TOP STORIES

• Carl Zeiss SMT acquires Pixer Technology
• Israel's Osem to Buy Tribe Mediterranean for $57 Million
• US Airways Files Application to Operate Tel Aviv Service from Its Philadelphia Hub in 2009
• Quiznos Announces Significant International Expansion in Mid East
• Excellent First Half for Jordan in 2008
• UAE Among World's Top 30 Importers
• Greece's GDP up 3.4%
• Ramadan Begins on 1 September

Back to Top

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Coalition Parties Unite in Opposition to Kadima Budget
1.2 Central Bank Defends Bank-Fee Reform

Back to Top

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Carl Zeiss SMT acquires Pixer Technology - Pixer Technology Becomes Part of Carl Zeiss
2.2 Tower Semiconductor & Jazz Technologies Announce Merger
2.3 Israel's Osem to Buy Tribe Mediterranean for $57 Million
2.4 Iberia Raises Capacity On Israel Route
2.5 Siano Raises $17.5 Million in Round C Funding To Expand its Mobile TV Markets
2.6 US Airways Files Application to Operate Tel Aviv Service from Its Philadelphia Hub in 2009

Back to Top

3: REGIONAL PRIVATE SECTOR NEWS

3.1 CryptoMetrics Receives Contract from UAE for Nation-Wide Wanted Person Detection System
3.2 Quiznos Announces Significant International Expansion in Mid East
3.3 Health Robotics New Exclusive Partnership for CytoCare in Turkey
3.4 Elephant Talk to Enter Turkish Market
3.5 Direct Petroleum Announces Results of Initial Completion in Bulgaria

Back to Top

4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel Completes First Stage of OECD Membership Process
4.2 Lehman Impressed With Economy But Concerned With Shekel
4.3 Environment Ministry Files Indictments for Air Pollution
4.4 IEC Says Power Consumption Has Risen 163% Since 1990

Back to Top

5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Middle East Leads Way in US Investment
5.2 Excellent First Half for Jordan in 2008
5.3 Jordan & Canada to Sign Joint Free Trade Agreement
5.4 Jordan's King Abdullah Visits Iraq & Urges Arabs to Support
5.5 Analysis of Jordan's Pharmaceuticals and Healthcare Industry
5.6 Giant "Kurdistan Gas City"
5.7 Persian Gulf to Replace Import Duty System
5.8 Kuwait Sees Iraq Budget Surplus & Wants Debt Repaid
5.9 Kuwait Allows Co-Ops to Import Products
5.10 Bahrain Clampdowns on Fake Degrees
5.11 UAE Invites Bids For Nuclear Power Project
5.12 UAE Among World's Top 30 Importers
5.13 UAE to Embark on Large-Scale Dam-Building Project
5.14 Dubai Warning On Gas Emission
5.15 Oman Inflation Close To 14%
5.16 Private Sector Companies in Oman Urged To Adopt Five-Day Week
5.17 Saudi Nuclear Plan Gets Green Light
5.18 Egypt Suez Canal Revenue Soars To $490 Million
5.19 Inflation in Egypt Hits Highest Level Since 1992
5.20 Egyptian Pharmaceuticals & Healthcare Industry
5.21 Algeria's Pharmaceuticals and Healthcare Industry 2008, Q3

Back to Top

6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey Rejects a Precondition for an IMF Agreement
6.2 Turkey to Renew Railways With Two-Way System
6.3 Greece's GDP up 3.4%
6.4 Costs & Benefits of Athens 2004 Olympics

Back to Top

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 UN Elects Israel to Postal Council
7.2 Ramadan Begins on 1 September

*REGIONAL:

7.3 More Than 1 Million Jordanian Students Start School on 18 August
7.4 President Musharraf of Pakistan Resigns

Back to Top

8: ISRAEL LIFE SCIENCE NEWS

8.1 VitiGam Inhibits Melanoma Growth in a Dose Dependent Manner
8.2 Pluristem's PLX-MS Shows Potential Benefit in the Prevention of Multiple Sclerosis
8.3 BrainsGate Raises $27.5 Million Financing Led by Johnson & Johnson

Back to Top

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 IDE Technologies to Supply €100 Million Desalination Plant to Australia
9.2 OTI to Supply ERG with Contactless Card Readers for Utah's Transit Payment Solution
9.3 AudioCodes Collaborates With Intelleca to Deploy VoIP Services
9.4 RADA Electronic Industries Receives $1.5 Million Follow-on Orders
9.5 AMIMON Makes IDX CAM~WAVE HD Camera Wire-free
9.6 Aladdin HASP SRM Adds Automatic File Wrapping to Secure IP in Java-Based Applications
9.7 Rafael Partners with General Dynamics in $37 Million Contract for Reactive Armor Production
9.8 SCD Awarded a Contract With DARPA for the Development of xBn Devices
9.9 Mellanox InfiniBand Accelerates Toshiba Medical's AquilionONE
9.10 Lucid HYDRA 100 Chip Series Available for Customer Validation
9.11 Voltaire Switches Drive World's Most Power-Efficient Supercomputers

Back to Top

10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli's CPI Rises by 1.1% During July
10.2 Israeli Technology Leads Continued Export Growth
10.3 Israel's Pharmaceutical Exports Increase
10.4 Tourist Arrivals On Pace For Record Year
10.5 Israel Railways Second Quarter Passenger Numbers Up 14%
10.6 Israel's January to July Car Deliveries Were Up 17.5% From 2007

Back to Top

11: In Depth

11.1 ISRAEL: Effects on Capital Inflow of Israel's Joining the OECD
11.2 Arab Middle East Economy: Trading Places
11.3 LEBANON: Long on Hope, Short on Time
11.4 KUWAIT: Tensions Escalate in Hormuz
11.5 BAHRAIN: Women at Work
11.6 BAHRAIN: Best Yet To Come
11.7 UAE: Fitch Affirms Abu Dhabi at 'AA'; Outlook Stable
11.8 UAE: Abu Dhabi Rolls Out the Barrel
11.9 UAE: Northern Emirates - Private Supply
11.10 OMAN: Mining the Ceramics Industry
11.11 SAUDI ARABIA: IMF Executive Board Concludes 2008 Article IV Consultation
11.12 EGYPT: Fitch Changes LTFC Outlook to Stable; Affirmed at 'BB+'; Downgrades LTLC to 'BBB-'
11.13 MALTA: IMF Executive Board Concludes 2008 Article IV Consultations
11.14 TURKEY: Politics - the Great Escape or A Stay Of Execution?
11.15 TURKEY: Hopes for Calmer Political Sea
11.16 BULGARIA: Fitch Affirms Bulgaria at 'BBB'; Outlook Negative

Back to Top

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Coalition Parties Unite in Opposition to Kadima Budget

Ministers from Labor, Shas and the Gil Pensioners Party came out strongly against the two budget proposals presented by Minister of Finance Bar-On at the 17 August cabinet meeting on the budget for 2009, the first it has held so far. During the meeting Bar-On presented two options - a budget slanted toward defense and another in which priority would be given to welfare issues, but his proposals prompted Kadima's coalition partners to threaten a coalition crisis. Labor ministers made it clear before the meeting began that they were opposed to both proposals. They were later joined by their colleagues from Shas and the Gil Pensioners Party. With the primaries in Kadima less than a month away, the cabinet was also divided over the date for the approval of the budget by the government. Senior Kadima members said that party partisans, Labor and Shas were seeking a postponement in the budget in order to increase their bargaining power in the coalition negotiations following the election of the new Kadima leader. (Globes 17.08)

Back to Table of Contents

1.2 Central Bank Defends Bank-Fee Reform

On 18 August, Supervisor of Banks Hizkiyahu defended the controversial bank-fee reform after the consumer price index for July showed a rise in the cost of banking services. Preliminary research conducted by the Banking Supervision Department shows that basic banking services fees, including management fees of checking accounts, have come down as a result of the bank-fee reform that came into effect at the beginning of July, the Bank of Israel's Banking Supervision Department announced. The bank-fee reform, which came into effect on July 1, was supposed to bring down fees. However, the consumer price index published on 15 August by the Central Bureau of Statistics revealed that the bank-services item of the index, which includes bank fees, rose by 16.2% in July. Despite this increase, and the public and media attention it is receiving, the rise was a negligible factor in the 1.1% jump in July's CPI, the Banking Supervision Department said. Bank fees account for 0.05% of the monthly inflation rate, it said. The bank-fee reform reduced the number of fees from 198 to 72; certain fees, such as for credit frameworks, were abolished altogether, but most fees on checking account transactions were raised. The Banking Supervision Department said the CBS figures were distorted since they are based on average fees across the sector, which do not yet take into account the reduction in the number of fees and trend to lower fees due to stronger competition among the banks. In addition, the department said, the CBS based its figures on the banks' fee/tariff schedule, but many customers are not paying the full rates, which are not reflected in the CBS calculation. (JP19.08)

Back to Table of Contents

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Carl Zeiss SMT acquires Pixer Technology - Pixer Technology Becomes Part of Carl Zeiss

Pixer Technology of Karmiel, Israel is to become part of Germany's Carl Zeiss. The two companies signed an agreement to this effect on 6 August. With this move, Carl Zeiss aims to further strengthen its position as a leading equipment provider for the semiconductor industry in the world market and expand its innovative product portfolio with the unique yield enhancement systems for photomasks developed at Pixer for semiconductor production. Organizationally, Pixer Technology will belong to the Semiconductor Metrology Systems (SMS) division. The transaction is scheduled to be finalized in Q3/08. Carl Zeiss SMT utilizes its globally leading know-how in light, electron and ion-optical technologies to offer its customers in the manufacturing industry and R&D a broad portfolio of products, services and application solutions. Carl Zeiss is a globally leading international group of companies in the optical and optoelectronic industry. Pixer Technology (http://www.pixertech.com) was founded in 2003 as spin-off of UC Laser. With deep expertise in semiconductor equipment manufacturing Pixer is specialized in photomask solutions. Based on its proprietary Shade-In Element technology the CDC system allows to correct illumination defects on photomasks. Galileo detects deterioration of quality on photomasks in an early stage preventing yield loss. (Pixer06.08)

Back to Table of Contents

2.2 Tower Semiconductor & Jazz Technologies Announce Merger

Tower Semiconductor and Newport Beach, California's Jazz Technologies, a leader in Analog-Intensive Mixed Signal (AIMS) foundry solutions, announced that their previously announced proposed merger is progressing toward timely closing, currently expected in September 2008. Tower's registration statement on Form F-4, containing information relating to its proposed merger with Jazz, was declared effective by the Securities and Exchange Commission, clearing the way for a Jazz stockholder vote on the merger. The merger is subject to customary closing conditions, including the approval of majority of Jazz's common stock outstanding. Migdal Ha'Emek's Tower Semiconductor (http://www.towersemi.com) is an independent specialty foundry that delivers customized solutions in a variety of advanced CMOS technologies, including digital CMOS, mixed-signal and RF (radio frequency) CMOS, CMOS image sensors, power management devices and embedded non-volatile memory solutions. Tower's customer orientation is complemented by its uncompromising attention to quality and service. (Tower08.08)

Back to Table of Contents

2.3 Israel's Osem to Buy Tribe Mediterranean for $57 Million

Osem Investments announced that its Tivall subsidiary has signed an agreement to acquire Taunton, Massachusetts' Tribe Mediterranean Foods Company for $57 million. Osem said the acquisition would be financed through its own funds as well as external funding. The company said it does not expect to have to make any substantial investments in Tribe in the near term. The deal is subject to regulatory approval. Osem said in a statement to the Tel Aviv Stock Exchange that Tribe had sales of $20.6 million in 2007, up from $17.9 million in 2006. Tribe has a 17% share of the Mediterranean chilled salad market in the United States. Osem (http://www.osem.co.il), 53.8% owned by Swiss food maker Nestle is one of Israel's largest food producers and exporters. Osem said the acquisition had the support and cooperation of Nestle with the aim of developing the chilled salad market in North America. (Osem14.08)

Back to Table of Contents

2.4 Iberia Raises Capacity On Israel Route

Spanish carrier Iberia will reportedly increase its seating capacity on its Madrid-Tel Aviv route by 13%. Beginning in September, the airline plans to operate two weekly flights using Airbus 340s, and will make twelve other weekly flights using smaller planes. The Airbus 340s will also enable Iberia to boost its cargo capacity on the route to 70 tons a week. The airline expects to significantly increase freight haulage between Spain and Israel, and also between Israel and the rest of Europe, Latin America and the US. Iberia noted that the Airbus 340 is mainly used on long-haul and intercontinental routes. Use on a European route indicates the airline's confidence in its Israeli routes. Iberia added that, in the past three years, it has nearly quadrupled its seat capacity on the Madrid-Tel Aviv route. It carried 169,000 passengers on the route in 2007, up 19.2% on 2006. Some 132,000 of these passengers made connecting flights from and to other Iberia destinations, especially Buenos Aires, Sao Paulo, Mexico City and Rio de Janeiro. (Globes 18.08)

Back to Table of Contents

2.5 Siano Raises $17.5 Million in Round C Funding To Expand its Mobile TV Markets

Siano Mobile Silicon has secured a third round of funding, of $17.5m. DFJ Tamir Fishman Ventures, the exclusive Israeli partner of the US based global venture capital - Draper Fisher Jurvetson (DFJ), led the round and was joined by all of the existing investors from previous rounds - JVP, Star Ventures, Walden Israel, Bessemer Venture Partners, and Inventec Appliances. Siano has now raised $52m, in three rounds of funding. The present financing round follows an eventful year for Siano, as the company expanded its footprint in the soaring Asian mobile TV market with the opening of offices in Korea and Japan, in addition to extensive activity in China that included the launch of its SMS1180 receiver chip, supporting the Chinese mobile TV technology that is currently making its debut at the Olympics Games. Netanya's Siano Mobile Silicon (http://www.siano-ms.com) provides integrated silicon receiver and antenna chips for the mobile digital TV (MDTV) market. Tailored specifically for handheld and mobile devices, the company's multi-standard solutions combine high performance with extremely low power and ease-of-design. (Siano Mobile Silicon13.08)

Back to Table of Contents

2.6 US Airways Files Application to Operate Tel Aviv Service from Its Philadelphia Hub in 2009

US Airways applied to operate year-round service between its hub in Philadelphia and Tel Aviv, Israel. Linking the two sister cities with a daily nonstop flight, the service is set to begin in July 2009 and is subject to both U.S. Department of Transportation (DOT) and Israeli government approval. Tel Aviv makes the twenty-first trans-Atlantic destination served from its Philadelphia hub. At more than 5,700 miles, the Tel Aviv flight will be the longest nonstop segment in the US Airways network made possible by the delivery of new, longer-range A330-200 aircraft set for delivery in spring 2009. US Airways is the fifth largest domestic airline employing more than 35,000 aviation professionals worldwide. (USA19.08)

Back to Table of Contents

3: REGIONAL PRIVATE SECTOR NEWS

3.1 CryptoMetrics Receives Contract from UAE for Nation-Wide Wanted Person Detection System

Tuckahoe, NY's CryptoMetrics, a leading global provider of critical infrastructure and key asset protection systems, announced a contract with the government of the United Arab Emirates (UAE) to deploy a state-of-the-art, face recognition-based wanted person detection system at Abu Dhabi International Airport. This installation represents the first phase of an anticipated nation-wide deployment in which CryptoMetrics is expected to implement the system at all points of entry to the UAE to proactively detect persons who are wanted or pose a threat to the State. This deployment makes the United Arab Emirates the first country to implement a proactive critical infrastructure protection and warning system using facial recognition on a comprehensive national basis. Financial terms of the contract between the UAE's Ministry of Interior and CryptoMetrics were not disclosed. CryptoMetrics delivers its technology to the Government of the UAE through BioDentity Systems, which was created to exclusively install and maintain CryptoMetrics critical infrastructure protection technology and systems in the UAE, GCC and MENA region. (CryptoMetrics 15.08)

Back to Table of Contents

3.2 Quiznos Announces Significant International Expansion in Mid East

Denver based Quiznos, one of the nation's fastest growing quick service restaurant chains, announced that it will significantly expand its international restaurant operations. The chain announced agreements in the UAE and Saudi Arabia. In addition, Quiznos has recently completed deals in Eastern Europe and the Dominican Republic. Celebrating its 27th anniversary, Quiznos is a national chain designed for busy consumers looking for a tasty, freshly prepared alternative to traditional fast food restaurants. Using only premium quality ingredients, Quiznos restaurants offer creative, chef-inspired recipes for sandwiches, soups and salads. (Quiznos 19.08)

Back to Table of Contents

3.3 Health Robotics New Exclusive Partnership for CytoCare in Turkey

King of Prussia, Pennsylvania's Health Robotics announced an exclusive agreement with Can-Med, a leading IV Solution provider and medical device company in the Republic of Turkey, in order to safely, accurately and cost-effectively automates the preparation of life-critical patient-specific Oncology IV Admixtures with Health Robotics' CytoCare. With its CytoCare Robot, Health Robotics has developed and deployed the world's first and only totally automated system for safe preparation of patient-specific Oncology IV doses. Health Robotics is the global leading supplier in the automation of life-critical intra-venous patient-specific medication preparation, compounding, and dispensing, providing health care facilities around the world with robotics and software automation solutions. The world-leading solutions CytoCare and IV Station have and will greatly contribute to ease global pharmacies' growing pressures to improve patient safety through the effective and efficient production of sterile, accurate, and ready-to-administer IVs, to decrease life-threatening medication errors and contamination risks, and to work more efficiently, increase throughput, reduce waste, and contain spiraling costs. (HR05.08)

Back to Table of Contents

3.4 Elephant Talk to Enter Turkish Market

California's Elephant Talk Communications, an international telecom and multimedia content distributor, has obtained board approval to expand its international telecom network and converged services for information and communication technologies (ICTs) into Turkey. In addition to providing its wide range of telecom services to the attractive local market, Elephant Talk (ET) will also use this latest addition to service its current customer base wanting to expand into new and emerging markets. ET Turkey will be based in Istanbul to offer traditional telecom services, Mobile Virtual Network Operator (MVNO) and Mobile Virtual Network Enabler (MVNE) solutions, including streaming and data services. MVNEs provide infrastructure, systems integration and management services that enable MVNOs to offer services that improve relationships with their customers or end-users. (ET18.08)

