of 131,871, down only 0.9% compared with 2008. (FM15.01)

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6.8 Greek Construction Activity Down 17% in October

Construction activity, as measured by the number of new building permits, fell 17.7% year-on-year in October after a 12.9% drop in September, the Greek National Statistical Service (NSS) said on 12 January. Building activity in the first 10 months of 2009 was down 15.6% year-on-year, it said. The NSS added that 4,752 new permits were issued nationwide in October, corresponding to 1.05 million square meters, versus 5,775 permits in the same month a year earlier. The slump in construction activity and the limited number of new homes being sold has helped property developers keep prices steady despite the economic crisis, according to economists. The construction sector contributes about 7% to total annual economic output and is one of the country's key employers, providing some 400,000 jobs. (NSS12.01)

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6.9 Bulgaria's Eurozone Quest Will Begin In January

Bulgarian Prime Minister Borisov has declared that entry to the Eurozone is now the country's top foreign policy priority. The Premier's statement has ended months of speculation by politicians and economic experts as to whether Bulgaria would formally apply to join the Eurozone. Borisov confirmed that Bulgaria would make an imminent application to be admitted to the European Exchange Rate Mechanism (ERM), a two-year currency stability test for candidate countries. If Bulgaria succeeded in gaining the approval of the European Central Bank President and the heads of state of the present Eurozone, it would remain on course to adopt the Euro in 2013, ahead of Romania and Hungary. Borisov acknowledged the current economic difficulties, and said he was concerned that a debt recession and an intensifying debt crisis might be an obstacle to new ERM candidates such as Bulgaria. In a related move, PM Borisov stated that he would broaden the powers of his Finance Minister, Djankov, by adding increased supervision of the real economy to his treasury portfolio. Borisov also confirmed that Bulgaria would not need to approach the International Monetary Fund (IMF) for emergency financing to cover budget deficits. There has also been speculation that the country will revise upwards its forecast for 2010 GBP from a small contraction to a 0.2% expansion. (SMN12.01)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israeli Aid Effort in Haiti

The Israeli delegation landed in the capital of Port-Au-Prince on Friday evening, 15 January and established its operation center in a soccer field near the airport. Two teams, comprised of search and rescue personnel and canine operators from the IDF canine unit were sent out on rescue missions. The first team was sent to the Haiti UN headquarters in order to assist in rescuing survivors. The rescue teams are working in cooperation with local authorities in order to reach disaster struck areas where survivors can be located and assisted. The IDF Medical and Rescue Team set up a field hospital in Port-Au-Prince and are treating patients there.

On the Israeli team rescued a top income tax official from the government office building which collapsed in the earthquake. The official, who had been trapped underneath the rubble for four days, was treated at the Israeli field hospital. The field hospital includes 40 doctors, 25 nurses, paramedics, a pharmacy, a children's ward, a radiology department, an intensive care unit, an emergency room, two operating rooms, a surgical department, an internal department and a maternity ward. The hospital can treat approximately 500 patients each day, and in addition will perform preliminary surgeries. In the field hospital set up in Port-au-Prince, members of the IDF medical staff are in a race against time to save lives. The Medical Corps found more than half of the injured are under the age of 16. While majority of injuries are limb injuries and bone fractures, 10 life saving surgeries were performed.

On 17 January, a resident of Port-au-Prince gave birth to a son at the Israeli field hospital. As a token of appreciation and gratitude, his mother decided to name him Israel in honor of the country that helped her. The delegation is scheduled to stay in Haiti for a minimum of two weeks. Further stay will be assessed at the end of this period.

The six-man ZAKA delegation (a Hebrew abbreviation for Zihuy Korbanot Ason, literally: "Disaster Victim Identification"), is a series of voluntary community emergency response teams in Israel) arrived in Haiti aboard a Mexican air force Hercules. On arrival, the ZAKA delegation was dispatched to the collapsed 8-story university building where cries could be heard from the trapped students. After 38 hours of work around the clock working with the Mexican military delegation and other Jewish volunteers from Mexico, the ZAKA volunteers succeeded in pulling eight students alive from the rubble. Amid the stench and chaos, the ZAKA delegation took time out to recite Shabbat prayers - a surreal sight of ultra-orthodox men wrapped in prayer shawls standing on the collapsed buildings. Many locals sat quietly in the rubble, staring at the men as they prayed facing Jerusalem. At the end of the prayers, they crowded around the delegation and kissed the prayer shawls.

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7.2 Tu B'Shevat Observed on 29/30 January

On the evening of 29 January and 30 January, Tu B'Shevat will be observed. Tu B'Shevat is a minor Jewish holiday in the Hebrew month of Shevat that marks the "New Year of the Trees." Tu B'Shevat is one of four "New Years" mentioned in the Mishnah. Tu B'Shevat is the new year for the purpose of calculating the age of trees for tithing. See Lev. 19:23-25, which states that fruit from trees may not be eaten during the first three years; the fourth year's fruit is for G-d, and after that, you can eat the fruit. Each tree is considered to have aged one year as of Tu B'Shevat, so if you planted a tree on Shevat 14, it begins its second year the next day, but if you plant a tree two days later, on Shevat 16, it does not reach its second year until the next Tu B'Shevat. Customs include planting trees and eating dried fruits and nuts, especially figs, dates, raisins, carob and almonds. In Israel, the flowering of the almond tree, which grows wild around the country, coincides with Tu B'Shevat. The name Tu B'Shevat is derived from the Hebrew date of the holiday, which occurs on the 15th day of Shevat. "Tu" stands for the Hebrew numerals "tet vav" which is 15.

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7.3 Joint German-Israeli Cabinet Meeting

The threat of a nuclear Iran to regional security is at the top of the agenda in a historic meeting on 18 January between Prime Minister Netanyahu and German Chancellor Merkel and their respective cabinets in Berlin. It is the first time the two governments have met together on German soil and follows by several months last year's first-ever joint meeting in Israel. Germany officials noted that the country rarely holds joint cabinet sessions except with countries with which it has very close relations. Talks focused on threats to regional security, mainly Iran. The purchase by Israel of a sixth Dolphin-class diesel submarine from Germany is also expected to be discussed. Israel already has purchased five of the vessels, three of them in operation and two of them on order.

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7.4 Abu Ghosh Secures Guinness World Record for Largest Dish Of Hummus

The Arab-Israeli village of Abu Ghosh, just 15 minutes drive from Jerusalem, is well-known for the annual vocal music festivals held in spring and fall, the near perfect acoustics in the village churches, and some of the finest hummus restaurants in Israel. On 8 January, 50 chefs prepared over four tons of hummus, beating the Guinness World Record set in Lebanon just months ago. Presided over by Guinness adjudicator Jack Brookbank, watched by hundreds of spectators and recorded by dozens of media outlets, the record hummus was dished out into a six-meter (20 foot) satellite dish provided by sponsors, weighing in at 4,087.5 kilos (8992.5 pounds), about twice as much as the previous record. In May 2008, Israeli hummus manufacturer Tzabar set the Guinness Record for the largest plate of hummus ever made. The Lebanese quickly broke the record with their own attempt a year later. Upping the ante against Lebanon, which retaliated against Israel's Guinness Record last year by cooking a plate of hummus clocking in at two metric tons (about 4,500 lbs) family and friends from Abu Ghosh set their sights on cooking the largest plate of hummus in the world. (IsraelNN11.01)

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*REGIONAL:

7.5 Jordan Moved From ‘Partly Free' To ‘Not Free' Category

Jordan is one of five countries that had their status downgraded to "not free" in Freedom House's 2010 global report, released on 12 January. The Kingdom was ranked "partly free" in previous reports. The report names the decision to dissolve the Lower House of Parliament as a top reason for the Kingdom's decline in the "Freedom in the World" report issued by the US-based human rights and democracy watchdog. Parliament's dissolution, coupled with the decision not to hold elections until the end of 2010, represent "an attempt to manipulate the political process by further marginalizing an already weak legislature", the report said. Jordanian officials maintain that the dissolution was taken as part of an overhaul process aiming to give a boost to the democratization process as well as introduce a new elections law that would boost political life in the Kingdom. The Freedom House report also cites "an increased influence of security forces over political life" as an indicator of decreasing freedom in Jordan.

Bahrain and Yemen also moved into the "not free" category in the 2010 report, raising the total number of countries in this category to 47, while declines in freedom were recorded in 40 countries. The number of electoral democracies fell from 119 to 116, the lowest since 1995, while 89 countries were designated "free" and 58 "partly free". The report noted a number of significant setbacks in Middle Eastern countries, most notably referring to Iran, which witnessed violent clashes after its disputed elections in June. The report registered improvements in freedom in Iraq and Lebanon, noting: "Iraq's political rights rating improved in light of provincial elections, which were generally regarded as fair and competitive, and due to the government's enhanced autonomy as the phased withdrawal of US troops got under way." However, the report highlighted that "violence remains a dominant theme in the politics of the region and a significant impediment to the exercise of fundamental freedoms in many countries, including Iraq". Yemen's drop from "partly free" to "not free" was attributed to "rapidly worsening security conditions and the increased marginalization of the parliament and other political institutions", the report said. In Bahrain, political rights suffered due to the "harassment of opposition political figures and discrimination by the minority Sunni elite against the Shiite majority". (JT 13.01)

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7.6 Israeli Government Minister Officially Visits Abu Dhabi

For the first time, an Israeli Cabinet minister has made an official visit to the United Arab Emirates – as part of the IRENA conference on renewable energies. Minister of Infrastructures Uzi Landau is participating in the Preparatory Commission of IRENA, The International Renewable Energy Agency. On 17 January he addressed the agency's third session, which took place in the capital of the UAE, Abu Dhabi. In his speech, Landau invited the participants – many of whom were Arab country representatives – to take part in next month's conference in Eilat dealing with advanced water technologies. The first time an Israeli flag was officially unfurled in the United Arab Emirates was three months ago, when two Israelis – from the Ministries of Foreign Affairs and Infrastructures – took part in IRENA's preparatory council for the conference. They were joined by representatives of 70 other countries. IRENA is an intergovernmental organization focusing on renewable energies, concentrating on alternative energies in both industrialized and developing countries. Its overall goal is to effect a rapid transition towards the widespread and sustainable use of renewable energy worldwide. (IsraelNN17.01)

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7.7 Ankara Delays New Constitution & Instead Focuses on EU Reforms

The Justice and Development Party (AK Party) government has decided to take up the preparation of a new and civilian constitution in 2011 following the general elections, placing a priority on European Union reforms for now,. The government, which has seen that passage of a new constitution through the current Parliament will not be possible because of the opposition parties blocking the government's plans, wants to carry out its plans for a new constitution after the general elections of 2011. Until the elections, the government wants to work on the enactment of EU harmonization laws that do not require a constitutional change. The allocation of seats in Parliament following the general elections of 2007 has made it difficult for the government to push ahead not only in constitutional changes but also in EU laws. The Republican People's Party (CHP) and the Nationalist Movement Party (MHP) continue to oppose a new constitution, as well as many of the EU harmonization laws. Taking this into consideration, the AK Party, which has 337 seats in Parliament, wants to push for EU laws by using its parliamentary majority. Taking important steps toward Turkey's EU goal with eight harmonization laws in 2003, the government declared that 2010 would be “EU harmonization year,” having only enacted one harmonization law in 2009. In 2009, a law that allowed members of the military to be tried in civilian courts in peace time was the only legal amendment that was enacted in line with EU harmonization laws. Since the CHP and MHP continue to oppose constitutional amendments, the government decided to postpone amending the Political Parties Laws, the Ombudsman Law, the Election Law and laws that will change the structure of the Constitutional Court and Supreme Board of Judges and Prosecutors (HSYK) to 2011.

