TOP STORIES

• Israel Reclassified As Developed Market by MSCI
• Qatar Exchange Launches in Strategic Partnership With NYSE Euronext
• Israel Weathering Economic Storm Due to High-Tech & High Exports
• Jordan's GDP Grows by 3.2% in First Quarter
• European Central Bank Against Speedy Euro Adoption For Bulgaria
• Israeli Drug Exports Up 23% Despite Global Financial Woes

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 European Commission & Israel Sign Financing Accord For Twinning Projects
1.2 Shas Suggests Alternative to VAT on Fruits & Vegetables

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Reclassified As Developed Market by MSCI
2.2 Merrill Lynch Believes Israel Will See $3 Billion inflow from MSCI Upgrade
2.3 Tefron in Discussions to Establish a Joint Venture in Egypt
2.4 Actimize, a NICE Company, Acquires Syfact
2.5 Zion Oil & Gas Awarded 165,000 Acre Petroleum Exploration Permit Onshore Israel
2.6 Nexperience Changes Company Name to Perfecto Mobile
2.7 BioSante Pharmaceuticals Announces Elestrin NDA Submission in Israel

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Qatar Exchange Launches in Strategic Partnership With NYSE Euronext
3.2 Pratt & Whitney Wins $233 Million Order for V2500 Engines from Qatar Airways
3.3 Numerix Opens Middle East and Africa Office in Dubai
3.4 Wendy's/Arby's Group Signs Major Development Agreement for MENA
3.5 Saudi Ministry Migrates to High-Performance Network From Juniper Networks
3.6 Turkish Ministry of Health Purchases Two CyberKnife Systems

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel Publishes $400 Million LNG Terminal Tender
4.2 Israel Weathering Economic Storm Due to High-Tech & High Exports
4.3 Israel Railways Says Fast TA-Jerusalem Link Will Be Economic Catalyst

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 World Banks Says Arab Middle East Economic Growth Will Slow To 1.6% In 2009
5.2 Jordan's GDP Grows by 3.2% in First Quarter
5.3 US Grants Jordan $1.3 Million
5.4 Iraq & IMF Near Deal On $5.5 Billion Standby Loan
5.5 Kirkuk Oil Production Rises
5.6 Abu Dhabi is UAE's Rising Retail Star
5.7 Dubai Contributes More Than 30% of the UAE Economy
5.8 Dubai Airports Sets $17.2 Billion for Expansion
5.9 Third of Dubai's Homes May Be Empty By End of Next Year
5.10 Sheikh Mohammed Creates 'Brand Dubai' Office
5.11 Oman's Medical Device Market Expected to Grow at a Healthy 5% per Year
5.12 Saudi Annual Inflation Rises for First Time in 2009
5.13 Saudi Arabia Leads World With Most New Store Openings For Top International Retailers
5.14 PepsiCo to Move Gulf Production to Saudi Arabia
5.15 Egyptian Inflation Continues Decline to Reach 10.2% in May
5.16 Mobile Phone & Internet Users Up In Egypt

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey & IMF Hold ‘Very Useful' Talks
6.2 Turkey Receives $800 Million World Bank Loan for Electricity Development
6.3 Turkish Tax on New Vehicles Raised To 27%
6.4 Cyprus' Economy Better Than Its European Peers
6.5 Cyprus Tourism to Reach Record Low This Summer
6.6 Greek Measures To Battle The Deficit
6.7 Greek Jobless Numbers Hit Three-Year High
6.8 Bulgarian Economy Shrinks by 5%
6.9 Bulgarian Inflation Slows in May To 3.9%
6.10 European Central Bank Against Speedy Euro Adoption For Bulgaria

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Malta Dedicates First Embassy In Israel

*REGIONAL:

7.2 Saudi Population Tops 25 Million
7.3 Greece To Apply Smoking Ban From 1 July

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Neurim Reports Long Term Efficacy and Safety for Circadin for Insomnia in Elderly Patients
8.2 Yissum & Aurum Ventures MKI Develop Liver-Bypassing Oral Drug Delivery Nanotechnology
8.3 Obecure's Histalean Mitigates Weight Gain Associated With Olanzapine
8.4 Pluristem Receives European Approval for Placental-Derived Stem Cell Clinical Trial
8.5 Israeli Drug Exports Up 23% Despite Global Financial Woes

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Fujitsu Adopts Waves MaxxAudio Sound Enhancements
9.2 dbMotion & CAP STS Team to Realize Vision of Advanced Interoperability
9.3 Leading Japanese Logistic Company Implements ImageID's Visidot For Pallet Traceability
9.4 Samsung & RADVISION Revolutionary Desktop Video Conferencing Solution
9.5 Polish Mobile Network Operator Advertising Campaigns Powered by Mobixell's Ad-It Mobile Solution
9.6 Elbit Systems' JV with Rockwell Collins' to Supply Helmet Mounted Displays Valued at $54.1 Million
9.7 VocalTec Announces Innovative Large-Scale Class-5 Solution for Mobile Networks
9.8 Ethos Networks' Carrier Ethernet Transport Solution Takes Part in OIF Interoperability Demonstration
9.9 Deutsche Bank Selects OpTier's CoreFirst for Business Transaction Management
9.10 SDS Completes 2-Year R&D for Cogito4M Military Grade Rapid Interrogation Technology

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's CPI Rises 0.4%
10.2 Israel's Balance Of Payments Surplus Triples
10.3 Israel's Exports of Chemicals Fall
10.4 Tourist Statistics Encouraging, Tourism Ministry Says

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11: In Depth

11.1 ISRAEL: Jerusalem Sees Significant Growth in its Life Science Sector
11.2 LEBANON: Parliamentary Elections
11.3 QATAR: Building on the Rise
11.4 ABU DHABI: Positive Energy

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 European Commission & Israel Sign Financing Accord For Twinning Projects

On 22 June, reported the Jerusalem Post, the European Commission and Israel signed a financing agreement for the development of two twinning projects in the areas of equal employment opportunities and veterinary services aimed at fostering economic integration. Foreign Ministry Director-General Gal and European Commission Ambassador to Israel Cibrian-Uzal signed the agreement for implementation of the Annual Action Program for Israel, which is part of the European Neighborhood Policy of the European Union. The program, which was established last year, is for seven years and has a €2 million annual budget. Last week the EU said any upgrade of its relations with Israel would depend on shared values, common interests and objectives. European experts will be working in Israel to assist in establishing an Equal Employment Opportunity Commission within the Industry, Trade & Labor Ministry. Last year, two twinning projects were established: to help the Transportation Ministry provide quality public transport in urban areas; and to establish the Israel Law, Information and Technology Authority. (JP23.06)

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1.2 Shas Suggests Alternative to VAT on Fruits & Vegetables

Shas remains opposed to the Ministry of Finance's plan to impose VAT on fruit and vegetables. Deputy Prime Minister and Minister of Interior Yishai has formulated an alternative proposal which includes cuts totaling NIS 1.8 billion, the sum that VAT on fruit and vegetables would raise. He will shortly present his plan to Ministry of Finance officials. One of Yishai's suggestions is freezing salaries in the public sector for three years for those with salaries more than three times the minimum wage. This would save NIS 100 million. Some members of Shas want these salaries to be frozen by law. Shas proposals will include another six or seven clauses all designed to harm the stronger sectors of society rather than the disadvantaged. The Ministry of Finance is expected to resist Shas' proposals. (Globes 23.06)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israel Reclassified As Developed Market by MSCI

MSCI has reclassified Israel as a "developed market", from its current emerging market status, effective as of May, 2010. Israel will be included in the MSCI World Index and the MSCI EAFE (Europe, Australasia and Far East) Index, some of the most widely-tracked global equity benchmark indices. MSCI listed only one issue of concern, the relatively short settlement cycle for equities on the Tel Aviv Stock Exchange (TASE), but decided it should not prevent the reclassification of the Israeli market to Developed Markets status, although they would like to see a change in that matter. Only securities of companies domiciled in Israel that have a listing on the Tel-Aviv Stock exchange will be eligible to join the MSCI EAFE and World indices. Investors have generally been concerned that the immediate impact of a reclassification will be negative, since investment managers of emerging market funds will sell their Israeli holdings very quickly, while developed markets fund managers will take a while to build up their positions. Korea, which was also reviewed, remained in the Emerging Markets index. (Globes 16.06)

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2.2 Merrill Lynch Believes Israel Will See $3 Billion inflow from MSCI Upgrade

Globes reported that Merrill Lynch expects that Morgan Stanley will reclassify Israel as a developed market, from its current emerging market status, and include Israel in its list of Morgan Stanley Capital International (MSCI) developed markets (DM). The pundits say that Morgan Stanley will include Israel in three major international benchmark indices the widely-tracked MSCI EAFE (Europe, Australasia, Far East), the MSCI World Index (a developed markets index), and the Kokusai Index (developed markets ex-Japan). When reviewing the issue, analysts have often expressed concern that Israel's relative weight in the developed market indices will be small, compared with its weighting in the emerging market index. The Tel Aviv Stock Exchange's (TASE) outperformance this year slightly reduced the difference, and that the TASE will be a net gainer in any case.

The pro-forma weight of Israel in the MSCI World index is 0.39%, versus 2.87% in MSCI EM index currently. The analyst points out, "While Israel would obviously not be one of the larger countries in the DM indices, it neither would be a notable laggard; based on Bank of America/Merrill Lynch estimates, Israel would rank 18th out of the 24 DM member countries, with similar weightings to Denmark and Belgium and larger weightings than Portugal, Ireland, Greece, New Zealand and Norway. Israel looks primarily at the passive investment industry, where investment managers track specific indices or benchmarks. In the active investment management industry, where fund managers have discretion about specific investments, Israeli shares may be overlooked due to their minute weighting. But just from managers tracking the three new indices Israel is expected to join, net new inflows can reach $2.81 billion. This includes about $4.1 billion in new inflows, with EAFE funds being the largest, and $1.29 billion in outflows as Emerging Markets fund managers sell their holdings. The overall positive effect of the new inflows may take a while to be felt, since Emerging Markets fund managers will sell very quickly, but Developed Markets fund managers will build their positions over time, so that the short term effect may be negative. (Globes 15.06)

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2.3 Tefron in Discussions to Establish a Joint Venture in Egypt

Tefron is currently in advanced negotiations with a number of third parties to establish a joint venture in Egypt to manufacture products on behalf of the Company's customers. The JV would be established through an Egyptian company (Tefron Egypt) in which the Company will hold a 50% interest and the remaining interests would be held by three other partners. Under the proposed arrangement, Tefron would transfer to Tefron Egypt equipment with a value of approximately $1 million and the other partners would invest in Tefron Egypt approximately $1 million in cash that would be used for investments and working capital required to commence the activities of Tefron Egypt. In addition, Tefron Egypt would acquire additional services from the company. It should be emphasized that there is no guarantee that the JV will be established or that the negotiations among the parties will lead to a binding agreement for the establishment of the JV. Misgav's Tefron (http://www.tefron.com) manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria's Secret, Nike, Target, The Gap, J.C. Penney, Maidenform, lululemon Athletica, Warnaco/Calvin Klein, Patagonia, Reebok, Swimwear Anywhere, Abercombie&Fitch, and El Corte Englese, as well as other well known retailers and designer labels. The company's product line includes knitted briefs, bras, tank tops, boxers, leggings, crop, T-shirts, nightwear, bodysuits, swimwear, beach wear and active-wear. (Tefron16.06)

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2.4 Actimize, a NICE Company, Acquires Syfact

NICE Systems and Actimize, a NICE Systems Company, announced the acquisition of the assets of the UK's Syfact, a pioneer of enterprise investigative case management solutions. Syfact's expertise, technology and best practices will help Actimize customers further improve investigative operations, increase compliance with regulations and reduce overall operational costs. The acquisition also enhances the joint company's footprint and competitive position, providing immediate benefits for both Actimize and Syfact customers. Actimize intends to continue supporting current product installations and increase investment in Syfact's product support program. This deal amounts to several million dollars. Syfact has been used by many of the world's largest and most respected corporations, government agencies and financial institutions including, among others, ING and Rabobank. Ra'anana's NICE Systems (http://www.nice.com) is the leading provider of Insight from Interactions solutions and value-added services, powered by advanced analytics of unstructured multimedia content - from telephony, web, radio and video communications. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. (Nice Systems 17.06)

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2.5 Zion Oil & Gas Awarded 165,000 Acre Petroleum Exploration Permit Onshore Israel

Zion Oil & Gas has been notified by the Israeli Petroleum Commissioner's office that the Company has been awarded a preliminary petroleum exploration permit with priority rights on approximately 165,000 acres onshore Israel. The permit area is adjacent to and to the east of Zion's Asher-Menashe license area and is in the area that was formerly within Issachar's and Zebulun's ancient biblical tribal areas, consequently Zion has named the area the ‘Issachar-Zebulun Permit Area'. The Issachar-Zebulun Permit extends Zion's petroleum rights from the Mediterranean at Caesarea across the Carmel Mountains to Megiddo and through to the Jordan River immediately south of the Sea of Galilee. It increases Zion's total petroleum exploration rights area to approximately 327,000 acres.