Back to Table of Contents

3.5 Direct Petroleum Announces Results of Initial Completion in Bulgaria

Denver, Colorado's Direct Petroleum Exploration (DPE) has finished the initial phase of the completion of its Deventci R1 gas discovery well in northern Bulgaria. Limited flow testing was undertaken on the high pressure Lower Jurassic Ozirovo zone on Sunday 17-August at the well site some 150 kilometers northeast of the capital, Sofia. Substantial gas and rich condensate flows were observed at the surface though no verifiable measurements were taken due to the limited availability of testing equipment for the high pressures encountered. The 12 hour shut-in tubing pressure was measured at 8,000 psi. The indicated BHP was ~ 11,500 psi. Flowback of the well was suspended, awaiting the arrival in September of specialized high-pressure testing and production equipment from the United States. The well is located on a geological feature known as the West Koynare Structure, measuring some 15 to 20 km2 in size as defined by seismic and DPE's proprietary ADD_HR geophysical technology. (DPE18.08)

Back to Table of Contents

4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel Completes First Stage of OECD Membership Process

Israel has completed the first stage of joining the Organization for Economic Co-operation and Development (OECD). In this stage, Israel committed itself to adopting the accepted legal foundations for group members regarding policy, legislation and implementation, among others. In May 2007 the OECD invited Israel to start the accession process. Israel's target for meeting the organization's standards is the end of 2009. Finance Minister Bar-On said on 5 August that completing the first stage during a period of economic uncertainty highlights the Israeli economy's advantages. (Globes05.08)

Back to Table of Contents

4.2 Lehman Impressed With Economy But Concerned With Shekel

Globes reported that Lehman Brothers recently announced that it is impressed with the Israeli economy and finds that shekel is poised to strengthen in the medium term. Nonetheless, it is concerned about the Bank of Israel's foreign currency purchases and the effect on the near-term value of the shekel. Its overall optimism is based on a strong current account and foreign direct investment, as well as strong local demand for shekels. Lehman notes that rental contracts are more often priced in shekels, providing a "structural flow" for shekels. Finally, Lehman notes that the high value added content of its exports and production has helped protect Israel's economy from global weakness. But despite the positive structural story, Lehman sees potential near-term weakness in the shekel. Nonetheless, it still recommends a long position in dollar-shekel trades, which implies the expectation that the shekel-dollar rate will fall in the medium term. The investment bank also notes that the dollar recovery "in the context of recovering risk sentiment could slow down the local selling of the greenback in favor of the shekel." (Globes 10.08)

Back to Table of Contents

4.3 Environment Ministry Files Indictments for Air Pollution

The Ministry of Environmental Protection has filed indictments against Israel's three large energy companies, Paz Oil Company, Delek Israel Fuel Corporation and Sonol Israel and against executives at the companies, for delaying the installation of fuel fume reclamation systems at the companies' fuel depots in Haifa. The lack of these facilities causes air pollution and exposes employees to toxic gases. The indictments state that, in April 2003, the Ministry of Environmental Protection ordered the companies to comply with EU standards for reducing benzene emissions at fuel terminals. Benzene fumes contain toxic chemicals and carcinogens, as well as hazardous ground-level ozone. The companies asked the ministry to delay installation of the system until August 2005, which the ministry agreed to. However, the companies failed to comply with the deadline, even with the two-year postponement. (Globes 18.08)

Back to Table of Contents

4.4 IEC Says Power Consumption Has Risen 163% Since 1990

According to the Israel Electric Corporation (IEC) environmental report for 2007, 70% of the electricity produced in Israel in 2007 came from coal, 10% from fuel oil and 20% from natural gas. The IEC, it appears to Globes, continues to lag behind the rest of the world not just in its method of production, but also its effort to reduce consumption. Between 1990 and 2007, for example, power consumption rose by 163%, and by 6% in the past two years alone. IEC stresses, however, that despite higher consumption, levels of toxic gas emissions have fallen. Emissions of sulfur dioxide, for example, fell 59%. Particle emissions fell 1%, but emissions of carbon dioxide, one of the causes of global warming, rose 6.5% in 2007, compared with 2006. The IEC attributed the lower emission levels to the switch to natural gas, which is a considered a fossil fuel, but causes less pollution. Another factor contributing to the fall in emissions is the switch to unleaded fuels at power plants such as the Orot Rabin plant at Hadera. Also contributing to the lower emissions was the installation of gas purification scrubbers which, according to the IEC, have a 90% efficacy rate and have made a vast improvement in the quality of air. As for the future, the IEC predicted that following completion of the building of the national gas pipeline from Dor to Hagit, and the new power plant at Gezer, use of natural gas will increase, reducing pollution levels in the process. The company did not, however, give any undertakings regarding the reduction of consumption or use of alternative energy in production. (Globes 18.08)

Back to Table of Contents

5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Middle East Leads Way in US Investment

Research has shown the Middle East is now the leading foreign property investor in the US as buyers in the region take advantage of the North American housing slump. Multi-million dollar investments from buyers in the Middle East have seen the region overtake more developed countries to become the largest foreign investor in the US property market, The National reported on Thursday. Abu Dhabi Investment Council's 90% purchase of Manhattan's Chrysler Building for $800 million and Istithmar's $750 million purchase of the Fontainebleau Hilton on Miami Beach are two of the biggest recent deals. Middle Eastern buyers have already made at least $2 billion in US property purchases so far this year, putting the region ahead of foreign buyers from Australia and Europe, according to the latest data from the US consultancy, Real Capital Analytics (RCA) in New York. (AB07.08)

Back to Table of Contents

5.2 Excellent First Half for Jordan in 2008

Despite rocketing prices of oil derivatives and essential commodities, Jordan maintained to dip foreign debt by 30% in the first half of 2008. Foreign debt shrank by 30% in June to $5.15b from $7.41b, which constitutes 28.5% of the Kingdom's gross domestic product. Foreign debt stood at $7.41b in 2007, representing 46.8% of the Kingdom's gross domestic product, the Ministry figures said, adding the internal debt increased by 35% in the first half of 2008 to reach $5.6b, representing 31% of the Kingdom's gross domestic product in 2008, whereas in 2007 the internal debt represented 26.2% of the Kingdom's gross domestic. The Ministry's figures showed that there was remarkable drop in the foreign and internal debt. It dropped by 7% in the first half to reach $10.76b. The debt recorded 60% of the estimated Kingdom's gross domestic product for 2008, whereas in 2007 it recorded 73%. (Petra07.08)

Back to Table of Contents

5.3 Jordan & Canada to Sign Joint Free Trade Agreement

Jordan and Canada will initially sign a joint free trade agreement at the end of August and will be officially approved by the end of this year, Jordanian General Secretariat for the Ministry of Industry & Commerce Al-Aqla said on 5 August. The official said that positive outcome regarding a joint free trade agreement with Canada was reached during a second round of talks between 24 – 31 July, where he was a representative of the Jordanian side. The two sides agreed on cooperation in the labor sector, environment, health, and government commercial facilities, Al-Aqla said. The two sides also discussed lower custom taxes, he said, noting that the agreement will include a tax relief on Canadian goods upon the date of signing of the agreement. (Petra05.08)

Back to Table of Contents

5.4 Jordan's King Abdullah Visits Iraq & Urges Arabs to Support

Jordan's King Abdullah II held talks on 11 August with Iraq's prime minister after arriving in Baghdad on an unannounced visit, the first by an Arab head of state since the US-led liberation toppled Saddam Hussein in 2003. Abdullah called on Arab governments to "extend their hand to Iraq" because a strong Iraq "is a source of strength for the Arab nation." King Abdullah had positive talks with Prime Minister Al Maliki on relations between the two countries. Al Maliki told the King that Iraq wanted to improve relations with all Arab countries. Ties between the two neighboring countries had been strained since the fall of Saddam because of Jordanian fears that Iraq's Shiite-led government was too friendly with Shiite-dominated Iran. Jordanian officials have been concerned about Iranian influence in Iraq and the loss of discounted oil, which Saddam once provided. Abdullah warned in 2004 about the emergence of a "Shiite crescent" including Iran, Iraq and Lebanon - remarks that angered Iraqi officials. Al Maliki visited Jordan in June for the first time in nearly two years, and since then, the two nations appear willing to put their differences behind them. During that visit, Al Maliki agreed to renew oil supplies to Jordan for the next three years at discounted prices. Jordan agreed to ease restrictions on the entry of Iraqi students and those transiting to a third country. Tens of thousands of Iraqis have sought refuge in Jordan to escape the sectarian violence that swept the country two years ago but has receded. Jordan has also named an ambassador to Iraq, joining other Arab countries that have agreed to upgrade their relations as the Iraqi government becomes more stable and security has improved, despite sporadic attacks and ongoing military operations. (AP12.08)

Back to Table of Contents

5.5 Analysis of Jordan's Pharmaceuticals and Healthcare Industry

Research & Markets has announced the addition of the "Jordan Pharmaceuticals and Healthcare Report Q3 2008" report to their offering. Jordan's pharmaceutical market is small at $339mn in 2007. Expenditure on pharmaceuticals should grow at an average of 7.2% year-on-year over the forecast period (2008-2012) to reach a value of $480mn by the end of 2012. The prospects for GDP-beating drug market growth will be constrained by the fact that the country already devotes a high proportion of GDP to healthcare and the pharmaceutical sub-sector compared to its regional peers (2.2% in 2007). A key reason for high pharmaceutical expenditure relative to wealth in Jordan is high drug prices. One solution that the government is reportedly considering in order to lower prices is the removal of import duties and sales tax from medicines. However, over the longer term, BMI expects a trend away from a traditional reliance on patented drugs. The preference for patented drugs has been exacerbated by the practice of prescribing by brand name, something that the government is likely to take steps to remedy, so increasing generic penetration.

Despite the strength of local pharmaceutical manufacturing, the domestic drug market remains reliant on imports for over 80% of demand. This figure highlights the lack of therapeutic reach of the domestic industry, with most local drug makers remaining focused on the manufacture of basic medicines. Problems are exacerbated by a lack of R&D expenditure by Jordanian companies. On the export market, Jordan's pharmaceutical industry continues to perform better. Indeed, it is the only Arab country with a positive pharmaceutical balance of trade. Led by Hikma Pharmaceuticals, Jordan's domestic industry exports much of its output to the Middle East, so should continue to benefit from strong growth in the regional pharmaceutical market, particularly the oil-fuelled economies of Saudi Arabia and the UAE, and the emerging generics market of Algeria in north Africa. Jordan's health sector continues to struggle under the weight of a significant number of Iraqi refugees, who have fled the instability in neighboring Iraq. It is estimated that at least 500,000 Iraqi refugees have settled in Jordan since the beginning of the conflict in 2003, adding around 8% to Jordan's population. In early 2008, the government estimated that it would need $248mn to build clinics and expand hospitals in Amman, Irbid and Zarqa in order to cope with the high numbers of refugees in these areas. (R&M12.08)

Back to Table of Contents

5.6 Giant "Kurdistan Gas City"

The Kurdistan Regional Government (the Kurdish autonomous region in northern Iraq) announced the designation of 461 million square feet of land for the construction of "Kurdistan Gas City" to be developed by an UAE company jointly owned by Dana Gas and Hilal Petroleum, also of the UAE. The new city is considered an industrial project that would take advantage of the huge quantities of natural gas available in the area. The project calls for the establishment of integrated petrochemical and heavy industries operated by natural gas. The new industries will create tens of thousands of new jobs and benefit the entire area economically. The new city will also include residential units and commercial facilities. The initial infrastructure is estimated to cost $3b designed to eventually attract foreign direct investment of $40b. Dana Gas has been active in Kurdistan since April 2007. It is constructing 2 plants for liquefied natural gas as well laying a network of 110 miles of pipelines for the transport of the LNG. The Kurdistan Gas City will be officially launched on 21 September 2008. (Al-Sharq29.07)

Back to Table of Contents

5.7 Persian Gulf to Replace Import Duty System

The six-nation Gulf Cooperation Council plans to end its system of charging import duty for the country of final destination and may replace it with a simpler mechanism. The new system will be in place and all issues concerning a GCC customs union will be completed by the end of this year. The customs union has been beset by problems that have stopped it from being fully implemented since it was first introduced in 2003. A proposed Gulf single currency is dependant upon the formation of a Gulf common market, which, in turn, relies on the successful implementation of the customs union. The customs union stipulates that goods coming into the Gulf are charged at a consistent tariff of 5% and can move around freely among the six member states. Under the current system, import duty is collected at the port of entry and is forwarded to the country of final destination. The UAE, Saudi Arabia, Oman and Kuwait are backing a proposal to allow the country where the goods arrive to keep 95% of the duty paid and distribute the remaining 5% to the other Gulf states based on a pre-determined formula. Approximately 3% of GCC customs duties are currently redistributed under the final destination system. The UAE paid $570m to its GCC neighbors under the final destination system in 2007. Other outstanding issues, such as a list of goods on which countries can charge more than five% tariff, will be completed by the end of the year. (GN18.08)

Back to Table of Contents

5.8 Kuwait Sees Iraq Budget Surplus & Wants Debt Repaid

Kuwait announced on 9 August that since fellow oil exporter Iraq is likely to report a budget surplus in 2008, it should then repay its debts. The debt, estimated at $15-16b, represents loans Kuwait made to Baghdad in the Saddam Hussein era, mostly during the 1980-1988 Iraq-Iran war. Kuwait said it would not allow debt repayment to become a burden on Iraq, but reiterated that only the Kuwaiti parliament could write off such debt. Several Kuwaiti deputies oppose debt forgiveness as many Kuwaitis are still bitter about Saddam's 1990 invasion of their country. The United States has, since liberating Iraq in 2003 from Saddam, been pressing its Arab allies to forgive Iraq's debts and restore top-level diplomatic ties. The United Arab Emirates waived all of Iraq's almost $7b debt to the UAE last month. Kuwait named its ambassador to Baghdad last month. (AB09.08)

Back to Table of Contents

5.9 Kuwait Allows Co-Ops to Import Products

Kuwait is allowing cooperative supermarkets to import products directly from the source in an effort to cut costs as the Gulf state battles inflation. Minister of Commerce & Industry Baqer has already unveiled a package of measures including higher subsidies on basic food items, in an effort to curb inflation that held above 11% in April and May. Cooperative supermarkets, where nationals can buy subsidized food under a special card scheme, are now allowed to import commodities directly, cutting out wholesale importers in an effort to reduce prices at the till, according to a decree published in the official gazette. The Union of Cooperative Consumer Societies would also collect orders from its members to get better prices in bulk and report unjustified price increases in its stores. Baqer had said earlier the country could work with Gulf states to invest in food production and farming abroad. (Reuters11.08)

Back to Table of Contents

5.10 Bahrain Clampdowns on Fake Degrees

Strict checks in Bahrain have kept the door closed on bogus degrees, it was declared on 17 August. The Higher Education Council said that it had not received any bogus degrees under its accreditation system. The council, which is responsible for accrediting degrees, says that every submission is evaluated according to strict regulations. This comes after 10 people from Bahrain appeared on a US government watchlist accused of buying counterfeit college and university degrees. They were among 10,000 people who spent $7.3m between them purchasing qualifications from a so-called 'degree mill' based in Washington. Among those implicated are hundreds of people with links to the US military, educational institutions, government and security agencies such as the CIA. All higher education degrees issued outside the country are presented to the National Committee for Degree Evaluation. Media reports say the buyers paid anything from a few hundred dollars for bachelor's and master's degree and up to $7,770 for a PhD (doctorate). However, some of those on the watchlist claim to have spent time studying and submitting assignments and say they have been the victims of an elaborate con. (TradeArabia 18.08)

Back to Table of Contents

5.11 UAE Invites Bids For Nuclear Power Project

The UAE's Emirates Nuclear Energy Corporation (ENEC) has invited bids by September 7 from pre-qualified firms for the contract to manage the country's nuclear power program. The contract is expected to be awarded by the end of 2008. Top government officials who were contacted by Gulf News, however, declined to comment on the report that appeared in MEED. Prospective bidders for the contract are US-based companies Bechtel, CH2M Hill, Fluor with Sargent & Lundy and PB Power, as well as Australia's WorleyParsons. The UAE is poised to join the ranks of nations generating nuclear power for peaceful purposes by the end of the next decade. Hamad Al Ka'abi was appointed the UAE's ambassador to the International Atomic Energy Agency this year as part of the country's intention to launch a nuclear program for power generation. ENEC was created to oversee the development of the UAE's nuclear power plants. (GN16.08)

Back to Table of Contents

5.12 UAE Among World's Top 30 Importers

The UAE has become the first Arab country to enter a top 30 nation list of world's largest services importer, according to official figures. Both the UAE and Saudi Arabia were also on the list of the world's top exporters of goods following a sharp increase in their crude and non-oil exports in 2007, the report by Kuwaiti-based Inter-Arab Investment Guarantee (IAIGC), an Arab League affiliate, revealed. The US topped the list of services importers, with a value of around $336b or 11%, followed by Germany with a value of $245b and a share of about eight%. Britain came third, with around $193b and a share of 6.3%. The report also showed the UAE was the world's 28th largest importer of goods, with a value of around $121b and a share of 0.9% of the total global imports last year. In exports, the UAE was ranked 24th on the list of top 30 exporters of goods, with an export value of $154b and a share of 1.1%. (AB08.08)

Back to Table of Contents

5.13 UAE to Embark on Large-Scale Dam-Building Project

The UAE will build 68 dams over the next five years to meet increasing water demand. Deputy Minister of Water & Soil Affairs Al-Mulla, was reported as saying that the ministry was preparing a new federal law draft to protect the country's water resources in a bid to meet the future water demand. Al-Mulla did not give a figure for how much would be spent on the new dams. The UAE now has 140 dams. He said that in future, industrial and agricultural sectors would be supplied with treated waste water rather than desalinated water as part of an improved waste water management policy. The Ministry believes that the major consumers of the UAE's water resources are the agricultural and industrial sectors. The aim is to use desalinated water only for domestic purposes. (GN13.08)

Back to Table of Contents

5.14 Dubai Warning On Gas Emission

Dubai Municipality has asked all companies working in the air conditioning and refrigeration industry to abide by the rules concerning gas emission. The Environment Department of the municipality has sent out a circular to the companies urging them to adhere to the UAE Federal Decree 72/2004, and the Environment Department Technical Guideline No. 58 on the prohibition of venting of refrigerant gas used in air conditioning and refrigeration systems. The circular asked the companies to adequately collect, handle and dispose all waste refrigerants which are considered controlled substances. They should do this in line with the Material Safety Data Sheet (MSDS) instruction and directive or advice from the department, a statement said. It further asked them to obtain approval from the Environment Department for activities related to air conditioning and refrigeration system maintenance and services. These companies, the circular stipulated, should have trained technicians and recovery equipment to make sure that refrigerants are recovered and/or recycled for reuse, reprocessed (reclaimed), or properly disposed of whenever removed from air conditioning and refrigeration systems. It warned of legal actions including fines and license cancellation in case of violation of these rules. (TradeArabia 14.08)