The government plans to work on two harmonization packages in 2010, one of which will be about freedom of expression and thought while the other concerns laws regarding the government's Kurdish initiative, which aims to resolve Turkey's long-standing Kurdish problem. Laws that will expand the freedom of the press will be made in the first package as well as amendments in the Turkish Penal Code and the Radio and Television Supreme Council Law. The Human Rights Presidency, which operates under the Prime Ministry, will be turned into a Human Rights Council which will include representatives from nongovernmental organizations and human rights associations. Separate councils will be established to fight discrimination and ill-treatment by the security forces. (Zaman19.01)

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7.8 Bulgaria PM Borisov Finally Leads Own GERB Party

Bulgaria's Prime Minister Borisov officially became the leader of the ruling GERB party after he was unanimously backed by the delegates of its second conference. The nomination of Borisov for head of the party was supported by all 1,227 of the delegates, which makes it possible for him to officially take over the leadership from its already former formal head Tsvetanov. The announcement of the vote result was followed by a storm of applause, even though Borisov was the only candidate nominated for the post. Tsvetan Tsvetanov will serve from now on as GERB only deputy chair. Earlier in the day the centre-right GERB party, which swept to a crushing victory over the Socialist-led ruling coalition last summer with a shade under 40% of the votes and 116 of 240 seats in parliament, announced plans for a second term and full majority. The new cabinet has patched up Bulgaria's leaky budget by cutting spending by 15% and has moved to crack down on smuggling and tax evasion to boost revenues. It has also dismissed hundreds of customs officers and taxmen in efforts to uproot official corruption and organized crime. The country plans to apply in March to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency in 2013. The new government is optimistic that Bulgaria's economy will recover after shrinking 4.9% in the second quarter as investment and demand waned. (SMN11.01)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Israeli Medical Research Offers New Hope for Treating Childhood Leukemia

A team of Israeli scientists at the Sheba Medical Center's Research Center for Leukemia and Childhood Malignancies has discovered a method for developing a more effective and less perilous treatment for those suffering from childhood leukemia, the most common cancer in children. New treatments associated with the research have the potential to impact upwards of 20% of those suffering from Acute Lymphoblastic Leukemia (ALL). The team, which worked in partnership with scientists at Tel Aviv University and the International BFM Study Group, has published a series of papers examining certain gene abnormalities in children with Down syndrome, which are 20-30 times more likely to develop ALL.

In the most recent paper, published in the leading hematology journal Blood, the researchers found that a gene abnormality called CLRF2 is common in more than 60% of ALL patients with Down syndrome. What makes this finding so significant is that the abnormality is directly connected to an anomalous protein, JAK2, which stimulates the kind of disruptive cell behavior typical of leukemia. These abnormalities, which have now also been examined and reported by several research groups in the US and Europe, also appear in the leukemia cells of some children and adults without Down syndrome. The findings indicate that using drugs to block the activity of anomalous JAK2 can effectively treat blood cells transformed by the abnormality. This targeted approach is likely to be more precise and less toxic than chemotherapy.

Currently, children with leukemia, receive intensive chemotherapy over two to three years, and about eight out of 10 recover. But chemotherapy is highly toxic, and does not target the specific abnormality underlying the disease. Treatments associated with this research would be able to address these issues, and importantly the drugs already exist. Drugs targeting the JAK2 protein are currently in clinical trials - but for a different blood disorder (polycythemia vera). Thus, if preclinical and then clinical trials in those suffering from ALL confirm the findings, no new drug need be developed - often a task that can take more than a decade to complete.

The Sheba Medical Center, with 1900 beds, is the largest and most comprehensive tertiary medical center in the Middle East, affiliated with the Sackler Faculty of Medicine at Tel Aviv University. The Medical Center is the largest university-affiliated hospital in Israel and is known for excellence in basic and applicable research. Patients from all over the world, including the US, Europe and the Palestinian Territories are treated at this facility. (Sheba Medical Center 05.01)

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8.2 Israeli Scientist Makes Safe Pesticide from Killer Scorpion Venom

Scorpions deliver a powerful, paralyzing venom - a complex cocktail of poisonous peptides that immobilize animal prey on the spot. Some of the toxins in a scorpion's payload damage only insects, which is why a Tel Aviv University researcher is harnessing them to create a safe and ecologically sound pesticide. Prof. Gurevitz of Tel Aviv University's Department of Plant Sciences has isolated the genetic sequences for important neurotoxins in the scorpion venom. He's also developed methods to produce and manipulate toxins to restrict their toxicity in certain insects or mammals. In his study of the toxins and the evolution of their genes he recently published a paper in the journal Molecular Biology and Evolution that demonstrates how computational analyses at the gene sequence level leads to better understanding of how to manipulate toxin activity.

Rather than isolating the venom constituents of the Israeli yellow scorpion, known to be among the world's most poisonous scorpions, Prof. Gurevitz developed genetic methods for producing and manipulating the desired toxins in bacteria. He then investigated how they act against insects and mammals, paving the way for potential use in the agriculture industry. Prof. Gurevitz says that some neurotoxins in the scorpion are highly active against some insects (e.g. leaf-eating moths, locusts, flies and beetles), but have no effect on beneficial insects like honeybees or on mammals like humans. He continues to pursue an effective mode of delivery for what could be a new insecticide.

Prof. Gurevitz is considered one of the world's pioneers in this field, having published numerous papers on this subject. He spent six years as a research fellow at Washington University in St. Louis and Michigan State University, beginning his scorpion studies while an M.Sc. student in Jerusalem 35 years ago. Since then, he's developed methods of toxin gene cloning, production and modification in his lab, paving the way for an entirely new molecular field based on the venom of the deadly insect. The agriculture industry already uses mostly pyrethroids, which also penetrate into insects and attack their nervous systems, leading to paralysis and death. Their main drawback, however, is the lack of specificity and the danger these compounds pose to the environment, livestock and humans. (IsraelNN11.01)

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8.3 Pluristem Therapeutics Announces Interim Results from PLX-PAD Clinical Trials

Pluristem Therapeutics announced interim results from their Phase I clinical trials utilizing their placenta derived cell therapy product, PLX-PAD, for the treatment of critical limb ischemia (CLI), the end-stage of peripheral artery disease (PAD). Data suggested that PLX-PAD is safe and potentially efficacious. Nine patients, representing one-third of the patients needed to complete the Phase I dose-escalating studies in the U.S. and Germany, have been dosed with PLX-PAD. Patients experienced no significant unfavorable effects related to PLX-PAD administration. Three of the nine patients dosed completed their three-month follow up and the data from those patients demonstrated a trend towards efficacy with a reduction in their Rutherford Category, a measure of the severity of their limb ischemia. Haifa's Pluristem (http://www.pluristem.com) is a clinical stage biotechnology company with proprietary technology for the development and manufacturing of standardized cell therapies derived from the human placenta. Pluristem's patented and scalable PLX (PLacental eXpanded) cell product candidates are developed as readily available for the treatment of critical limb ischemia (CLI) and other diseases. (Pluristem 11.01)

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8.4 Japan Approves First Non-Invasive Technology for Treatment of Uterine Fibroids

InSightec announced that Japan's Ministry of Health, Labor and Welfare (MHLW) has approved the company's ExAblate MR-guided Focused Ultrasound (MRgFUS) system for the treatment of women with uterine fibroids. ExAblate is currently the only noninvasive treatment for uterine fibroids approved for use in Japan. Approximately 25% Japanese women will develop symptomatic uterine fibroids, primarily during childbearing years. These benign tumors can significantly impair functionality and degrade quality of life resulting in significant work absences. Using the ExAblate system, the physician uses the Magnetic Resonance Imaging (MRI) to visualize the patient's anatomy and then aims focused ultrasound waves at the targeted tissue to thermally ablate, or destroy it. The MRI allows the physician to monitor and continuously adjust the treatment in real time. The patient is consciously sedated to alleviate pain and minimize motion. The ExAblate system received the CE Mark for uterine fibroids in October 2002 and US FDA approval in 2004. Over 5,500 women around the world have chosen to undergo the non-invasive ExAblate treatment for their symptomatic uterine fibroids over invasive surgery.

Tirat Carmel's InSightec (http://www.insightec.com) is a privately held company owned by Elbit Imaging, General Electric, MediTech Advisors and employees. It was founded in 1999 to develop the breakthrough MR guided Focused Ultrasound technology and transform it into the next generation operating room. The company has over 160 employees and has invested more than $130 million in research, development, and clinical investigations. (InSightec 13.01)

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8.5 Moody's Upgrades Teva Rating to A3

Teva Pharmaceutical Industries announced that Moody's Investor services has upgraded the Company's rating to A3 from Baa1. Following this most recent upgrade, the rating outlook is now stable. Teva is the first generics-focused pharmaceutical company to be rated in Moody's “A” category. Moody's indicated that the upgrade of Teva reflects a favorable growth outlook, clearly articulated financial targets and the expectation that M&A can be financed with debt levels appropriate for the A3 rating. The A3 rating is supported by Teva's global leadership position and its strong cash flow. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in 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 pharmaceuticals and active pharmaceutical ingredients. (Teva14.01)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Discretix Announces Embedded Security Solutions for Media Phones

Discretix announced a comprehensive platform and content protection suite for media phones - a new category of communication products that combine advanced telephony with a diverse selection of multimedia-based services. Essential for open source platforms, Discretix' CryptoCell enables software updates, data storage and debugging to be performed securely, ensuring that the media phone is trusted to deliver advanced services to homes and businesses. Discretix' Multi-Scheme DRM, already used in millions of devices around the world, enables sophisticated business models for high-value content. Discretix has already achieved strong traction with Tier 1 chipset vendors involved in media phone development. Media phones are widely regarded as the “fourth screen” in homes after the TV, PC and mobile handset. Combining open source operating systems, advanced telephony, home networking and touch screens, media phones can be used for inbound/outbound calling plus Web browsing, audio-video playback and photo viewing, as well as access to various onscreen services. Discretix' Multi-Scheme DRM (Digital Rights Management) is the most flexible solution of its kind. Reinforced by the underlying Discretix security subsystem, the solution provides a complete implementation of the major schemes in use today: OMA DRM v1.0, OMA DRM v2.x, Microsoft WM-DRM 10, CPRM. It can also be easily expanded to support new schemes as they become available.

Kfar Netter's Discretix' (http://www.discretix.com) security solutions are deployed in a wide range of consumer electronics devices enabling services and applications, while protecting the device and its contents. Discretix' products include embedded security co-processors and a broad range of security applications. The solutions are tightly integrated into the device, enhancing security without compromising the user experience. (Discretix 07.01)

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9.2 Celeno Announces 2nd Generation CL1800 Beam Forming 802.11n Chipset

Celeno Communications announced the immediate availability of the CL1800, its second generation 802.11n chipset. The new CL1800 is powered by Celeno's field-proven OptimizAIR technology suite that optimizes 802.11n performance for whole-home HD video distribution applications. Manufacturers and Original Equipment Manufacturers (OEMs) can leverage the CL1800 to enable residential gateways, multimedia home routers, set top boxes, digital video recorders (DVR), networked TVs, wireless HDMI bridges and a variety of other Consumer Electronics (CE) devices with robust, wire-like, HD video distribution throughout the home. The robust chipset builds on the success of the CL1300, Celeno's first generation HD video Wi-Fi chipset and its field-proven Implicit Transmit Beam Forming technology. The CL1800 quadruples the video throughput/range combination of typical 802.11n systems, reaching over 120Mbps of video throughput at the edge of the home with zero packet errors. The chipset supports up to 8 concurrent HD video streams. Faithful to the CL1300 principles, the second generation CL1800 meets carrier grade performance requirements while maintaining client silicon agnostic operation. The CL1800 was jointly developed with Ralink as part of the companies' strategic partnership.

Ra'anana's Celeno (http://www.celeno.com) is a leading provider of high performance Wi-Fi chips for HD multimedia and entertainment home networking applications. Powered by Celeno's system-on-chip (SoC) and its OptimizAIR technology, home gateways, multi-room DVRs and media servers can distribute multiple and simultaneous HD video streams to standard set-top boxes, PCs, television sets and other Wi-Fi enabled consumer devices. (Celeno07.01)

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9.3 Lucid Highly Anticipated HYDRA Now Available on MSI's Big Bang Fuzion Motherboard

Available this month and marking the beginning of a new era in high-performance multi-core graphics, MSI's Big Bang Fuzion motherboard powered by LucidLogix Technologies (Lucid) HYDRA 200 enables the first ever mix-and- match multi-core GPU enabled system. Designed with the PC gamer in mind, the MSI Big Bang Fuzion's integration of Lucid's HYDRA 200 brings the meaning of high-performance flexible graphics to a whole new level. Now, manufactures and consumers have the ability to select the graphics card of their choice today and know that when they are ready to upgrade tomorrow or six months from now, they can choose from the latest technology on the market, regardless of the graphics chip vendor. The HYDRA engine offers a “generic” solution for performance hungry consumers whose different gaming needs have been hampered by their inability to upgrade to multiple GPUs. This new approach provides interoperability among GPUs and chipsets, auto-correct load balancing and multiple GPU's that simultaneously process a single frame within a game, thus resolving bottlenecks and inter-frame dependencies prior to rendering. Kfar Netter's LucidLogix Technologies (http://www.lucidlogix.com) is reinventing multi-core graphics with its HYDRA real-time distributed processing engine that will improve visual computing for both business and gaming applications. Its innovations are protected by more than 60 patents and patents pending, and it is backed by leading venture providers Rho Ventures, Giza Venture Capital, Genesis Partners and Intel Capital. (LucidLogix 08.01)

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9.4 Cable&Wireless Selects ClickSoftware for Optimized Mobile Workforce Management

ClickSoftware Technologies announced that Cable&Wireless Worldwide, provider of mission critical communication solutions to large users of telecoms services globally, has selected and implemented its ServiceOptimization Suite to increase engineer productivity, reduce costs and further improve the services Cable&Wireless delivers to its customers. Cable&Wireless has implemented ClickSoftware's workforce management solutions including ClickSchedule, ClickMobile, ClickAnalyze, Street Level Routing and ClickLocate, which will enable the company to increase the average number of visits completed by each engineer in a working day. This means Cable&Wireless will be able to further improve the customer experience and productivity. Cable&Wireless, with the help of Wipro, have implemented the solution within two distinct business areas of field operations: installation and maintenance of mission critical telecoms solutions. The previous bespoke system used to manage programs of work for Cable&Wireless was deemed inflexible and didn't optimize engineer time. As a result, the company looked to the open market for providers of specialist workforce scheduling and mobility software that could better address these issues.