Dallas & Caesarea's Zion Oil & Gas (http://www.zionoil.com), a Delaware corporation, explores for oil and gas in Israel in areas located on-shore between Haifa and Tel Aviv. It currently holds two petroleum exploration licenses, the Joseph and the Asher-Menashe Licenses, between Netanya, in the south, and Haifa, in the north, covering a total of approximately 162,000 acres and the Issachar-Zebulun Permit Area, adjacent to and to the east of Zion's Asher-Menashe license area, covering approximately 165,000 acres. Zion's total petroleum exploration rights area is approximately 327,000 acres. (Zion22.06)

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2.6 Nexperience Changes Company Name to Perfecto Mobile

Petah Tikva's Nexperience, a leading provider of remote access and automated testing solutions for mobile devices, announced that is has changed its name to Perfecto Mobile. The new name highlights Perfecto Mobile's mission and on-going commitment to its customers and partners to improve efficiency and maximize quality in the development, testing and deployment processes of mobile applications and services. With the new company name and new website, http://www.perfectomobile.com, Perfecto Mobile is offering special terms and promotions to its Handset Cloud service customers. Perfecto Mobile's Handset Cloud service enables developers and testers located anywhere in the world to access, via the Internet, a comprehensive range of the latest mobile handsets. Users can use the Perfecto Mobile handsets to develop, test, deploy and monitor their mobile applications and services. In addition, they can use the service to ensure effective collaboration between their various internal teams, their customers and their partners. Perfecto Mobile also provides dedicated Private Handset Cloud systems for mobile operators, handset manufacturers and independent software vendors. The Perfecto Mobile system provides a secure, online environment where users can access pre-and post-launch handsets for development, testing, and post-deployment service monitoring. Vodafone and Swisscom are among the Perfecto Mobile customers who are already taking advantage of the Private Handset Cloud system. (Perfecto Mobile22.6)

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2.7 BioSante Pharmaceuticals Announces Elestrin NDA Submission in Israel

Lincolnshire, Illinois' BioSante Pharmaceuticals announced that an Elestrin (estradiol gel) new drug application (NDA) has been submitted in Israel by its Israeli licensee, PharmaSwiss SA. The Elestrin filing is based on BioSante's U.S. FDA approved NDA for the treatment of moderate-to-severe vasomotor symptoms (hot flashes) associated with menopause. PharmaSwiss is responsible for regulatory and marketing activities in Israel. Approval in Israel is expected to take approximately one year. Elestrin is a fast-drying gel formulation of estradiol, the same estrogen produced naturally in women. Elestrin is absorbed through the skin after topical application on the upper arm, and delivers estradiol to the bloodstream evenly over time in a non-irritating, painless manner. BioSante is a specialty pharmaceutical company focused on developing products for female sexual health, menopause, contraception and male hypogonadism. Based in Zug, Switzerland, PharmaSwiss offers full third party representation of specified drugs or portfolios from research-based pharmaceutical and biotech companies. It represents several clients, such as Amgen, Bristol-Myers Squibb, Wyeth Pharmaceuticals, Ipsen, Astellas Pharma, Eli Lilly and Ferring. (BioSante 23.06)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Qatar Exchange Launches in Strategic Partnership With NYSE Euronext

Qatar Holding (QH), the strategic and direct investment arm of Qatar Investment Authority (QIA), and NYSE Euronext announced the signing of binding agreements to form a major strategic partnership which will establish Qatar Exchange (successor to the current Doha Securities Market) as a world-class international exchange, and provide NYSE Euronext with a valuable presence in the Middle East. The successful closing of negotiations follows a preliminary announcement on 24 June 2008 that Qatar had selected NYSE Euronext as a partner. NYSE Euronext is taking a 20% stake in QE for $200 million, the largest investment ever made by NYSE Euronext in a foreign exchange. The QIA will retain 80% of QE through its strategic and direct investment arm, QH. The new exchange will be overseen by a newly appointed board. The benefits of the partnership will extend beyond the international development of the QE, as NYSE Euronext has committed to use Doha as its Middle East operational and support hub. Furthermore, both the State of Qatar and NYSE Euronext have committed to work together in partnership to develop other opportunities in the Middle East region. The terms of the agreements are intended to align closely the interests of both partners to the success of the project. It provides the State of Qatar with a means of developing a sophisticated global market to provide issuers and investors an exposure to the success of its economy which continues to grow despite the global downturn. By 2015, Qatar is expected to be the second-largest economy in the GCC region which underlines the rationale behind the country's role as a major regional capital market. It offers NYSE Euronext the exposure to one of the world's fastest growing regions. (NYSE19.06)

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3.2 Pratt & Whitney Wins $233 Million Order for V2500 Engines from Qatar Airways

Qatar Airways has selected International Aero Engines (IAE) V2500 engines to power a new fleet of 24 Airbus A320-family aircraft. The contract is valued at more than $233 million to Pratt & Whitney, including a long-term IAE aftermarket agreement. Pratt & Whitney, a United Technologies Corp. (NYSE:UTX) company, is a major participant in IAE. The Qatar Airways order covers engines for 20 A320s and four A321s. The airline already operates the V2500 on a fleet of 21 Airbus A320 family aircraft. The V2500 is available in seven different thrust settings, from 22,000 to 33,000 lbs., to power the Airbus A319, A320 and A321 family of aircraft as well as the A319 Corporate Jet. The V2500 SelectOne build standard delivers an additional 1% fuel burn advantage, along with a corresponding reduction in CO2 emissions. It improves time on-wing by up to 20% and is compliant with the most stringent CAEP/6 NOx standards. It entered service in October 2008. Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, space propulsion systems and industrial gas turbines. United Technologies, based in Hartford, Conn., is a diversified company providing high technology products and services to the global aerospace and building industries. (Pratt & Whitney 15.06)

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3.3 Numerix Opens Middle East and Africa Office in Dubai

New York's Numerix, a leading independent, cross-asset, analytics service provider for the structuring, pricing and valuation of derivatives and structured products, has opened a new regional office in Dubai. As a satellite of the EMEA group based in London, Numerix is the first analytics company in the region to provide local quantitative support. The growth of the Middle East and African financial markets in the past 10 years, along with the accompanying rise in both local and international investments, has been matched by the growth of Numerix. This mutual expansion has now led to the opening of Numerix in Dubai, to provide permanent local support for its growing clientele. Numerix has developed a reputation for delivering the most sophisticated analytic solutions and therefore has been the product of choice for some of the largest derivative market participants in the region. Moreover, Numerix's relationship with over 45 partners provides users with end-to-end, STP, solutions - from pre-trade structuring and pricing, through trade capture and onto valuation and risk management. (Numerix11.06)

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3.4 Wendy's/Arby's Group Signs Major Development Agreement for MENA

The Wendy's/Arby's Group announced an agreement with Saudi Arabia-based Al Jammaz Group to build 135 dual-branded Wendy's and Arby's restaurants in nine countries in the Middle East and North Africa over the next decade. This milestone marks the first agreement with an international franchisee to build dual-branded restaurants since the formation of Wendy's/Arby's Group in September 2008. The development of dual-branded restaurants is an important component of Wendy's/Arby's Group's long-term international strategy and growth plan. A subsidiary of Al Jammaz Group, Specialized Catering Services Est., with regional offices in Dubai, United Arab Emirates, is scheduled to open the first of these restaurants in Saudi Arabia by early 2010. There are currently two Arby's restaurants in the region, located in Dubai and Qatar. These restaurants are not part of the announced agreement with Al Jammaz. All Wendy's and Arby's restaurants located outside North America are franchised. The Al Jammaz Group is a well-diversified and fast-growing Saudi conglomerate whose activities cover a wide variety of business categories such as Agriculture, Foods, Retail, IT, Travel & Tourism, Investments and Logistics. (Wendy's/Arby's16.06)

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3.5 Saudi Ministry Migrates to High-Performance Network From Juniper Networks

Sunnyvale, California's Juniper Networks, a leader in high-performance networking, announced that the Ministry of Culture and Information, the Kingdom of Saudi Arabia's agency responsible for state broadcasting, printing and information services, has built a new high-performance network for voice, video and data using an end-to-end integrated infrastructure solution from Juniper Networks. The Juniper solution includes switching, routing and security technologies, and has been designed to provide a fast, reliable, secure infrastructure for the ministry's mission-critical network traffic and applications while reducing total cost of ownership. The Ministry of Culture and Information is responsible for all information services in Saudi Arabia, including television broadcasting, radio broadcasting, publication of printed material and foreign press relations. Information and news is provided to the public through the Ministry's network of radio and television broadcasting stations, and through the publication and distribution of books and other material. The Ministry of Culture and Information has deployed Juniper Networks EX Series Ethernet Switches and M Series Multiservice Edge Routers in its corporate backbone network. By deploying a switching and routing solution that leverages JUNOS Software - a single source operating system integrating routing, switching, security and network services from Juniper - the Ministry can streamline network operations and improve the availability, performance and security of business applications. A commissioned study has estimated costs savings of using JUNOS Software to be as much as 41%. (Juniper Networks 16.06)

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3.6 Turkish Ministry of Health Purchases Two CyberKnife Systems

Sunnyvale, California's Accuray Incorporated, a global leader in the field of radiosurgery, announced that the Turkish Ministry of Health has purchased two CyberKnife Robotic Radiosurgery Systems for installation in Ankara and Istanbul, Turkey. Turkey's first CyberKnife System was installed at Anadolu Medical Center in January 2005. A second system was installed in Turkey at Hacettepe University Hospital in May 2007. In addition to the two recent purchases by the Ministry of Health, a fifth System for installation within Turkey was recently purchased by Istanbul University, Oncology Institute, a leading academic institution in Capa district, Istanbul. The sales of these Systems were coordinated by local distributor Radontek. The CyberKnife Robotic Radiosurgery System is the world's only robotic radiosurgery system designed to treat tumors anywhere in the body non-invasively. Using continual image guidance technology and computer controlled robotic mobility, the CyberKnife System automatically tracks, detects and corrects for tumor and patient movement in real-time throughout the treatment. This enables the CyberKnife System to deliver high-dose radiation with pinpoint precision, which minimizes damage to surrounding healthy tissue and eliminates the need for invasive head or body stabilization frames. (Accuray19.06)

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4: ISRAEL MACRO-DEVELOPMENTS