Back to Table of Contents

5.15 Oman Inflation Close To 14%

The Oman Ministry of National Economy announced that inflation in Oman rose to a record near 14% in June as increasing food prices and a currency peg to the weak US dollar pushed costs in the Gulf state higher for a 14th consecutive month. Food, beverage and tobacco costs, which account for almost a third of the consumer price index, jumped by 23.7%. Inflation is soaring across the world's biggest oil-exporting region, where economies that have boomed on the high price of oil are being hit by higher import costs. Inflation, which hit 13.73% in June, has been accelerating since May 2007, with the consumer price index jumping to 125.1 points on June 30, compared with 110 points a year earlier, ministry data showed. Oman and most of its neighbors, including Saudi Arabia, peg their currencies to the US dollar, which is driving up import costs. Currency weakness is only part of the problem, as countries across the world suffer from high global commodity prices. Rents, which account for just over 15% of Oman's index, eased to 14% in June from 16.6% in May, the data showed. The central bank's deputy chief said in July inflation had probably hit its peak at a record 13.2% and is likely to stabilize as the impact from a global food crisis wanes. (AB10.08)

Back to Table of Contents

5.16 Private Sector Companies in Oman Urged To Adopt Five-Day Week

Following closely after the Manpower Ministry's appeal to young Omanis to take up jobs in the private sector, the Chairman of the Oman Chamber of Commerce and Industry (OCCI) has urged the sector to make its option attractive by adopting a five-day week. It is felt that the five-day week would not only support the government efforts to nationalize jobs but help increase the private sector's contribution to the Omanization drive. The preference is for two days off on Fridays and Saturdays for the private sector. The Oman Chamber of Commerce and Industry (OCCI) has already implemented a five-day week. The Saud Bahwan Group, a major automobile player in the country, has already started working five-days a week from this month. According to the new schedule, the group's corporate offices work from Sunday to Thursday with Friday and Saturdays being a weekend holiday and have a straight working shift from 8.30am to 6pm with a half-hour lunch break. Earlier this year, the Zubair Group also adopted a five-day week and many others are expected to follow suit. (AB03.08)

Back to Table of Contents

5.17 Saudi Nuclear Plan Gets Green Light

The Saudi Arabian cabinet has decided to approve the country's agreement with the International Atomic Energy Agency (IAEA) on the protocols and application of safeguards under the Nuclear Non-Proliferation Treaty. The Saudis established their Atomic Energy Research Institute in 1988 to conduct research for declared peaceful purposes. In December 2006, Saudi Arabia and the other members of the GC - Gulf Cooperation Council (Kuwait, Qatar, Bahrain, the UAE and Oman) announced that they were setting up a commission to study the peaceful uses of nuclear energy. For technical expertise most of GCC countries turned to France and not their traditional ally, the US. While it might seem strange that the world's largest producer of oil and the one believed to have the largest oil reserve would need nuclear power to supply the county with electricity, many analysts say that with crude oil prices at record levels it makes economic sense to sell the oil abroad and use nuclear power at home. (AN16.08)

Back to Table of Contents

5.18 Egypt Suez Canal Revenue Soars To $490 Million

Egypt's revenues from the Suez Canal rose to $490m in July 2008 from $406.3m in the same month last year, the government said on 13 August. The canal is an important source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad. The number of vessels passing through the waterway rose to 1,854 in July from 1,819 in June and 1,761 in July 2007, the government said. (Reuters13.08)

Back to Table of Contents

5.19 Inflation in Egypt Hits Highest Level Since 1992

Rising food prices drove Egypt's urban inflation to 22% in the year to July, the highest since January 1992, according to the state-run statistics agency CAPMAS said on 10 August. Urban inflation stood at 20.2% in the year to June. Monthly inflation rose 2.2%, compared to 0.6% in June. The Egyptian Central Bank raised its key overnight interest rates for the fifth time this year on 7 August by 50 basis points to tame inflation, bringing the rates to 11% for deposit and 13% for lending. Investment bank EFG-Hermes said the central bank was likely to allow the Egyptian pound to appreciate against the US dollar "as a more effective means of addressing inflation. The pound has gained more than 7% against the US dollar since the start of 2007. With the economy growing at its fastest pace in decades, rising inflation has emerged as a tough challenge for the government in a country that has a low per capita income and high poverty rate relative to other Middle East nations. Soaring food prices triggered violent protests in some areas in the country this year. This prompted the government to raise public sector salaries by 30% and then nudge up fuel prices to finance the wage increase. Price rises in urban food and beverages, which slowed down in the month to June at a rate of 0.8%, accelerated again in July to a rate of 3.1%. Egypt has responded to public anger over inflation by making more cheap food available on a ration card system. Food inflation has hit the poor especially hard because many of them spend more than half their income on food. Prices for transport in urban areas, which stabilized in June, rose 1.7% in the month to July, while urban telecommunication inflation stood at 5.3%. Prices in the country as a whole, an indicator released every two months, rose 23.1% in the year to July, from 21.1% in the year to May. In the countryside, inflation rose to 24.3% in the year to July, from 22.9% two months earlier. (AB10.08)

Back to Table of Contents

5.20 Egyptian Pharmaceuticals & Healthcare Industry

Research & Markets has announced the addition of the "Egypt Pharmaceuticals and Healthcare Report Q3 2008" report to their offering. Egypt's pharmaceutical market is a relatively unattractive prospect. Tough pricing regulation limit the market's potential, despite its size and government plans to roll out basic universal health coverage. In 2007, BMI estimates that drug expenditure was $1.75bn. By 2012, we expect the market to be worth more than $2.73bn. However, expectations that the Egyptian pound will strengthen further against the US dollar over the forecast period and significant price inflation serve to limit market growth in real terms. Local currency growth should average 5.5% a year between 2008 and 2012 – primarily driven by expanded basic government healthcare coverage.

Indeed, one of Egypt's leading drug-makers, the Egyptian International Pharmaceutical Industries Company (EIPICO), has decided to locate more production abroad to counter the effects of tough pricing regulation in its home market. EIPICO has a strong presence in Middle Eastern export markets, but has increasingly found that restrictive pricing in Egypt has translated to make for a tough export climate. Not only has a strong Egyptian pound squeezed profit margins, but countries that insist products are not priced higher than in their country of origin has made it difficult for EIPICO to continue its remarkable profitability. As a consequence, EIPICO is exploring the possibility of building factories in Saudi Arabia and Algeria.

Unsurprisingly, Egypt performs poorly in BMI's Business Environment Ratings. For Q3/08, the country is again ranked in 11th place of the 13 Middle East and Africa (MEA) markets surveyed. The country scores particularly poorly in the market risks category due to its restrictive pricing policy. As foreseen by BMI, a bright spot for the country's regulatory environment came with the announcement that Egypt was downgraded from the USTR Special 301 report Priority Watch List to the Watch List in the organization's 2008 report. Cairo remains committed to its goal of achieving basic universal healthcare by 2010. The formidable task of healthcare system modernization should prove a welcome boost for the healthcare industry as a whole. The medical device market, for which BMI provides five-year forecasts for the first time in Q3/08, is poised to benefit from improvements in the healthcare system. Indeed, we expect the medical device market to grow at close to 10% a year over the forecast period - significantly faster than the pharmaceutical market. (R&M12.08)

Back to Table of Contents

5.21 Algeria's Pharmaceuticals and Healthcare Industry 2008, Q3

Research and Markets announced the addition of the "Algeria Pharmaceuticals and Healthcare Report Q3 2008" report to their offering. Algeria is the second-largest African country by territory, and one of the key markets on the continent. While the standard of healthcare provision across the country is uneven, the market's relatively large size (Algeria's population is in excess of 34mn), high dependence on imported medicines and steady forecast growth are key attractions. By 2012, BMI forecasts that the market value will top US$1.26bn, with an average annual growth of around 6%. Generics will continue to represent the bulk of consumption in terms of volumes, although improving conditions for multinationals will gradually result in the further erosion of their market value share by patented drugs.

Algeria has been included in BMI's Business Environment Ranking table for Q308 for the first time, sharing 11th place with its North African peer, Egypt. Algeria is found above all the other African markets in the table, namely Kenya, Nigeria and Zimbabwe – bar the more advanced market of South Africa. Algeria's score for risks to potential returns is negatively impacted by the government's progenerics stance and some shortcomings of the country's intellectual property rights (IPR) regime. In addition, the country's excessive red tape and corruption are also viewed with concern, as are certain macroeconomic indicators. On a positive note, the forecast pharmaceutical value growth and rising numbers of urban dwellers are factors in favor of local investment, as is the fact that the country is making progress towards World Trade Organization (WTO) membership. Illustrating the above situation, local press in October 2007 revealed that French pharmaceutical major Sanofi-Aventis is considering creating a local manufacturing facility in Algeria, which would be engaged in the production of generic medicines. Although no further details have been revealed, it is known that Sanofi-Aventis continues to record annual growth rates of over 10% in Algeria. Pharmaceutical market growth over the next five years will be stimulated by the continuation of the $2bn healthcare modernization 2005-2009 program, which envisages the building of numerous hospitals and clinics. Authorities are aiming to improve healthcare access, with adequate provision of health services being a challenging proposition, given the vast inhospitable areas of the country. Additionally, the World Bank has warned that projects should be implemented gradually and that the government should return to the viable level of spending for the longer term. (R&M12.08)

Back to Table of Contents

6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey Rejects a Precondition for an IMF Agreement

Turkey has rejected a precondition of a potential stand-by deal with the International Monetary Fund requiring it to reverse recent moves towards additional expenditures. The IMF had asked the government to revoke investment decisions increasing spending and implementing new taxes that would create new financing to compensate for the expenditures. Turkey's economy minister said a precautionary stand-by deal would be the most appropriate agreement and that Turkey did not need the financial resources of the IMF, adding it would be more difficult to reach an agreement if the IMF insists on preconditions. The new deal is expected to be signed by mid-October. The Turkish government had decided to cut social security premiums by 5% to promote new investments and employment as well as to create a financial source for agricultural investments in the country's poorer southeastern region. The government allocated $1.94b for the Southeastern Anatolia Project, or GAP, and $760m to local administrations. The cut in social security premiums would create a loss of $321m in income. Turkey would also pay a total of $380m in aid to drought-hit farmers. According to official figures, such decisions would add $3.37b to the government's spending. A precautionary stand-by arrangement allows for a fair degree of IMF oversight of fiscal policy but only provides financing in emergencies, unlike the agreement that expired in May in which the $10b was guaranteed. (TDN13.08)

Back to Table of Contents

6.2 Turkey to Renew Railways With Two-Way System

The Turkish State Railways (TCDD) has entered a new era in the country's 100-year-old railway system by proceeding with a project to lay a second track next to the country's current one-way railroad as part of efforts to retrofit the system. The Ministry of Transportation decided to upgrade the country's railway system, a project that has been postponed for many years, after observing the success of double lane highways in the country, which were constructed after the Justice and Development Party (AK Party) came to power in 2002. All new railways to be constructed will have two sets of tracks, as is the case with the Ankara-Istanbul and Ankara-Konya high-speed train tracks. The project also involves improving the current railway network by constructing a second railway track alongside current tracks. The first phase entails the maintenance and renewal of the current tracks. The second phase involves the electrification of the lines and an improvement of the signal system. The final phase will see the laying of an additional track. Once completed, the project is expected to double the freight transportation capacity. The Ministry of Transportation has developed predictions for three, five and 10-year investment plans as part of the TCDD's modernization project. If $8.3b is invested in the railway network, the TCDD will save $253m over three years from personnel costs alone. Likewise, if the Ministry of Transportation invests $10.7b, the TCDD will save $410m in personnel costs over five years. This figure would increase to $467m over 10 years. (Zaman14.08)

Back to Table of Contents

6.3 Greece's GDP up 3.4%

The Greek Gross Domestic Product (GDP) increased by 3.4% in Q2/08, compared to last year's corresponding period, the National Statistics Service (ESYE) announced on 11 August. Investments during the same period fell by 2.8% compared to the 2007 corresponding period. Exports increased by 3.7%, while imports decreased by 3.8% in the same period, ESYE said. (ESYE11.08)

Back to Table of Contents

6.4 Costs & Benefits of Athens 2004 Olympics

Four years have passed since the Olympic flame burned in Athens' Olympic Stadium, heralding the start of the last Summer Games. In the run-up to that memorable occasion, Athens enjoyed a construction boom not seen since the Periclean age. The rush of spending gave the capital a lavish, brand-new infrastructure. Athens made particularly huge strides in transportation, with a state-of-the-art airport, a modern subway system, a commuter rail system, a metropolitan tramway and a beltway. Urban planning scholar Giorgios Tziralis credits those improvements with reducing pollution and boosting economic growth. Moreover, construction crews racing the clock built a plethora of stadiums and support facilities. Other Athenians turned their energies to the private sector, renovating most local hotels and replacing dilapidated taxis. All three major domestic telecom firms established a universal mobile telecom system for the benefit of incoming tourists.

Most Greeks look back at this era with nostalgia and pride. They perceived hosting the 2004 Games as rightful recompense for being outbid in 1996 (the centennial of the modern Olympics) by Atlanta. However, they must wrestle with the staggering cost, officially put at €11.2b, but possibly much higher. Security alone for the first post-9/11 Games cost €1b. Another host city, Montreal, needed 30 years to pay off the deficit it incurred from the 1976 Olympiad.

The major problem was and still is the use of the costly infrastructure that Athens inherited. The organizing committee rejected Atlanta's option of building temporary facilities that could be rapidly dismantled. Instead, it went the more expensive route of building state-of-the-art stadiums, such as the 50m-euro weightlifting arena. The government, now faulted by many for poor post-Olympiad planning, has found unlikely tenants for some of the buildings. There are plans to convert that weightlifting arena into university classrooms, and the badminton arena is now a 2,000-seat theatre. But other facilities, such as the pool, are abandoned or nearly so, and the open area around the principal complex remains barren and dusty, causing Tziralis to muse about the value of placing a "large park" there. The debate boils down to whether the intangible benefits outweighed the bill to Greek taxpayers. Those who point to the gains see a "coming-out party" resembling that for previous host cities, such as an economically ascendant Tokyo in 1964 or a democratizing Seoul in 1988. Athens sought to shake off its image as the capital of the EU's poorest Western member and by all accounts successfully hosted the world's greatest sporting event. Foreign Minister Dora Bakoyannis, Mayor of Athens at the time, believes it was "worth it". Now it is Beijing's turn to ponder the same equation. (HMN15.08)

Back to Table of Contents

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 UN Elects Israel to Postal Council

For the first time in the history of the organization, the Postal Operations Council of the United Nations' Universal Postal Union elected the Israel Postal Service to serve on its professional decision-making body. Israel has been a member of the Universal Postal Union since December 1949. The Postal Operations Council makes decisions relating to international postal services, financial issues and setting standards in quality of service. Israel will serve on the council for four years. The election of Israel to international organizations is virtually impossible due to the anti-Israeli atmosphere generally prevailing in the United Nations institutions. Thus, every vote won is the result of a complex process of bilateral negotiations in the multilateral context. Israel's election by almost 90 votes is the result of almost two years' work, and of cooperation between the Israel Foreign Ministry, the Israel Postal Company and the Ministry of Communications. (IsraelNN11.08)

Back to Table of Contents

7.2 Ramadan Begins on 1 September

Ramadan in 2008 will start on Monday, 1 September and will continue for 30 days until Tuesday, 30 September. It is the ninth month of the Muslim calendar. The Month of Ramadan is also when it is believed the Koran was sent down from heaven. Fasting is one of the Five Pillars of the religion of Islam and one of the highest forms of Islamic worship. Abstinence from earthly pleasures and curbing evil intentions and desires is regarded as an act of obedience and submission to God as well as atonement for sins, errors and mistakes. Muslims fast during Ramadan from the moment when it first starts to get light until sunset. Muslims fast as an act of faith and worship towards Allah, seeking to suppress their desires and increase their spiritual piety. Fasting together as a worldwide community - Ummah - affirms the brotherhood and equality of man before Allah. This fast lasts the entire month. Ramadan is a time when Muslims concentrate on their faith and spend less time on the concerns of their everyday lives. It is a time of worship and contemplation. During the Fast of Ramadan other strict restraints are also placed on the daily lives of Muslims. They are not allowed to smoke and sexual relations are also forbidden during fasting. At the end of the day the fast is broken with prayer and a meal called the iftar. In the evening following the iftar it is customary for Muslims to go out visiting family and friends. The fast is resumed the next morning. It is also a period in which business activity is significantly slower and usually no major business decisions are taken.

The last ten days of Ramadan are considered highly blessed, especially the 27th night which is also called the 'Night of Power', or the 'Night of Destiny'. It is believed that on this night the prophet Muhammad received the first revelation of the Koran. For many Muslims, this period is marked by a heightened spiritual intensity and they may spend these nights praying and reciting the Koran. After 30 days of fasting, the end of the month of Ramadan is observed with a day of celebration, called Eid-el-Fitr.

Back to Table of Contents

*REGIONAL:

7.3 More Than 1 Million Jordanian Students Start School on 18 August

On 18 August, some 1.129 million students from all parts of Jordan began their 2008/2009 scholastic year. Secretary General of the Education Ministry for Administrative and Financial Affairs Asfour said the ministry had taken all administrative and technical measures to receive students at all schools. Asfour added that the ministry will employ around 4,100 teachers, adding the ministry's needs of teachers this scholastic year stands at 5,100 teachers. The ministry, he said had received 31 new schools that could accommodate 28,000 students, noting it will also receive 4 new schools over the next two months. (Petra17.08)

Back to Table of Contents

7.4 President Musharraf of Pakistan Resigns

Under pressure over impending impeachment charges, Pakistani President Pervez Musharraf announced that he would resign on 18 August, ending nearly nine years as one of the United States' most important allies in the campaign against terrorism. Speaking on television from his presidential office, Mr. Musharraf, dressed in a gray suit and tie, said that after consulting with his aides, "I have decided to resign today." He said he was putting national interest above "personal bravado." Mr. Musharraf said the governing coalition, which has pushed for impeachment, had tried to "turn lies into truths." His resignation came after 10 days of intense political maneuvering in Pakistan and cleared the way for the four-month-old coalition government to choose a new president by a vote of Parliament and the provincial assemblies. But there were intense concerns in Washington that Mr. Musharraf's departure would open a new era of instability in Pakistan, a nuclear-armed country of 165 million people, as the fragile coalition jockeys for his share of power.