Tel Aviv's ClickSoftware (http://www.clicksoftware.com) is the leading provider of workforce management and service optimization solutions that create business value for service operations through higher levels of productivity, customer satisfaction and cost effectiveness. Combining educational, implementation and support services with best practices and its industry-leading solutions, ClickSoftware drives service decision making across all levels of the organization. (ClickSoftware 11.01)

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9.5 MediaTek Selects RADVISION Technology for Mobile Handset SoC

RADVISION announced that MediaTek has licensed RADVISION's 3G-324M Stack to embed mobile video telephony to their WCDMA baseband processors. Taiwan's MediaTek is a well known fabless player in the baseband processor market. MediaTek has integrated RADVISION's 3G-324M stack into their WCDMA baseband processor, targeted at the smart phone market. The stack's high performance coupled with patented MONA technology makes it an important component of the handset offering. Tel Aviv's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video 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. (RADVISION12.010)

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9.6 PineApp New MASA Solution - Email Security &Archive Security in One Product

PineApp announces its new cutting edge solution for email security and archiving, combined in one product; PineApp MASA. With MASA, midsized organizations enjoy the benefits of both solutions without the burden of maintaining two separate servers. A single server and single operating system, allow organizations to consume less space and power with the benefits of a secured and easy to manage solution. PineApp MASA is designed to help SOHO and SMBs manage, secure and archive their email data in an efficient and cost effective manner. MASA performs three complementary functions: email security, email archiving and email management. MASA includes a high-performance security function which provides complete virus and spam protection. In addition, MASA supplies organizations a powerful set of tools to cope with their email archiving needs and boosts archiving efficiency by providing a highly advanced Indexing mechanism and a remarkable data compression tool. Finally, MASA provides a set of highly sophisticated but flexible management tools, which allow system administrators, postmasters and end users to design smart and efficient policy enforcement measures and have complete control over auditing and management. Nesher's PineApp (http://www.pineapp.com) is a leading security solution provider for Information Technology. PineApp offers comprehensive appliance solutions for all-sized organizations and a DRP (Disaster Recovery Plan) solution. In addition, PineApp's Managed Service package enables service providers to offer advanced email management and protection services to customers on remote sites. (PineApp13.01)

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9.7 BroadLight & Realtek Deliver GPON and Active Ethernet Reference Design

BroadLight announced that it is collaborating with Taiwan's Realtek Communications to provide complete, turnkey reference platforms that integrate BroadLight's GPON and Active Ethernet (AE) Processor technology with Realtek's rich-featured Ethernet switching technology. The companies introduce a single platform that can address both GPON and AE CPE applications addressing a variety of Fiber-to-the-Home deployments. Realtek and BroadLight have established a strategic alliance that delivers best-in-class solutions complementing both companies' product offerings. Realtek's customers can enjoy the fast time-to-market and best-in-class performance of Realtek's RTL8366 and RTL8367 integrated with BroadLight's GPON and AE Processor. Ramat Gan's BroadLight (http://www.broadlight.com) is a fabless semiconductor company supplying semiconductor devices and solutions to equipment vendors for FTTH applications around the globe. Its technology spans from optical access to home networking which enables the delivery of highly integrated, low-cost, end-to-end (E2E) solutions from the central office to the customer premise. As a result, BroadLight is the leader in GPON semiconductor devices and software and is currently powering all of the world's largest PON deployments. (BroadLight14.01)

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9.8 Voltaire Scale-Out InfiniBand Fabric Accelerates South Africa's Largest Supercomputer

Voltaire announced that the Centre for High Performance Computing (CHPC) in Cape Town, South Africa has selected a Voltaire 40 Gb/s QDR InfiniBand director switch as part of its new Sun Microsystems supercomputer. The CHPC is a division of the South African Counsel for Scientific and Industrial Research (CSIR). With a peak performance of 27 teraFLOPS, the new supercomputer is the fastest in Africa and ranks among the TOP500 supercomputers in the world. It's therefore no surprise that the CHPC has chosen a Voltaire 40 Gb/s InfiniBand switch to help deliver this amazing level of performance. The supercomputer, based on a Sun Constellation System, includes three Sun Blade 6048 Modular Systems, with 144 Sun Blade X6275 server modules using the Intel Xeon processor 5500 series, and a Sun SPARC Enterprise M9000 server with 64 SPARC64 VII quad-core processors. The Grid Director 4700 features 324 ports of 40 Gb/s InfiniBand connectivity, with the option to double capacity to 648 ports using Voltaire's HyperScale fabric boards; and utilises Voltaire's unique stackable architecture for building larger configurations into the hundreds and thousands of nodes, with lower latency and greater simplicity than alternative solutions. Ra'anana's Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire's family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. (Voltaire 19.01)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's Inflation Zero in December – Annual Inflation at 3.9%

On 15 January the Central Bureau of Statistics announced that Israel's Consumer Price Index for December remained unchanged, in stark contrast to earlier predictions of pundits who predicted a rise of at least 0.3%. The annual inflation rate for 2009 therefore stands at 3.9%, 0.9% over the upper limit of the price stability target range set by the government. The reason for the flat index is explained mainly by the decline, for the first time in 2009, in the housing item, which fell 0.8%. This item constitutes 21% of the total index. There were also falls in prices of cucumbers by 25%, in fuel by 0.5% and in hospitality by 5%. The falls were offset by rises of 8.3% in prices of clothing, following the entry of winter items into stores, and of 6.7% in footwear prices. Electricity prices rose 2.1%. The Bank of Israel argues that tax increases in the bi- annual budget and economic plan (VAT, cigarettes, alcohol, gasoline, etc.) caused a rise in the index of at least 1.2%. (CBS15.01)

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10.2 Israel Trade Deficit Hits 19 Year Low

Israel's trade deficit fell to $5.1 billion in 2009, the lowest level since 1990, and less than half of the trade deficit of $13.2 billion in 2008, the Central Bureau of Statistics announced on 12 January. Excluding fuel, diamonds, ships and aircraft, Israel actually had a trade surplus of $2.3 billion. Exports amounted to 86% of imports in 2009, up from 75% in 2008. Exports of goods totaled $41.8 billion in 2009, 18.5% less than in 2008. Industrial exports accounted for 83% of total exports. High-tech exports, 51.4% of total industrial exports, totaled $20.5 billion in 2009, $725 million more than in 2008. Exports of electronic components rose by 165%, but pharmaceutical exports fell by 6.7%. This was the first drop in pharmaceutical exports since 1998.

Medium high-tech exports, 28% of all industrial exports, fell 26.8% to $9.6 billion in 2009; medium low-technology exports fell 34.2% to $5.3 billion; and low technology exports fell 14% to $2 billion. Agricultural exports totaled $1.2 billion, boosted by exports of citrus and other fruits, although exports of flowers fell by nearly a third. Polished and rough diamond exports fell to $5.8 billion in 2009 from $9.6 billion in 2008. Import of goods total $46.9 billion in 2009, 27.3% less than the $64.5 billion in 2008. Imports of investment goods (excluding ships and planes) fell 25.5% to $7.6 billion. Imports of raw materials (excluding diamonds and fuel) fell 24.3% to $18.4 billion, and imports of consumer goods fell 7.8%. (CBS12.01)

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10.3 Foreign Residents Buy Fewer Apartments In 2009

Foreign residents bought 2,800 apartments in Israel in 2009, 13% fewer apartments than in 2008, according to the Ministry of Finance survey on the real estate sector. Last year's drop in apartment purchases by foreign residents followed the 33% drop in 2008 over 2007, as the global economic crisis took hold. Foreign residents purchased apartments for a total of NIS 4.3 billion in 2009, one fifth of which was for luxury apartments. The Ministry of Finance said that the sharpest drop in apartment purchases by foreign residents was in the Central District, including Netanya and Rehovot - down 34-41%. The activity of residents in the high-end segment of the market was also down 19% in numerical terms and down 22% in financial terms. However, foreign residents still accounted for 30% of purchases of luxury apartments. Foreign residents accounted for 2.8% of apartment sales in 2009, down from 5% in the peak year of their activity. Foreign residents were most active in Jerusalem, Eilat, and Netanya, accounting for 6 - 11% of the local housing market. Foreign residents also sold 2,400 apartments in 2009, 10% more than in 2008. (Globes 11.01)

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11: In Depth

11.1 MIDDLE EAST: Bouncing Back from the Brink

On 18 January, Morgan Stanley (http://www.morganstanley.com) reported on their assessments for 2009 and forecasts for 2010 in the Middle East. The main engines of growth in the region witnessed severe recessions in 2009 such that weighted average real GDP growth was -5.8%Y. On the back of decisive monetary policy responses as well as countercyclical fiscal policy measures, almost all economies are forecast to grow this year, with Russia and Turkey leading the pack. Our projections point to an overall real GDP growth rate of 3.8%Y (GDP weighted) in 2010, followed by a mediocre performance of 3%Y in 2011.

In Turkey, the simultaneous decline in external and domestic demand caused a sharp contraction in growth in 2009, which was partially being supported by loose monetary policy and various fiscal measures aimed at encouraging consumption. Given the fact that the economic slowdown de facto commenced in 2007, the size of the shock was manageable. Looking into 2010, we expect interest rates to remain mostly accommodative in H1/10 and the fiscal picture to broadly remain accommodative to help the economy revive. With improved external demand conditions in 2H, improvement in credit conditions and better consumer sentiment, we expect growth to reach 4%. A possible IMF Stand-By Arrangement with sufficient funding would raise the upside to growth by 1.1pp to 5.1%Y, in our view.

In the Middle East, Israel was well positioned to weather the global downturn thanks to very timely and decisive policy action by the BoI and the Ministry of Finance. Thanks to the efficient and effective usage of both conventional and non-conventional tools, the economy posted positive growth in 2009, according to our forecasts. In comparison to the previous episodes, the recession experienced in 2009 was shallow and short, with overall annual growth amounting to 0.7%Y. According to our forecasts, the economy will grow by 3.7% in 2010, mainly driven by exports, but private consumption should contribute significantly to the headline figure as well.

Elsewhere in the Middle East, the drop in oil production and the slowdown in domestic demand hampered the real GDP growth in the UAE. The correction in the real estate market has significantly affected the construction industry, which is believed to have contracted significantly in 2009. Weak credit growth has remained an adverse factor, as has the lack of transparency about the strength of Dubai's public sector finances - a situation that culminated in Dubai World's debt rescheduling announcement this past October. Looking into 2010, the recovery is expected to be quite weak, with real GDP growth projected to be around 1%. Growth in the non-oil sector will likely be constrained by continued weakness in credit expansion, sluggish domestic demand and supply-side constraints. The mitigating factor will likely be the continued fiscal expansion in Abu Dhabi.

Inflation Will Be Lower on Average in 2010 Except in Turkey

In comparison to the average inflation rate of 6.1%Y in 2009 we expect the regional average to ease to 4.7%Y this year and remain almost flat in 2011. The two countries where we expect inflation to rise this year are Turkey and the Czech Republic.