4.1 Israel Publishes $400 Million LNG Terminal Tender

On 14 June, the joint tenders committee of the Ministry of Finance and the Ministry of National Infrastructures published an international tender for construction of a terminal for importing liquid natural gas (LNG). The tender is worth some $400m. Bids for the pre-screening stage will be received by mid-September. The final tender is expected to be published in the second half of 2010. The tender is for a build, operate, transfer (BOT) project for the planning, financing, operation and maintenance of a maritime LNG installation capable of handling up to four billion BCM of gas annually. The tender winner will receive a concession to operate the installation for 20 to 30 years, at the end of which the infrastructure will be transferred to the state. The installation is due to start operating by August 2015. Setting up the LNG installation is meant to diversify Israel's sources of energy and reduce dependence on current supplier EMG and the partners in the Tamar drilling, headed by Noble Energy, Delek and Isramco. From 2015, the Israeli economy is expected to consume 10-15b BCM of natural gas annually, which will represent some 40% of power production. (Globes 14.06)

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4.2 Israel Weathering Economic Storm Due to High-Tech & High Exports

Despite sinking economic estimates for countries around the world, Israel continues to avoid an equivalent major economic downturn, largely due to the strength of Israeli exports and the country's emphasis on high-tech. While global trade was slashed by 40% between August 2008 and February 2009, Israeli exports fell by only 30%. A Bank of Israel study attributes Israel's buoyancy to its emphasis on high-tech exports. The Bank of Israel study relied on a key international report finding countries with an advantage in high-tech being less negatively impacted by the worldwide economic crisis. Israel's high tech exports account for 50% of its total exports, double the global average of 25% of world exports. So resilient is Israel's economy, that its balance of payments surplus (seasonally adjusted) for Q4/08 was last matched in the Q2/07, at the height of a global economic surge. The $2.7 billion surplus in Q1/09 is more than triple the surplus in Q4/08, when it was just $800m, according to the CBS. A substantial drop in imports was influential in the surplus. The goods account is recording a surplus in Q1/09, after years of deficits. Comparatively, the United States recorded a balance of payments deficit of $132.8 billion in Q4/08. Although the figure is astronomical, it is the lowest US deficit in five years. (IsraelNN16.06)

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4.3 Israel Railways Says Fast TA-Jerusalem Link Will Be Economic Catalyst

Development of the fast rail link (A1) between Tel Aviv and Jerusalem will double the number of passengers travelling by rail between the two cities at peak hours from 14,000 today to 28,000. The figures are contained in an opinion prepared for Israel Railways and given to Jerusalem Mayor Barkat, in advance of the decisive session of the planning sub-committee on the approval of the route for the line. The opinion, prepared by Gal Tichnun Ma'arachot Urbaniyot, states that operating the fast link will lead to a saving of 20,000 hours per day in journeys by road vehicles, which will ease traffic congestion. The opinion also says that the line will help to stem migration from Jerusalem thanks to the improvement in the accessibility of centers of employment. It claims that the line will reduce air pollution nationally by 0.5%, as a result of lower use of private vehicles. On 24 June the sub-committee is due to hear objections to the final route plan for the new rail line, in particular objections by environmental organizations to the bridge planned over the Yitleh stream. The environmentalists are demanding that the route should be via a tunnel, to minimize environmental damage to an area of natural beauty, but Israel Railways says that any change in the route will delay the project for years. Meanwhile, Israel Railways continues to make progress on other sections of the fast rail link, and today it published the tender for planning and erecting a bridge in the Arazim Park area, as part of the construction of section D of the line from Mevasseret Zion to Jerusalem. (Globes 22.06)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 World Banks Says Arab Middle East Economic Growth Will Slow To 1.6% In 2009

Economic growth in the Arab Middle East and North Africa will remain below its average rate of 4.5% until 2011 as lower oil prices and weaker European export markets hurt growth, the World Bank said. Economic expansion in the region will slow to 1.6% this year from 5.6% last year. Gross domestic product for the developing countries of the region is expected to halve to 3.1% this year from 6% last year. The Middle East and North Africa account for more than a third of global oil production. Oil prices plummeted from a high of around $147 a barrel in July to a low of about $34 a barrel in December. Prices are now at around $69 a barrel. Oil producing Gulf states are increasing state spending to bolster their economies and tapping bond markets to support businesses. Oil and gas revenue for the Gulf Cooperation Council, an economic and political group which includes Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Oman and Qatar, dropped from $670 billion in 2008 to an estimated $280 billion during 2009, a decline equivalent to 38% of the group's GDP.

Revenue for the developing oil exporters of the region; Algeria, Iran, Iraq, Syria and Yemen declined from $320 billion to an estimated $140 billion, equivalent to 28% of GDP, the bank said. Saudi Arabia and Kuwait will fall into recession in 2009 and spillovers from lower oil revenue may damage other Middle East countries through reduced investment, remittances and tourism. Jordan and Lebanon, which have large current-account deficits face the largest risk of a balance of payments crisis in a protracted recession scenario. Growth in Jordan and Lebanon will slow to 2.5% this year, according to the World Bank's forecasts. The World Bank also slashed its outlook for developing nations' economies, estimating growth at a meager 1.2% this year while warning more measures were needed for a recovery to take hold. The forecast amounts to steep drops from the previous two years, with developing countries having seen 8.1% growth in 2007 and a 5.9% expansion in 2008. Without China and India, the bank said, output would shrink 1.6% this year. The economic weakness in the developing world after recent years of robust growth heightens the risks of social unrest and deepening poverty, the 185 nation institution said. (BI-ME 22.06)

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5.2 Jordan's GDP Grows by 3.2% in First Quarter

The Department of Statistics (DoS) announced on 20 June that Jordan's gross domestic product (GDP) grew during Q1/09 by 3.2% at fixed market prices compared to 8.6% in the same period last year. During 2008, the GDP growth stood at 7.9%. The growth envisaged for this year, under the budget law, was forecast at 5 - 6% while the International Monetary Fund (IMF) lowered the rate to 3-4%. According to DoS data, construction topped the list by achieving a 30.5% growth during the first three months of this year compared to 7.3% during the same period last year. Agriculture, hunting, forest and fishery sector followed at 19% compared to 3% whereas government services producers' sector posted an 8.9% growth compared to 1.6%. Water and electric services and manufacturing industries grew by 8.5% and by 2.3% from 14.8% and 7.5% respectively. The mining industries, finance, insurance, real estate and business services as well as wholesale and retail trade were among the main sectors which witnessed a decline in the first quarter of this year. (DoS20.06)

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5.3 US Grants Jordan $1.3 Million

On 16 June, the United States granted Jordan more than $1.3 million for further developing the Kingdom's national law enforcement and criminal justice system capacity. Jordanian Planning & International Cooperation Minister Al-Ali signed the agreement with US Ambassador to Jordan Beecroft, who described the grant as an example of the excellent bilateral cooperation that aims to improve Jordanian lives. Beecroft reiterated the US commitment to support Jordan in achieving its objective of sustainable economic growth and development. The funding, which is provided by the US State Department's International Narcotics & Law Enforcement Affairs Bureau, will support the government in enforcing the protection of Intellectual Property Rights, empowering the system that combats money laundering and terrorist financing through training and capacity building to all stakeholders, and reducing gender–based violence. Al-Ali said US assistance has increased tremendously in recent years; this includes Jordan's partnership with the USAID, the US Trade and Development Agency, and the Millennium Challenge Corporation, in addition to the expanding trade and business relations between the two countries. (Petra17.06)

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5.4 Iraq & IMF Near Deal On $5.5 Billion Standby Loan

Iraq and the International Monetary Fund are nearing agreement on a $5.5 billion, 5-year standby loan that the country would be able to draw down in three installments. The IMF presented its proposed conditions for the loan during a recent meeting in Amman, including a call for fiscal reforms, restructuring of state banks and banking sector reform. The Fund called on Iraq to reconsider its food ration program so only those in need received subsidized products, also proposing that the central bank be obliged to pursue currency stability and to fight inflation. The proposed agreement, which involves three tranches of a total of some $5.53 billion will be submitted to the Iraqi government for consideration. The meetings in Jordan were attended by Iraqi Central Bank Governor al-Shibibi and Finance Minister Jabor. Jabor had previously said Iraq might seek a loan arrangement for as much as $7 billion to help it cope with a budget shortfall that has resulted from a drop in oil prices from a record high above $147 a barrel last summer. Iraq relies on oil exports for more than 95% of state revenue and desperately needs money to rebuild after years of sectarian warfare and insurgency triggered by the 2003 US liberation. Iraq has had two previous arrangements with the IMF of less than $1 billion each, set up without the expectation Iraq would draw on the funds given strong oil revenue in recent years. (Various16.06)

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5.5 Kirkuk Oil Production Rises

Oil production for northern Iraqi oil fields rose by 90,000 barrels per day as the Iraqi Oil Ministry faces questions over slow development. Iraqi Oil Minister al-Shahristani faces criticism for his performance despite a modest opening of the Iraqi energy sector with Kurdish oil exports earlier this month. Sameer al-Salihi with the North Oil Co., a state company within the Iraqi Oil Ministry, bragged, however, that oil production in Kirkuk has increased, Iraqi daily Azzaman reports. The production levels, however, are still far short of the 800,000 barrels per day produced in Kirkuk prior to the U.S.-led liberation in 2003. Overall Iraqi oil production rose slightly earlier in the year to more than 1.82 million barrels per day. The Kurdistan Regional Government in Iraqi, meanwhile, began exports from its northern Taq Taq and Tawke oil fields June 1, and Baghdad expects to open the bidding season on eight oil and gas fields by the end of the month. (UPI10.06)

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5.6 Abu Dhabi is UAE's Rising Retail Star

While Dubai has recently been synonymous with retail expansion, Abu Dhabi is the rising star of the UAE, according to the 2009 Global Retail Development Index (GRDI), a study of retail investment attractiveness among 30 emerging markets. Abu Dhabi has risen 16 places to fourth position as its oil-driven economy proved more resistant to widespread downturn than other countries, according to global management consulting firm AT Kearney's eighth annual GRDI study. The report noted that while the UAE's population of five million is relatively small compared to the three countries above it in the GRDI, it has the highest per capita consumer spending of any country in the Index. In fact, Dubai is on track to have the world's largest amount of shopping space per capita by 2010. Retailers in Dubai are focusing on local customers as tourism drops and that is creating entry opportunities for hypermarkets and discounters, AT Kearney said. Yet while Dubai has recently been synonymous with retail expansion, Abu Dhabi is the rising star of the Emirates. It has remained well insulated from the global economic crisis because of its oil reserves and sovereign wealth fund. Several new museums and a Formula One race are planned and will help it attract tourists. Immigration is also expected to pick up as Abu Dhabi becomes a nearby alternative to Dubai. New city developments will increase real estate supply and strong awareness of global brands among the population will provide opportunities for foreign retailers. The current downturn has increased emerging market opportunities for global retailers, the study noted. (AB20.06)

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5.7 Dubai Contributes More Than 30% of the UAE Economy

The Dubai Chamber of Commerce & Industry stated that Dubai's economy represents more than 30% of the UAE economy, with retailing and manufacturing comprising the largest shares. While Abu Dhabi contributed nearly 55% of GDP in 2007, the overwhelming share of FDI investment has been in the Emirate of Dubai. In terms of growth performance, while Dubai performed better than Abu Dhabi in 2007, the downturn in Dubai's real estate and construction sectors is expected to lead to a weakening of Dubai's output this year compared to that of Abu Dhabi. The collapse in worldwide demand will mean that Dubai's exports and re-exports will suffer in 2009. International agencies acknowledge that Dubai will suffer from the backlash of the global economic slowdown, but any fall in output may be limited. Meanwhile, some forecast that the UAE economy may rebound from next month with a gradual recovery that could stretch till next year. (GN17.06)

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5.8 Dubai Airports Sets $17.2 Billion for Expansion

Dubai Airports has earmarked $17.2 billion for expansion at Dubai International as passenger volumes continue to grow at the world's sixth largest airport for international passenger traffic despite the economic downturn. This includes Terminal 3 and the second concourse, which opened in October 2008 increasing the airport's overall capacity to 60 million passengers per annum. It will also include the construction on Concourse 3, due for completion at the end of 2011, which will boost total airport capacity to 75 million passengers per annum. Another $10 billion has been allocated for the construction of Dubai World Central – Al Maktoum International. Upon completion, it will be the largest airport in the world with capacity for 160 million passengers and 12 million tonnes of cargo per year. The first phase is due to open in June 2010. Currently over 100,000 travelers pass through Dubai International every day on more than 800 daily flights with at total of 39 million passengers projected for 2009. Some 130 airlines fly out of Dubai International to over 200 worldwide destinations and that number is expected to increase. (TradeArabia 16.06)

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5.9 Third of Dubai's Homes May Be Empty By End of Next Year

The vacancy rate in Dubai's residential property market could double to about a third by the end of 2010 as the population declines and new buildings add to a glut of homes, UBS announced. The amount of empty houses and apartments may increase from as much as 15% at the moment. About 30,000 homes will be competed by 2011. Dubai's property market was hurt more than others by the global financial crisis and, according to the UBS report, home prices may slump as much as 70% from their peak last year. The market's collapse followed a construction boom that created thousands of homes just as demand began to evaporate. Large areas of Nakheel's International City are known to be unoccupied and the new developments covering one square kilometer in the Mirdif area of the city (close to the upcoming Mirdif City Centre) by Dubai Properties are completely empty, resembling a ghost town. The current estimates are that Dubai is about 10% to 15% vacant, although it is probably more, since published vacancies in the fourth quarter hovered around 7%. In April, Colliers CRE said about 64,800 homes will be completed by the end of 2011, lower than the broker's previous estimate of 140,000 units by the end of next year. The number of new homes will probably decline as developers cancel projects and delay others.