Mr. Musharraf, 65, will stay in Pakistan in the immediate future, a condition he had insisted on. The ruling coalition, led by Asif Ali Zardari, the leader of the Pakistan Peoples Party, and Nawaz Sharif, the chairman of the Pakistan Muslim League-N, were to meet in Islamabad to discuss the way forward. The senior leaders of the coalition immediately began deliberations, but there were few indications of who the next president would be. According to the Constitution, a new president must be chosen within 30 days. The choice will be made by an electoral college of the parliament and four provincial assemblies. Mr. Musharraf leaves office as the Taliban insurgency in the tribal areas has taken on renewed vigor, prompting civilians to leave their homes there and pitting the paramilitary Frontier Corps, directed by the army, directly against the insurgents. (Various18.08)

Back to Table of Contents

8: ISRAEL LIFE SCIENCE NEWS

8.1 VitiGam Inhibits Melanoma Growth in a Dose Dependent Manner

GammaCan International announced further progress in its VitiGam development program. In preparation for its upcoming IND submission for VitiGam, the Company successfully completed additional experiments using its established mouse melanoma model. These studies demonstrate a dose response of tumors (human melanoma cells) when treated with IgG preparations derived from vitiligo donors. In addition, the Company has conducted a meta-analysis (a statistical analysis of a large number of experiments) based on a series of previously announced studies with its mouse melanoma model. The results of this meta-analysis further confirm the effectiveness against melanomas of IgG preparations derived from vitiligo donors. The Company also conducted a meta-analysis to further confirm the overall effectiveness of vitiligo-derived IgG preparations against melanoma cells. This analysis revealed a specific and highly statistically significant inhibition of tumor growth in mice treated with vitiligo-derived IgG preparations.

Kiryat Ono's GammaCan (http://www.GammaCan.com) develops proprietary immunotherapy and related approaches to treat melanoma and other cancers. GammaCan's patented platform technology is based on the use of IgGs (gamma-immunoglobulins), a safe, relatively non-toxic human plasma-derived product used to treat a variety of immune deficiencies and autoimmune diseases. In cancer, IgG-based therapies work by strengthening the patient's immune system. Many experts currently view immunotherapy as a future alternative to chemotherapy. (GammaCan11.08)

Back to Table of Contents

8.2 Pluristem's PLX-MS Shows Potential Benefit in the Prevention of Multiple Sclerosis

Pluristem Therapeutics announced that the Company's PLacental eXpanded (PLX-MS) cells have demonstrated in vivo efficacy in the prevention of Multiple Sclerosis (MS). PLX cells are Pluristem's placental-derived mesenchymal stromal cells (MSCs) that have been expanded in the Company's proprietary PluriX 3-D bioreactor. In a further analysis aiming to demonstrate the in vivo efficacy of PLX-MS cells for the prevention of MS, Experimental Autoimmune Encephalitis (EAE) was induced in mice via immunization with the MOG35-55 protein on day 0. EAE is an autoimmune inflammatory disease of the CNS that represents the paradigmatic model for MS. The animals then received, on day 8, intravenously either PLX-MS or PlasmaLyte, which served as a control. PLX-MS administration prevented the appearance of clinical symptoms and signs associated with MS throughout the 35-day study period compared to those animals receiving the control. Additionally, the beneficial effects were similar to when Zappia et. al. used MSCs that were non-placental in origin in this EAE animal model.

Haifa's Pluristem Therapeutics (http://www.pluristem.com) is a bio-therapeutics company dedicated to the commercialization of non-personalized (allogeneic) cell therapy products for the treatment of several severe degenerative, ischemic and autoimmune disorders. The Company is developing a pipeline of products, stored ready-to-use, that are derived from human placenta, a non-controversial, non-embryonic, adult stem cell source. Pluristem's first product in development, PLX-PAD, is intended to improve the quality of life of millions of people suffering from peripheral artery disease (PAD). The Company's products in development also include PLX-BMT, targeting the global shortfall of matched tissue for bone marrow transplantation (BMT) by improving the engraftment of hematopoietic stem cells (HSCs) contained in umbilical cord blood; PLX-STROKE, targeting ischemic stroke; PLX-MS, targeting Multiple Sclerosis; and PLX-IBD, targeting Inflammatory Bowel Disease (IBD), which includes Crohn's disease and Ulcerative Colitis. (Pluristem11.08)

Back to Table of Contents

8.3 BrainsGate Raises $27.5 Million Financing Led by Johnson & Johnson

BrainsGate completed a $27.5 million series C financing round in which both new and existing investors participated. Johnson & Johnson Development Corporation (JJDC) led the round, joined by Israeli VC-Fund Agate Medical Investments. Prominent existing investors who also participated in the current round included Elron Electronic Industries, Pitango Venture Capital, MB Venture Capital and Alice Lab. Caesarea's BrainsGate (http://www.brainsgate.com) is a developer of a novel therapeutic platform based on electrical neuro-stimulation of the Spheno-Palatine Ganglion (SPG). BriansGate's leading indication is acute ischemic stroke with a 24 hour treatment window. The company is nearing completion of a multi-national multi-center pilot clinical study which to date has recruited over 90 stroke patients, and is about to initiate a pivotal study to gain market approval for its stroke therapy. (BrainsGate13.08)

Back to Table of Contents

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 IDE Technologies to Supply €100 Million Desalination Plant to Australia

Kadima's IDE Technologies, jointly owned (50:50) by The Israel Corporation Group subsidiary Israel Chemicals and the Delek Group, signed a contract to supply a desalination plant worth over a €100 million to a major industrial client in Australia. The client will use the desalinated water for its production processes. Slated for completion during 2010, the new plant will be based on reverse osmosis technology - a modern process technology used for desalinating water in a wide range of applications. The plant will provide 140,000 cubic meters/day (50 million cubic meters/year) of high quality desalinated process and drinking water, using innovative technologies implemented by IDE in its projects worldwide. Other projects include the plants in Ashkelon and Hadera (over 100 million cubic meters/year each), Cyprus (20 million cubic meters /year) and in Eilat (3.6 million cubic meters/year). This project is one of the most complex in the world and one of the largest of its kind supplied by IDE to a foreign client. The quality of the feed water necessitates more precise and complex treatment than in similar installations elsewhere and will be subject to the rigid and meticulous standards of the local industry. Established in 1965, IDE Technologies (http://www.ide-tech.com) is a world leader in water desalination, specializing in commercial applications of thermal and membrane technologies for desalinating and converting sea- and brackish water to drinking and process water. (IDE12.08)

Back to Table of Contents

9.2 OTI to Supply ERG with Contactless Card Readers for Utah's Transit Payment Solution

On Track Innovations will supply its contactless readers to the ERG Group, a world leader in smart card automated fare collection solutions, for Utah Transit Authority's (UTA) contactless credit card bus payment solution. This ERG-UTA roll-out is another U.S. project based on OTI's reader solutions, including projects in Boston and Houston. The contract for the full rollout of the system in the Salt Lake City metropolitan area follows the recently reported successful pilot project completed by ERG and UTA. For the pilot, buses serving Salt Lake City area ski resorts were equipped with the new system which allowed customers to use contactless credit cards and other smart cards for both transit payment and ski resort access. UTA's system will similarly allow passengers the choice of contactless credit cards and other smart cards for mass transit payment and ski resort access.

OTI is supplying the front-end solutions, including readers and its proprietary software, to support ISO 14443 proximity payments and ISO 15396 vicinity payments. The ability to support both payment and vicinity cards gives UTA the flexibility to implement various types of contactless cards according to their specific use, and establishes a flexible and modular contactless payment platform.

Established in 1990, Rosh Pina's OTI (http://www.otiglobal.com) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking, loyalty programs and secure campuses. (OTI05.08)

Back to Table of Contents

9.3 AudioCodes Collaborates With Intelleca to Deploy VoIP Services

AudioCodes and Intelleca, a division of the Bytes Technology Group and South Africa's fastest growing call center specialist, announced their collaboration to deploy AudioCodes Mediant 8000 Media Gateway in conjunction with Genesys' VoiceGenie system for contact centers into a Tier 1 South African, network operator. The Mediant 8000 Media Gateway bridges the gap between the IP and TDM networks, allowing centralized SIP based IVR to service all calls initiated in the Operator's nationwide switching centers. The combination of VoIP media gateways and the VoiceGenie Call Center Solution gives the Operator the ability to introduce a cost-effective SIP based IVR service for their broad spectrum of contact centers. This deployment is a step forward in the transition from a legacy network to VoIP. The Mediant 8000 VoIP Gateway is the large-scale member of the AudioCodes' family of market-ready, scalable, standards-compliant media gateway systems for wireline, wireless, cable, broadband access and fixed-mobile-convergence networks. Designed for the carrier environment, the Mediant 8000 is a robust system solution which incorporates AudioCodes' leading Voice over Packet technology.

Lod's AudioCodes (http://www.audiocodes.com) provides innovative, reliable and cost-effective Voice over IP (VoIP) technology, Voice Network Products and Value Added Applications to Service Providers, Enterprises, OEMs, Network Equipment Providers and System Integrators worldwide. AudioCodes provides a diverse range of flexible, comprehensive media gateway, and media processing enabling technologies based on VoIPerfect - AudioCodes' underlying, best-of-breed, core media architecture. (AudioCodes05.08)

Back to Table of Contents

9.4 RADA Electronic Industries Receives $1.5 Million Follow-on Orders

RADA Electronic Industries it has recently received follow-on production and maintenance orders with total value exceeding $1,500,000 to deliver Video Recorders, Head Up Display Cameras, Ground Debriefing Stations and other products to various customers. Deliveries are scheduled to start in Q4/08 and to conclude within 12 months. Netanya's RADA Electronic Industries (http://www.rada.com) is an Israel based company involved in the military and commercial aerospace industries. The Company specializes in Avionics systems (Digital Video Recorders, Ground Debriefing Stations, Stores Management Systems, Flight Data Recorders, Inertial Navigation Systems), Trainers Upgrades, Avionics systems for the UAV market, and Electro optic cameras for airplanes and armored vehicles. (RADA07.08)

Back to Table of Contents

9.5 AMIMON Makes IDX CAM~WAVE HD Camera Wire-free

AMIMON has cooperated with IDX, a premier manufacturer and supplier of batteries and equipment to the international broadcast and professional video industry, in the introduction of its CW-5HD, the world's first Wireless Uncompressed HD system for professional HD cameras. The IDX CAM~WAVE system, a recipient of the NAB 2008 STAR Award, uses AMIMON's revolutionary Wireless High-Definition Interface technology. Operating in the 5.1-5.8GHz unlicensed band, the CAM~WAVE HD (Model CW-5HD), along with AMIMON's technology, is capable of delivering wireless full-bandwidth uncompressed HD-SDI and SD-SDI pictures, live and in real time with virtually no latency (less than 1 millisecond delay). AMIMON's technology uses a unique video-modem approach to deliver clear, artifact-free images, wirelessly up to 150 feet in line-of-sight shooting or 100 feet through walls. Unique to CAM~WAVE HD wireless systems, no compression allows productions to seamlessly intercut cameras with other wired cameras and avoid lip-sync errors.

Herzliya's AMIMON (http://www.AMIMON.com) is a fabless semiconductor company pioneering wireless uncompressed high-definition video for universal connectivity among CE video devices. AMIMON's uncompressed Wireless High-Definition Interface technology enables HDTV manufacturers to offer consumers wireless flat panel displays that can interface wirelessly to all HD video sources throughout the home at a quality equivalent to that achieved with wired interfaces such as HDMI. (Amimon09.07)

Back to Table of Contents

9.6 Aladdin HASP SRM Adds Automatic File Wrapping to Secure IP in Java-Based Applications

Aladdin Knowledge Systems announced the release of Aladdin HASP SRM v 3.50, adding automatic file wrapping for Java applications, enhanced security and ease-of-use to Aladdin's award-winning, fully-integrated hardware and software-based copy protection and licensing solution. The HASP SRM Java Envelope provides advanced protection for Java Archive (JAR) files through strong encryption, protecting against reverse engineering at the class-level through the encryption of user-selected class files. Within just minutes, the HASP SRM v 3.50 Java Envelope automatically "wraps" Java applications in HASP SRM's award-winning copy protection without requiring any changes to the source code itself. A cross-platform environment based on intermediate code, Java is highly prone to reverse-engineering, making Envelope protection critical to securing intellectual property. Unlike other software DRM solutions, the HASP SRM Java Envelope does not require the conversion of Java files into another format in order to implement HASP SRM software- or hardware-based locking. HASP SRM v 3.50 is the only automatic file wrapping system that supports both hardware and software locking.

Petah Tikva's Aladdin Knowledge Systems (http://www.Aladdin.com) is an information security leader with offices in 12 countries, a worldwide network of channel partners, and numerous awards for innovation. Aladdin eToken is the world's #1 USB-based authentication solution, offering identity and access management tools that protect sensitive data. Aladdin HASP SRM boosts growth for software developers and publishers through strong anti-piracy protection, IP protection and secure licensing and product activation. (Aladdin 11.08)

Back to Table of Contents

9.7 Rafael Partners with General Dynamics in $37 Million Contract for Reactive Armor Production

The U.S. Army awarded General Dynamics Armament and Technical Products a $37m contract for the qualification and production of reactive armor side skirt tiles for the Bradley Fighting Vehicle System. Work under this contract will be performed at the General Dynamics' facility in McHenry, Miss., and is expected to be completed in November 2009. As a strategic partner, RAFAEL Armament Development Authority, Ordnance Systems Division, will share the production workload in Haifa, Israel. The reactive armor system is comprised of tiles that fasten to the exterior of a vehicle allowing it to better withstand a direct hit from a variety of anti-armor munitions. In addition to manufacturing the reactive armor tiles for the Bradley Fighting Vehicle and the Abrams Tank, General Dynamics provides complete assembly, integration and storage capabilities. Designed specifically for the U.S. Army Bradley Fighting Vehicle, the reactive armor is saving lives and preventing severe damage to combat vehicles in Iraq. General Dynamics' site in McHenry, Miss., is the load, assemble and pack facility for the company's reactive armor tile program. General Dynamics manufactures reactive armor tiles for the Bradley Fighting Vehicle and Abrams Tank and provides complete assembly, integration and storage capabilities. Rafael (http://www.rafael.co.il) designs, develops, manufactures and supplies a wide range of advanced defense systems. These leading edge products include naval, air and ground precision weapons, electro-optic systems, electronic warfare (EW) systems, C4I and unmanned systems, acoustic defense systems, armored protection, breaching munitions and space technologies. (General Dynamics 13.08)

Back to Table of Contents

9.8 SCD Awarded a Contract With DARPA for the Development of xBn Devices

SCD has announced the receipt of a phase I contract from DARPA, valued at $1.75m, for the development of a new "XBn" infrared detector technology. If all phases of the development program are completed, the total value of the funding could be up to $5m. This program considers a new type of semiconductor hetero-structure detector, in which no depletion layer exists in any narrow bandgap region. Instead, the depletion layer is confined to a wider bandgap barrier material. In such a "barrier device" the dark current can be made lower than in a conventional homo-structure device operating at the same temperature. This will allow operating temperatures to be achieved in the region of 150K without degrading the detector's performance relative to homo-structure devices with a similar photo-response operating at lower temperatures. SCD SemiConductor Devices (http://www.scd.co.il) is a partnership of Rafael (50%) & Elbit Systems (50%), and located at Leshem industrial park, Galilee mountains, Israel. SCD develops and manufactures cooled and uncooled infrared detectors and laser diodes. SCD offers a range of off-the-shelf and custom-designed detectors in various configurations.

