• Israeli Innovation Contributes $2.4 Billion to Massachusetts Economy
• Israeli IPOs on Wall Street Outperform Market
• Saudi Arabia Sending Seventh Most Students to United States
• Bulgaria & Russia Sign South Stream Agreement
• Israel Enjoys 6th Straight Quarter Of Growth
• BAHRAIN: Economic Freedoms

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 OECD Secretary Visits Israel and Lauds Economy Despite Issues
1.2 RFI Published For Fast Rail Link To Eilat

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israeli Innovation Contributes $2.4 Billion to Massachusetts Economy
2.2 Israel Breaks Tourist Volume Record
2.3 Trieste Seeks Israeli High-Tech Companies
2.4 Israeli IPOs on Wall Street Outperform Market
2.5 Anobit Closes a New Funding Round of $32 Million Led by Intel Capital
2.6 Celeno Closes $12 Million Investment Round
2.7 Makhteshim Agan Announces Acquisitions in Mexico and Korea
2.8 Imaging Diagnostic Systems Installs Its CTLM in Israel
2.9 Israel Aims to Re-Attract Polish Tourists

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 UAE Pharmaceutical Market Analysis - A Future Outlook
3.2 Saudi Arabia Sending Seventh Most Students to United States
3.3 Saudi Automobile Market Increases Demand for Luxury European Cars
3.4 Egyptian Air Force Selects Goodrich DB-110 Airborne Reconnaissance System

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Bahrain Plans To Set Up Wind Energy Plant
4.2 UAE & Saudi Arabia Top List of Carbon Emitters

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordanian Inflation Hits 4.8% During First 10 Months
5.2 Turner Investments Gives High Marks For Iraqi Oil
5.3 Bahrain Inflation Rebounds in October 2010 To Reach 2.1% Y-O-Y
5.4 Bahrain Plans $70 Million US Arms Deal
5.5 Qatar's First Half Imports Value Drops 20%
5.6 Emirates Seek Alternative Oil Export Route
5.7 UAE Imports Rise As Demand Picks Up
5.8 Egypt To Issue Tender For First Nuclear Plant By Year End
5.9 Pakistani Defense Sector Expected To Grow by 10% Per Annum Until 2015

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey Unveils Wide Tax Relief
6.2 Cyprus 2010 GDP Growth Seen at 0.5 - 1.0%
6.3 Greece’s 2011 Budget Sees Spending Cuts & Revenues
6.4 Greek Jobless Rate Hits Record High
6.5 Bulgaria & Russia Sign South Stream Agreement
6.6 Bulgaria Revamps Euro Bid Plans – Looking to H2/11 For ERM II
6.7 Unemployment in Bulgaria Falls to 8.9 % in October
6.8 Bulgaria Opens Way To Start LNG Talks With Qatar

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Chanukah Celebrated in Israel & the World Over
7.2 Islamic New Year Falls on 7 December

*REGIONAL:

7.3 Jordanian Loyalists Sweep Election
7.4 Iraq's Talabani Upbeat On New Government
7.5 Egyptian Parliamentary Elections Of 2010
7.6 Alevis Seen As ’Threat’ To Religious Education In Turkey

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8: ISRAEL LIFE SCIENCE NEWS

8.1 SleepQuest Purchases Additional WatchPAT Devices by Itamar for Home Sleep Diagnostics
8.2 EarlySense’s EverOn Contact-Free Patient Supervision System Wins Popular Science Best Award
8.3 BioCancell Successfully Raises $5.1 Million in Public Offering
8.4 Compugen Discovers Platform for Protein Families with Known Therapeutic Applications

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Alvarion Selected by 4G Africa to Deploy 4G Network in Cameroon
9.2 Texas Advanced Computing Center Selects Mellanox for New Large-Scale Lonestar 4 Cluster
9.3 Discretix CPRM Content Protection Client Shipping on Selected Mobile Phones in Japan
9.4 Mellanox Announces Next Generation InfiniBand Technology
9.5 Voltaire Announces FDR InfiniBand Switch Development Plans
9.6 RADVISION Gateway Connects Microsoft Lync with Telepresence Solutions
9.7 Altair Chipsets Selected by Mobyland to Power Poland’s First Commercial-Grade LTE Solution
9.8 Incapsula Launches Cloud-based Web Application Firewall Service
9.9 TraceSpan Adds Enhanced TR-156 Support to Its GPON Xpert Analyzer
9.10 Siano Launches Integrated Receiver Chip for Latin America's Emerging Digital TV Market