Dubai's expatriate population, which accounts for most of the Emirate's inhabitants, may drop 8% this year and another 2% in 2010, UBS said in March. Expatriates who were fired by companies trying to weather the global recession are being forced to leave the country because of visa restrictions, Colliers said in April. House prices in Dubai, the second-largest of the seven Emirates that make up the United Arab Emirates, fell 32% in the 12 months ended 31 March 31, Knight Frank said last month. In Abu Dhabi, the country's capital, the vacancy rate is between 1% and 3%. Abu Dhabi has most of the country's oil and gas reserves and needs an additional 70,000 homes, according to Colliers estimates. (BI-ME11.06)

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5.10 Sheikh Mohammed Creates 'Brand Dubai' Office

Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai, established the Dubai Media Affairs Office 'Brand Dubai' to coordinate Dubai's strategic media affairs regionally and internationally, according to newswire WAM. The new office will work on preserving and enhancing Dubai's image as an Arab city of international spirit and sensibility. The Dubai Media Affairs Office (DMAO) will encourage maximum exposure for Dubai's continuing achievements on economic, cultural and social matters, the newswire reported. Under the mandate given by Sheikh Mohammed, the new entity will work closely with Dubai government departments and authorities as well as non-government stakeholders. The DMAO will facilitate greater communication coordination among different organizations that are directly or non-directly responsible for Dubai's image. Among DMAO's other objectives are enhancing the media's accessibility to accurate information on various subjects related to Dubai, and facilitating greater interaction with Dubai government officials. (WAM13.06)

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5.11 Oman's Medical Device Market Expected to Grow at a Healthy 5% per Year

Research & Markets (http://www.researchandmarkets.com) has announced the addition of the "The Medical Device Market: Oman" report to their offering. Oman is a small, oil-dependent state in the Middle East, bordering the Indian Ocean. The country has strong diplomatic relationships with both Arab and leading Western nations. The country has a growing healthcare sector that is constantly being improved and modernized, which is also benefiting from the many construction projects announced in recent years. Over the last 30 years, Oman has invested heavily in the health sector and succeeded in creating a modern hospital system. Despite this, it still lacks rural infrastructure and a local base of trained medical personnel, problems which current health policies are seeking to resolve. The majority of the healthcare sector is run by the government although the private sector is very active in the provision of clinic services. Total health expenditure is estimated at around $1.0 billion, the majority of it is provided by the public sector. There is very little domestic production in Oman, therefore the market is heavily reliant on imports. In 2007, Oman imported medical supplies and devices valued at $41.3 million, around a quarter of which comprised general surgical instruments & appliances. The EU countries dominated, supplying, as a whole, 72% of the market in 2007. In March 2008, it was announced that Oman's Majan Development Company (MDC) is planning to develop a Healthcare City near Muscat with an estimated total investment of RO300-400 million ($780-$1,040 million). Espicom estimates the Omani market for medical devices to stand at $44.2 million in 2009, equal to $15 per capita. It is expected to grow at a healthy CAGR of 5.0% per annum to reach $56.4 million by 2014. (R&M18.06)

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5.12 Saudi Annual Inflation Rises for First Time in 2009

Saudi Arabia's annual inflation rate rose for the first time in seven months to hit 5.5% in May due mainly to a surge in food prices. The cost of living index stood at 121.3 points on May 31 compared with 115 points a year earlier, the Central Department of Statistics announced. Inflation in April was 5.2%, the lowest rate since September 2007. On an annual basis, the increase in food and beverage index accelerated to 2.4% in May, up from 1.6% in April, the data showed. Last year, when inflation peaked at more than 11% in July, food and beverage costs in Saudi Arabia had surged an annual 16%. The annual rise in rental price however eased to 17.7% in May, down from 18.8% in April, the data showed. Before May, inflation rates have been declining rapidly in the largest Arab economy as commodity prices slumped and a stronger U.S. dollar helped reduce import costs for the kingdom, which pegs its riyal to the dollar. (AB21.06)

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5.13 Saudi Arabia Leads World With Most New Store Openings For Top International Retailers

Saudi Arabia has emerged as the country which saw the most new retailer arrivals in the past year, attracting 37 new retailers, according to the latest research report from CB Richard Ellis, 'How Global is the Business of Retail?' Middle Eastern countries have seen a marked increase in the number of new retailers entering the region and dominated the top five countries with ranking with Kuwait in 2nd place and UAE in 4th. Serbia and Indonesia ranked 3rd and 5th respectively. CBRE's annual study mapped the global footprint of 280 of the world's top retailers across 67 countries, exploring the globalization of the retail industry and highlighting differences between sectors and regions. Some of the world's best known brands were amongst the new retailers entering the Saudi market. Broken down by sector, Saudi Arabia had the following new openings: 16 for clothing, footwear and accessories, three department stores, one furniture and textiles, two grocery and food and drink, 12 luxury stores and three others. Saudi Arabia also leads the luxury sector openings. Its nearest rival, Kuwait, had 29 new retail openings. (BI-ME10.06)

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5.14 PepsiCo to Move Gulf Production to Saudi Arabia

Beverage giant PepsiCo is set to transfer its Gulf production to a new factory in Jeddah 2nd Industrial City, Saudi Arabia. The 300,000 square meter factory, with an investment of $266m, is the largest industrial unit for the soft drinks company in the Middle East and Africa region. PepsiCo will move its projects and factories for the production of soft drinks, juices, water, gas water cylinders and cans manufacturing, the Saudi Industrial Property Authority (Modon) announced. The company did not give a date of when the move will take place. Modon is responsible for developing and supervising industrial cities in the Kingdom. (AB14.06)

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5.15 Egyptian Inflation Continues Decline to Reach 10.2% in May

Urban consumer inflation in Egypt fell to 10.2% in May 2009, from 11.7% in April, according to figures released on 10 June by the Central Authority for Public Mobilization and Statistics (CAPMAS). Nationwide inflation came in at 9.8% for the 12 months to May as prices of food and beverages, hotels and restaurants, and miscellaneous services increased. Inflation has seen a dramatic decline since August 2008, when it peaked at 23.6%. This past February, inflation dropped to 13.5%, then 12.1% in March and 11.7% in April. Accordingly, the Central Bank of Egypt (CBE) has lowered the main interest rates three times between February and May, bringing overnight deposit rates to 9.5% and overnight lending rates to 11%. Food prices increased 9.8% in the year to March 2009, groceries 15.5%, confectioneries 8.7%, beverages 0.2% and household items 17.6%. (DNE10.06)

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5.16 Mobile Phone & Internet Users Up In Egypt

The number of individuals in Egypt accessing telecommunications systems through mobile phones and the internet continues to rise. According to a report by the Information and Decision Support Center, 44.59 million people in Egypt hold mobile phone subscriptions. This is an increase of 12.4 million over Q1/08. The number of internet users in Egypt also expanded in the last year, from 10.92 to 13 million users. Land-line (or fixed-line) usage has experienced modest growth, but at nowhere near the rate of mobile phone subscriptions. The flexibility, availability and reliability that mobile phones offer have radically altered the market. Mobile phones have reached markets in Egypt which traditional land-lines never could by virtue of geographic and economics. With regards to internet, Telecom Egypt has witnessed an 83% increase in DSL subscriptions during the last year. The telecom giant also had a 72% rise in net profits from the first quarter of 2008 to 2009. A healthy economy during the previous four years has contributed to this growth. It is unclear whether this explosive growth can be maintained. Stagnation in the new future is possible, as some analysts speculate the possible market for mobile phones has nearly been exhausted. Mobile usage has only penetrated a little over half of the Egyptian population, which stands at 81.7 million according to 2008 figures. Other countries in North Africa, like Libya, Algeria and Tunisia, have far higher rates of penetration. But the fact that 25% of the Egyptian population is below the poverty line means that the ceiling for penetration may be lower as this market typically does not have the means to subscribe to mobile services, according to MMC group analysts. (DNE15.06)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey & IMF Hold ‘Very Useful' Talks

On 20 June, Turkey and the IMF held very useful talks on a long-awaited new lending agreement. The IMF's No 2 official and the Turkish economy minister said their views were close. Both sides said they would stay in touch in the next few weeks. Economists welcomed the four-hour meeting and said it brought fresh momentum to talks on a deal, which markets want in order to remove any risk that Turkey will have difficulty rolling over billions of dollars in debt in the coming months. (Various21.06)

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6.2 Turkey Receives $800 Million World Bank Loan for Electricity Development

The World Bank board of executive directors approved the First Programmatic Electricity Sector Development Policy Loan Program for Turkey in the amount of $800m. The purpose of the loan is for the support and implementation of an updated national electricity program that aims to reform the Turkish electricity sector. Specifically, the program and supporting loan endeavor to improve the security of the country's sustainable electricity supply, ensure the financial viability of the electricity sector, improve its operational efficiency and help Turkey fulfill the requirements to attract enhanced private investment and improve energy efficiency in the supply and consumption of electricity. Under the program, measures to improve operational efficiency and conditions for private investment, such as the privatization of distribution companies and generation plants, will encourage local private investment as well as foreign direct investment (FDI) inflows. This is a euro-denominated commitment-linked flexible loan with a variable spread. The final maturity of the loan is 23.5 years, including a 12-year grace period and customized repayment of principal. (Zaman13.06)

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6.3 Turkish Tax on New Vehicles Raised To 27%

Ankara increased a consumption tax on new cars to 27% from 18%, reversing part of a temporary cut announced three months ago. The new rate is valid for cars with engines of 1.6 liters or less, and will continue until Sept. 30, the Finance Ministry in Ankara said. The ministry also raised the tax on home appliances such as washing machines, which had been abolished as part of the stimulus measures, to 2% - still below the previous rate of 6.7%. Prime Minister Erdogan announced the package of cuts in March, seeking to preserve jobs and encourage spending. These changes mean the government is starting to phase out the tax cuts, which had reduced the car tax from 37%. Taxes on furniture and computers, reduced to 8% from 18% in March, will stay at that rate until the end of September, the ministry said. The government also announced an increase in tax on tobacco products. (Hurriyet17.06)

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6.4 Cyprus' Economy Better Than Its European Peers