Haifa's Elbit Systems (http://www.elbit.co.il) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. Rafael (http://www.rafael.co.il) designs, develops, manufactures and supplies a wide range of advanced defense systems. These leading edge products include naval, air and ground precision weapons, electro-optic systems, electronic warfare (EW) systems, C4I and unmanned systems, acoustic defense systems, armored protection, breaching munitions and space technologies. (Elbit Systems13.08)

Back to Table of Contents

9.9 Mellanox InfiniBand Accelerates Toshiba Medical's AquilionONE

Mellanox Technologies announced that its InfiniBand adapters accelerate Toshiba Medical's AquilionONE, a new dynamic volume computed tomography system which significantly shortens patient diagnosis time, by enabling diagnosis of figure, dynamic image and function within a single scan, decreasing the need for multiple, duplicative tests and invasive procedures. The AquilionONE acquires large volumes of thin-slice, high resolution data which can be rendered by advanced 3D volume and vessel visualization software to streamline image interpretation. Mellanox InfiniBand adapters provide high bandwidth and low latency to keep overhead away from the processor, allowing more CPUs to be used for the visualization process, reducing the overall job runtime. Mellanox Technologies (http://www.mellanox.com) is a leading supplier of semiconductor-based, high-performance, InfiniBand and Ethernet connectivity products that facilitate data transmission between servers, communications infrastructure equipment and storage systems. The company's products are an integral part of a total solution focused on computing, storage and communication applications used in enterprise data centers, high-performance computing and embedded systems. Founded in 1999, Mellanox Technologies is headquartered in Santa Clara, California and Yokneam, Israel. (Mellanox18.08)

Back to Table of Contents

9.10 Lucid HYDRA 100 Chip Series Available for Customer Validation

Reference designs for LucidLogix Technologies' new real time distributed processing technology are now available, enabling manufacturers to begin deploying parallel graphics power into PCs, laptops, motherboards or other creative implementations. The Lucid SoC technology – called the HYDRA 100 Series – offers a groundbreaking approach to scaling 3D graphics performance in a multi-GPU environment. The first HYDRA real-time distributed processing engine is a solution that efficiently load-balances graphics processing tasks, delivering linear performance improvement with two or more graphics cards. Because it is the industry's first parallel graphics technology that works with any GPU, any CPU or chipset and on any application, the HYDRA engine allows people to customize and optimize their PC to achieve the price and performance balance they want – whether it is a mainstream system or a high-performance gaming package. The HYDRA 100 reference design system ensures OEMs can rapidly prototype, develop, test and validate the technology on their current systems. The HYDRA 100 SoC works with PC motherboards, notebook motherboards and add-in cards, and any GPU from the same brand family can be mixed and matched for performance and price targets as well. LucidLogix Technologies (http://www.lucidlogix.com) is reinventing multi-core graphics with its HYDRA real-time distributed processing engine that will exponentially improve visual computing for both business and gaming applications. Lucid is a fabless SoC provider headquartered in Kfar Netter, Israel. (LucidLogix19.08)

Back to Table of Contents

9.11 Voltaire Switches Drive World's Most Power-Efficient Supercomputers

The high performance and power efficiency of Voltaire's switching solutions are connecting the world's most energy efficient supercomputers, according to the new Green500 List. Voltaire Grid Director InfiniBand switches are powering the world's most energy-efficient supercomputer at IBM Boeblingen Lab and the world's fastest Los Alamos Laboratory petaflop supercomputer, which took the No. 3 position for energy performance. The supercomputers are based on industry-standard technologies and interconnected by Voltaire Grid Director DDR/20 Gbps InfiniBand switches. Delivering 20 Gbps InfiniBand performance, Voltaire switches require on average only 5 watts of power per port, making them a much more energy efficient networking technology than 1 and 10 Gigabit Ethernet. Voltaire also delivered the high performance interconnect for many of the other supercomputers on the list. Headquartered in Herzliya, Voltaire (http://www.voltaire.com) designs and develops server and storage switching and software solutions that enable high-performance grid computing within the data center. Voltaire refers to its server and storage switching and software solutions as the Voltaire Grid Backbone. Voltaire's products leverage InfiniBand technology and include director-class switches, multi-service switches, fixed-port configuration switches, Ethernet and Fibre Channel routers and standards-based driver and management software. (Voltaire 19.08)

Back to Table of Contents

10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli's CPI Rises by 1.1% During July

Israel's July inflation figure - the Consumer Price Index (CPI) - rose by 1.1%, double the estimates. This means that inflation over the twelve months to July was 4.8%, similar to the rate in the twelve months to June. Since the beginning of 2008, the CPI has risen by 3.5%. The rate of inflation is currently 1.8% above the government's target range. Eight main items in the CPI rose sharply, prominent among them being housing, home maintenance, public transport, cultural and entertainment services, fresh fruit and vegetables. Banking service prices rose 16.2% following the reform in bank charges. The exchange rates for both the dollar and the euro against the shekel fell after the CPI figure was announced. (IBS15.08)

Back to Table of Contents

10.2 Israeli Technology Leads Continued Export Growth

Despite growing worries about a recession, the Central Bureau of Statistics reported on 13 August that industrial exports, spanning the spectrum from low tech to high tech, are still showing double-digit growth. Export of goods, except diamonds, rose by an annualized 16.8% in May-July 2008 in trend figures, after growing 23.4% in February-April. Industrial exports rose by an annualized 17.7% in May-July, after rising 24.8% in the preceding three months. High-tech exports, which account for 42% of industrial exports excluding diamonds, rose by an annualized 18.1% in May-July. Mixed high-tech exports, which account for 30% of industrial exports, rose by an annualized 23.4%; mixed low technology exports, 22% of industrial exports, rose by an annualized 18.1% and low technology exports, 6% of industrial exports, rose by annualized 4.9%. Even exports of textiles, clothing and footwear exports rose by an annualized 1.6% in May-July, after declining steadily for years. Exports totaled $4.8b in July, imports totaled $6.4b and the balance of trade deficit was $1.5b. Imports of goods, excluding diamonds, fuel, ships and planes rose by an annualized 14% in May-July in trend figures, after rising 20% in February-April. Imports of raw materials, excluding diamonds and fuel, rose by an annualized 21.9% in May-July, after rising 22.9% in preceding three months. Imports of machinery and equipment, 74% of imports of investment goods, rose by an annualized 7.4% in May-July, indicating that economic growth will continue, but more slowly than before. (CBS13.08)

Back to Table of Contents

10.3 Israel's Pharmaceutical Exports Increase

Israel's pharmaceutical exports totaled $2.22b in the first half of 2008, 43% more than in H1/07, according to the Manufacturers Association of Israel Chemical and Pharmaceutical Society. The largest increase in exports was to Eastern Europe. Pharmaceutical exports to Russia rose 250% to $4.4m in the first half, exports to the Czech Republic rose 101% to $23.3m and exports to Hungary rose 6% to 15.2m. Pharmaceutical exports to the EU as a whole rose 32% to over $337m in the first half. The US was still the largest export market for Israel's pharmaceutical industry, with exports rising 43% to $1.65b. (MA17.08)

Back to Table of Contents

10.4 Tourist Arrivals On Pace For Record Year

Israel's tourism industry is on pace to reach a record 2.8 million tourists this year. The Ministry of Tourism reported that 1.7m tourists visited Israel since the beginning of 2008 (January - July). The figure represents an increase of 41% over the same period last year, when one million tourists visited the country. Over 260,000 tourists visited Israel in July - an increase of 22% over July 2007, and a 75% increase over July 2006. The increase in incoming tourism is consistent with the Ministry of Tourism's forecast of a record year for Israeli tourism - 2.8m tourists in 2008. Recently, for the first time, the Ministry of Tourism held a special two day workshop for bus drivers, aimed at providing good service and the role of the bus driver as a service provider to tourists. (Globes 13.08)

Back to Table of Contents

10.5 Israel Railways Second Quarter Passenger Numbers Up 14%

The Ministry of Transport announced that Israel Railways that it carried 8.8m passengers during Q2/08, 14% more than during the corresponding quarter of 2007. The average daily number of passengers was 131,500 during Q2, 11% more than during the corresponding quarter. The average daily number of passengers totaled 137,600 in June. Israel Railways posted $35m revenue for the second quarter, 13% more than the $29.7m for the corresponding quarter. However, the average revenue per passenger fell by 0.6% because of the increase in passengers on suburban lines. The Ministry of Transport attributes the increase in passenger traffic to the opening of three new stations: Modi'in Central, Ganei Aviv on the Lod line, and Petah Tikva-Kiryat Arie. Israel Railways CEO Harel added that in response to the rise in traffic, the company seeks to become the country's national carrier. (Globes 10.08)

Back to Table of Contents

10.6 Israel's January to July Car Deliveries Were Up 17.5% From 2007

In July, 110,314 cars were delivered in Israel during the January-July period, rising by 17.5% over the corresponding period of 2007, according to the Israel Motor Vehicles Importers Association. Deliveries of gas-guzzling off-road vehicles rose 40% to pass the 10,000 mark. Part of the increase was attributed to the offering of new models in the 4 and 5 value use classifications by leasing companies. Altogether, 135,568 vehicles of all types were delivered in January-July, 20% more than in the corresponding period of last year. Some 19,255 vehicles were delivered in July, 6.6% fewer than in July 2007. However, July deliveries were slightly above the average monthly deliveries so far this year. The higher than average monthly deliveries in July was due to purchases by rental companies for the summer tourist season, as well as by higher purchases by leasing companies.

Mazda was the leading brand, with 23,902 deliveries in January-July, 40% more than in the corresponding period of last year. Hyundai was in second place, with 15,022 deliveries in January-July, up 9% on the corresponding quarter. Toyota was in third place, with 13,950 deliveries, up 4.5%, and Chevrolet was in fourth place with 9,920 deliveries, up 62%. Honda was in fifth place with 8,897 deliveries, up 69%. Ford was in seventh place, with 7,165 deliveries, down 15%. Vehicle importers predict a sharp drop in car deliveries in the fourth quarter as signs of a slowdown increase and the anticipation of substantial price cuts in for cars in January 2009 after prices for value use classifications are updated in accordance with the exchange rates. (Globes05.08)

Back to Table of Contents

11: In Depth

11.1 ISRAEL: Effects on Capital Inflow of Israel's Joining the OECD

The Bank of Israel discussed a study by Morgan Stanley Capital International (MSCI) entitled "The Effects on Capital Inflow of Israel's Joining the OECD and its Possible Reclassification as a Developed Country." This study examined the likely effects of Israel's expected accession to the OECD and of its reclassification as a developed market in the categorization of the global share indices on capital inflow and on other economic parameters.

The research found that countries that acceded to the OECD in the last decade experienced an improvement in a number of economic parameters in the years leading up to accession. This was apparently due to the steady improvement in their economic fundamentals needed to meet the requirements of the OECD. In addition, a correlation was found between joining the OECD and an improvement in a country's credit rating.
However, accession to the OECD did not lead to a significant change in capital inflows to the countries that joined the organization during the last decade. Countries that joined the MSCI list of developed markets benefited from continued foreign financial investment in shares, and in the main from a balance of holdings higher than that derived proportionally from the MSCI index.
A paper written by Bank of Israel researchers examined the effects of Israel's expected accession to the OECD and the process of becoming reclassified as a developed market according to the global share indices on the size of capital flow into the economy.
This research found that Israel's accession to the OECD and to the list of developed economies would certainly improve its international standing, lower its cost of borrowing and oblige it to meet the accepted international standards on all matters related to economic policy. In this sense, the commitment itself is likely to lead to a further improvement in Israel's economic fundamentals and to make it more attractive to foreign investors.

The authors found, however, that these processes did not result in a significant change in capital flows to the countries that joined the OECD relative to those that did not (the control group). For some of the variables, the improvement was most evident just in the years prior to their joining the organization, a reasonable result in light of the fact that countries are accepted as members on the basis of continued improvement in their economic fundamentals in the years before their accession. There was a clear correlation between joining the organization and an improved credit rating.

The four countries that joined the MSCI list of developed markets in the last twenty years benefited from continued foreign financial investment in shares, and in the main from a balance of holdings higher than that derived proportionally from the MSCI index. No evidence was found to support the claim that the decline to a share of less than one% of the market portfolio (in the index of the developed markets) resulted in a significant drop in the volume of investments, and certainly no negative impact on investments was discerned over time. There are likely to be conflicting effects on the net capital inflow from automatic adjustments to their portfolios by "passive" investment funds: an automatic withdrawal of investments by passive emerging market funds, and an automatic increase by passive developed market funds.
* The views expressed in the paper are those of the author, and do not necessarily reflect those of the Bank of Israel. (BoI18.08)

Back to Table of Contents

11.2 Arab Middle East Economy: Trading Places

Morocco's bid to establish its new port development to the east of Tangiers as the principal container hub at the Atlantic entrance to the Mediterranean took a major step forward in July with the award of concessions for the complex's third and fourth terminals. According to the Tanger Mediterranean Special Agency (TMSA), the government body responsible for the port, once these two terminals start up in 2012, Tang Med will have the capacity to handle 8m twenty-foot equivalent units (TEUs) per year, which will make it the leading container handling centre in the Mediterranean.

Tang Med faces an equally ambitious rival for regional prominence at the other end of the Mediterranean, where Egypt's East Port Said terminal is aiming to increase capacity to 5.1m TEUs by 2011, and is studying further expansion over the subsequent ten years. To the east of the Suez Canal, developers have even bigger plans, with new berths or entire new ports planned at Aqaba, Al Sokhna (on Egypt's Red Sea coast), Jeddah (both in the existing city and at the King Abdullah Economic City, to the north), Aden, Salalah and Bahrain. A common factor in many of these developments is Dubai Ports World (DP World), which is now one of the top four global operators and which has set a target of increasing its gross capacity to 90m TEUs by 2017, compared with 43.3m last year.

Jebel Ali Inspiration

Both Tang Med and East Port Said owe something to the precedent set by Dubai's Jebel Ali, which has demonstrated the potential within the Middle East of using the establishment of a major new port as the platform for broader industrial and services development. Tang Med was launched in 2002—a quarter of a century after ground was broken at Jebel Ali—and the first terminal started operations in July 2007 under a concession awarded to a locally incorporated subsidiary of Denmark's Maersk. Terminal 2 was scheduled to start up during the third quarter of 2008, operated by a consortium of Eurogate-Contship, a German-Italian port operator, and three shipping firms—the local Comanav, CMA-CGM of France and MSC of Switzerland. Maersk is also a major partner in Terminal 3, along with its Netherlands-based affiliate, APM Terminals and Morocco's Akwa Group. The concessionaire for Terminal 4 is the first at Tang Med to involve a non-European operator, with Singapore's PSA, the world's largest container terminal operator (handling 58.9m TEUs in 2007), holding 50%, and the remaining equity held by local partners, Mersa Maroc and SNI.

The port's main function is to provide feeder services to shipping on the east-west global trade route, enabling vessels from Asian exporters to drop off containers to be redirected to European, north and west African and US destinations. The robust trends for the expansion of global trade—despite the worsening outlook for global economic growth—mean that Tang Med's expansion is unlikely to come at the expense of other regional container hubs, such as nearby Algeciras, Cagliari in Sardinia, the southern Italian ports of Gioia Tauro and Taranto, and the Malta Freeport. The Economist Intelligence Unit estimates that world trade growth slowed to 7.3% in 2007, from 9.1% the previous year, and although there is likely to be a further slowdown in 2008-09, world trade is still expected to grow at an average of over 5% over the next five years. The volume of containers handled in Mediterranean ports is expected to reach 40m TEUs by 2015, compared with 22m TEUs in 2000, according to a study by the UK's Ocean Shipping Consultants.

The Tang Med complex includes dedicated industrial zones located in the hinterland. Among the tenants that have committed themselves to investing in these TMSA-administered zones is the Renault-Nissan Alliance, which at the start of 2008 signed the final agreement for a low-cost car manufacturing plant, to be located in the Meloussa zone. The project will cater mostly to the European export market, producing around 400,000 vehicles per year.

Looking East

Egypt's East Port Said cannot yet boast an industrial investor to match Renault-Nissan, but it has gained a head start over its Moroccan counterpart in its port activities. The project was pushed forward in the late 1990s by the government of Kamal el-Ganzouri as part of a public investment drive that also included the Toshka irrigation and farm scheme in the deep south of the country. The new port took shape on the muddy Sinai side of the Suez Canal, close to the waterway's entrance to the Mediterranean, and it received its first container ship in October 2004.

The port is run by Suez Canal Container Terminal, in which APM Terminals is the largest shareholder, with a stake of 55% (reduced from 60% at the end of last year when Hong Kong-based Cosco Pacific acquired a 20% stake—it bought the other 15% from a Danish development bank). Egyptian interests hold 25%. According to Egypt's Ministry of Transport, East Port Said handled 1.7m TEUs in 2007, of which 95% entailed transhipment. Work is now underway on the terminal's second phase which will take its capacity up to 5.1m TEUs/y within three years. The government has commissioned studies suggesting that the port could reach capacity of 11m TEUs/y by the middle of the next decade.

All About The Gulf

The next two new ports to be created in the Middle East will both be in the Red Sea. The first will entail the relocation of the existing port of Aqaba to a new site 20 km to the south. The scheme is part of a broader plan whereby the old port and its surrounding area will be developed for tourism and real estate, while the new port will be the focus of a specialized trading and industrial zone. Al Maabar International Investments, a consortium of Abu Dhabi real estate firms, was recently appointed as the master developer for the old port project; the Aqaba Development Corporation launched the tender process at the end of June for the award of a 30-year contract to design, build, finance and operate the new port. It will consist of a general cargo and roll on-roll off terminal, a grain terminal and a ferry terminal.

Over the border in Saudi Arabia a much more ambitious scheme is taking shape, envisaging the creation from scratch of a new port that will become one of the top ten container terminals in the world. The port will be part of King Abdullah Economic City, which is being built to the north of Jeddah by Emaar, a venture set up by Dubai-based Emaar Properties and partners from the Saudi private sector. The Dubai connection has been strengthened with the signature earlier this year of a Memorandum of Understanding with DP World with regard to developing and operating the port. The first element, a multipurpose cargo terminal, is scheduled to start operations in 2010, and the container terminal is set to follow in mid-2011, with an initial capacity of 1.6m TEUs/y, to be ramped up in phases to a target of 20m TEUs/y. The new port will add to DP World's operations in that part of the Red Sea, as it is already the operator of the existing two container terminals in Jeddah itself, as well as Al Sokhna in Egypt (acquired last year, and aiming to reach 1.2m TEUs/y in 2009), Djibouti and, most recently, Aden. The Jeddah terminals handled just over 3m TEUs in 2007, an increase of 5% over the previous year, and face the challenge of a big expansion in demand for their services once the Saudi Landbridge—a railway linking Jeddah to Riyadh and Dammam—is complete.

In mid-July DP World finally signed an agreement with the Yemeni government for a 35-year concession to operate Aden Container Terminal (ACT) and the nearby Ma'alla port—more than three years after the UAE port operator was provisionally selected for the contract. A joint venture operating company will be formed with state-owned Yemen Gulf of Aden Port Corporation, which is committed to invest at least $220m in expanding ACT, including the addition of a new 400-metre berth within five years of the official handover, due by the end of the year. DP World aims to increase the port's capacity from about 700,000 TEUs/y today to 1.5m TEUs/y by 2012. Throughput has been increasing at an average annual rate of about 18% over the past seven years. A bidding process for the concession was prompted back in 2003 by the withdrawal of the then-operator Yeminvest, a joint venture between Singapore's PSA and Saudi Arabia's Bin Mahfouz Group, owing to a drop in container traffic through the port following the attack on the USS Cole warship in Aden harbor three years previously. However, the award to DP World provoked debate, on the grounds that ACT would be a competitor to the UAE firm's flagship Jebel Ali port—and hence a conflict of interest might occur.

It now seems that the Yemeni authorities have acknowledged that DP World is a genuinely global operator and should not be viewed simply as a Jebel Ali concern. Moreover, it has become clear that the growth of some ports in the Gulf region does not necessarily come at the expense of others. Salalah Port, operated by a venture in which APM Terminals holds 30%, started up in 1998, and now has six berths capable of handling 4.5m TEUs/y. Capacity is to be doubled by 2011 through upgrading the existing berths and building three more as part of a second-phase development of the terminal. Salalah and Jebel Ali have grown in tandem, in a largely complementary fashion. DP World's Dubai ports (Jebel Ali and Port Rashid) handled 10.7m TEUs in 2007, up 20% on the previous year, and traffic increased by 17% year on year in the first half of 2008 to 5.8m TEUs. (EIU08.08)

Back to Table of Contents

11.3 LEBANON: Long on Hope, Short on Time

Lebanon's new national unity cabinet has approved a statement setting out the policies the coalition government will follow in the months leading up to general elections, scheduled for next May, though the gap between ratification and implementation may prove to be a wide one. Having taken nearly three weeks to hammer out an agreement on the policy statement, the document was tabled for debate by the Lebanese parliament on August 9. It was met with disapproval from all sides, even those who initially supported it in the cabinet room.