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s October CPI Increases by 0.3%
10.2 Israel’s GDP Growth Stronger Than Expected
10.3 Israel Enjoys 6th Straight Quarter Of Growth
10.4 High Tech Leads Drop In Exports
10.5 Israel’s Unemployment at its Lowest Since 1990

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11: IN DEPTH

11.1 ISRAEL: Summary of Israeli Private Equity Deals – Q3 / 2010
11.2 BAHRAIN: Economic Freedoms
11.3 QATAR: Meeting the Challenges
11.4 UAE: Abu Dhabi 'AA/A-1+' Sovereign Ratings Affirmed by S&P
11.5 EGYPT: Egypt’s Electoral Commission: Who’s Running the Show?
11.6 MALTA: 2010 Article IV Consultation Concluding Statement of the IMF Mission
11.7 TURKEY: Syria Talking Turkey

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 OECD Secretary Visits Israel and Lauds Economy Despite Issues

On 21 November, OECD Secretary Angel Gurria praised Israel's economic growth but criticized the real estate bubble, saying that home prices are dropping around the world except in Israel. Gurria, who was the cabinet meeting's guest of honor, said that the Israeli economy is growing faster than in other nations within the international organization because it suffers fewer deficiencies and has less debt and lower unemployment rates. To the praise Gurria added some criticism, noting that Israeli society had made a leap forward in recent years and has undergone a process of global integration, but has neglected certain sectors. He singled out the ultra-Orthodox and Arab sectors, noting that these groups are not moving forward at the same pace as the general public. Gurria said he has met with the Socioeconomic Cabinet and discussed ways to improve the quality of life and the integration of these lagging sectors. Prime Minister Netanyahu addressed Israel's recent acceptance into OECD by saying that it is a direct result of the numerous economic reforms that the state has implemented over the years. He added that additional restructuring is needed to make Israel independent of the global economy, especially in the real estate industry, and that capital gains tax relief will be one of several foreseeable reforms. (Ynet 23.11)

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1.2 RFI Published For Fast Rail Link To Eilat

On 22 November, the Ministry of Transport published a request for information (RFI) to build a high-speed railway to Eilat. Ministry of Transport Katz said that the RFI was intended to gauge the level of interest by the private sector in the project, and the nature of its collaboration. The announcement did not detail the exact route of the planned railway. The Ministry of Transport said that it wants to build the line as either a BOT (build, operate, transfer) or PFI (private finance initiative) project, including planning, construction, financing, and operation of the line. The budget for planning the Eilat high-speed railway is part of the NIS 2.5 billion budget, which Katz allocated for the planning of projects as part of his Netivei Israel project. The high-speed railway will be a two-track, 170-kilometer line between Eilat and Beer Sheva. The route was selected from six alternatives and will run via Mount Zin and the communities in the Arava Valley. The line will have eight stations, 63 bridges and five tunnels. The Ministry of Transport believes that the line will carry more than 3.5 million passengers a year, as well as cargo and vehicles. (Globes 22.11)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Israeli Innovation Contributes $2.4 Billion to Massachusetts Economy

A groundbreaking study released recently at the New England-Israel Business Council’s 2010 Life Sciences Summit at Brandeis University in Waltham, Massachusetts revealed the scope and impact of Israeli related businesses on the Massachusetts economy. The new study, "The Massachusetts-Israel Economic Relationship," conducted by Stax Inc., an independent global strategy consulting firm, shows the impact of Israeli innovation and entrepreneurship on the Commonwealth’s economy, and underscores the importance of Israeli relations to the state, especially in the area of life sciences and high-tech.

The study found that nearly 100 companies in Massachusetts are founded by Israelis or offer products based on Israeli technology. These businesses generated $2.4 billion in direct revenue in Massachusetts in 2009. In total, the direct and indirect revenue impact on the Massachusetts economy was $7.8 billion. From an employment perspective, these businesses directly generated 5,920 jobs in Massachusetts. Some 50% of these businesses focus on IT, 29% are in life sciences, and the remainder in other industries.