In Turkey, the widening of the output gap, lack of external and domestic demand as well as the low energy prices led to a sharp fall in inflation to record lows in 2009 before ending the year at 6.5%Y and below the inflation target of 7.5%. In 2010, we expect inflation to rise on the back of the indirect tax hikes as well as the base effects for most of 1H10. We also expect inflation expectations to deteriorate, which might have adverse implications for the pricing behavior of goods and services. In line with the gradual improvement in domestic demand and the pent-up demand, coupled with a revival in credit growth, we believe that inflation risks will be on the upside. Hence, we expect inflation to rise to 7.7%Y and the 6.5% target to be missed in the absence of a sizeable adjustment in monetary policy.

Israel missed the inflation target once again as the rate is forecast to have ended 2009 at 4%Y. We expect inflation to remain outside the 1-3% target range for most of 2010 but, with the monetary tightening in place, the fading out of one-off increases in VAT as well as the removal of the water surcharge, inflation should ease to around 2% by end-2010.

Elsewhere, in the UAE, we estimate headline inflation to have been around 1.7%Y in 2009 (based on official data). But we believe that official CPI numbers are not consistent with what appears to be a much more significant drop in consumer prices. Anecdotal evidence shows that rents, which along with other housing costs have a 40% weight in the CPI, have dropped by about 15-30% on average in 2009, compared to an official estimate of about 1%Y in November. Looking into 2010, we believe that inflationary pressures will remain subdued, mainly due to a weak recovery in domestic demand and lower rents.

Fiscal Challenges to Remain

In the UAE, we estimate that the fiscal balance was negatively impacted by the significant drop in oil revenues in 2009. Expansionary fiscal policies are likely to have put additional strain on government finances. However, a clear distinction needs to be made between the fiscal situation of Abu Dhabi (which sits on massive oil reserves and foreign assets) and that of Dubai, which is currently having to deal with a significant public sector debt burden. Looking into 2010, we expect higher projected oil revenues to shore up government finances. We expect the expansionary momentum to continue in Abu Dhabi. However, Dubai will likely need to rationalize its public expenditures due to more restricted financing.

In Turkey, the countercyclical spending in 2009 escalated the deterioration in the fiscal picture, and the rise in overall deficit to around 6% of GDP was almost entirely due to rising non-interest expenditures. The 2010 budget sees a deficit of 4.9% of GDP, which we believe is attainable, especially in light of the recent hikes in various taxes. On the fiscal front, the main event to watch in H1/10 will be the passage of the Fiscal Rule legislation that would provide a strong assurance against discretionary budget spending in the future.

Israel's fiscal performance had been somewhat impressive as the government managed to undershoot the fiscal ceiling of 6% by 0.8pp to end 2009 at 5.2% of GDP. We expect the 5.5% deficit ceiling set for 2010 to be undershot as well and the deficit to ease to 4.5%. The main aim of lowering debt/GDP to 60% remains intact, although it is likely to take a few years longer than the initial target date of 2015, in our view.

Current Account Adjustments: A Mixed Picture

The recession and the sharp decline in oil prices resulted in a noticeable decline in the current account deficit in Turkey. From a high of 6% of GDP back in 2007-08, the deficit declined to around 2% of GDP in 2009, and we expect it to rise marginally to 3.1% in 2010 mostly because of higher commodity prices and a pick-up in growth. We project the deficit to rise slightly higher in 2011 to reach 3.4% of GDP. The main risk to our forecasts remains the price of oil, and any sharp move on that front would affect the headline numbers substantially, given the heavy reliance on oil and natural gas imports.

In the UAE, the external account was negatively impacted by a 40% drop in average oil prices in 2009 and an estimated 12% decline in oil production due to lower OPEC production ceilings. Hydrocarbon exports make up about 40-50% of the UAE's total gross exports, or closer to 70% if we exclude net exports. Looking into 2010, we expect a strengthening of the UAE's external account on the back of a projected increase of about 30% in average oil prices and a 2% marginal rise in oil production. We expect import growth to be weak on sluggish growth in the non-oil sector.

In Israel, the sharp decline in imports in 2009 and a better-than-expected performance on the exports front led to a current account surplus of some 3.6% of GDP. This allowed the country to yield the highest surplus in the region after Russia. We expect the surplus to be maintained in 2010, but to be at a lower rate in 2011.

Political Outlook

We do not expect any significant domestic political noise in the UAE or Israel in 2010. In Turkey, we expect the political scene to get gradually active towards the end of the year ahead of the general elections scheduled for summer 2011. While there are slight noises surrounding a possibility of early general elections, we dismiss the possibility almost in full. (MS18.01)

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11.2 ISRAEL: Summary of Israeli High-Tech Company Capital Raising - 2009

On 18 January, the IVC Quarterly Survey was released by the IVC Research Center (http://www.ivc-online.com), which for more than 13 years has been at the forefront of high-tech, venture capital and private equity research in Israel. This Survey reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds, foreign and other investors. The Survey is based on reports from 93 investors of which 52 are Israeli management companies and 41 are other – including foreign – investment entities. The complete Annual Survey results will be published in the IVC 2010 Yearbook, due April 2010.

In 2009, 447 Israeli high-tech companies raised $1.12b from local and foreign venture investors, 46% below $2.08b raised in 2008 and 36% below 2007 levels.

In the fourth quarter, 124 Israeli high-tech companies raised $275m from venture investors – both local and foreign. The amount was 30% below the $394m raised in the fourth quarter of 2008, and down 9% from the $303m raised in the third quarter of 2009. In Q4 2009, the average company financing round was also lower at $2.22m, compared to $3.61m in the fourth quarter of 2008 and $2.8m in the previous quarter.

Sixty-seven companies attracted more than $1m each. Of these, 17 raised $5m to $10m each and four companies raised more than $10m. “Even though 2009 capital raising was sharply lower than previous year's – consistent with our projections – a further decrease to about $800m is foreseen for 2010,” said Koby Simana, CEO of IVC Research Center. “The decline in capital raising in 2009 reflected the impact of the economic crisis on Israel's high-tech industry, but despite talk of recovery, the effect of the economic situation continues to linger. Israeli companies are likely to have an even harder time raising capital in 2010,” Simana concluded.

Israeli VC Funds - Investment Activity

In 2009, Israeli VC funds invested $410m in Israeli high-tech companies. The Israeli VC fund share of the total amount invested in Israeli high-tech companies was just under 37%, which compares to 38% ($780m) in 2008 and 39% ($678m) in 2007.

In the fourth quarter, Israeli VC funds invested $102m or 37% of the total capital invested in Israeli high-tech companies, compared to $151m invested in Q4 of 2008 and $89m invested in the previous quarter. The remainder came from foreign investors as well as non-VC Israeli investors.

In 2009, First investments made by Israeli VCs were 29% of the total amount invested by Israeli VC funds, compared to 31% in 2008. The average First and Follow-on investments were $2.07m and $0.86m, respectively.

In the fourth quarter, First investments made by Israeli VC funds accounted for 27% of their investments, compared to 23% in the fourth quarter of 2008 and 20% in the third quarter. The average First investment by Israeli VC funds was $1.55m, while the average Follow-on investment was $0.73m.

Israeli VC Fund Activity in Foreign Companies

Israeli VC funds invested $80m in foreign companies during 2009 (in addition to their investments in Israeli high-tech companies), compared to $57m in 2008 and $50m in 2007. Nine of the 37 investments were First investments, with follow-ons accounting for the remainder.

Capital Raised by Sector

In 2009, the Life Sciences sector led capital raising with $272m or 24% of total capital raised, followed by Software with $258m or 23% and the Communications sector with $219m or 20%. Internet firms continued to attract investor attention with 13% of capital raised in 2009 and 14% and 15% in 2008 and 2007, respectively. The Software sector led capital raising in Q4 2009 with $74m or 27% of capital raised, followed by the Life Sciences sector with $62m or 22.5%.

“Investors are allocating to the life sciences a significantly larger share of the capital invested than in previous years,” observed Marianna Shapira, Research Manager at IVC. With 24% of capital invested in 2009, the sector allocation well outpaced the 15% of 2008, and also exceeded the six-year average of 21%. “Interestingly, said Shapira, “the life sciences attracted even more investment than the communications sector, which slipped from first place for the first time since 2000.”

Capital Raised by Stage

In 2009, 77 Seed companies attracted $63m, the lowest amount raised since 2004. At 5.5%, the Seed share of total capital raised was in line with the 5% of the previous year, which was lower than the previous four-year average of 8%. In the fourth quarter of 2009, Seed companies attracted just 4% of total capital raised, compared with 8% in the fourth quarter of 2008 and 5% in the previous quarter. Mid Stage companies captured $153m or 56% of the total capital raised.

IVC Research Center is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC products and services are used regularly by high-tech companies, venture capital funds, private investors, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of Israel and the Office of the Chief Scientist. IVC owns and operates the IVC Online Database (http://www.ivc-online.com) containing over 8,000 Israeli high-tech companies, venture capital funds, investment companies, angels and technology incubators, as well as news updates and lots more. (IVC18.01)

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11.3 LEBANON: Health Boost

Lebanon is reported by the Oxford Business Group (http://www.oxfordbusinessgroup.com) to be working to implement a sweeping overhaul of its health sector, aiming to upgrade the direct provision of services, put in place more cost-effective management practices and expand basic medical coverage to all members of society.

With one of the highest per-capita outlays for health services provision of any country in the region, Lebanon spends $820 per person annually. The most recent World Health Organization figures put Lebanon's total expenditure on health at 8.9% of GDP and 11.9% of total state outlays.

While expenditure may be high, many believe that Lebanon is not getting full value for its money, with the National Social Security Fund (NSSF) - the workplace-funded health scheme covering those in contracted employment - heavily in deficit, while state services are under pressure to meet demand.

Key to the reforms proposed by the health minister, Mohammad Jawad Khalifa, will be providing insurance to those people who do not have access to coverage through the NSSF or other insurance options. Though people currently without coverage are given free treatment through the Health Ministry, there are concerns that this system does not provide adequate or equitable service. As proposed by Khalifa, the 58% of people not currently covered would be included in a public program giving them the option to access both public and private health care facilities.

Payment for treatment would be through a mix of direct charges met by patients and contributions from health insurance premiums, with the state paying 40% of a beneficiary's total health care costs. The reforms will also see the introduction of electronic cards, national insurance numbers and a fully computerized database, which are all aimed at improving managerial services and speeding up the processing of patients.

Among the proposed improvements to direct service provision include an increase in the level of free preventative care, including scanning for cancer and mammograms. "There is an emphasis on public health care with these reforms, though I want to encourage the private sector as well," Khalifa said in an interview with international media in late August. "There is no reason why everyone should not have access to affordable health care and excellent hospital treatment wherever they go."

The latest reforms are just part of a far broader process that the ministry has been working to put in place over the past few years. Earlier this year, the ministry mandated fixed rates for certain medical procedures and treatment, with more than half of all procedures having set tariffs.

Another step was taken in mid-October, with the ministry announcing it has chosen Accreditation Canada, an independent non-profit organization that undertakes external reviews of health and social service providers, to conduct a six-month study of current Lebanese primary health care standards. The project is seen as an important step in accomplishing the ministry's goal of upgrading health facilities, including hospitals, primary health care centers, laboratories and other medical institutions.

According to Accreditation Canada's president and CEO, Wendy Nicklin, one of the aims of the project is to share the organization's expertise in health care excellence through accreditation with Lebanon's Ministry of Public Health. "This initiative clearly demonstrates the ministry's commitment to improve the health and wellbeing of the Lebanese people by providing them with the best quality health care services possible," Nicklin said on October 19.

Of course, drafting a program for broad-based reforms is one thing; implementing them is another. While Khalifa has held the office of health minister since 2005, long-running political uncertainty, combined with a new cabinet, will do little to help his efforts of pushing through such important reform. Though it will probably be a challenge to advance the proposed reform package quickly, Khalifa does have a blueprint to work from for the future. Such a dramatic overhaul of the sector will surely be costly, but with some of the highest health costs in the region already, short-term spending pain may result in longer-term gain. (OBG07.01)

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11.4 JORDAN: A Year In Review - 2009

The Oxford Business Group says that Jordan has managed to avoid the worst of the global recession in 2009, with the economy still expanding. Nevertheless, the drying up of liquidity and a slowing of business activity, along with a widening gap between state revenue and expenditure, means that the effects of the international crisis will continue to be with the Kingdom well into the new year. Though final figures have yet to be tabulated, the pace at which Jordan's economy grew in 2009 will be significantly slower than the year before, when GDP climbed by as much as 8%. For 2009, the figure is expected to be in the range of 3-3.5%, the easing of growth attributed by the IMF in a report it released in mid-December to "sluggish activity in the finance, trade and mining sectors". The IMF was more positive for the coming year, stating that the Kingdom's economic growth should pick up to around 4%, reflecting slowly recovering global and regional conditions.