Representatives of both Prime Minister Fouad Siniora's majority March 14 bloc and the Hezbollah-led minority in the government criticized the policy statement. Pro-March 14 deputies were unhappy that it did not do enough to force Hezbollah to disarm. Hezbollah supporters complained about a clause which set out "the state's right to spread its sovereignty over the entire Lebanese territory so as to prevent these areas from becoming a safe haven for fugitives of the law." They believed the clause implicitly targeted the group and its supporters.

Much of the document was dedicated to outlining policies that would revive the economy. One of the underlying principles of the program is to restore trust in the future of the Lebanese economy, both at home and abroad, as well as strengthening the partnership between the public and private sectors. At the heart of these efforts is a proposal to open up Lebanon's electricity production and distribution network to private investment.

Though often mooted in the past, plans to privatize state electricity monopoly Electricite du Liban have repeatedly fallen by the wayside. One of the reasons for this has been the massive losses the utility incurs, having required state funding in excess of $1bn last year to prop up its operations, making it a relatively unattractive proposition for the private sector. Another has been strong opposition to the sell-off from some political parties, including Hezbollah, which are thought to favor a more centralized control of the economy. As a short-term measure, the cabinet has proposed an increase in electricity prices, an effort to cut losses in production costs and end user payments.

The government also said it would push ahead with privatizing the telecom sector, a direct reference to plans to auction off two mobile phone licenses. This plan has also been stalled, mainly due to parliament not sitting for more than a year to sign off the proposal. With broad-based support for the sale, the two state-owned licenses could now be put on the block before the general elections.

The policy statement offered the prospect of state aid to small and medium-sized businesses, proposing a 0%-interest loan scheme and boosting opportunities for smaller firms to bid on state tenders.

The document stated that sectors such as industry and agriculture were vital for the economy and would be given every assistance to expand and revitalize. Yet the document did not put a costing on any of the projects or policies it outlined. Though proposing soft loans to farmers, businesses and start-ups, exact details of these schemes, along with their expense, were not provided. With many of these assistance schemes having to either be started from scratch or be significantly overhauled, it is hard to see how much benefit could be derived from some of these programs before the country goes into election mode.

On the issues of public funding and debt, the statement said the government would work with parliament to get approval for the previous three budgets and work towards approving the draft budget for 2009. It also gave a commitment to reduce public spending "through discussion and draft laws, especially those that are currently in parliament" and to improve expenditure management programs and bolster tax collection mechanisms.

In the case of tax collection, the government perhaps faces an uphill battle. It is unlikely that any of the diverse groups represented in the national unity cabinet would like to be seen supporting cuts in state spending while stepping up measures to increase the tax burden on businesses and families, according to local media.

Despite the ongoing debate over the government's policy agenda, the formation of the new cabinet has found favor with at least one international credit agency. On August 6, the day after the cabinet approved its policy platform, Standard & Poor's ratings services upgraded its long-term sovereign credit ratings for Lebanon to 'B-' from 'CCC+'. The improved assessment reflected the easing of tensions in Lebanon and the rapprochement between March 14 and opposition groups, according to Ben Faulks, a credit analyst with S&P. "This reduces the risk that depositors will withdraw funds from the Lebanese banking sector, which in turn lessens the government's near-term financing risks as banks are by far the government's largest creditors," a statement read.

It could be argued that the reduction in political tension cited by S&P has not diminished. While parliament has convened, it has yet to ratify the cabinet policy document, with the ballot effectively a vote of confidence in the new government. If that support is not forthcoming, agencies such as S&P may revise their estimates. (OBG13.08)

Back to Table of Contents

11.4 KUWAIT: Tensions Escalate in Hormuz

Escalating tensions between the US and Iran are leading Kuwait to prepare for the worst, according to local media reports cited by the Oxford Business Group. The ongoing crisis over Iran's nuclear program, coupled with hostile comments lately from Iran's deputy foreign minister Manouchehr Mohammadi, have reportedly prompted Kuwait's acting Prime Minister Sheikh Jaber Al Mubarak Al Sabah to request various ministries to draw up emergency contingency plans in case of war in the region. The news also follows unconfirmed reports of a planned build-up of US naval forces in the Gulf.

According to the local press, Sheikh Jaber has asked several ministries, including the Interior Ministry, the Health Ministry and the Ministry for Electricity and Water (MEW), as well as the Kuwaiti Civil Defense, to prepare contingency plans divided into three sections: security, humanitarian and vital services. In related news, the government has also begun drawing up a new military conscription law which, though reducing the period of service and increasing exemptions for certain professions, can nonetheless be interpreted as a sign of growing preparedness for a deterioration in the regional situation. One government official commented the new law was necessary to ensure that mobilization plans were ready "in case of any emergency in the country".

The latest developments in Kuwait follow a speech last week by Mohammadi, who was quoted as saying that the next crisis in the Middle East "will centre on the legitimacy of the dirty traditional regimes, and would include most of the Persian Gulf States." In response, Gulf Cooperation Council secretary Abdul Rahman Al Attiya called Mohammadi's comments "hostile and grave", and demanded further clarification.

Mohammadi's comments may be interpreted as little more than saber-rattling. Kuwait, however, is acutely conscious that it lies geographically on the front line of any future escalation between the US, its allies and Iran - a conflict that will likely be played out in the Straits of Hormuz. A multi-nation naval exercise, Operation Brimstone, took place in the Atlantic earlier this month involving predominately US, UK and French forces. Among exercises conducted was the flying of joint sorties from the US carrier Harry S Truman, involving the launch and recovery of French Rafales fighter jets simultaneously with US fighters. According to reports, exercises were conducted to simulate a potential blockade of the Straits of Hormuz. The two US carriers involved are scheduled to join the US Fifth Fleet in the Gulf this autumn.

Although clearly intended to send Iran a signal that the US/EU remains serious in its attempts to force a climb down from Tehran, one direct effect of the maneuvers is to place Kuwait and fellow Gulf nations on a state of high alert.

In a sign that the Kuwaiti government expects tensions to remain high in the Straits for years to come, oil industry sources and diplomats revealed earlier this month that plans were currently under consideration to develop oil storage facilities abroad. Currently, all of Kuwait's crude exports - totaling some 1.7m barrels a day - as well as an estimated 700,000 barrels a day of refined liquids, are exported through the Straits. A blockade against Iran is therefore likely to result in the oil facilities of the West's Gulf allies being targeted by Iranian naval installations, which currently line the northern banks of the Gulf. As such, Kuwait is reportedly planning to develop strategic storage capacity at locations such as China and Vietnam, where it is building new refineries. Kuwait already signed a joint storage deal in 2005 for 2m barrels of crude with South Korea; however, the lead time for new storage capacity is likely to be several years, meaning that in the short-term, Kuwait remains vulnerable to any blockade.

For this reason, and given the recent trauma caused by the oil price hike at a record $147 a barrel, a blockade of Hormuz remains unlikely in the current climate. The wild card however will be Israel, which has already made clear it will not tolerate a nuclear Iran. In this scenario, the presence of US naval forces in the Gulf will be as much to reassure Kuwait and the GCC, as to threaten Iran. (OBG15.08)

Back to Table of Contents

11.5 BAHRAIN: Women at Work

While the decision taken by the Bahraini government at the end of May to name a woman as its next ambassador to the US made headlines, efforts by both the state and the private sector to increase the participation of the kingdom's women in the wider economy have received less attention. The fact that the new ambassador, Houda Nonoo, was also Jewish, partly explains the extent of the coverage overseas, whereas at home, she has long been a member of the appointed Shura Council, the upper chamber of the Bahraini parliament.

Government officials denied the appointment was a public relations maneuver, arguing instead that it reflected the state's commitment to end discrimination against women in the political arena. These statements are lent extra credence as Nunu is the third female ambassador to be appointed by Bahrain - the others being posted to France and China.

However, although rarely hitting the headlines, there have been concrete efforts in the past few years to raise the profile of women in the workforce. According to Bahrain's Supreme Council for Women (SCW), female Bahrainis account for 82% of the country's pool of unemployed workers, a figure the state would understandably like to see reduced.

On August 6, a project was launched to encourage women to set up small businesses in the transport sector. Bahraini women between the ages of 23 to 40, with high school level education or higher, and who have had a driving license for a minimum of five years, will be trained in driving mini-buses and on how to set up their own company. At the end of the training period, the state will provide them with vehicles worth $22,000 each, refundable through monthly installments spaced over 10 years. In the longer term, the project is expected to develop women's economic abilities and encourage them to establish small companies, the SWC statement said.

Women are also playing an increasing role in Bahrain's finance services industry, which accounts for more than 25% of Gross Domestic Product (GDP). Figures released by the Central Bank of Bahrain (CBB) on June 1 showed that Bahraini women accounted for 37.2% of the 8248 nationals employed by the financial sector, and one-quarter of its total workforce of 11,960 as of the end of 2007. Significantly, the CBB report showed a 22.8% increase in the number of women employed in the finance sector in the 12 months ending December 31, 2007 - a solid improvement on the 20% increase in 2006.

R Lakshmanan, the chief executive officer of Sakana Holistic Housing Solutions, an Islamic mortgage provider where women make up 46% of the workforce, said Bahraini women were "extremely well qualified to take up professional positions within the financial services sector".

Another potential avenue opening up for Bahraini women is the Bahrain-Qatar causeway. Currently, the only road link to Bahrain is the King Fahad Causeway, connecting the kingdom to Saudi Arabia, where women are not allowed to drive, a restriction shared by neither Bahrain nor Qatar. Construction on the new road link is due to start in 2009, and when completed in 2013, could open up employment opportunities in Qatar for Bahraini women. Last year, the Bahrain Ministry of Labor set up an employment office in Qatar to help Bahraini nationals find jobs in the neighboring economy. The new causeway would allow women to commute to work in Qatar.

However, the role of the government in promoting the participation of women in Bahrain's economy has drawn some criticism. Some conservative circles fear it could weaken the family structure. On the other hand, groups such as the Bahrain Centre for Human Rights claim not enough is being done to redress what it describes as a male dominated workplace. Despite criticism, the number of women in the Bahraini workforce is on the rise, as are the opportunities on offer. (OBG15.08)

Back to Table of Contents

11.6 BAHRAIN: Best Yet To Come

Two years down the track, Bahrain's free trade agreement (FTA) with the US has garnered mixed reviews, with some hailing it as an overwhelming success while others say it has yet to reach its full potential. The FTA came into force on August 1, 2006, and was the first such agreement between a member state of the Gulf Co-operation Council (GCC) and the US. Under the agreement, all bilateral trade in consumer and industrial products became duty-free, with Bahrain lifting 98% of all tariff barriers on US agricultural exports as soon as the FTA was implemented, with the remainder to be phased out within 10 years.

The agreement required the US to provide immediate duty-free access for all of Bahrain's current exports of consumer, industrial and agricultural products, along with a series of other measures. These included opening up its service, telecommunications and finance sectors to US investors and strengthening copyright, patent and anti-piracy regulations.

On the agreement's second anniversary, Hassan Fakhro, Bahrain's industry and commerce minister, hailed the FTA as a landmark for his country but said it was too early to be talking about results. "The early signs are very encouraging, but I would expect a lot more two-way trade and investment over the coming years as the private sector impetus grows on the back of increased understanding of the opportunities on offer," he told local media on August 1.

While the FTA offered great opportunities, Fakhro said, businesses and investors have to be proactive and take advantage of its potential, though he acknowledged that larger scale enterprises with greater resources were better positioned to reap benefits from the deal. "Small companies are at a disadvantage as they tend not to have the depth of knowledge, access to advice and expertise to understand what opportunities are on offer," he said.

According to the minister, the two greatest advantages stemming from the FTA to date have been the elevation of Bahrain's profile in the US business community and the affect the agreement has had in terms of prompting the government to accelerate economic reform. "In particular, we made enormous progress on the development of our intellectual property laws, which are a major source of interest for foreign investors and one of the principle foreign direct investment determinants," Fakhro added.

The US is also pleased with the progress made in the past two years, with Christopher Henzel, Washington's deputy chief of mission in Manama, saying there was no limit to the positive effects that the FTA could have on the US trade relationship with Bahrain. "The continuing rise in trade volumes is the early fruits of the agreement," Henzel said in a statement issued on July 30. "We are just starting to see long-term potential."

There is no question that benefits have accrued to Bahrain since the deal was struck, with bilateral trade with the US rising from $782.4m in 2005 to $1.1bn last year. This figure is set to climb even further this year, with trade between the two countries for the first five months of 2008 totaling $540m, according to data issued on July 30 by the US embassy.

Despite the increase in trade volume, there have been critics of the FTA. They point out that the balance is tipping in favor of the US. Last year, Bahrain recorded a surplus in its bilateral trade with the US of $91m, down from the $158m of 2006. In the first 12 months of the FTA, US exports to Bahrain increased by 28%, valued at $529m. The kingdom's exports to the US fell to $638m, a drop of 10%. This is according to Jasim Husain, a member of Bahrain's council of representatives' finance and economic committee. He believes the first year results support the argument that developed countries have most to gain from such agreements.

At the time, the signing of the FTA was not received too warmly by some of Bahrain's neighbors, who argued the deal undercut the GCC's standing as a trade and political bloc. Saudi Arabia was particularly vocal in its opposition, with officials saying the deal threatened the future of GCC economic integration. Two years on, these objections have faded away. Oman signed a similar agreement with the US, and the United Arab Emirates is in the process of negotiating its own FTA with Washington. The GCC is also involved in drawn-out talks with the EU on implementing a FTA between the two regional groupings.

Apart from directly improving trade ties with the US through the FTA, Bahrain has sought to use its agreement with Washington to promote itself as a gateway for regional investors eager to enter the US market. On August 3, ahead of a visit to Turkey, Bahrain's King Hamad bin Isa Al Khalifa, said Turkish investors, and those from other Gulf countries could benefit from the FTA by setting up operations in Bahrain and directing their exports to the US. While Bahrain has yet to make the most of its FTA with Washington, Fakhro said it was now up to the private sector to grasp the opportunities it presented. "The FTA is an agreement between governments, but it takes the private sector to turn the written agreement into positive trade and investment opportunity," he said. (OBG08.08)

Back to Table of Contents

11.7 UAE: Fitch Affirms Abu Dhabi at 'AA'; Outlook Stable

On 14 August Fitch Ratings affirmed Abu Dhabi's Long-term local and foreign currency Issuer Default Ratings (IDR) at 'AA', with a Stable Outlook. The Short-term foreign currency IDR is affirmed at 'F1+'. A Country Ceiling of 'AA+' is assigned to the UAE, applying to Abu Dhabi and all other emirates within the UAE. "In the context of high oil prices, Abu Dhabi's financial wealth is increasing at a rapid rate as the government uses huge fiscal surpluses to accumulate external assets," said Charles Seville, Associate Director in Fitch's Sovereign team. Per capita income of $71,196 in 2007 is one of the highest among rated sovereigns.

Abu Dhabi government non-reserve assets managed by the Abu Dhabi Investment Authority (ADIA), the principal sovereign wealth fund, were worth at least twice the country's GDP in 2007, according to official guidance. Fitch projects that, despite depressed global stock markets, government non-reserve assets will continue to grow and maintain a similar ratio to GDP through to end-2008.

Abu Dhabi's net public sector external creditor position is estimated to be substantial as a percentage of GDP - one of the strongest among Fitch-rated sovereigns, comparable with Kuwait ('AA-' (AA minus)/Outlook Stable) and Saudi Arabia ('AA-' (AA minus)/Outlook Stable) and stronger than that of Asian net external creditors such as Singapore, Taiwan and China. Its overall net external creditor position is likewise comfortable, and takes no account of private sector external assets, data for which is unavailable.

Gross external debt is increasing, related mostly to the financial system and to majority state-owned enterprises, but remains small in relation to assets. There are no officially available external debt figures. Fitch estimates gross external debt at around USD60bn, or 55% of GDP. Public sector external debt is estimated at 17% of GDP. More transparency on both assets and liabilities would be positive for the ratings.

A strong external balance sheet mitigates Abu Dhabi's main vulnerability, namely the risk of a steep fall in the price of oil. Oil represents over 90% of exports and central government revenues. Nevertheless, the government budgets cautiously and with spending at 2008 levels, the fiscal balance including estimated investment income would stay in surplus at average oil prices as low as $30 per barrel, with no adjustment in outlays. The true breakeven oil price, taking account of the dividend ADIA receives from the state-owned Abu Dhabi National Oil Company (ADNOC) is lower still.

Abu Dhabi is a major oil exporter and has credible investment plans to maintain and increase oil export capacity. Efforts to reform the state, reduce the size of the public administration, and diversify the economy, are positive for the ratings. The government has outlined a development strategy and is encouraging private sector investment to create opportunities for its citizens. For the moment public sector firms continue to play a leading role, and the government could be exposed to contingent liabilities from this source.

The financial sector is well-capitalized and asset quality is good, although strong credit growth and an overheating real estate sector could generate problems and result in liabilities for the sovereign - albeit of a lesser magnitude than the resources available to Abu Dhabi. Abu Dhabi is under no obligation to prevent other emirates from defaulting on their debts, but is likely to provide support selectively, case by case.

Abu Dhabi is politically stable and has been free from terrorism, although the ratings are constrained by geopolitical risk, in common with others in the Gulf. Checks and balances on executive power are lacking relative to 'AA' peers and this is a potential weakness.

Abu Dhabi has a pre-eminent position in the seven-member United Arab Emirates (UAE), producing most of the UAE's oil and gas and accounting for more than half of the federation's economic output. Individual emirates control their natural resources and revenue and retain much policy autonomy. Consequently, although the emirate is a member of the UAE, Fitch treats Abu Dhabi and other emirates as sovereign entities. (Fitch Ratings14.08)

Back to Table of Contents

11.8 UAE: Abu Dhabi Rolls Out the Barrel

The government of Abu Dhabi has confirmed its commitment to a massive capital injection in the nation's oil sector. As cited by the Oxford Business Group, in a report published by the Department of Planning & Economy on 7 August, the government committed to investing $20bn to raise production capacity from the current level of 2.7m barrels a day to 3.5m by 2010.