Cyprus may require further measures to support longer-term sustainable growth, although the economy has fared better than its European peers from the global economic crisis, its central bank said on 20 June. The bank, whose governor is on the Governing Council of the European Central Bank, met with a team from the International Monetary Fund as part of an annual consultation process. It was jointly noted that Cyprus was not unaffected by the crisis, but, relative to other European countries, it was to a lesser degree. Both sides expressed the view that with the appropriate measures, Cyprus can deal with the crisis and lay the foundations again for long-term sustainable development. It did not specify what measures. The Cypriot government expects a 2% fiscal deficit in 2009, from a 0.9% surplus in 2008. (Various21.06)

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6.5 Cyprus Tourism to Reach Record Low This Summer

Cyprus's tourism industry is bracing itself for the worst summer season on record as the global financial crisis hits the pockets of tourists, edging Cyprus closer to a recession. With tourism arrivals to the eastern Mediterranean island down 8.9% by May, authorities have clamored to reverse forecasts of a massive 20% drop in arrivals during the holiday island's high season. Locals worry that British tourists - over half of total arrivals to Cyprus - will holiday elsewhere this year, after a survey in April found Cyprus was the fourth least "value for money" destination due to sterling's weakness against the euro. Official data showed that tourism revenue for 2008 represented 11% of the island's GDP, from 2.4 million arrivals. This month, Cyprus's central bank forecast 0.4% growth in the island's economy for 2009. The Finance Ministry sees 1.0% growth, down from 3.7% in 2008. The island, a euro zone member since Jan. 2008, is the only country among its peers to expect growth this year. Hoteliers in Cyprus believe that this year's experience has prepared them for the worst. However, UN World Tourism Organization data showed that popular destinations such as Malta and Croatia have seen their arrival numbers plummet between 18 and 20%. Meanwhile, analysts are optimistic that last minute bookings will curb the drop in arrivals. (FM23.06)

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6.6 Greek Measures To Battle The Deficit

Athens is likely to soon approve the first package of measures intended to bring the budget deficit to below the European Commission's cap of 3% of GDP by the end of 2010. The measures are exclusively intended to bolster revenues by about €1 to 1.5 billion. The special consumption tax on fuel will probably go up by about 10%, which will mean a rise in the cost of unleaded gasoline by 4.5 to 6.5 euro cents per liter. The special consumption tax on cigarettes and alcoholic drinks will also go up. Prepaid card cell-phone users will have to start paying a special levy, calculated as 10% of the cards that their owners purchase. There will also be an adjustment of the cell-phone levy for those who have a contract with a network. In order to reduce the negative impression and the political cost created by these measures, the government will add some fresh changes intended to reduce tax evasion. The Economy Ministry is aiming to close some loopholes, such as that concerning recreational boats by abolishing tax-free fuel for them, and by expanding the range of receipts that could increase exemptions from annual taxable revenue. At present, 40% of spending on restaurants, celebratory functions, electricians, plumbers and such services is exempt from taxable income. The government is planning to expand this to include spending on other services, such as car repair shops, dry cleaners, private schools, hotels and rented rooms, cafeterias etc. However, these measures are not enough to satisfy the demands of the European Commission, which should mean that more measures could be expected in October. (Ekathimerini23.06)

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6.7 Greek Jobless Numbers Hit Three-Year High

Greece's jobless rate rose to 9.3% in Q1/09, a three-year high, up from 7.9% in Q4/08, with unemployment queues expected to get longer in coming months. In Q1/08, unemployment stood at 8.3%. Data from the Greek National Statistical Service (NSS) showed unemployment in the 15-29 age group was much higher, at 18.5%. Unemployment was also seen affecting women more than men with the female jobless rate at 13.0% versus 6.8% for the male population. Economists said that the relative resilience observed in retail trade and other sectors has been offset by a drop in manufacturing and construction. Investment in Greece's building sector, which employs in the region of 400,000 people, has slumped with an improvement not expected by some experts until the middle of next year. According to data from Eurostat, the average jobless rate in the eurozone stood at 8.9% in March and worsened to 9.2% in April. In its spring forecasts, the European Commission projected Greece's unemployment will rise to 9.1% this year from 7.7% in 2008. Athens remains more optimistic, projecting a jobless rate of 8.0%. There were about 462,343 Greeks officially unemployed in Q1, while an estimated 4.48 million had jobs. (NSS22.06)

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6.8 Bulgarian Economy Shrinks by 5%

The Bulgarian economy shrank by 5.0% in Q1/09 compared to the previous three months, official data showed on 10 June, confirming that the country had entered a recession. Bulgaria's GDP had contracted by 1.6% in Q4/08, according to seasonally adjusted figures released by the national statistics institute. Recession is traditionally defined as two consecutive quarters of negative growth. This is the first time that Bulgaria's economy has shrunk since 1997, when the country was in a deep crisis. The statistics office also provided quarter-on-quarter figures for the first time this month. It usually only releases 12-month comparisons. (AFP11.06)

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6.9 Bulgarian Inflation Slows in May To 3.9%

Bulgaria's consumer price inflation slowed to 3.9% year-on-year in May from 4.8% a month earlier, the statistics office announced on 15 June. On a monthly basis, consumer prices fell 0.3% from a 0.7% increase in April, the data showed. The Socialist-led government expects consumer price growth to ease to about 2.5% at the end of the year, as domestic demand slumps due to the global economic downturn. (Various16.06)

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6.10 European Central Bank Against Speedy Euro Adoption For Bulgaria

European Central Bank (ECB) governor Trichet stands against the immediate eurozone admission of the countries that have not met the European Union (EU) criteria. During his recent visit in Sofia, Trichet saw the requirements for the introduction of the euro as crucial, dampening hopes of a quick Bulgarian entry. Moreover, he stated that his position was shared by all governments of the EU member states, including that of the Central and Eastern European (CEE) countries. For his part, Bulgarian Prime Minister Stanishev noted that Bulgaria would stick to the currency board mechanism pegging the lev to the euro until it entered the eurozone, while he added that the country was only fighting the global economic downturn by its own means. In April, the International Monetary Fund (IMF) suggested the countries of the CEE to scrap their currencies in favor of the euro, even without full eurozone membership, in a report published on the Financial Times. The IMF proposed to the EU to 'relax' the Maastricht criteria for the countries aiming to enter the eurozone, so as to become ‘unofficial' eurozone members with no voting rights in the management of the ECB. The EU member must meet the Maastricht criteria on inflation, public debt, budget deficit, currency stability and interest rates to qualify for adoption of the euro. Bulgaria targets to adopt the euro in 2012. (Reporter16.06)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Malta Dedicates First Embassy In Israel

Malta dedicated its first embassy in Israel, as Maltese Foreign Minister Borg arrived in Israel on 21 June and officially dedicated the Maltese embassy in Tel Aviv. The embassy had opened last October. FM Tonio Borg met President Peres in Jerusalem and visited the Yad Vashem Holocaust Memorial Museum. The day before, the foreign minister opened a diplomatic mission in Ramallah in the Palestinian Authority, where he met with PA officials. (JTA21.06)

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*REGIONAL:

7.2 Saudi Population Tops 25 Million

The population of Saudi Arabia, the world's largest oil exporter, has risen to just over 25 million, according to an official estimate. The Central Department of Statistics and Information estimated the population at 25.37 million, of whom 18 million are Saudis. Official population figures are rarely issued in Saudi Arabia, the most populous Gulf Arab state. The last census in 2004 put the total at 22.6 million, of whom 16.5 million were Saudis. A government official said the next census would be conducted next year. Analysts and diplomats say providing jobs and housing for the rising population is one of the main challenges facing the kingdom. Saudi Arabia has pledged investments worth $400 billion to diversify its economy and create new jobs outside the oil industry. It plans a mortgage law by the end of the year to boost home ownership. (Reuters13.06)

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7.3 Greece To Apply Smoking Ban From 1 July

Greece, Europe's heaviest smoking nation, will try to kick the habit by banning tobacco in indoor public places from July 1, but many doubt the ban will work. Greece breaks all European records with more than 40% of the population smoking and six out of ten being exposed to smoking at work, according to a European Union poll. Greece has tried to ban smoking in hospitals and offices and requires restaurant and bar owners to designate smoking areas, but the measures have so far been widely ignored. Smoking-related diseases kill about 20,000 people a year in Greece, costing the country $2.97 billion a year, the Health Ministry said. The new law will ban smoking indoors in all public or private areas used for working purposes, including airports, taxis and buses. Restaurant and bar owners of properties of up to 70 square meters can decide whether their business is smoking or non smoking. Others can set up ventilated smoking areas. Bar and restaurant owners, as well as the private sector's umbrella labor union, say the law will harm business. Smokers breaking the law will pay a fine of up to €500. Businesses breaching it for the first time will face fines of up to €1,000. The fines go up for each repeated offence and businesses could be banned from selling alcohol or tobacco for up to three months on the third violation. The fourth time, the company's license would be removed. (Reuters23.06)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Neurim Reports Long Term Efficacy and Safety for Circadin for Insomnia in Elderly Patients

Neurim Pharmaceuticals (http://www.neurim.com) presented the preliminary results of a large-scale Phase III study of Circadin 2mg, prolonged release melatonin in insomnia, demonstrating long term efficacy and safety in elderly patients. Circadin is a novel sleep medicine that has been approved by the European Commission pharmaceutical regulatory agency and the Israeli Ministry of Health for the short-term treatment of primary insomnia, characterized by poor quality of sleep in patients who are aged 55 and over. The approval is based on clinical studies showing positive effects on sleep quality, sleep induction and most importantly next day alertness and functioning. The new double blind placebo controlled trial with more than 790 insomnia patients aged 18-80, shows that 6 months continuous treatment with Circadin is both safe and efficacious. The trial demonstrated improvements in sleep latency, quality of sleep and morning alertness particularly in elderly patients, with no withdrawal symptoms and rebound insomnia. Tel Aviv's Neurim Pharmaceuticals was founded in 1991 and is focused on drug discovery and development of treatments for age-related disorders, primarily in the central nervous system (CNS). (Neurim 11.06)

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8.2 Yissum & Aurum Ventures MKI Develop Liver-Bypassing Oral Drug Delivery Nanotechnology

Yissum Research Development Company signed an agreement with Aurum, Ventures MKI for the development of a nanotechnology controlled release drug delivery platform that increases the bioavailability of orally administered lipophilic drugs. The technology was developed at the Hebrew University's School of Pharmacy. Initially, Aurum will sponsor a pre-clinical feasibility study that will assess the safety and efficacy of the proprietary oral delivery of an existing drug for the treatment of solid tumors that is currently delivered intravenously. Previous pre-clinical experiments on Tacrolimus, an effective drug which prevents the rejection of transplanted organs but is poorly and variably absorbed with marked intestine and liver metabolism, resulted in 2.4 times higher bioavailability.

Lipophilic drugs are poorly soluble in water, seriously limiting their bioavailability and clinical efficacy. In addition, when administrated orally 25% of these sensitive drugs cannot be absorbed because they activate an intestinal pump barrier and are metabolized in the intestines and liver. Therefore, currently many drugs present limited oral bioavailability or else are injected. Yissum Research Development Company (http://www.yissum.co.il) of the Hebrew University of Jerusalem Ltd. was founded in 1964 to protect and commercialize the Hebrew University's intellectual property. Products based on Hebrew University technologies that have been commercialized by Yissum currently generate $1.2 billion in annual sales. Aurum Ventures MKI is the technology investment arm of Morris Kahn, a prominent business man, philanthropist and entrepreneur. Aurum Ventures MKI invests in Israeli and Israel related companies in the fields of life sciences and clean-tech in all stages of development. (Yissum15.06)

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8.3 Obecure's Histalean Mitigates Weight Gain Associated With Olanzapine

Obecure announced a positive outcome of its BET-209 clinical study, a randomized, double-blinded, placebo-controlled, four week Phase Ib, Proof-of-Concept (POC) study evaluating both the safety and the ability of Histalean to mitigate the weight gain side effect associated with the anti psychotic drug, Olanzapine. Preliminary analysis showed that the study achieved its primary objective, confirming the safety of administering 144 mg/day Histalean (a dose which is three-fold higher than the standard) in combination with Olanzapine. Moreover, top line results indicate a statistically significant reduction in mean weight gain due to Olanzapine in the Histalean treatment group, as compared to the Placebo treatment group. Obecure is also developing Histalean for obesity and is currently awaiting results of its recently completed Phase IIb clinical trial in obese premenopausal women, which was conducted in Germany, Belgium and the Netherlands.