While 3.5% growth for 2009 is impressive – especially in times of global recession – Jordan needs to maintain or surpass this rate of expansion in order to provide jobs for its increasing population and to replace dwindling foreign assistance as a component of the economy, with aid and grants falling by more than 40% in 2009 to an estimated $570m. Jordan will ring in 2010 with a new prime minister and cabinet, after King Abdullah II dissolved parliament in late November, a move seen as an attempt to clear the way for new elections and speed up economic reforms. These reforms include a reduction in expenditure on the civil service, an overhaul of the subsidy regime and strengthening of the legislation covering foreign investment, blocked by the parliament in August.

With the subsequent resignation of Prime Minister Nader Al Dahabi, Samir Rifai was sworn in at the head of a new cabinet in mid-December, with a mandate by the king to draft new electoral laws and call a general election within a year.

At the end of November, the budget for 2009 was about $1.38bn in deficit, with the total state debt expected to reach $14bn by the end of the year. The 2010 budget has already been approved, with an 11.3% reduction in projected spending from 2009, with total outlays set at $7.6bn, with the deficit target being $967.5m, 3.9% of GDP, compared to the estimated 7.3% in the past year.

While the state is aiming to tighten its belt in the coming year, the country's banking sector is looking to 2010 for better things to come, after a somewhat lean time of late. According to official figures, profits recorded by the country's banks for the first half of 2009 were around 30% down, with some analysts expecting a similar decline for the year-end results. The ratio of toxic loans to total loans extended by Jordanian commercial banks rose to 6.4% in 2009, Central Bank of Jordan (CBJ) figures show, up from the 4.2% of the previous year, although this is still significantly lower than in years past.

Throughout the year, the CBJ maintained a fairly tight monetary policy and closely monitored the financial sector, moves Umayyah Touqan, the governor of the CBJ, said had helped mitigate the effects of the global recession. "The CBJ adherence to international supervision and audit criteria has helped Jordanian banks to face the repercussions of the global financial crisis with the minimum negative effects," Touqan told the official news agency Petra in late November. On December 18, the CBJ reduced interest rates by 50 basis points, taking its discount rate to 4.75%, its repo rate to 4.5% and the bank's overnight rate on the dinar to 2.5%. Though the CBJ has cut rates four times since the end of 2008, the December move was the first reduction since April.

One of the reasons cited by the CBJ for the latest cut was easing concerns over inflation and worries about increasing liquidity fuelling price hikes through pushing up demand. However, recent figures suggest that the specter of inflation has receded, at least for the time being. Having hit 14% in 2008, inflation is expected to slide to a far more moderate 1-2% in 2009, prompting the CBJ to loosen the monetary taps slightly. With increased liquidity in the domestic market, expected growth for the local and global economies and anticipated fiscal reforms fast tracked, Jordan should be able to look forward to a better year in 2009, though with the continued constraints on state spending, the government will have to work hard to put in place all of its social and economic agenda. (OBG13.01)

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11.5 KUWAIT: A Year in Review 2009

Though 2009 has not been easy for Kuwait, with many of the country's leading sectors experiencing a downturn, the country appears to have weathered the worst of the global crisis and can ring in the new year on a positive note. The Oxford Business Group noted that while Kuwait's economy expanded by 5.9% in 2008, the situation is expected to be somewhat different come the end of 2009, with most predictions tipping a contraction of GDP to around 1.5%. However, with the price of oil having risen through 2009, Kuwait is in a far stronger position than many expected earlier in the year.

Having planned for a $16.9bn deficit for the 2009-10 budget, expecting oil prices of around $35 per barrel, Kuwait instead garnered a $17.5bn surplus for the first six months of the financial year as per barrel prices have topped $75. With some projections putting the total 12-month budgetary surplus by the end of March 2010 at around $34bn, the government should be able to sustain both its economic expansion programs and social support schemes.

That is not to say everything has been smooth in Kuwait's economic path this year. In March, the government announced that it was cancelling the tenders it had held for the $14.5bn Al Zour oil refinery, in part so that the costing for the massive project could be reassessed in light of falling materials prices. Though the project had been halted, the government is still committed to building the new refinery, with the oil minister, Sheikh Ahmad Abdullah Al Sabah, saying on December 12 that the development would be part of $87bn worth of investments that would be made in the energy sector between now and 2030. The investments were part of a program to increase output from 3m to 4m barrels per day (bpd).

The closely linked construction and real estate sectors both saw a fall off in activity in the first half of the year, though there are signs that rising liquidity and growing confidence among consumers will lead a revival into 2010. There was an increase in real estate transactions for October, up 35% on the previous month, and if this trend is maintained it will not only help kick-start the property market but draw the building sector into its tail stream.

The country's stock market also experienced mixed results in 2009. Having opened the year at 7917 points, the main index of the Kuwait Stock Exchange (KSE) dipped below 7000 less than three weeks into the new year. By May, the index had fallen through the 8000-point barrier before sliding back to the 6900-mark in December. Throughout the year there have been calls, both from investors and some members of parliament, for the state to compensate shareholders who lost money on the KSE, with the issue being one of the reasons there were delays in implementing a planned $5.17bn economic stimulus package that had been approved by the cabinet in early February.

The package finally came into force in mid-April, providing a series of measures to support the economy, including state guarantees of up to 50% for new credit facilities offered to local firms by banks. The package also provided a 15-year guarantee against any fall in the value of local banks' investment and real estate portfolios and old loans to local companies.

According to Majid Al Shatti, the chairman of the Commercial Bank of Kuwait and chairman of the Union of Kuwaiti Banks, the government's stimulus package had helped cushion the economy from the effects of the global economic crisis and saved the country's financial sector from potential bankruptcy. "It protected the banking sector and stabilized the market," Al Shatti told a seminar in November. "It also leveraged productive sectors."

Much of the year's economic developments were played out against a backdrop of political tension, with parliamentary deputies repeatedly pressuring the cabinet over its policies and blocking items of legislation the government saw as crucial to overcoming the financial downturn. Events came to a head in March, when His Highness Sheikh Sabah Al Ahmad Al Sabah, Kuwait's Emir, was forced to dissolve parliament and call early elections, the third time in as many years the country had gone to the polls. However, the ballot left the distribution of seats in the 50-member assembly little changed in that there is no clear majority bloc in the house, though the election was notable for the fact that four women were elected to the parliament, a first for the nation.

As the year came to a close, political tension was again on the rise. The media suggested that the Emir might again dissolve the parliament after opposition deputies tabled a motion in the assembly that, if passed, would halt co-operation between the elected branch of government and the prime minister and interior ministers. With the economy looking to edge its way out of recession early in the new year, and ride high oil prices and stronger demand to post solid growth in 2010, Kuwait should be well placed to put a slow 2009 behind it and return to more positive territory. (OBG07.01)

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11.6 BAHRAIN: Strength in Diversity

The Oxford Business Group says that Bahrain appears to have finished 2009 in better shape than many could have foreseen at the beginning of the year; it will be looking to 2010 with a confidence garnered from the solid performance of the country's economy under pressure. There had been fears that Bahrain would be hard hit by the global crisis, especially as one of the key components of its economy is the financial sector, but as 2009 drew to a close it became apparent that the country is far more resilient than some had thought.

Year-end predictions are for a contraction of GDP of less than 1%, with some projections putting the decline at just 0.1%, prompting analysts to expect moderate growth to kick in for 2010. With the global economy having slumped into recession in 2009, Bahrain's performance is a positive achievement, testimony to the long-term policy of diversifying and broadening the base of the economy.

That policy has seen a strong push towards establishing Bahrain as the region's premier banking centre, with more than 400 conventional and Islamic financial service providers operating out of the Kingdom in 2009. While almost all of these institutions have been affected by the crises, the broad spread of investments and the highly regulated nature of the financial system in Bahrain have mitigated the impact.

Most recently, concerns over the debt levels of Dubai World prompted Rasheed Al Maraj, the governor of the Central Bank of Bahrain (CBB), to issue a statement that, while all the banks on the island had some exposure to the Dubai-based corporation, this added up to less than 0.1% of their combined assets.

Of slightly more concern was the exposure to Saad Group and Ahmad Hamad Algosaibi & Bros (AHAB) of Saudi Arabia, both of which defaulted on loans mid-year. In July the CBB was forced to take control of two local lenders linked to the Saudi-based companies, The International Banking Corporation (TIBC) and the Awal Bank, after they announced they were having difficulties in meeting obligations. Many local banks reported lower-than-expected earnings in the third quarter, but analysts expected most to bounce back in the last months of the year and to move forward in 2010.

Though there has been some slowdown in the real estate and construction sectors, the latter in particular will be encouraged by news in late November that the parliament had approved a supplementary budget proposal by the government, allowing the state to provide additional funding for existing projects, in particular infrastructure work. Not only did the parliament vote to approve the $880m requested, but it allocated an extra $66m and lifted the government's loan ceiling, allowing it to borrow another $2.6bn if required.

In the same month, officials confirmed that work would begin early in the new year on an infrastructure project that would change the face of Bahrain's economy, the long anticipated 40-km causeway linking the Kingdom with Qatar. While Bahrain already has one connection with the mainland, a causeway running to Saudi Arabia, the $2.7bn link with Qatar will not only have a four-lane roadway but also a double rail line, an addition to the plan that delayed the start date for construction from 2009. The broad-gauge line will serve as the final piece in the network to establish Bahrain as a logistics hub in the region, allowing fast movement of cargo to and from its deepwater ports.

These maritime facilities include the new Khalifa bin Salman Port, officially opened in December having commenced operations in April. The port, built at a cost of $362m, has the capacity to handle 1.1m containers a year, and also has a terminal to cater to passenger ships, helping to serve Bahrain's growing tourism trade.

There is also potential growth coming from a traditional though unexpected sector of the economy. Hydrocarbons still play a leading role in the economy, despite dwindling reserves, contributing some 25% to GDP, in large part through refining and processing activities, with much of the raw feedstock having to be imported.

In late May, Abdulhussain Mirza, Bahrain's oil and gas affairs minister and chairman of the National Oil and Gas Authority, announced a $20bn plan to bolster the energy sector, including a $5bn upgrade of the main refinery. Under the program, set to run for 20 years, additional fields will be developed, existing fields modernized and advanced extraction technology used to increase output from the current 35,000 barrels per day (bpd) to some 100,000 bpd within seven years. This would be 50% higher than Bahrain's previous production peak, achieved in the early 1970s, and could see the country reposition itself as an oil exporter.

Having ridden out the worst of the global financial crisis and seen its economic mainstays - the financial sector and the hydrocarbons industry - remain solid throughout the downturn, Bahrain will enter 2010 with confidence. (OBG07.01)

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11.7 BAHRAIN: Building Momentum

Increased state investments in housing and infrastructure projects, combined with accelerated spending by private companies, are expected to see the Bahraini construction industry build momentum throughout 2010. The local construction sector will be buoyed by a $2.6bn scheme to redevelop an area of downtown Manama, aimed at creating a city within a city and revitalizing the old central market district. At the core of the project are four 28-storey office and shopping towers, residential blocks, a redeveloped central market, hotels, parks and recreation space.

According to Majeed Millad Al Jazeeri, chairman of the Manama Municipal Council, which is backing the development, the company awarded the contract for the project - Tashgeel for Commercial Buildings Management - is drafting a five-phase strategy on how to carry through the scheme from beginning to end. "Tashgeel will have 18 months to complete a five-phase plan it has presented us with and if things go according to schedule, then work on the project could begin as early as the end of 2011," he told local media on January 3.

Another long-term project that will bolster the sector's returns is the plan to significantly expand Bahrain International Airport, announced in October 2009. The first stage of the $4.8bn development, a new terminal capable of handling 5m passengers a year, is scheduled to be opened in 2012, with work set to begin shortly.

The government has also been laying the foundations for a revival of the construction sector, pumping additional funds into utilities and infrastructure projects. In late November, the parliament ratified a government request for additional funding to capitalize a series of projects, most of those being carried out by the Works Ministry. Of the supplementary budget's $945m, $370m will be allocated to the ministry, mainly to support infrastructure schemes.