The report, titled "Abu Dhabi Economic and Social Report 2008", contains the latest figures on the emirate's economy, which remains dominated by the oil and gas sector. Oil, gas and derivatives currently account for 59% of Gross Domestic Product (GDP) - around $38bn. More significantly though, they make up 80% of government revenue and 90% of total exports - suggesting that while the wider economy may be enjoying significant non-oil sector growth, the government remains heavily reliant on hydrocarbons to fund its activities.

Indeed, the non-oil sector experienced a Compound Annual Growth Rate (CAGR) of 13.34% from 2002 to 2007, increasing from $23bn to $43bn. This growth figure is lower than that enjoyed by the wider economy as a whole - up to 22% CAGR, from $40bn in 2002 to $109bn last year. The report predicts nominal GDP growth of 18% for 2008, converting into real GDP growth of 11% (taking into account the current high levels of inflation being experienced throughout the Gulf Cooperation Council).

The economy's high level of dependence on hydrocarbons naturally leaves it greatly exposed to price variations. The 2007 figures relate to a period when Abu Dhabi's various grades of crude averaged just over $60 a barrel (January-June 2007). By contrast, the half-year figures for 2008 have surged 74% to an average of $108. July, the peak of the recent bull market on oil, witnessed average prices of $135.68 for Abu Dhabi crude, $12 below the Brent peak of $147.

Speculator-busting action by Saudi Arabia and the US Federal Reserve is likely to have seen off the threat of $150 - for 2008 at least - yet the result of this summer's market frenzy is nonetheless a windfall for the United Arab Emirates (UAE), and Abu Dhabi in particular. The cash bonanza in fact comes at a useful time for the Abu Dhabi National Oil Company (ADNOC), which has been attempting to expand its natural gas production of late by developing the Shah field.

This onshore field, located approximately 180km southwest of the city, contains enormous reserves of gas and is expected to eventually produce around 1bn cubic feet a day. However, the gas is both sour (it contains high levels of sulphur), and acidic (high levels of carbon dioxide), making it both difficult to extract and refine. ADNOC signed a deal with US firm ConocoPhillips in July to co-develop the field, though it is expected to require major capital investment, which could reach as high as $10bn. If successful, the Shah field may well provide a welcome respite from gas shortages currently affecting some of the more outlying emirates of the UAE.

Abu Dhabi holds the lion's share of natural resources in the UAE - some 94% of the UAE's total crude output comes from Abu Dhabi fields. Its stated reserves of 97.9bn barrels account for almost 8% of the world total - a tally which places it fifth in global standings. As such, its current output is relatively modest in comparison with, for example, Russia, which produces over 9m barrels a day, despite holding only 6.4% of global reserves. Abu Dhabi's low production means its reserves to production ratio - 91.9 years - is currently the highest in the world. It is likely that, given this summer's rapid escalation in the price of crude, the government has decided the time is ripe to invest in increasing output. (OBG12.08)

Back to Table of Contents

11.9 UAE: Northern Emirates - Private Supply

The Oxford Business Group said that uncertainty regarding the security of power supply is prompting real estate developers in the UAE's northern emirates to make alternative arrangements. Ajman is one of several northern emirates currently experiencing uncertainty over future power supplies. The Federal Electricity and Water Authority (FEWA), which is officially charged with securing provision for most of the northern emirates (Sharjah is the exception - its power is provided by the devolved Sharjah Electricity and Water Authority), has been stretched to capacity keeping pace with galloping demand from new construction projects. It has accused local government of failing to adequately plan for the strain these developments and mega-projects are placing on infrastructure.

Hassan Abdullah Al Ghasyah, FEWA's executive director of supply, underscored this, saying, "local government authorities have not coordinated on precise water and power requirements with FEWA." He went on to say that it had resulted in shortages and the need for independent generating capacity.

Other emirates are being affected by the lack of power, too. For example, the $8.2bn Al Salam City project, due to be built in Umm Al Qawain (UAQ) by Tameer, was recently indefinitely postponed. Tameer accused the government of failing to provide a clear outline of energy and water provision for the project, prompting a quick response from the UAQ government, which took the unusual step of publishing a private clause from the project contract, showing that liability for power, water and canalization lay with the developer.

The root cause of the power shortage stems from the increasing difficulty in sourcing feedstock for generation. Most of them have either limited or no fossil fuel resources, instead relying on either natural gas sourced from neighboring states such as Qatar, or diesel from Abu Dhabi. Ras Al Khaimah (RAK), for example, produces only 30m cubic feet per day (cu f/d) of gas, and is forced to import 40m cu f/d from Oman via the Dolphin pipe network, and a further 80m cu f/d from UAQ (one of the few northern emirates with the capacity to export fuel).

Soaring prices have led Ajman to look toward coal for its future energy security. Earlier this month, the emirate signed a $2bn deal with Malaysian power company MMC to build the Gulf's first coal plant, which is anticipated to come online in early 2012. The 1 GW plant should provide sufficient capacity both to meet Ajman's current demand and create a cushion for future growth. However, the lignite feedstock will need to be sourced from several thousand miles away - most likely South Africa - an ironic situation given the abundance of natural gas in the region. The emirate's situation is not helped by ambiguity over who is in charge of power provision. FEWA, despite its role as official provider, appears to be devolving responsibility, allowing both private sector developments and individual emirates to seek their own deals.

In the meantime, the supply gap is likely to result in increasing numbers of developers offering their own generation capacity. For instance, Eye of Ajman, a $950m real estate project currently under development by the Bonyan Group, will be supplied with its own generators in a bid to reassure investors. Other projects aiming to carry out their own power generation in Ajman include Sweet Homes Real Estate, involved in several developments throughout the emirate, and High Sky Properties, which is currently developing Triple Towers.

The Federal National Council recently gave approval for private companies to generate power and desalinate water under the supervision of FEWA. This may ease short-term bottlenecks and stop further cancellations of projects. The danger, however, is that small-scale generation will further push up demand for limited feedstock, thus exacerbating the price situation. (OBG08.08)

Back to Table of Contents

11.10 OMAN: Mining the Ceramics Industry

As Oman continues to diversify its economy, industry is increasingly looking to opportunities presented by the country's largely unexploited mineral deposits at a time when global demand for building materials is soaring. As the Oxford Business Group observes, Oman's ceramic tile industry is one sector ideally positioned to benefit from these resources. In conjunction with the directorate general of minerals and private partners, Al Maha Ceramics, the latest player to enter the tile manufacturing sector, launched Mineral Development of Oman (MDO) with the aim of developing investment prospects in industrial-grade mineral mining. The directorate general of minerals is the government body charged with the sustainable development of the country's deposits.

Launched on March 20, the venture has already identified several opportunities and, on June 10, formed its first special-purpose vehicle, Manar Carbonates, which will produce ground calcium carbonates and precipitated carbonates from the country's abundant limestone deposits. Information on the target markets and the amounts to be produced have yet to be released.

According to Suresh Deshmukh, general manager of Al Maha Ceramics, Oman is blessed with high quality industrial minerals in commercial quantities. "There are many opportunities here to develop non-metallic mineral-based industries," he told OBG on August 4. "The ceramics industry is based on industrial minerals, using shale, limestone and silica sand as the main raw materials. As such, we already have an expertise in processing industrial minerals," he added. Although mining of metallic minerals in Oman dates back around 4,000 years, with archaeological evidence indicating that copper was both extracted and smelted in the region in ancient times, the future strength of the industry will be determined by the exploitation of non-metallic minerals since they are more abundant and have wider uses.

According to the directorate general of minerals, the sultanate has deposits that can be used as basic raw materials for a number of industries. In addition to ceramics, these include glass, chemical, fertilizer, agriculture, abrasive, filler, refractory, construction and insulation products. In addition to the ready supply of feed stocks for such industries, there are other factors that are contributing to the prospects for the sector. The managing director of Al Anwar Ceramics, A Shamsuddin, told OBG that in addition to the abundant raw materials the company benefited from the "relatively low energy costs and proximity to booming construction markets."

Elaborating, Shamsuddin went on to say, "We do not foresee a construction slowdown in the Gulf Cooperation Council (GCC) markets because high oil prices are driving government spending in infrastructure projects. Additionally, the young population of the region is in need of homes, not to mention that the emphasis on tourism and freehold properties is further fuelling the sector." According to Shamsuddin, the demand for ceramic tiles in the GCC continues to grow at 15-20% annually, while production capacity has seen a growth of merely 5-8%. To meet part of this increasing demand, Al Anwar recently increased the capacity of its plant in Nizwa by 3.5m sq meters per annum, bringing it to 10m sq meters. Al Maha Ceramics' Sohar Industrial Area plant, which came online at the start of April, has an annual production capacity of 5m sq meters. Plans are already afoot to increase that level.

"Because the region is a net importer of ceramic tiles, this presents a clear opportunity for local manufacturers. The market for ceramic tiles in the GCC is 150m meters square per annum. The GCC can produce only 50% of what is needed and therefore imports the rest," Shamsuddin said. "The Chinese threat of cheap imports is diminishing for a variety of reasons, including higher shipping costs," he added. Ventures like MDO represent collaboration between local industry and government to increase the prospects for mineral based industry within the sultanate. Indeed, the sector looks well positioned for strong growth. (OBG12.08)

Back to Table of Contents

11.11 SAUDI ARABIA: IMF Executive Board Concludes 2008 Article IV Consultation

On July 21, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Saudi Arabia.

Background

Saudi Arabia's macroeconomic performance in 2007 was strong. Real GDP grew by 3.5%, sustained by strong and broad based private non-oil sector growth (6%), especially in construction, retail trade, transportation and communication services. Inflation accelerated during 2007 and reached a historical high of 10.5% year-on-year in April 2008 driven by domestic demand pressures (especially rents) and higher import prices (mostly food). Higher oil prices contributed to a large current account surplus of $96b (25% of GDP) despite a surge in imports. The surplus was used to build up the net foreign assets (NFA) of the central bank $301b (19 months of imports).

The fiscal surplus declined to 12.3% of GDP due to higher-than budgeted spending and to a temporary decline in the proportion of oil receipts transferred from the state oil company (Saudi Aramco) to the budget owing to higher investment spending. Spending was driven mainly by capital expenditures and a higher wage bill.

Monetary policy was accommodative, given the peg to the U.S. dollar, and despite efforts to sterilize the build up in NFA. Broad money grew by 20% in 2007, similar to 2006, but private sector credit growth more than doubled to 21.4%. The central bank sought to contain the expansion in monetary aggregates by raising reserve requirements in late 2007 and early 2008. Speculation for a revaluation of the riyal emerged in 2007 and was reflected in forward premia in offshore futures markets.

The stock market rebounded in 2007 with an increase in the main stock exchange index (TASI) by 44% during 2007, following a major correction in 2006. However the TASI followed global markets downwards in early 2008. Anecdotal evidence suggests that real estate prices increased by double digits in 2007.

Structural reforms contributed to an improvement in investor confidence, record foreign direct investment (FDI) inflows and strong non-oil private sector growth. A major reform and investment program has been launched to address weaknesses in education, health, utilities and the judiciary.

The outlook for 2008 remains favorable. Real GDP growth is projected to reach 5% with a rebound in oil output to 9.2m barrels/day and a further acceleration in non-oil growth. Reflecting higher oil prices, a record current account surplus of $191b (35% of GDP) is projected despite continued strong import growth. The overall fiscal surplus is expected to more than double to 30.4% of GDP and public debt is envisaged to shrink further to 11% of GDP. Inflation is projected to peak around 10.6% in 2008, exacerbated by rising imported commodities and domestic supply constraints, but to ease in subsequent years.

Executive Board Assessment

Executive Directors welcomed the continued strong growth performance and highly positive external financial position, and concurred with the authorities' plans to expand oil production and refining capacity to support global oil market stability. They agreed that Saudi Arabia's medium-term economic prospects appear bright, with continued strong inflows and propitious conditions for the further development of the non-oil sector. At the same time, inflation, fuelled in large part by rising food import prices and infrastructure bottlenecks, has accelerated recently and poses the main challenge for the authorities in the period ahead.

Directors emphasized that the macroeconomic policy mix should aim at sustaining job-creating growth while preserving domestic and external stability, with a critical focus on containing inflation. In view of the limitations imposed on interest rate policy by the currency peg, fiscal restraint will be critical. Directors observed that strengthening prudential measures to contain credit growth will also help to reduce demand pressures.

Directors recommended that public expenditure focus on investments in infrastructure, education and public services, with a view to diversifying the economy, encouraging job creation, and reducing dependence on oil income over the medium term. Introduction of a value-added tax would help diversify fiscal revenues away from oil and gas. While recognizing that many elements of this strategy are already in place, Directors urged the authorities to further tighten current spending, in particular for wages, and to target more narrowly large implicit water and energy subsidies. They also recommended anchoring one-year budgets in a rolling medium-term fiscal framework, and further improving the availability of fiscal data. Directors encouraged the authorities to develop a long-term strategy of accumulating foreign assets beyond stabilization purposes, so that the benefits of the current oil wealth can be shared with future generations.

Directors took note of the staff's finding that the Saudi riyal appears to be undervalued, given sizable terms of trade gains. At the same time, it was noted that the riyal is starting to appreciate in real effective terms due to higher inflation and increased absorption through higher imports will reduce the current account surplus. Further expansion of oil production will help global oil market stability, even if it will boost Saudi Arabia's external surpluses.

Directors observed that the peg of the riyal to the U.S. dollar has provided a credible anchor that has contributed to macroeconomic stability. Most Directors considered the benefits of maintaining the peg to outweigh the cost of higher short-term inflation, provided current inflationary pressures prove temporary. If, however, inflation should persist and the Gulf Cooperation Council monetary union be delayed, they recommended to consider also alternative exchange rate regimes. A number of Directors, however, were of the view that, given the limited role of monetary policy and the riyal's undervaluation, all policy options, including alternative exchange rate regimes, should remain under review. Directors urged the authorities to monitor inflation developments closely.

Directors noted that downside risks to the outlook include a sharp drop in oil prices and fresh external inflationary pressures that would arise from a further depreciation of the U.S. dollar or further increase in global commodity prices. Under such circumstances, Directors saw a greater role for monetary policy in stabilizing inflation.

Directors welcomed efforts to further liberalize the financial sector and strengthen its soundness. They looked forward to the adoption of a new mortgage law that would help clarify the legal framework for housing finance. They encouraged the authorities to continue fostering greater competition in the financial sector and developing the corporate market for Islamic bonds (sukuk). Directors commended the central bank for progress made in implementing Basel II.

Directors welcomed the authorities' recent subscription to the General Data Dissemination Standards. They encouraged the authorities to improve further the timeliness, availability and comprehensiveness of key economic data and to develop an action plan for subscription to the Special Data Dissemination Standards. They welcomed the progress made in compiling Saudi Arabia's International Investment Position data for the public sector.

Directors commended the authorities for the substantial assistance Saudi Arabia has extended to developing countries, and its active support for the Heavily Indebted Poor Countries (HIPC) Initiative. They encouraged the authorities to restructure claims on Iraq in line with recent Paris Club reschedulings. (IMF12.08)

Back to Table of Contents

11.12 EGYPT: Fitch Changes LTFC Outlook to Stable; Affirmed at 'BB+'; Downgrades LTLC to 'BBB-'

On 18 August 2008 Fitch Ratings (http://www.fitchratings.com) revised the Outlook on the Arab Republic of Egypt's Long-term foreign currency Issuer Default rating (IDR) to Stable from Positive, while affirming the rating at 'BB+'. The agency has also downgraded the Long-term local currency IDR to 'BBB-' (BBB minus) from 'BBB'. The Outlook remains Stable. The Short-term foreign currency IDR and Country Ceiling are affirmed at 'B' and 'BB+', respectively.

"This year's surge in global food and fuel prices has increased the challenges facing Egypt's policymakers," says Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. "The power of Egypt's monetary tools to curb inflation is still quite weak, raising the prospect of double-digit inflation continuing well into next year. No reduction in the very high budget deficit is planned this year, with the timing of critical fiscal measures - subsidy reductions and the introduction of VAT - sensitive to their impact on inflation."

The change in the FC rating Outlook to Stable reflects the more challenging policy environment as demonstrated by the slowdown in deficit reduction compared to what Fitch expected a year ago. The general government deficit remained at 7.7% of GDP in FY08 (fiscal year ended June 2008) - amongst the highest of any Fitch-rated sovereign, with other high-deficit countries rated lower. Nevertheless, the authorities did well to contain the narrower 'budget sector' deficit to a less-than-budgeted 6.7% of GDP, including measures to offset the rising cost of energy subsidies, but this was still higher than Fitch had expected. Substantive deficit reduction is now unlikely until FY10. The introduction of VAT, legislation for which is expected to be introduced to the People's Assembly in November, will inevitably raise prices so its timing will be sensitive to inflation dynamics. Despite increased interest rates and stronger sterilization efforts, double-digit inflation is likely to continue well into next year.

The downgrade in the LC rating reflects several factors. Public finances are much weaker than external finances: although gross and net debt ratios continue to fall, at 70% and 56% of GDP, respectively, they are still more than twice the 'BB' and 'BBB' median of under 30%. Egypt's inflation in recent years has also been higher and more volatile than its 'BB' peers, which exacts a higher interest risk premium and can be associated with increased macro-economic instability. While Egypt's ability to fund itself domestically is an important strength, high inflation is a factor in the predominantly short-term nature of that funding: two thirds of marketable debt and the bulk of this year's issuance comprise short-term treasury bills. Finally, with foreigners now holding almost a quarter of treasury bills, the distinction between domestic and external debt is narrowing.

External finances are a key rating strength. Egypt is a solid net external creditor and although the current account is likely to move into deficit in the coming year, it will remain well covered by increasing FDI, which is itself a testament to the credibility of the reform program and the improved business climate. An overall investment rate of approaching 25% of GDP is encouraging as it will help sustain economic growth in the 6% to 7% range, notwithstanding current more difficult global conditions.

The success of Egypt's reform program and the government's commitment to advance it provides crucial support to the ratings. The Stable Outlook on both ratings reflects Fitch's expectation that reform momentum will continue in the medium-term and that as inflation subsides, deficit reduction will resume. Future positive rating action will require appreciable progress towards the FY11 3% 'budget sector' deficit target and reduction in debt ratios closer to peer group medians; a strengthened monetary policy framework and further progress of banking sector reform; and sustained growth in per capita incomes, supported by further improvement in the business climate. A stalling of reforms or an ineffectual policy response to future shocks would prompt negative rating action. (Fitch18.08)

Back to Table of Contents

11.13 MALTA: IMF Executive Board Concludes 2008 Article IV Consultations

On August 6, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Malta.