Ramat Gan's Obecure (http://www.obecure.com) is focused on the development of weight management drug therapies, based on clinical evidence showing that betahistine (active drug in Histalean) is effective in reducing weight in obese women. Obecure has a worldwide exclusive license from Mor Research Applications, the Technology Transfer Office of Clalit HMO to clinically develop and commercially exploit the technology. The Company is currently pursuing the clinical development of its lead compound Histalean for general obesity and for weight gain associated with anti-psychotic drug therapy. (Obecure 16.06)

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8.4 Pluristem Receives European Approval for Placental-Derived Stem Cell Clinical Trial

Pluristem Therapeutics announced that the Paul Ehrlich Institute (PEI), the German competent authority in the European Union, has approved the Company's Clinical Trial Application (CTA) and granted approval to begin clinical trials with its placental-derived adherent stromal cell product, termed PLX-PAD, for the treatment of critical limb ischemia (CLI), the end-stage of peripheral artery disease (PAD). In addition, Pluristem has already received approval from the Ethics Committee and, as previously announced, the US FDA had cleared the Company's Investigational New Drug (IND) application to initiate a similar trial in the United States. Both approvals of the CTA and IND clear the way for the world's “first-in-man” clinical trial using PLX-PAD.

Pluristem's placental-derived stem cells are expanded using the company's proprietary 3D PluriX technology. PLX-PAD is an off-the-shelf, one-size-fits-all product that needs no tissue matching prior to being administered to patients. In these phase I trials, to be conducted at multiple locations in the US and Germany, PLX-PAD will be administered to patients considered "late stage" that have not responded to traditional medical or surgical interventions. Haifa's Pluristem Therapeutics (http://www.pluristem.com) is a bio-therapeutics company dedicated to the commercialization of unrelated donor-patient (allogeneic) cell therapy products for the treatment of several severe degenerative, ischemic and autoimmune disorders. The Company is developing a pipeline of products derived from human placenta, a non-controversial, non-embryonic, adult stem cell source. The (PLacental eXpanded) cell products are stored off-the-shelf, ready-to-use, and require no histocompatibility matching. (Pluristem16.06)

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8.5 Israeli Drug Exports Up 23% Despite Global Financial Woes

The deepening financial woes that have affected the global business community appear to be having the opposite effect on Israel's pharmaceutical industry. According to Israel Manufacturers' Association director Horowitz, the dollar value of exported generic and other drugs from Israel reached $1.1 billion in Q1/09. Horowitz, a senior executive with generic drug giant Teva Pharmaceuticals, said that sales of Israeli pharmaceuticals were 23% higher than those recorded in the same period last year. Horowitz attributed the hike to an increased transition to generic drugs in countries around the world due to the international financial crisis. He noted that Israeli pharmaceuticals are exported to more than 100 countries. (IsraelN23.06)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Fujitsu Adopts Waves MaxxAudio Sound Enhancements

Waves announced that its MaxxAudio sound enhancement algorithms are now being implemented by Fujitsu in 3 new models. The FMV Deskpower LX and F all-in-one desktop computers and the FMV Biblo NW laptop are the first in Fujitsu's extensive product line to integrate MaxxAudio, enabling state-of-the-art sonic performance. Waves is the world leader in digital sound processing technology, heard on hit records, major motion pictures, and popular video games everywhere. MaxxAudio from Waves employs these same professional algorithms for use in a wide variety of CE applications including TVs, docking stations, mobile phones, headphones, speakers, and more. In addition to Fujitsu, MaxxAudio can be found in CE products by Sony, Sanyo, Toshiba, Lenovo, Altec Lansing, Microsoft, and more.

Tel Aviv's Waves (http://www.waves.com) is the world's leading developer of digital signal processing tools. Through every stage of the creative audio process, Waves is there, from recording to mixing to mastering to broadcast and beyond. Over the past two decades, Waves has pioneered an entirely new kind of audio tool. Among Waves official endorsers are such luminaries as Kanye West, Beatles producer Sir George Martin, and Linkin Park. Waves' impact on the way music is made, mixed, and mastered has been immeasurable. Major technological contributions include precision EQ, level maximization, analog console models in-the-box, advanced noise reduction, state-of-the-art guitar amp modeling and more. These technologies do not merely emulate their hardware predecessors; they allow a level of exactitude and control never before possible. They offer sound engineers the ability to sculpt their sonic creations with unsurpassed possibilities. (Waves10.06)

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9.2 dbMotion & CAP STS Team to Realize Vision of Advanced Interoperability

dbMotion and Deerfield, Illinois' SNOMED Terminology Solutions, a division of the College of American Pathologists (CAP), and a leading organization in offering customized, best-practice terminology implementation and education services, announced a partnership aimed at delivering a solution that enables their clients to reach the highest levels of interoperability and raises the industry's bar for advanced interoperability. This solution aims to define a semantic health information exchange (HIE) ontology based on SNOMED Clinical Terms for clinical vocabularies that is essential for achieving semantic interoperability. The dbMotion Solution is a proven SOA-based platform that enables healthcare organizations and exchanges to meaningfully integrate and leverage their information assets, driving improvements in the quality, safety and efficiency of patient care. dbMotion transforms care through the creation of a virtual patient record that logically connects patient information in existing systems without requiring their replacement. By providing access to integrated patient information the solution connects care settings, bridging gaps that often exist between inpatient/acute care and community care, and demonstrates a compelling return on investment (ROI).

Hod Hasharon's dbMotion (http://www.dbmotion.com) is an innovative provider of health interoperability and intelligence solutions. It develops and markets the dbMotion Solution, a proven SOA-based platform that enables healthcare organizations and exchanges to meaningfully integrate and leverage their information assets, driving improvements in the quality, safety and efficiency of patient care. dbMotion transforms care through the creation of a virtual patient record that logically connects patient information in existing systems without requiring their replacement. (dbMOTION11.06)

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9.3 Leading Japanese Logistic Company Implements ImageID's Visidot For Pallet Traceability

ImageID announced that Nippon Pallet Pool (NPP) has decided to deploy the Visidot system to manage over 3-million pallets inventory. NPP offers vendors an efficient physical distribution scheme. Customers can pick the pallets at any one of its 220 depots across Japan and return them in any other. Accurate stock control is essential for the company's profitability. NPP evaluated several traceability technologies including RFID and concluded that ImageID's Visidot, a field proven solution for RTI Poolers, is the most practical solution in terms of cost, accuracy and system management. Following an intensive evaluation and trial with excellent results, NPP proceeded to implement the first systems in a long term roll-out plan, aiming for full traceability across its service network. Tel Aviv's ImageID (http://www.imageid.com) is a leading provider of imaging-based traceability solutions. Visidot, the company's line of products enables tracking and tracing of hundreds of thousands of assets a day, with 100% accuracy. Visidot enhances logistics and manufacturing process efficiency and reliability to customers in a broad range of industries, from fresh food manufacturers and RTI poolers to automotive companies and others. (ImageID15.06)

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9.4 Samsung & RADVISION Revolutionary Desktop Video Conferencing Solution

Samsung Electronics Co. and RADVISION announced the VC240, a jointly developed high definition desktop video conferencing device that integrates advanced high definition video conferencing into a high resolution multimedia LCD monitor. The VC240 is the result of joint design and development between the two companies and leverages each company's respective best of breed expertise. Samsung is the worldwide market leader in both LCD screen technology and supplying high quality, high value consumer and enterprise products. RADVISION is the market leader in providing highly interoperable and flexible multimedia and signaling developer solutions to the visual communications industry. The VC240 is the first product in the market to integrate all the components required for high definition desktop video conferencing into a single unit at an affordable price. It can operate as a standalone desktop HD video conferencing device as well as a 24 inch high resolution monitor.

Tel Aviv's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video networking infrastructure and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the unified communications evolution by combining the power of video, voice, data and wireless – for high definition video conferencing systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION14.06)

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9.5 Polish Mobile Network Operator Advertising Campaigns Powered by Mobixell's Ad-It Mobile Solution

Mobixell has been selected by Play, a 3G operator in Poland, to deploy Mobixell's Ad-It as the platform for its WAP channel. Play and Mobixell have trialed the new advertising service on Play's WAP portal. The campaign ran from March-April, during which time the operator ran 33 different advertising promotions, including a premium campaign designed by Ogilvy Poland to promote the new Motorola MotoROKR E8 handset. The MotoROKR campaign is the first venture undertaken as a global partnership between digital marketing agency, OgilvyOne, and Mobixell. The campaign was implemented by OgilvyAction, the brand activation arm of the Ogilvy Group. Mobixell is providing Play Mobile with a WAP Advertising solution powered by the Mobixell Ad-It platform, including: inventory management, trafficking, campaign management, business operation and the Ad Server functions. Ogilvy Poland designed the Motorola campaign which featured on the operator's WAP Portal and has generated an impressive Click Through Rate (CTR) of 4.3% on average, reaching 13% at its highest.

Ra'anana's Mobixell Networks (http://www.mobixell.com) provides a comprehensive range of mobile media solutions to enable service providers to deliver mobile messaging, mobile advertising and mobile TV to over half a billion subscribers worldwide. By partnering with over 300 mobile operators and content players worldwide, including top tier carriers in five continents, Mobixell is helping to create a richer mobile world. Mobixell's solutions focus on enhancing the user experience to increase adoption, encourage customer loyalty, and build on the operators' assets to introduce new revenue streams. (Mobixell 16.06)

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9.6 Elbit Systems' JV with Rockwell Collins' to Supply Helmet Mounted Displays Valued at $54.1 Million

Elbit Systems announced that its joint venture with Rockwell Collins, Vision Systems International (VSI), has received several new contracts with a total value of more than $54.1m relating to the F-35 aircraft. The contracts received from Lockheed Martin Corporation, include the delivery of 52 F-35 Helmet Mounted Displays and 30 additional aircraft systems. VSI also received initial funding for the Pilot Fit Facility Standup at Eglin Air Force Base for the F-35 Helmet Mounted Display System program. Delivery under the contracts will commence this year and continue through 2012. Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The 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. The Company also focuses on the upgrading of existing military platforms and developing new technologies for defense, homeland security and commercial aviation applications. (Elbit16.06)

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9.7 VocalTec Announces Innovative Large-Scale Class-5 Solution for Mobile Networks

VocalTec Communications announced the launch of its Essentra Large-Scale BAX Solution for Mobile and Fixed Networks. The evolving mobile industry coupled with the tremendous surge in the uptake of mobile broadband services and the increasing availability of 3G and 3.5G handsets encourage worldwide mobile service providers to transition and upgrade their networks to accommodate the increase in traffic and usage. This creates a market opportunity not only for mobile service providers but also for alternative providers wishing to tap into the burgeoning mobile market. In order to address the growing demand for VoIP services across both wired and wireless networks, VocalTec has evolved its Class-5 VoIP solution. Based on innovative grid computing technologies, VocalTec Essentra Large-scale Class-5 solution, enables scaling up to millions of subscribers through sharing of application objects across multiple servers. Herzliya's VocalTec Communications (http://www.vocaltec.com) is a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers. A pioneer in VoIP technology since 1994, VocalTec provides proven VoIP trunking, VoIP peering and residential/enterprise VoIP application solutions that enable flexible deployment of next-generation networks (NGNs). (VocalTec18.06)

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9.8 Ethos Networks' Carrier Ethernet Transport Solution Takes Part in OIF Interoperability Demonstration

Ethos Networks has demonstrated interoperability with other Carrier Ethernet Transport vendors as part of the OIF's fourth worldwide interoperability demonstration. Ethos Networks' E-Series switches created a PBB-TE domain with other vendor's equipment, simulating a carrier's transport network with traffic handoff to core switches. Seven of the world's largest telecommunications companies have united under the banner of the Optical Internetworking Forum to showcase multi-vendor interoperability in a multi-carrier environment at the OIF's Worldwide Interoperability Demonstration – Enabling Broadband On-Demand Services. The OIF's fourth worldwide interoperability test and demonstration is conducted simultaneously in China, Japan, France, Germany, Italy and the United States. The event highlights network-interoperable solutions among participating vendors, including Ethos Networks, employing OIF UNI 2.0 and E-NNI implementation agreements. The demo addresses Ethernet Virtual Private Line (EVPL) Services over multiple, control plane-enabled intelligent optical core networks with technologies ranging from Layer 2 transport to OTN.