The parliament also voted to approve an increase in the government's borrowing limits, allowing a further $2.6bn of funds to be raised on the market. Isa Abu Al Fateh, of the parliament's Financial and Economic Affairs Committee, said these funds would help the state to carry through large-scale projects, primarily construction-based, that regular funding could not meet. "Those include housing projects in addition to expansion of electricity and water networks, amongst others," he said on November 20.

While final figures have yet to be released, most experts have predicted that the Bahraini economy will have either contracted marginally in 2009 or at best been flat. For the Kingdom's building industry the past year has been a lean one, with a recent report by Business Monitor International (BMI) estimating that the sector may have contracted by just over 4.5% last year, a sharp turnaround from the 21% growth averaged between 2005 and 2007. While predicting a return to positive territory this year, the study forecast that it would not be until 2012 that the construction trade will start to really pick up, expanding by 4% as demand climbs.

With demand for high-end residential properties falling amidst the economic slowdown, a number of builders have been looking to remain active by turning to the lower end of the market. While there are some private low-cost housing developments on the drawing boards, it is mainly the state that is working to fill this segment, with plans to contract the construction of up to 38,000 units by 2013. Tenders have already been opened for some of these state-sponsored projects, with more expected to be launched throughout the year. (OBG19.01)

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11.8 UAE: Abu Dhabi's Year in Review 2009

The Oxford Business Group said 2009 saw Abu Dhabi avoid the worst of the global financial crisis, lay out long-term economic plans, buttress its credentials as a home for green technologies and make noteworthy inroads into the global tourism market. Despite troubling economic results globally, Abu Dhabi is expected by most to register small but positive GDP expansion for 2009. Compared to recent years such modest growth appears unimpressive but when weighed against most economies around the world, the forecasts are actually quite positive. Moreover, the silver lining to the global slump has been a reduction in inflationary pressures. According to Statistics Centre-Abu Dhabi, the emirate recorded a 0.85% inflation rate in the first 11 months of the year, making it the lowest in the UAE.

Meanwhile, in January 2009 the government made public its Abu Dhabi Economic Vision 2030. Upon release of the 142 page strategic plan, Mohamed Al Bowardi, secretary-general of the Abu Dhabi Executive Council, said, "The publication of Economic Vision 2030 is a significant further milestone in the government of Abu Dhabi's ongoing commitment to greater transparency and accountability. The document articulates a comprehensive vision for Abu Dhabi's economic development and explains the key policy initiatives that will be implemented by various entities of the government in order to achieve it."

The overall aim of the document is to build a sustainable economy by ensuring balanced social and regional economic development. Revenue diversification via strengthening the non-oil sector is seen as the cornerstone of achieving such a lofty goal.

Although established in 2006, the Masdar Initiative, a multi-billion dollar, multi-faceted investment in alternative energy, is one of the government's ideas to reduce economic dependency on oil receipts over the long term. On May 30 a small but important step towards that goal was taken. At a ceremony at Masdar City, officials connected a 10-MW solar panel plant to the electricity grid. The project was groundbreaking for the Middle East and supporters believe the $50.3m project is testimony to the argument that solar energy is a viable method of powering, at least in part, the emirate's electricity needs.

It was policies such as these that helped Abu Dhabi to become the new headquarters of the International Renewable Energy Agency (IRENA), the first intergovernmental agency focused on the promotion of environmentally friendly initiatives. On June 30, IRENA's 136-member body watched as Germany and Austria, the UAE's rivals to host the fledgling agency, agreed to step aside and allow the headquarters to be set up in rent-free offices in Masdar City.

In September the emirate supported its aspiring renewable energy credentials further. The Masdar Institute of Science and Technology, the world's first graduate academic institution dedicated to the research of alternative energy, began classes for the inaugural intake of 92 graduate students. The pupils were selected from more than 1200 applicants from 82 countries worldwide. They were, however, not the only people to make the trip to Abu Dhabi in 2009. The emirate's tourism sector - though hobbled by weakening global demand - still managed to attract more people than in 2008.

Abu Dhabi Airports Company (ADAC) released figures showing visitor numbers grew at a healthy clip of 7.0% over the first 10 months of the year. October 2009 saw a 2.8% increase in passengers and 24.3% increase in cargo year-on-year. One of the main reasons for this was the hosting of the inaugural Abu Dhabi Formula 1 Grand Prix. The race, which marked another milestone in the emirate's development, promoted the capital internationally and gave its hospitality sector a welcome fillip. Etihad Airways, the Abu Dhabi-based airline, also played its part in attracting ever-increasing numbers of travelers to the capital. The company's reward was the top award at 2009's World Travel Awards (WTA), being voted the world's leading airline by more than 180,000 travel industry professionals from over 175 countries.

Policymakers, it appears, seem convinced now is the best time to exploit favorable conditions thanks to low costs and eager contractors. Given its sagacious economic planning, bountiful resources and a healthy cash surplus, Abu Dhabi is well placed going into the new year and beyond. (OBG08.01)

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11.9 UAE: RAK's Year In Review 2009

The year 2009 was a turbulent time for global business, with the UAE in particular facing some stiff challenges. To say that Ras Al Khaimah (RAK) sailed through the economic hurricane untouched would be false, but the Oxford Business Group attributes that due to sound economic planning, 2009 was a year of stable progress for the emirate.

The authorities have encouraged the development of the manufacturing sector, part of a long-standing policy aimed at diversifying the economy that has resulted in industry contributing more than 8% to RAK's GDP. This policy, bolstered by state incentives and the establishment of dedicated industrial zones, has made a number of manufacturers in RAK sectoral leaders in the region and beyond. In particular, RAK's mineral wealth, which includes limestone, gabbro and silica, provides the materials for successful cement, ceramic and glass industries.

That being said, industries in RAK have had to contend with challenges in the past, especially a shortage of electricity to keep plants powered-up and a transport infrastructure grid attempting to keep pace with the expanding demand put on it by the growing economy. The government has made significant moves throughout 2009 to install additional generation capacity over the next few years, and committed $5bn to a program of improvements to the transport network. The busy port of Mina Saqr will be updated to allow a 400% increase in cargo-handling capacity, allowing materials and finished products to move more quickly. These developments will help put the final pieces in place to allow RAK's industrial sector to expand further and faster in the coming years.

RAK has not been unscathed by the real estate slump that has beset the Gulf. But there are substantial grounds for confidence in the future of the property sector in this emirate of around a quarter of a million people. RAK is increasingly being seen as an alternative to Dubai, offering a more laid-back atmosphere while still maintaining enviable proximity to the other emirates - at a fraction of the price.

The emirate is also now capitalizing on its natural attractions, including mountains, beaches and archaeological sites, to build its tourism sector. A far cry from the theme parks springing up across the Gulf, RAK hopes that its back-to-nature approach will appeal to those seeking a more authentic taste of Arabia. Apart from trying to create a niche market, off-the-beaten track holidays bring with them the added advantage of requiring local guides and experts, further boosting employment in the more remote regions of the emirate.

At the close of 2009, RAK was somewhat a victim of its own success in these efforts, with many hotels overbooked. Therefore, a further 3700 rooms are expected to be added in the coming years. Growing tourism should also stimulate population growth (and hence the residential market), as well as the retail sector. With the development of more housing and tourism options, companies that once monitored RAK from nearby Dubai are finding compelling reasons to move their headquarters to the emirate.

RAK has long held a lower profile on the international scene thanks to its late-bloomer status and lower hydrocarbon reserves, but this is changing. RAK Investment Authority and RAK Free Trade Zone have attracted investors with tariff-free trade, installed infrastructure, light-touch regulation and a favorable location. The Department of Economic Development (DED) follows the federal regulations of the UAE, but also has flexibility to adapt rules and regulations to cater to RAK's market needs: for example, it has created a one-stop shop to obtain a business license in the emirate by maintaining representative offices of the RAK Chamber of Commerce inside the DED.

A less obvious but equally important factor in RAK's development has been its continued investment in its own citizens through improved health care and education. An ambitious program of reforms designed to open up these sectors to private investment and enterprise has resulted in a fast-growing system capable of training a new generation of workers - and creating higher-level jobs in-country to employ them when they finish their studies.

The private sector has not been slow to enter the health sector to supplement state-provided services. In November, plans were unveiled for a $21m private hospital to be built in the Al Diq Dag district on the Airport Road. The RAK Medical and Health Sciences University, established in 2006 by the Human Development Foundation (HDF), a joint venture between the government, Al Ghurair Investments and ETA Ascon Group of Dubai, today offers a wide range of accredited courses, aimed at producing medical professionals. As a fee-charging institution, the university looks to attract students from abroad, as well as from RAK, putting it in competition with other medical teaching facilities across the region, in particular Dubai and Abu Dhabi.

Education, especially higher education, is seen as integral to the development of the work force and as such is a key ingredient in the push for diversification. Efforts are being made to improve the quality of academia, not just the quantity of students in schools. More funding is being dedicated to research rather than vocational training programs, with the aim of training a class of creative entrepreneurs that will create jobs within the country. This is not to say that practical skills are being neglected: on the contrary, the government has been keen to see funding directed towards projects that tackle domestic issues, while maintaining an international draw-card by offering most degrees in English. The year 2010 will be an interesting one in this dynamic emirate, as the effects of ongoing development become clearer. What is already obvious though is that RAK's days as a smaller player in the UAE are in the past. (OBG08.01)

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11.10 OMAN: Year in Review 2009

In common with the rest of the world, 2009 was a year of challenges for the Omani economy. A gloomy outlook for global demand, coupled with depressed energy prices on the international markets, meant the Sultanate has had to look inward for continued economic growth, while also pressing ahead with its economic diversification strategy.

The year 2009 began on a positive note, with the realization of a free trade agreement (FTA) with the US on January 1. The accession marked the fourth such agreement signed between the US and an Arab country, and reflects Oman's continued commitment to the liberalization of international trade, despite the challenging conditions prevailing at the time. The US FTA followed hot on the heels of a similar GCC-wide agreement signed with Singapore the previous month, while 2009 also marked progress for Oman in terms of its growing trade relationship with India - set to hit $2.5bn by the end of the year. Altogether, Oman's integration with the global economy continued to strengthen in 2009, in spite of the constraints on international trade.

Domestically, Q1/09 witnessed some poor fundamentals, as January-to-April oil revenues slumped 50.5% year-on-year, and bank loans grew at their slowest pace for four years. However, consistent investment in the oil and gas sector continued to pay off, as the turnaround from long-term decline in oil production into increased production growth, which began in 2008, was extended into this year, with output up 6.6% year-on-year in August. In particular, the enhanced oil recovery techniques put in place by Petroleum Development Oman (PDO) has placed the Sultanate at the forefront of the field internationally. Two concessions for further exploration of Oman's gas reserves were also awarded in April of this year, with Malaysia's Petronas and American firm Harvest Natural Resources taking control of blocks 63 and 64.

In the technology-related sectors, mobile telecoms in the Sultanate continued to keep pace with international standards, as more advanced 3G networks were implemented by Nawras and Oman Mobile in the first half of the year. Further liberalization of the telecoms sector is also on the cards, with the government announcing in July that it was considering selling a further 25% stake in Omantel, and a second fixed-line license, held by Nawras, currently in the process of starting operations. The latter is expected to improve Oman's internet penetration figures, currently a relatively low 13.7%, compared to the regional average of 23.7%. Elsewhere in the IT sector, work continued apace at the Knowledge Oasis Muscat (KOM), with the founding stone laid in March for the new ICT business development facility. KOM was established in 2003 under the aegis of the Public Establishment of Industrial Estates (PEIE), as part of the government's economic diversification strategy, as outlined in the Vision 2030 Development Plan.

Further diversification is centered on the special economic zones of Sohar and Salalah. The former has enjoyed a relatively successful 2009, with continued international investment in the shape of aluminum smelting, iron ore pelletizing and further port expansion. Brazilian mining giant Vale expects its $1.5bn iron ore plant to come on-line next year and is already considering doubling production capacity from 9m tonnes. The government hopes to attract a further $2.5bn of international investment to Sohar over the next five years.

Although government infrastructure investment has taken up some of the slack in project financing since the onslaught of the global crisis, recent figures show that Oman's financial sector remains relatively healthy. The Central Bank's cautious asset/liability management policy appears to have paid dividends in this respect, with many of the Sultanate's largest banks remaining profitable in 2009. NBO, the country's second-largest bank, posted net profit of $50.9m for the first nine months of 2009, with its loan book increasing 12% to $3.58bn and deposits totaling $3.22bn, up 7%. Bank Muscat, which has substantial operations abroad, including Saudi Arabia and Bahrain, also retained profitability, making a third-quarter profit of $50.6m.