Background

Malta joined the European Monetary Union (EMU) on January 1, 2008 and has implemented broad liberalizing economic reforms since EU accession in 2004. The economy has experienced a three-year-long expansion with average annual growth of over 3% during 2005-07, driven by productivity gains, foreign direct investment and export diversification into new dynamic sectors. Domestic demand was supported by rising employment and incomes. The external current account deficit fell to 5% of GDP in 2007 due to the revival of tourism, new niche service and pharmaceutical exports, and sustained terms of trade gains. Traditional manufacturing exports, however, continued a prolonged decline in the face of intense competition. Recently, Malta has been adversely affected by the euro appreciation reflecting its predominant export orientation toward non-EMU countries. High dependence on fuel and commodity imports has pushed inflation - subdued until late 2007 - above 4%.

Expenditure-based fiscal consolidation continued in 2007, with the fiscal deficit falling to 1% of GDP in 2007. However, subsidies and state aid, the public wage bill, and entitlement spending are comparatively high, exerting significant pressure on the budget. The authorities have recently adopted several expenditure retrenchment measures, including adjustments in the subsidized retail electricity tariff, aiming to keep the 2008 budget on track and continue progress toward their medium-term objective of structural balance.

Financial soundness indicators held up in 2007 despite unfavorable international developments. The banking sector's liquidity and funding profile are healthy, and banks have remained profitable despite markdowns in security portfolios. Nonperforming loans fell further but are still comparatively high and thinly provisioned. Loan portfolios remain concentrated in the real estate sector, which is cooling down.

Privatization and restructuring of public enterprises in key sectors (harbor services, post, energy) continued during 2007. The authorities are unbundling and opening to private participation the fuel and gas operations of the public energy company, and have announced their intention to privatize the shipyards shortly.

Executive Board Assessment

Executive Directors congratulated the authorities for Malta's successful EMU entry on January 1, 2008. The authorities' strategy of boosting growth and external competitiveness through closer regional and global integration, supported by fiscal adjustment and liberalizing reforms, has catalyzed foreign direct investment, the emergence of dynamic new export sectors, and attendant productivity gains. Malta's three-year-long expansion in employment and activity largely reflects economic opening and public sector rationalization. Directors also noted the recent favorable trends in Malta's price and non-price competitiveness, which have contributed to reducing the current account deficit.

Looking ahead, Directors stressed that the economy will face some challenges from a weakening global economy, higher food and fuel prices, and possible risks in the financial sector. Also, the decline in traditional sectors could accelerate and outpace the emergence of new export activities. In the absence of independent monetary and exchange rate policies, Directors underlined the importance of continuing to pursue sound fiscal policies, increasing the flexibility of the economy, bolstering productivity growth and monitoring developments in the financial sector closely.

Directors praised the authorities' fiscal performance, and welcomed measures to contain public spending in 2008 as necessary for continued progress in reducing the budget deficit. In particular, Directors viewed the increase in retail electricity tariffs as instrumental in limiting expenditure overruns and encouraged the authorities to follow through with further steps toward full cost recovery while supporting efforts to protect low-income households. The announced elimination of certain subsidies, notably those to public shipyards, in 2009 are also important steps in putting the public finances on a sound footing.

Directors stressed that reinforcing the budget framework with a medium-term orientation would help preserve the benefits of consolidation while better prioritizing spending. They supported the authorities' objective of structural balance by 2010, and reiterated the desirability of targeting a surplus thereafter, given the vulnerabilities inherent in the economy's small size and prospective demographic pressures on spending.

Directors observed that Malta's banking system appears well-positioned to weather the global financial turmoil, as banks have healthy liquidity and a good funding profile. At the same time, Directors noted that the banks' still-high level of nonperforming loans, relatively thin provisioning, and concentrated exposures in the cooling housing sector called for increased supervisory vigilance aimed inter alia at augmenting provisioning buffers. Directors welcomed the upgrading of the supervisory and crisis management frameworks, and recommended more frequent public reporting by the main banks. It would also be useful to review the existing legal authority and institutional mechanisms to act expeditiously in a crisis situation in light of recent international experiences.

Directors stressed the importance of strengthening labor and product market flexibility, and further streamlining the public sector, to realize Malta's growth potential and maintain competitiveness within the EMU. They suggested introducing stable rules-based mechanisms for setting administered prices, aiming at cost recovery over the medium term. Directors recommended implementation of the EU Services Directive to foster competition in sheltered markets, and reinforcing the competition and statistics authorities. They encouraged the authorities to consider means to relax the price indexation of wages, which could entrench inflationary dynamics and hinder alignment between wage and productivity increases. Directors pointed out that that further privatization in the banking sector would help to strengthen economic resiliency and seize new growth opportunities. (IMF11.08)

Back to Table of Contents

11.14 TURKEY: Politics - the Great Escape or A Stay Of Execution?

The AKP, Turkey's ruling party, has narrowly avoided being closed by the courts for anti-secular activity. However it might be that a major institutional crisis has been delayed rather than averted. The AKP is minded to revise the constitution, but this could set it on a collision course with the court, where a majority feel the AKP threatens secular state principles. Whether this happens will depend on whether the AKP can build a broad coalition in favor of change, and at the same time embrace the broader pro-EU reform agenda on which it was elected.

Narrow Escape

Turkey's constitutional court on July 30th found the governing Justice and Development Party(AKP) party guilty of having become a focus of anti-secularist activity, but stopped short of banning the AKP of expelling 71 of its leading members. The case had threatened a major institutional crisis in Turkey. The AKP, which won the July 2007 parliamentary election with 47% of the vote, was accused of undermining the secular nature of the state. Seventy-one of its members - 39 of them MPs, including Prime Minister Recep Tayyip Erdogan and five other ministers - faced being banned from membership of a political party and stripped of their parliamentary seats. Although all 39 could have been re-elected as independents in by-elections and the AKP reformed under a new umbrella, with Mr Erdogan returning as premier, the loss of parliamentary immunity would have laid them all open to criminal charges. If convicted, they would have been barred from running for parliament.

In the event, only six judges were in favor of closing the AKP and banning the 71 members, one short of the required number. Instead, the court imposed a lesser punishment of halving the party's funding from the Treasury. The AKP is unlikely to be troubled by the financial penalty. It has ample funds, it can always rely on donations and contributions from individual members and it controls the public purse strings.

Moreover, the verdict was taken by many investors as marking an end to the uncertainty that has clouded Turkey's political outlook since the lawsuit was launched in mid-March. It also averts the risk of a major institutional crisis that might have followed the closure of the ruling AKP or expulsion of 39 of its MPs.

Veiled Threat

Nevertheless, the verdict is a strong warning. Six of the 11 judges voted to close the AKP and four more voted for the imposition of financial sanctions. Only one, chief justice of the constitutional court Hasim Kilic, voted neither to close the party nor to impose a financial penalty. The main risk to stability now is that Mr. Erdogan and his party may fail to interpret the court's message properly and tailor their policies accordingly.

Given the suspicion with which the secularist elite views the AKP, tensions are likely to continue between the government and its rivals, including the staunchly secularist Republican People's Party - CHP (which is the main opposition force), plus the military and the judiciary. Possible government policy initiatives that would be likely to provoke a reaction from the secularists are the AKP's plan to overhaul the military-inspired 1986 constitution and replace it with a "civilian" constitution.

Constitutional Flashpoint

The AKP embarked on this process immediately after the July 2007 election, but abandoned it to focus on the narrower issue of easing restrictions on women wearing Islamic style headscarves at university (the constitutional court annulled the government's amendments in June). A new constitution would probably go a long way towards satisfying the EU's demands for greater freedom of expression and the protection of human rights. But if the AKP revives the plan it will have to tread carefully, making sure to not challenge secularist principles and to build as broad a consensus as possible.

There is nothing to stop the chief state prosecutor from filing another closure case if the AKP does not. Ten of the 11 constitutional court judges hold the view that the ruling party was undermining the secularist principles of the state. Constitutional changes to make it more difficult to close political parties may also be put forward. The AKP does not have a sufficient majority to pass the constitutional reforms required in this area without the support of a section of the opposition, but the court's chief justice, Mr. Kilic, called for such changes when he announced the verdict in the case against the AKP. Recent revelations of an alleged ultra-nationalist plot to overthrow the AKP government in 2004 and frequent terrorist attacks will also continue to create tension.

Refocus on Reform?

The main question following the verdict is how the Mr. Erdogan and the AKP will react to it. Besides relief and public statements describing the verdict as a victory for democracy, some party representatives acknowledged that there were lessons to be learnt from the lawsuit. Following its overwhelming victory in the July 2007 general election and the election by parliament of the party's then deputy leader, Abdullah Gul, to the presidency in August of last year, the AKP government appeared to lack a clear reform strategy and even at times sought to use its wider support base to satisfy the demands of its more conservative followers. Thus, rather than propose a wide-ranging reform program aimed at meeting the membership requirements of the EU, as it said it would, the AKP focused on the headscarf issue.

The AKP's reaction will become clearer after parliament returns from its summer recess at the end of August. It was re-elected last year mainly because it was perceived to have managed the economy well and done more than any previous government to advance Turkey's EU membership bid. If Mr Erdogan and his government refocus their efforts on tackling the imbalances and inefficiencies in the Turkish economy and meeting the EU's requirements for membership, it will reduce the risk of political instability and strengthen the AKP's electoral support ahead of the 2009 local elections. If it does not, it will leave itself open to challenges from the secularist elite who are seeking to maintain their control over the state. (ViewsWire01.08)

Back to Table of Contents

11.15 TURKEY: Hopes for Calmer Political Sea

The Constitutional Court's decision not to close Turkey's ruling Justice and Development Party (AKP) has drawn the country back from the brink of a crisis that could have called into question the country's democratic credentials and almost certainly have resulted in fresh elections. The decision puts an end to the political uncertainties that have deterred investors and stunted economic growth in recent months.

On July 30, six of the 11 members of the constitutional court voted to shut down the AKP on grounds of unconstitutional and anti-secular activities, one short of the seven votes needed to enact the closure. Had the case been successful, 70 members of the party, including Prime Minister Recip Tayyip Erdogan and President Abdullah Gul, could have been banned from politics for five years. Instead the court opted to cut the AKP's $40m state funding by half, a firm slap on the wrists and a clear warning that further incursions into sensitive areas of secular politics will not be tolerated by the court. In February, the AKP forced a law through parliament loosening restrictions on the wearing of headscarves in universities. The law was later overturned by the constitutional court but its original enactment was a key element in the prosecutions case.

Investors are optimistic in the wake of the decision. "This was a market-friendly decision," Veyis Fertekligil, chief economist of Turkland Bank, told OBG, "If the ruling party had been closed, there would have been a strong knock-on effect for the stock market, government bonds and the exchange rate."

Instead, the Istanbul Stock Exchange (ISE), which had slumped after the announcement of the closure case in March, rebounded strongly. On the day of the decision, the ISE-100 index rose 5.6%, its biggest leap in six months, capping off a 27% rise since the index hit a two-year nadir on July 1. The Lira also made strong gains, rising to 1.162 against the dollar.

Gökçe Kabatepe, managing director of Raymond James Securities Turkey, told OBG that political uncertainty was the main reason for the ISE's recent underperformance against other emerging markets. "In the days following the announcement of the court's decision, the ISE has already made up most of the ground it had lost compared to other bourses at the beginning of the year," he said. Kabatepe explained that the decision not to close the party would boost investor confidence and open the door for a new surge in Foreign Direct Investment (FDI). "There has been a slowdown in FDI in recent months. The government has been cautious about potentially low valuations of privatization tenders, and foreign investors have delayed their entrance in the private sector to see how the political situation plays out. We expect to see greater merger and acquisition activity before the end of the year, and 2009 could be an excellent year for IPOs."

International ratings agency Standard & Poor's also revised their investment outlook for Turkey from negative to stable, reasoning that "diminished near-term political uncertainties" would act to "bolster investor confidence, widening the sources for the financing of Turkey's current account deficit." Addressing this deficit will be a key challenge for the government in the near future according to Fertekligil, "This year we expect the deficit to exceed $50bn. In recent years, with FDI exceeding $20bn, this was not a major issue. With the recent slowdown in foreign investment however, corporate borrowing from abroad is increasing, exposing the economy to greater risk."

Despite the positive outlook, S&P's credit rating remains at BB-. Brazil, on the other hand, whose Bovespa bourse has often been described by analysts as the ISE's "twin" due to the similarity of its behavior, achieved the coveted BBB investment grade in April. To some in the Turkish financial sector, this disparity seems unwarranted. Tolga Egemen, executive vice president of Garanti bank, told OBG, "Turkey is one of very few emerging markets from Brazil to South Korea which has never defaulted on debt, but its good track record is neglected in evaluations." The ratings agencies, however, point to a different record: that of political uncertainty.

The close call of the decision demonstrated deep divisions between the AKP and the secular elements of the judiciary and military. Last year, the constitution was changed to ensure that seven votes rather than six were required to pass a law in the constitutional court. In the final AKP ruling, 10 of the 11 judges agreed that the party had become a "focal point for anti-secular activities," but the case was not serious enough to warrant closure. On August 4, Turkey's Supreme Military Council replaced General Yasar Buyukanit with General Ilker Basbug to the position of general chief of staff. While less confrontational than his predecessor, Basbug is a strong supporter of Turkey's secular system and his appointment indicates that the country's military will continue to take a tough stance towards any activities they deem a threat to the system.

Nevertheless, there is reason to suspect that the resolution of the closure case may be the high tide mark of recent political tensions. By stepping back from the "nuclear option" of banning the party and its members, the constitutional court has opened the way for compromise. Many AKP members, reportedly convinced the party would not survive the ruling, may begin to take heed of criticisms that they could do more to assuage the fears of the country's secular population.

If an effective compromise can be reached, the social and economic reform process - which was initiated during the AKP's first term but has stalled in recent years as a succession of political confrontations between the AKP, the secular opposition and the apparent French opposition to Turkish membership have distracted government attention and coincided with a drop in public enthusiasm for accession - could be revived. The Turkish government and EU representatives were keen to emphasize that with the significant hurdle of the court case overcome, political attention could once again be focused on accession. On the evening following the verdict, Prime Minister Erdogan restated his commitment to pushing towards EU membership while the EU Commissioner for Enlargement, Olli Rehn, told the international press it was time for Turkey to "resume its reforms to modernize the country with full energy." (OBG08.08)

Back to Table of Contents

11.16 BULGARIA: Fitch Affirms Bulgaria at 'BBB'; Outlook Negative

On 15 August, Fitch Ratings (http://www.fitchratings.com) affirmed the Republic of Bulgaria's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BBB' and 'BBB+', respectively, both with Negative Outlooks. The agency has also affirmed the Short-term foreign currency IDR at 'F3' and the Country Ceiling at 'A-' (A minus).

"The Negative Outlooks signal Fitch's concern that Bulgaria's booming economy, now running a current account deficit of around 22% of GDP, is on an unsustainable path and risks a hard landing, despite rigorously disciplined macroeconomic policies," said Andrew Colquhoun, Director in Fitch's Sovereigns Group. "Even if Bulgaria achieves a smoother adjustment, its gross and net external debt levels are starting to look stretched relative to its rating peers, and further deterioration could trigger a downgrade."

A sharp slowdown in the economy would be negative for the ratings. Booming domestic demand is contributing to a rise in imports, taking the current account deficit (CAD) to 21.7% of GDP in 2007. Soaring bank credit, growing 63% in 2007, is fuelling the boom; a sharp correction in credit growth could trigger a wider slowdown. The stock of bank credit is already relatively high among peers at 71% of GDP. Inflation averaged 14% over the first seven months of 2008, adding to concerns. The composition of Bulgaria's growth looks increasingly frothy, with construction, real estate and financial services contributing 3.4pp of the 6.3% growth in the economy's gross value-added in 2007. The authorities' options for dealing with these pressures are limited. Fitch believes the budget surplus of 3.5% of GDP in 2007 is near the limits of political sustainability. Monetary policy is constrained by a currency board arrangement (CBA), pegging the currency to the euro.

Bulgaria's external finances are already a rating weakness and further deterioration would add to negative pressure on the ratings. Gross external debt climbed to 105% of GDP in 2007, more than double the 'BBB' median of 45%. However the CBA remains well-supported, with reserves growth of 38% in the year to June 2008. Bulgaria continues to attract high non-debt FDI inflows, totaling $5.2bn in 2007, worth some 13% of GDP, although worsening prospects for the euro-area economy may dent FDI. The liquidity ratio, at a projected 124% for 2008, is below the 'BBB' median of 152%. In mitigation, Fitch notes that the external funding of the Bulgarian banking system, with external debt worth 21% of GDP at end-2007, is likely to have come mostly from banks' foreign parents and so should be relatively stable.

Bulgaria's ratings are supported by exceptionally strong public finances. Fitch expects Bulgaria will become a net general government creditor to the tune of 2% of GDP by end-2008 as fiscal surpluses bolster the fiscal reserve account. The authorities prepaid a further €300m in World Bank debt in March 2008. EU membership supports Bulgaria's fundamental political stability and its long-term economic prospects. The EU's suspension of some unspent pre-accession funding in July 2008 poses no immediate fiscal risk for Bulgaria, although it highlights weaknesses in public institutions and a serious corruption problem. Wholesale withdrawal by the EU of €11bn of structural and cohesion funding over 2008-2011 could damage Bulgaria's long-term prospects, but Fitch does not consider this to be likely. (Fitch15.08)

Back to Table of Contents

- Israeli Shekel conversions done at a rate of NIS 3.50 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.10 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.50
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.66 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 60 = $1.00

This fortnightly newsletter is a free service of Atid, EDI. We are a team of economic and trade development consultants, headquartered in Jerusalem, with satellite operations in Istanbul and Amman. EDI works with an international clientele interested in identifying and researching business opportunities in the region. We also serve as the regional representative offices for a number of U.S. states and bilateral Chambers of Commerce. EDI's other services include development of feasibility studies and tailored research reports, as well as identification of potential joint ventures for commercial clients. For more information on how we may better assist you, please visit our Web site at: http://www.atid-edi.com.