Herzliya's Ethos Networks (http://www.ethos-networks.com) helps service providers migrate their legacy metro transport network to Carrier Ethernet, enabling operational simplicity and cost effectiveness. Ethos Networks' Carrier Ethernet switches, combined with its comprehensive, yet easy-to-use Domain Management System provide a pure-packet transport solution, while maintaining carrier-grade “five 9s” service availability and SONET/SDH-like operational simplicity. Ethos Networks' standards-based products utilize patented traffic engineering technology to address the stringent quality-of-service requirements of demanding applications like mobile backhaul, voice and video services. (Ethos Networks 22.06)

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9.9 Deutsche Bank Selects OpTier's CoreFirst for Business Transaction Management

OpTier announced that Deutsche Bank has selected the company's CoreFirst software to enhance visibility into its IT environment in order to reduce the costs associated with downtime and mean time to recovery (MTTR) throughout its retail banking and trading divisions. The transparency that CoreFirst provides enables the world's largest and most successful financial services organizations to manage IT from a business perspective using transactions. With CoreFirst, Deutsche Bank is able to identify and resolve problems more quickly in order to drive operational efficiencies. When potential problems arise, CoreFirst automatically identifies trends and alerts the Deutsche Bank IT staff so they can remediate problems before they occur. In one instance, Deutsche Bank experienced a problem while migrating a project from one datacenter to another which caused a reduction in transaction throughput of at least 30%, in addition to a 30% increase in elapsed transaction time. For several weeks, the IT support team at the bank worked with a specialist in attempts to identify and resolve the issue, until ultimately it was decided that a costly hardware replacement was necessary. In an effort to resolve the issue without a complete hardware overhaul, CoreFirst was installed and the problem was identified within two hours. The issue was resolved within another 20 minutes, and based on the information CoreFirst provided, Deutsche Bank was also able to improve elapsed transaction time and throughput on 14 other applications with similar issues. Ramat Gan's OpTier (http://www.optier.com) harnesses the power of real business transactions with its unique Business Transaction Management (BTM) software solutions. Their CoreFirst product assures that business transactions flow smoothly within IT applications and infrastructure without bottlenecks or outages, for improved end-user experience and reduced cost. (OpTier22.06)

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9.10 SDS Completes 2-Year R&D for Cogito4M Military Grade Rapid Interrogation Technology

Suspect Detection Systems announced the company's Cogito4M Military Grade Technology has successfully completed a two-year research and development project. The system was developed through the accumulation of defense field experience in Israel. Cogito4M enables military and homeland security organizations to interrogate terror suspects while operating in precarious field conditions. Cogito4M has been developed to resolve one of the challenges of modern war-in particular the accurate identification and capture of terrorists hiding among collaborating civilians. The automated interrogation system can be operated by a single soldier with very basic computer training and without knowledge of interrogation techniques or local languages. At present, Cogito4M is programmed to utilize English, Spanish, Afghani, Iraqi, Hindi, and Arabic languages and is encoded with algorithm data relevant local terrorists' cultural knowledge bases. Cogito4M is designed to be easily carried into the field and is assembled into lightweight military grade rigid packaging.

Shoham's Suspect Detection Systems (http://www.suspectdetection.com) is a developer of proprietary counterterror and crime prevention technology designed to identify threats in real-time, and prevent incidents before they are carried out. The technology detects the hidden 'hostile intent' of assailants-before they commit their intended acts-with a remarkable degree of accuracy. The system can also be used after crime was committed to quickly identify criminals from among a pool of suspects. (SDS22.06)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's CPI Rises 0.4%

On 15 June, the Central Bureau of Statistics announced that Israel's Consumer Price Index (CPI) for May rose by 0.4%. The rise was in line with economists' expectations of 0.3-0.4%. Inflation over the previous twelve months, as measured by the change in the CPI, was 2.8%, near the upper limit of the 1-3% target range. The CPI has risen 1.2% so far in 2009. Fresh fruit was the component that contributed the most to the rise in the CPI. The rise in fresh fruit prices added 0.125% to the rise in the CPI. (Globes 15.06)

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10.2 Israel's Balance Of Payments Surplus Triples

On 15 June, the Central Bureau of Statistics announced that Israel's balance of payments current account showed a surplus of $2.7 billion (seasonally adjusted) in Q1/09, more than three times the surplus shown during Q4/08, when it was just $800 million. The surplus reflects a substantial drop in imports that was steeper than the drop in exports (22% versus 10%). The last time such a large current account surplus was recorded was during Q2/07, at the peak of a global boom. The goods account was in surplus in Q1/09 after many years of deficits. Direct investment overseas by Israeli residents fell sharply in the first quarter compared with the corresponding quarter last year. The Q4/08 figure was affected by a single large deal amounting to $4.1 billion in which an Israeli company acquired a company overseas. In the other direction, direct investment in Israel by overseas residents in the first quarter of 2009 fell in comparison with the corresponding quarter of 2008 and with quarterly averages for the past three years, but by a smaller percentage than the fall in outward investment. (CBS15.06)

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10.3 Israel's Exports of Chemicals Fall

Israel's exports of chemicals amounted to $2.68b in Q1/09, 21% down from Q1/08. These figures were reported by Manufacturers Association's Chemical & Petrochemical Industries chair. Israeli chemicals are sold to 150 countries worldwide. Figures released also showed that exports of industrial chemicals fell by 37% in Q1/09 compared with Q1/08 to $308m. Over the same period, exports of pesticides and disinfectants fell by 10% to $278.5m, exports of minerals plummeted 53% to $171.6m, exports of petrochemicals and plastic raw materials fell 40% to $115.3m, exports of oil products fell 20% to $113m and, soap, cleaning materials and cosmetics, fell 3% to $91.9m. On the other hand, exports of pharmaceuticals for human and veterinary use climbed 28% to $1.218b in Q1/09 compared with Q1/08. (Globes 14.06)

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10.4 Tourist Statistics Encouraging, Tourism Ministry Says

The Ministry of Tourism announced that Israel's incoming tourism has decreased in 2009 compared with the previous year, there are signs that the decline is slowing down. In April 2009, 252,000 tourists visited Israel, a decrease of 13% from the same month in 2008, when 290,000 tourists entered the country. It is still 23% higher than the figure for April 2007, which stood at 200,000. The average decrease in incoming tourism in the first three months of 2009 was 25%, so a decline of only 13% in April is a good sign. According to the Central Bureau of Statistics, 222,000 of incoming tourists stayed at least one night in Israel – a decrease of 13% compared to April 2008. 29,000 were day visitors – 17% less than in April 2008. A significant increase was recorded in the number of tourists arriving on cruises and stood at 5,200 in April 2009, 53% more than in 2008. The Tourism Ministry has succeeded in slowing down the sharp declines in incoming tourism, thanks to intensive marketing activities. The Tourism Ministry will invest more than $22m in marketing activities around the world targeted at specific market segments, including a special allocation for the Catholic market following the Papal visit. (IsraelNN15.06)

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11: In Depth

11.1 ISRAEL: Jerusalem Sees Significant Growth in its Life Science Sector

Mr. Nir Barkat, Mayor of Jerusalem, announced that the Jerusalem Municipality, in collaboration with the Jerusalem Development Authority, intends to raise and invest approximately NIS 100 million over the next 5 years to promote the health and life sciences business cluster in the capital city. The budget will be allocated to bolstering infrastructure necessary for biomedical research and development; training skilled personnel for the life science industry; promoting and populating the first Israeli biomedical industry park situated in the campus of Hadassah medical center and the Hebrew University School of Medicine; and for establishing an investment fund that will focus on life science companies based in Jerusalem.

The Mayor explained that he has long considered the health and life sciences business cluster as a field of utmost importance for the economic growth of the city and for the creation of new jobs, and that he fully intends to continue and even intensify the growth of the capital's biomedical industry that we are witnessing in the past few years.

Despite the economic situation, Jerusalem has seen a 20% growth in the number of companies and a 34% growth in the number of biomed employees in town relative to 2006. With Teva Pharmaceutical Industries as the anchor of the pharma industry in Jerusalem, additional bio-pharma companies, such as Protalix and Omrix, recently purchased by Johnson & Johnson, join the 110 biomed companies that are currently based in Jerusalem and that employ over 3,250 people.

The life science industry in the capital is based on impressive academic infrastructure and R&D that have already yielded two innovative drugs, Doxil and Exelon, which originated from the Hebrew University and are sold at over a billion dollars per year. Jerusalem is Israel's leading knowledge center in the life science field in general, especially in bio-pharma. Approximately 43% of all biotech research in Israel is performed at the Hebrew University, and Hadassah Medical Center is responsible for about half of the clinical research in the country. Of note is the School of Pharmacy of the Hebrew University, the first and only of its kind in Israel, which has long been a strategic partner of the biotech and pharmaceutical industry, and that has recently been converted to an institute for drug research and development. In addition, Jerusalem hosts the only incubator in Israel dedicated to drug development - BioLine Innovations Jerusalem. The town's assets render Jerusalem the natural center of the biomed industry in Israel.

An initiative of the Jerusalem Development Authority, BioJerusalem (http://www.biojerusalem.org.il) was founded to help fuel the economic development of Jerusalem by leveraging the vast life sciences resources available in the city. BioJerusalem is committed to developing Jerusalem into a thriving life sciences center of sustainable enterprises and solid investments, grounded on cutting edge innovation. BioJerusalem is the hub for life sciences in the city, connecting life science companies with resources, offering guidance to companies, attracting ventures to Jerusalem, encouraging the creation of new enterprises in the city, and strengthen the ties between the local and global life sciences industry. (BioJerusalem 15.06)

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11.2 LEBANON: Parliamentary Elections

INSS Insight (http://www.inss.org.il) No. 113 reported in the recent Lebanese parliamentary elections. The parliamentary elections in Lebanon on June 7, 2009 featured two main electoral camps. One, the March 14 Alliance, comprised the Sunnis, represented by the al-Mustaqbal (Future Movement) Party headed by Sa'ad al-Hariri; the Druze – the Progressive-Socialist Party headed by Walid Jumblatt; and various Christian elements, among them the Phalangists and the Lebanese Forces. Opposing them was the March 8 Alliance, composed of the Shiites – Hizbollah and Amal; "The Free Patriotic Movement,” the party of the Christian Maronite politician Michel Aoun; and other small factions such as Sleiman Franjieh's Christian party from northern Lebanon.

The March 14 coalition won the elections, earning 69 seats, compared with the 57 won by the March 8 coalition; these and the two independent representatives total 128 parliamentary representatives. Despite early assessments of a close race, the March 14 candidates won by a landslide in a number of provinces. Thus in the 1st voting district in Beirut, March 14 candidates won every seat (of the 7 in contention); similar results were found in Zahle (5) and Kura (3). Hizbollah and Amal even saw a reduction of their parliamentary power: 25 representatives in the new parliament compared with 29 in the outgoing. Nevertheless, in practice, the power of the opposition has increased somewhat, now numbering two more representatives (57 compared with 55 in the outgoing parliament), while the power of the coalition has waned somewhat (69 representatives compared with 72).