As global market fundamentals return to a more favorable outlook for 2010, Oman can be reassured that it has weathered the storm of 2009 without too much discomfort, and remains in good shape to take advantage of renewed trade and investment opportunities. The IMF anticipates 3.8% real GDP growth for the Sultanate in 2010 - down slightly on the predicted figure of 4.1% for 2009, yet with a more stable consumer price outlook of only 3%, down from 3.3%. (OBG07.01)

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11.11 OMAN: Aviation Lift-Off

Following a tough economic year for the region, welcome news came from the aviation industry, which witnessed flag-carrier Oman Air closing 2009 with successful growth figures. The airline reported a 17% increase in passenger numbers and a 67% increase in revenue for its cargo division, demonstrating its growth strategy has retained resilience despite a poor year globally for the sector. The good news was further augmented by an announcement at a general meeting held by the company that the government had increased its operating capital six-fold, from $129.8m to $779.1m.

In all, passenger numbers for the airline rose from 1.98m to 2.33m last year, as the company introduced an additional 8 aircraft to bring its fleet to 21. Among the new entrants were Oman Air's first A330s, enabling the Sultanate to expand its range, with the addition of several new routes to destinations such as Frankfurt, Munich and Paris. The airline now serves a total of 32 destinations worldwide, with other recent additions including the Maldives and Sri Lanka, both added in October 2009.

A recent order for five Embraer 175s, due for delivery in 2011, indicate that the airline is looking to expand its coverage of the local market, and indeed perhaps to enhance the appeal of Oman as a hub for multi-trip tourism. With the Maldives and Sri Lanka relatively close by, expanding and consolidating these routes offers Oman Air a useful new niche in the market.

The company also has six of the new Boeing 787 "Dreamliners" on order, which it will lease from Kuwaiti company Alafco, as well as two further A330s due in 2010. The first three A330s delivered in 2009 have already been retrofitted with the latest mobile phone and broadband connectivity hardware, enabling passengers to stay connected while in the air, while the latest A330s will come with the technology pre-fitted.

The combination of long- and short-haul equipment, alongside the airline's new Business Class Seat configuration launched early last year, seems part of a strategy to position itself as "a boutique airline in the premium segment". While the global market for premium air travel has shrunk dramatically in the past two years, following a so-called "boutique" strategy may well prove a more resilient model for first- and business-class travel.

Given the highly competitive nature of Gulf premium aviation, with Emirates, Etihad and Qatar Airways all undergoing aggressive expansion campaigns, and with big order books to expand still further, Oman Air will be looking to achieve a competitive edge through a combination of service and destination choice. As CEO Peter Hill told press in November, "We are definitely not talking Emirates or Etihad here." Rather, the airline remains one of the few carriers to still pay a full 9% commission to travel agents, and with Muscat already a popular travel destination among more affluent travelers in the adventure or cultural tourism bracket, using the airline's increasing range of short-hop destinations from Muscat to augment package deals is a prime market for growth.

With Europe moving steadily out of recession, and official figures showing all major economies on the continent except the UK to have already resumed economic growth, 2010 will witness renewed consumer confidence that is sure to trickle into the tourist market. The next two months however will be vital for judging the extent of recovery, as the New Year remains a period when demand for summer packages kicks off. If tourist appetites have recovered sufficiently, Oman Air is likely to see its impressive growth carried forward to 2010. (OBG12.01)

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11.12 SAUDI ARABIA: Fitch Affirms Saudi Arabia at 'AA-'; Outlook Stable Ratings

On 12 January, Fitch Ratings (http://www.fitchratings.com) has today affirmed Saudi Arabia's Long-term local and foreign currency Issuer Default ratings (IDRs) at 'AA-', both with Stable Outlooks. The Country Ceiling is affirmed at 'AA' and the Short-term foreign currency IDR at 'F1+'. "Saudi Arabia's strengths have come to the fore amid the global slowdown and financial crisis," says Charles Seville, Director in Fitch's Sovereign team. "The financing flexibility offered by the government's balance sheet - built up by saving past oil revenues - has enabled it to forge ahead with spending plans without raising borrowing."

A strong government balance sheet is one of the chief supports to the ratings. Sovereign net foreign assets were estimated at 132% of GDP at end-2009 and are conservatively-managed and valued. Consolidated general government debt was just 6% of GDP. In absolute terms, net foreign assets are second only to Japan's in the 'AA' category. They are also among the strongest in relation to GDP and current account receipts, but remain weaker compared to other major Gulf Cooperation Council (GCC) oil producers, particularly measured against government spending.

Government external assets, reported monthly on the Saudi Arabia Monetary Authority's (SAMA) balance sheet, fell $65bn (17.6% of GDP) between their peak in November 2008 and their trough in September 2009, from where they have since resumed growth. The central government ran an estimated deficit of 3.3% of GDP in 2009, the first since 2002. This performance contrasted with 2008, when a spike in oil revenues allowed the government to run a fiscal surplus of 34% of GDP and its external assets grew $140bn.

The government plans to raise spending by 13.7% in 2010. Should oil prices match Fitch's assumption of $70/b in 2010, then the government will be able do so while continuing to run a fiscal surplus of at least 5% of GDP. The public finances are vulnerable to a fall in oil prices, but this would have to be steep and prolonged to affect sovereign creditworthiness.

Saudi Arabia faces the challenge of diversifying the oil-dependent economy to create jobs for a young and growing population. The government is investing to achieve these long-term goals, successfully spurring growth in the non-oil sector. However, Fitch notes that the breakeven oil price has crept up and was $68/b in 2009. A period of lower oil prices could still compel the government to curb spending to preserve its balance sheet, although under most conceivable oil price scenarios, the government's net foreign assets position will remain comfortable.

A prudently regulated banking system has weathered the crisis without state solvency support, unlike most others in the GCC. SAMA has offered timely liquidity support to banks and eased monetary policy. Loan impairments have increased and the system-wide risk weighted capital ratio has fallen, but at 15.9% of assets in March 2009 it is still comfortable relative to peers. Structural factors are weaknesses relative to similarly rated countries outside the region. As elsewhere in the GCC, greater transparency, particularly over government finances, would be positive for the ratings. (Fitch 12.01)

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11.13 EGYPT: The ElBaradei Effect on Egyptian Politics

Issandr Amrani writes in the Carnegie Arab Reform Bulletin (http://www.carnegieendowment.org/arb) that the advent of Mohammed ElBaradei as a potential presidential candidate has introduced an unpredictable new element into Egypt's slow-moving succession crisis. For the first time in recent memory, a prominent member of Egypt's establishment has spoken out against the Mubarak regime. Even if ElBaradei never attacked President Hosni Mubarak personally, his indictment of Egypt's current predicament is all the more devastating because it comes from a man who appears eminently more qualified for the presidency than the heir apparent, Gamal Mubarak.

For several months, ElBaradei - who recently stepped down as head of the International Atomic Energy Agency (IAEA) and resides in Vienna pending a return to Egypt in February - had figured on wish lists of grandees who might be able to thwart an inheritance of power scenario. His unexpected statement, issued on 6 December 2009, listing conditions for his candidacy, not only upset some factions of the Egyptian regime, but also spoke to the perennial difficulty the opposition has had in having real political impact.

Since December 2004, when the Kifaya movement first gathered outside Cairo's Court of Cassation to protest Hosni Mubarak's expected re-election (tagdid, renewal) and the prospect that his son Gamal was being groomed to inherit his position (tawrith, inheritance), Egypt's opposition has made little progress in mounting a serious challenge to the Mubarak regime. The Kifaya movement was crucial in giving expression to dissatisfaction with the status quo, but largely failed to appeal beyond a core of activists or much of the country's establishment. The major legal opposition parties - the Wafd, Tagammu', Arab Nasserist, and even the newer Ghad Party - have continued their slow slide into irrelevancy, securing fewer seats in parliament and a narrowing share of public awareness, just as their media organs have been overshadowed by a vibrant new commercial press. Other parties have either been denied legal recognition (al-Wasat, al-Karama), are virtually non-existent (the majority of legal parties), or remain intellectual movements rather than political machines (Democratic Front).

The Muslim Brotherhood, long presented as the most potent challenger to the regime, has explicitly stated it has no interest in contesting the presidency. More generally, the re-assertion of the Islamist movement's conservative and politically quietist current- in part because of a bruising face-off with the regime in recent years - suggests that it has no desire or even capability to mount a challenge to either tagdid or tawrith.

It should no be surprise, then, that in recent years alternatives to formal political organizations, often centering on the idea of providential savior(s) as the last best hope against tawrith, have dominated media debates. Journalists and activists have speculated about whether a prominent personality - ElBaradei, Secretary-General of the Arab League Amr Moussa, Nobel Prize-winning chemist Ahmed Zuwail, Director of General Intelligence Omar Suleiman, prominent jurist and writer Tareq al-Bishri - could head off a Gamal Mubarak presidency. Muhammad Hassanein Heikal, the former minister of information and Nasser confidante who has turned into a leading critic of the Mubarak regime in its twilight years, proposed a variant of this personality-driven opposition in his latest television program. A council of elders would steer the country through a transition period, during which a new constitution would be drafted before a presidential election would be held. All of these scenarios took into account the inability of existing political organizations to achieve these changes; instead they focused on the moral suasion that the right person could exercise to convince the regime of the necessity of genuine reform.

This imperative of constitutional change lies at the core of ElBaradei's conditions for running for president. He has shone a spotlight on the political illegitimacy of the 2007 constitutional amendments, which notably restricted eligibility requirements in presidential elections, making an independent presidential candidate virtually impossible. But beyond electoral rules, ElBaradei has undermined the present constitution with numerous moral and legal arguments, articulated in a long interview with the prominent journalist Gamil Mattar in al-Shorouk newspaper. Many of these arguments have been made before, but ElBaradei's stature has given them new moral force.

The response to ElBaradei's advent on the political scene spoke volumes about tensions within the elite. Pro-regime newspapers immediately went on an offensive of insinuations (ElBaradei was accused of being a tool of both Washington and Tehran, out of touch, and secretly Swedish), only to be pushed back by a chorus of indignation by establishment voices left and right. One might not like ElBaradei, this consensus held, but his achievements and stature must be respected; not for him the smear campaigns used against the likes of politician Ayman Nour or civil rights activist Saad Eddin Ibrahim (as unfair as those might have been).

Considering that ElBaradei knows that the constitution is unlikely to be amended again, it is fair to view his position as a call for radical change outside of the present constitutional and legal framework. Indeed, it is hard to see alternatives to such a deus ex machina considering the legal and political advantages enjoyed by the regime. But even within the current system, his views might have repercussions. ElBaradei's call for internationally-monitored elections (a first for any major opposition figure) might bring greater scrutiny to 2010's parliamentary polls (in spring and fall, respectively, for the Shura Council and the People's Assembly). Moreover, he has amplified public attention to the presidential election scheduled for the following year. Some believe that Gamal Mubarak will find it much more difficult to run in 2011 (or before that should his father pass away) if ElBaradei is the face of the opposition, and suggest that President Mubarak is now almost certain to run for a sixth term.

ElBaradei faces an uphill struggle when he returns to Egypt in February, and he has yet to commit to the fight. Should he do so, however, the Mubarak regime might have to face its strongest challenge to date: a man with impeccable credentials and the potential to become the face of Egypt's long-leaderless opposition. (Issandr Amrani is a writer and political analyst based in Cairo) (CARB January, 2010)

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11.14 TUNISIA: Exporting Health Care

Tunisia's pharmaceuticals sector is receiving increased attention from the government, with plans to boost exports and develop a biotechnological industry. The Oxford Business Group says the Tunisian government would like the pharmaceutical industry to have a bigger weight in the economy, as well as in the country's exports. At a recent cabinet meeting, plans were discussed on how to increase production and exports of locally made products to an increasing array of external markets. The government also aims to have 60% of local medicine needs covered by the country's production, local media reported. "It's an ambitious goal, but the country wants to increase pharmaceuticals exports five-fold in the next five years," Maher Kamoun, the president-director of General at Societe des Industries Pharmaceutiques de Tunisie and the president of Chambre Nationale de L'Industrie Pharmaceutique, told OBG.

So far, Tunisia's pharmaceuticals sector has not suffered any negative consequences from the current recession. "We had a crisis before the crisis, because of the heavy increase of a lot of our raw materials and the sudden surge in energy costs," Kamoun told OBG. "Other than that, there hasn't really been an impact in the current economic situation, because pharmaceuticals are generally a priority for people."