Lebanon and the world were surprised by the results: the prevalent expectations were that Hizbollah and its allies would win. These assessments were backed by opinion polls, which predicted a slim majority for the March 8 camp. Moreover, it seemed that the victory of these factions was a natural development given the spirit of the times: the weakening of the status of the United States and its Arab allies, compared with the strengthened influence of Iran and its allies – Syria, Hizbollah and Hamas. The West's failure to root out the Taliban; American's Iraqi quagmire; the disintegrating international pressure on Syria; Iran's continued progress towards a nuclear capability; Hamas' victory in the Palestinian parliamentary elections; and Hezbollah's relative success in the Second Lebanon War formed a smooth backdrop for a Hizbollah victory in the Lebanese elections. Yet the elections resulted in a victory for the pro-Western camp. How can this development be explained and what are its ramifications?

It seems that several factors are behind Hezbollah's weaker showing. One of the main sources for the surprise lies in the assessment that the success of the March 14 camp in the previous elections incorrectly reflected the true balance of power in the Lebanese political system, as they were held shortly after the assassination of Prime Minister Rafiq al-Hariri in 2005 and the ensuing public outrage at Syria's allies in Lebanon – Hizbollah and the March 8 camp. It was suggested that the balance of power between the vying blocs was actually even, perhaps slightly favoring the March 8 camp, and the 2009 elections were supposed to restore the political order to its correct alignment.

A second factor may lie in the Lebanese system itself. At the center of this explanation stands Michel Aoun's failure to enlarge his power base in the Christian sector. Aoun, head of the Free Patriotic Movement, was the surprise of the previous elections. Just before those elections, he had returned to Lebanon from an extended exile in Europe, yet managed to win 18 seats in the parliament. (In practice, his party was apparently bigger because it earned the support of a number of independents.) Different estimates, especially those within his own close circle, maintained that in the current elections his power would grow significantly because most of the Christian sector ostensibly stood behind him. There were even projections that the party would double its power and win 30 or more seats. The changes in the voting districts made under Hizbollah pressure in the Doha Agreement of May 2008 were supposed to help Aoun attain this goal. In practice, Aoun failed to garner additional support, and his party even lost one mandate. In this sense, the gap between the expectations of the Free Patriotic Movement with Aoun at its head and the actual results is significant.

A third factor behind Hezbollah's poor showing – at least compared to expectations – was its inability to reach beyond the borders of the Shiite community and become a national political establishment acceptable to large segments of the Lebanese public. While in the Shiite strongholds in the south and in the Lebanon Valley (the Baalbek and al-Hakmal regions), Hizbollah and Amal candidates won most of the seats allotted to the Shiite sector, in other districts where Hizbollah ran candidates running (especially in Beirut) they failed. Hezbollah's inability to become a national power accepted by all other communities is likely found in the Second Lebanon War of 2006 and no less so in the events of May 2008. Following the IDF's withdrawal from the security zone in May 2000, Hizbollah enjoyed great popularity among the Lebanese public. The resistance was seen as an historic Lebanese achievement, and Hizbollah seemed poised to become a political entity that to a great extent would rise above sectarian differences of opinion. The 2006 war rendered a severe blow to this image. The kidnapping of IDF soldiers and the subsequent war were seen by large segments of the Lebanese public as a colossal mistake motivated by external interests. Hizbollah was considered an Iranian tool in Tehran's war on the United States and Israel. The "Weapon of Resistance," Hezbollah's independent military wing, which until then was seen as an asset, suddenly seemed a burden that was dangerous to Lebanon's wellbeing.

This suspicion was validated further by the events of May 2008. As a result of the disagreement with the government about Hezbollah's attempt to set up an independent communications network and install cameras at Beirut's airport, violent confrontations between Hizbollah fighters and government supporters erupted. Within a few days, Hizbollah conquered neighborhoods in West Beirut, as well as areas in the north and east of the country. Eighty civilians were killed in the fighting. Following Qatari mediation, a compromise agreement was signed in Doha whereby Hizbollah and its ally Michel Aoun scored noteworthy political gains. Nonetheless, it seems that the May 2008 violence significantly damaged the organization's national image and demonstrated to the Lebanese public – the Sunnis and the Christians – that the Weapon of Resistance is no less dangerous to the Lebanese than to Israel.

It is still too early to pinpoint the likely implications of the election results on the Lebanese political system and the regional arena. To judge by statements issued by Hassan Nasrallah and his spokesmen, in the short term Hizbollah will seek to make sure that the new government will not act against Hezbollah's military wing and make any decisions that breach the status quo. In order to achieve this, the organization will probably attempt to establish partnerships in the government or at least receive some kind of political guarantees. For the long term, it seems that the elections clarified for Hizbollah the limitations imposed on it by the principle of sectarian division in the Lebanese confessional political system. According to the confessional system, each community is awarded a set number of seats in parliament (64 Christian, and 64 Muslim divided into 27 Sunnis, 27 Shiites, 8 Druze, and 2 Alawis). Similarly, senior political positions are divided on a community basis (a Maronite president, a Sunni prime minister, and a Shiite speaker of parliament). Therefore, the results of the elections will likely underscore for both Hizbollah decision makers and Iran that in order to realize their strategic goals regarding Lebanon, the political system in the country must be organized in a more egalitarian way to realize the Shiites' growing demographic weight. How this change is to be achieved – whether through the Weapon of Resistance or through political compromise – remains an open question for the moment.

Yet in any event, the most recent elections, despite their importance, are no more than a milestone in a long term struggle for the character of Lebanon, or as Nasrallah phrased it, a station on the road to fulfilling “a great program of reforms at all levels – political, security, economic, and social.” When and how that program is to be fulfilled is not clear, but the Shiites' demographic growth and the military might of Hizbollah constructed under the aegis of Iran and Syria are definitely liable to ensure that at the end of this reform Lebanon will look very different. (June 2009)

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11.3 QATAR: Building on the Rise

Qatar's construction sector, observes the Oxford Business Group, is going from strength to strength, benefitting from high levels of investment, healthy consumer confidence and the overall sense of wellbeing in the country's economy. While the IMF says that the economies of some of Qatar's neighbors are likely to contract this year, dragged down by lower oil prices and falling demand in the property sector, the reverse is true for the gas-rich country. According to a report issued by the IMF in May, Qatar's economy is expected to grow by almost 17% in 2009, nearly five times the predicted rate for the rest of the region.

It is no coincidence that the Qatari construction sector is expected to record a similar rate of growth, with the building industry being one of the main non-oil contributors to the country's GDP, its share of the economy predicted to rise to 9.7% this year. According to Muteab Al Saaq, the chairman of events firm Trance Continent, organizer of the recent 4th Qatar International Real Estate and Investment Exhibition in Doha, all indications are that Qatar's construction sector will grow by 17.6% in 2009. With the Qatari government continuing to invest in large-scale projects in order to position the country as an economic leader in the region, there will be significant investments spilling over to its real estate market, further sustaining the construction sector, Al Saaq told local media on May 21.

Driven by solid demand, around 9000 new apartments are scheduled for completion by next year. A result of rising interest in Qatar as a tourism destination, some 80,000 hotel rooms will be added to the hospitality sector's stocks over the next five years, and about $17bn will be poured into tourism infrastructure, according to figures released by the Qatar Tourism and Exhibitions Authority.

A recent study by market analyst Proleads Global put the value of major construction projects being carried out in Qatar as of the end of March at $82.5bn, with developments ranging across real estate, civil infrastructure, leisure and entertainment.

The pace of growth in the Qatari construction industry is unlikely to slow anytime soon, with the local economy having avoided the global downturn, said Ibrahim Jaidah, the managing director of Doha's Arab Engineering Bureau. "Whether it is government-owned or private sector, growth in Qatar is steady, healthy and mature," Jaidah was quoted as saying by industry online publication Construction Week in early May. "Whether it's hotels or high-rises, in Qatar more and more projects are happening, and there are quite a few currently on the design table."

In fact, there are so many construction projects under way in Qatar that the growth could be building difficulties for itself. The Proleads report said that some 80% of projects are behind schedule, though none have budgetary difficulties. In some cases it could be the sheer number of developments that are creating shortages or a lack of skilled labor and materials in a highly active market.

However, both these potential difficulties have solutions at hand. Falling material costs, especially for steel and cement, have allowed some developers to renegotiate the budgets for major projects, and thanks to other Gulf states scaling back some of their construction programs, the pool of experienced workers has suddenly become larger.

Shahzad Nasim, the managing director of infrastructure construction firm Meinhardt International, said that Qatar is drawing increasing numbers of industry professionals, along with overseas developers, due to its continued building expansion. "With its massive investments in infrastructure development and continued focus on building activity, Qatar has attracted a lot of global attention in the past few years and many world leaders have evinced interest in starting operations," Nasim said in an interview with The Gulf Times on May 26.

With its gas revenue locked in through long-term agreements with customers and estimates that its reserves will be able to meet current production levels for up to 200 years, Qatar is not going to have trouble funding the future expansion of its economy. With the construction sector both providing one of the pillars of the economy and the foundation stone on which the other sectors are built, the future of the industry itself looks rock solid. (OBG10.06)

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11.4 ABU DHABI: Positive Energy

Although Abu Dhabi's first atomic power plant is many years away, its sensible nuclear strategy, which is receiving positive feedback from the West, is making steady progress. The Oxford Business group noted that in late May, Abu Dhabi's plans for a nuclear reactor received a boost when the US administration, while officially informing the US Congress of the proposed nuclear pact between the US and the UAE, not only backed the Emirates' request to acquire American nuclear technology but also held the peaceful nuclear program up as exemplary. From that date of notification, policymakers in Congress have 90 days to make a decision on the agreement - if they decide to do nothing the deal will automatically kick in. Should they decide to give the deal their seal of approval, it will offer US companies the necessary authorization to compete and bid in the UAE's nuclear program and the construction of its nuclear plant in Abu Dhabi.

Judging by statements made by officials close to the administration, there are strong indications that the UAE will get the green light. "We should not only support the UAE deal, but it could be used as a model," Jon Wolfsthal, a former US government monitor at North Korean and Russian nuclear facilities and an advisor to Joe Biden, the vice-president of the US, told Bloomberg. Opposition to the agreement is limited, according to President Barack Obama's administration and industry officials, and they expect the bill to become law by September 2009.

The "123 agreement", named after Section 123 of the US Atomic Energy Act, contains several terms and conditions designed to ensure that nuclear power in the UAE will not include domestic uranium enrichment. Indeed, the agreement states that the program will obtain the fuel from external sources. Given the current economic situation in the US, the nuclear program also gives American corporations an important opportunity to take part in what is highly likely to be a lucrative venture. General Electric (GE) is among the US-based firms that have submitted bids for the UAE's nuclear program, according to the Wall Street Journal.

On May 22 President Obama said that he feels the agreement "will promote, and will not constitute an unreasonable risk to, common defense and security" of the US. Of course when news first arrived that Abu Dhabi, an emirate blessed with a bounty of hydrocarbons, wanted to go down the nuclear route some skeptics found it hard to believe. But in a white paper released in April 2008, the UAE Foreign Ministry laid out the reasons for choosing such a path.

As the white paper explains, annual peak demand for electricity in the UAE is likely to rise to more than 40,000 MW by 2020, a cumulative annual growth rate of about 9% from 2007. Current capacity committed to domestic electricity generation can only match about 50% of that amount, creating a worrying supply gap. The use of crude oil to meet that demand "would entail significant financial and environmental penalties for the UAE," according to the Foreign Ministry. There is, however, yet another sensible reason for implementing a nuclear strategy. Lady Judge, the chairman of the UK Atomic Energy Authority, told OBG, "From an economic perspective, it makes sense for Abu Dhabi to use nuclear power for domestic consumption so that it can sell more of its oil profitably on the international market." (OBG12.06)

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- Israeli Shekel conversions done at a rate of NIS 4.00 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.60 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.25
- 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

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