According to the Ministry of Health, Tunisia produces TD360m (€190m) of pharmaceuticals, which represent 45% of the total pharmaceutical market in the country. The government wants to reach TD730m (€385.8m) in national production terms by 2016 and increase the market share of locally manufactured products to 60%. Current exports are at TD30m (€15.8m) and the country also hopes to export TD160m (€84.5m) of pharmaceuticals by 2016.

The main export markets for Tunisian pharmaceuticals are mostly within the Middle East and North Africa region. The country's biggest markets are in neighboring Libya, Algeria and Morocco, but also in other countries such as Mauritania, Senegal, Jordan, Yemen and Saudi Arabia. Yet in order to grow the business, companies will need to get a better foothold on the European markets. Tunisian companies already export to France, and are aiming for a stronger grip on the continent by increasing revenues in the more sophisticated markets.

Stringent regulation will help. Tunisian authorities have placed the bar very high in terms of quality and safety standards of the products, and many companies are certified to export to the EU. But there is still some brand-building work to be done, say some experts. "The goal now is to work on the image of Tunisian medicines and convey our quality, in order to develop exportation," states Hatem Hachicha, Pfizer's general manager for Tunisia and Libya.

Even regarding the local market, there is enormous potential for the future, considering the still relatively low expenditure per-capita rates and the country's large middle-income class that is becoming more health-aware. Furthermore, increased government subsidizing of medicines related to chronic disease means that more people are now able to keep up with regular treatment. "In developed countries, the expenditure per citizen on pharmaceutical products is between TD600 (€315) and TD800 (€420)," Hachicha told OBG. "Here in Tunisia, the average expenditure is about TD60 (€31). Add to this rising life expectancy and living standards and you can understand that the market cannot but grow."

The country also wants to develop the biotechnology and research and development side of the industry. The Tunisian health care sector is well regarded abroad, and citizens of neighboring Algeria and Libya, as well as European countries, often visit to receive medical treatment. Currently, over 150.000 health tourists visit Tunisia annually. Nonetheless, the country needs to better sell its image and become more visible on the international stage in order to attract further investment and become known as a knowledge centre for the biotechnology sector. (OBG13.01)

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11.15 TURKEY: A Year in Review 2009

Though the Turkish economy slid into recession, in part due to the steep decline in overseas trade and a falling off in domestic demand, there was no financial collapse as occurred during the downturn of 2001. The Oxford Business group noted that the local banking sector not only survived, but prospered and the stock market is riding a wave of growing activity. That said, Turkey remains in negative territory and unlike some of Europe's other big economies, such as Germany and France, it may take a bit longer to move out of recession, with many experts predicting a return to growth in the second half of the year.

While final year-end results have yet to be released, most indications show that the Turkish economy will have contracted by around 6.5% in 2009, after a 1% increase the year before. Though a marked retreat, an improved regulatory environment, swift interventions by the Central Bank and some measures applied by the state helped to avoid the worst-case scenario.

The increasing resilience of the Turkish economy was reflected in a decision by ratings agency Moody's early in the new year to upgrade the country's rating and outlook from Ba3 to Ba2, and from stable to positive, respectively. According to the agency, the upgrade was based on the increased confidence in Turkey's ability to absorb shocks, access to funding and negate the effects of recession. The strong performance of public finances compared to previous economic crises was notable, said Moody's analyst Sarah Carlson on January 8. "The ability of the government and the country more generally to regroup when faced with a very significant economic and financial challenge indicates that Turkey has reached a higher level of resiliency, which is what our ratings ultimately reflect," she said.

Turkey's stock market was not just resilient but positively buoyant, with the Istanbul Stock Exchange's main share index bouncing back from losses in the second half of 2008 to post a 97% increase on the year.

The country's banking sector also had a stellar year, cashing in on the Central Bank's monthly interest rate cuts with net profits for Turkey's banks rising by 44% to $12.6bn in the 11 months ending November, while their combined assets climbed by 11.5% to $544bn. However, Turkey's lenders did not pass on the reserve's rate reductions, with the bank's loan activity increasing by a far more modest 4%, with just $260bn disbursed.

Though Turkey saw the brakes put on its export trade, with overseas sales needing a late surge in December to push them through the $100bn mark, the overall performance was better than forecast earlier in the year, when some analysts were predicting a top-range figure of below $90bn. The climb in exports was in part driven by some of Turkey's major trading partners, notably those in Europe, moving out of recession in the latter months of 2009. Imports were also down for the year, coming in at just under $140bn, equivalent to approximately 30% fall due in part to lower oil prices and weakened consumer demand.

There are some causes for concern heading into 2010, one of which is increasing inflationary pressures, with year-end consumer inflation coming in at 6.5%, with wholesale prices rising by 5.9%. Though well down on the 10% increase recorded by the consumer price index in 2008 and the 8.1% for producer prices, many analysts had expected a better performance. With inflation hitting a 10-month high in December and the government hiking costs on a number of core goods and services at the beginning of 2010, the outlook is for prices to trend upwards throughout the year.

The rise in inflation late in the year prompted the Central Bank's monetary policy committee to end its monthly round of interest rate cuts, the reserve keeping its key borrowing rate at 6.5% at its December 17 meeting. This followed 13 reductions over the previous 12 months that saw the bank's rate fall from 16.75% to historically low levels.

Though inflation has eased and the economy appears to be moving out of recession, unemployment has remained stubbornly high, defying state-backed efforts to promote job creation and preserve existing positions. Despite providing tax breaks for both the automotive sector and the white goods segment, aimed at stimulating sales and propping up two of Turkey's key sectors, the government was unable to plug the hole draining away jobs. By late in the year, the unemployment rate had risen to 13.4%, up from the 11% of 2008, with the best hopes for a turnaround being a major increase in activity in the manufacturing sector.

Throughout the year, the economy managed to shrug off concerns swirling around alleged coup plots by retired military officers, calls for early elections and ongoing low-level terrorist activity, mainly in the country's south-east. In years past, such issues could have caused ripples in the economy, though it seemed that in 2009, Turkey had matured somewhat and was better placed to ride out both domestic and international storms. (OBG12.01)

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11.16 TURKEY: Moody's Upgrades Government Ratings to Ba2/Stable

On 08 January, Moody's Investors Service (http://v3.moodys.com) upgraded Turkey's government bond rating to Ba2 from Ba3, reflecting Moody's growing confidence in the government's financial shock-absorption capacity. The outlook was changed to stable from positive. "Although Turkish growth has contracted very sharply - even more sharply than was seen in its 2001 financial crisis - the resilience of the public finances relative to past such crises has been notable," said Sarah Carlson, the lead analyst for Turkey in Moody's Sovereign Risk Group. "The ability of the government and the country more generally to regroup when faced with a very significant economic and financial challenge indicates that Turkey has reached a higher level of resiliency - which is what our ratings ultimately reflect." Carlson said that the Turkish economy's ability to rebound from shocks, whether external or domestic, is the product of a significant improvement in the policy credibility over the last decade. She called the recent financial crisis a kind of 'stress test' for these policy reforms.

Looking ahead, the economy is now starting to recover and capital inflows have resumed. The Turkish government has proven access to foreign capital, as was demonstrated by its new $2 billion 30-year Eurobond issue. This was the largest-ever emerging market sovereign transaction of that maturity. "Moreover, the government's fiscal exit strategy has begun with the passage of the 2010 budget," said Carlson. "The budget was in line with the Medium-term Expenditure Plan, announced in September 2009, and represents a first step in a three-year plan towards reining in the budget deficit and returning the budget to a primary surplus position, barring election-related spending setbacks."

Moody's said that the foundations for Turkey's long-term growth are also looking robust, although growth is not likely to resume at the pace achieved in the mid-2000s due to both global and local factors. Still, the country has become increasingly open to the global economy and Turkish industry - which was already moving up the value chain - has used the financial crisis to expand into new export markets and therefore reduce their dependence on EU countries. The population dynamics are also its favor. Carlson cautioned, however, that Turkey continues to face a range of downside risks.

Its debt affordability metrics are still poor by international standards, with interest/revenues estimated at 27% and debt/revenues at 219% in 2009. Its external vulnerability has improved in recent years, but it remains in the bottom quintile of the emerging markets universe. Turkey also lacks policy rules that would instill additional discipline to the budget process; these, in turn, would make the improvements in debt dynamics more durable and predictable, a decisive factor for any sovereign country to eventually become investment grade.

"If nominal interest rates are maintained in the single digits or low double digits going forward, the debt affordability ratios could improve fairly quickly," Carlson pointed out. "A fiscal rule targeting ongoing budget restraint would enhance the Turkish authorities' fiscal credibility, particularly given the slippage that occurred even prior to the onset of the crisis and the absence of an external anchor like the IMF or EU."

Other potential challenges come from the fact that Turkey may not benefit in the coming years of the same degree of government stability that it enjoyed during most of the decade. At Ba2, Moody's rating takes account of the fact that greater policy volatility is a distinct possibility in the next two years in light of the electoral calendar. Our rating also factors the usual political noise that comes with long-standing internal and external tensions. (Moody's 08.01)

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11.17 BULGARIA: EU Debt Crisis Imperils Bulgaria's Euro-Zone Bid

Joe Parkinson in the Wall Street Journal writes that Bulgaria, the newest and poorest member of the European Union, is emerging as a fiscal model for a number of EU countries struggling to fend off debt crises. Despite Bulgaria's budgetary rigor, other EU members' swelling debt burdens may end up foiling Sofia's aspirations to join the euro in three years. Bulgaria joined the EU in 2007 and posted the smallest budget deficit among the 27 member states last year, according to the finance ministry. It is expected to be the only EU nation to balance its budget in 2010.

The country pegs its currency, the lev, to the euro, and has a currency board that forces the government to hew to tight fiscal policy. Officials in Sofia have frozen government wages and pensions, mothballed costly state investment projects, raised taxes on tobacco and slashed government spending by 15%. The result is a full-year deficit of less than 500 million lev (0 million), or 0.8% of gross domestic product.

Prime Minister Boyko Borisov, who has drawn international accolades for cutting spending while maintaining high levels of public support, says he fears Bulgaria's fiscal performance won't guarantee entry to the 16-nation euro zone. "I am afraid that the debt crisis in newer euro-zone countries will negatively affect us," he said. "We hope that the authorities respect the admission criteria as we've worked hard to get here." In a thinly veiled reference to Greece, which has struggled to persuade investors that it can cut its budget deficit from more than 13% of GDP toward the EU's 3% ceiling, Mr. Borisov said he is making progress in persuading European leaders that his government would be fiscally disciplined "now and in the future." Bulgaria is eager to adopt the euro in order to boost confidence and foreign investment.

Still, the country must meet a number of criteria covering currency stability, public-sector debt, interest rates and inflation. The application also needs approval from euro-zone heads of government and European Central Bank President Jean-Claude Trichet. Bulgaria's economic progress could see it leapfrog longtime euro aspirants, such as Romania and Hungary, where sharp downturns have required bailouts from the International Monetary Fund. Sofia isn't currently receiving IMF assistance, and doesn't plan to seek help from the fund this year, Mr. Borisov said.

In the race to the euro, Bulgaria also could outpace Poland, where policy makers have been cautious about entering the currency club. That could raise eyebrows in Brussels and other European capitals where Bulgaria remains synonymous with corruption and organized crime. Economists say Bulgaria's economic and fiscal management has made it a role model for other countries in Europe.

Spearheading the austerity drive is Prime Minister Borisov, a former karate champion who says his government will formally apply to join the euro zone by the end of January, setting it on course to adopt the currency in 2013. "We have everything in order and we're ready to start the road to the euro zone by the end of the month," says Mr. Borisov. "It is now the first foreign-policy priority of my government."

The currency board, in place since an economic crisis in 1997 led to hyperinflation and the lev's collapse, compels Bulgarian policy makers to preside over a tight fiscal policy to guard against speculative attacks. But the current government's decision to bear down on spending and balance the budget contrasts with other Baltic states, where deficits are widening, despite currency pegs or oversight. Bulgaria's growth forecast for this year has increased to 0.2%, from minus 2%. Credit-ratings agency Standard & Poor's has upgraded the country's outlook from negative to stable at BBB -- two notches above investment grade. Mr. Borisov also is relying on his finance minister, Simeon Djankov, to step in. Mr. Djankov, a former World Bank economist, said that fiscal credibility is "nonnegotiable" to navigate Bulgaria's entry into the euro zone. (Various12.01)

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