Israeli entrepreneurs chose Massachusetts over other US destinations to launch or grow their enterprises due to the deep talent pool of educated workers, the opportunity to be part of an industry cluster, world class universities and outstanding business infrastructure. The Stax study, which surveyed Massachusetts business executives of companies based on Israeli innovation and entrepreneurship, also found that other states are aggressively pursuing linkages with Israeli businesses. In addition to Massachusetts, the interviewees particularly identified these five states as being especially attractive to Israeli entrepreneurs for growing their businesses: California, New York, Georgia, New Jersey and North Carolina. The analysis also details ways that Massachusetts can strengthen its economic ties with Israel and compete with other states. (Ynetnews 10.11)

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2.2 Israel Breaks Tourist Volume Record

On 22 November, Israel marked the milestone by welcoming tourist number 3,000,001, a Brazilian pastor who arrived in Israel from Sao Paolo, in a celebratory reception at Ben Gurion Airport, attended by Tourism Minister Misezhnikov. Misezhnikov, along with El Al CEO Shkedy, Tourism Ministry director general Bar-Nir and other ministry, airline and civil aviation executives, met the arriving visitors on the tarmac and welcomed them to Israel with flowers and commemorative pins. Ladislau was one of the last passengers to disembark from the plane and his descent down the stairs to the tarmac was greeted by applause from the ceremony participants. Misezhnikov mentioned that it is fortuitous that the tourist arrived on a flight from Brazil, where Israel has launched a major marketing campaign. The lucky tourist, a member of a delegation of 120 evangelists that arrived on an El Al flight, was chosen in a lottery. He was awarded a Hanukkah menorah and a somewhat more prestigious prize: A six-day vacation in Israel, to be used over the following year. The Tourism Ministry estimates that the tourist volume will reach an all time high of 3.4 million by the end of 2010 - 700,000 more tourist than in 2009 and 400,000 more than in 2008, when the previous record was set.

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2.3 Trieste Seeks Israeli High-Tech Companies

Globes reported that a delegation of the Trieste Chamber of Commerce has visited Israel and offered a package of benefits to base themselves in the port city in northeast Italy. The benefits include grants for 50% of the investment and tax breaks for both start-ups and established companies. The Israel Italy Chamber of Commerce and Industry said that Trieste has large budgets for boosting the region's competiveness vis-à-vis Eastern Europe. It has budgeted €138 million for innovation, R&D, technology transfer, and entrepreneurship. In addition, Italy became Israel's second largest science and technology partner in 2010. The Trieste delegation mentioned that Israeli wireless technology company Telit Communications is located in the city. (Globes 11.11)

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2.4 Israeli IPOs on Wall Street Outperform Market

Between 1985 and 2003, more than 120 Israeli companies went public in the US, bringing the accumulated number of US bound, Israeli initial public offerings (IPOs) to a figure greater than all other foreign countries combined, excluding Canada. A study by Iftekhar Hasan and Maya Waisman, titled "Going Public: An Empirical Investigation of US Bound Israeli IPOs" in the summer edition of the Financial Markets, Institutions & Instruments journal of the New York University Salomon Center, compared the returns of Israeli, other foreign, and US company IPOs on Wall Street between 1985 and 2000.

Despite the assumption that lack of knowledge about non-US companies leads to a price significantly more discounted than necessary for initial public offerings on Wall Street, the results showed that the opposite was the case for Israeli companies. The researchers write, "Holding all else equal, we find that Israeli IPOs are significantly less underpriced than their local and foreign counterparts." The researchers wrote of four significant characteristics of Israeli firms that compensate for what they call "information asymmetry" and country risk. "First, compared to their home market capitalization size, US bound Israeli IPOs are significantly larger than the IPOs conducted by their foreign counterparts. Second, Israeli issuers tend to perform better than other foreign and US local IPOs during our entire period of observation. Third, to a large extent, the Israeli firms in our sample have products, licensing or franchising relationships or venture capital funds with strong roots in the US prior to the IPO. Fourth, the relevant investor community of Israeli IPOs, at least at the early stages, is small and overwhelmingly American. Hasan and Waisman add that their findings are in line with other research findings, which show that firms raising capital outside of their home country are generally "a select group of high quality firms in need of external financing that cannot be sufficiently provided in their home market." (Globes 16.11)

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2.5 Anobit Closes a New Funding Round of $32 Million Led by Intel Capital

Anobit closed a new funding round of $32 million, raising the total funding of the company to over $70 million. This new investment round was led by Intel Capital and includes new funding from strategic investors and Anobit’s current investors. This funding will help accelerate the expansion of Anobit’s core business operations and enable the company to meet surging demand for its technology and products, used today by leading NAND flash manufacturers, consumer electronics vendors and storage solution providers. Herzliya Pituah’s Anobit (http://www.anobit.com) is a provider of leading-edge solutions to the growing NAND flash memory market. Its patented MSP (Memory Signal Processing) technology significantly improves the endurance and thus the cost structure of NAND-based products and systems. Anobit’s products, ranging from flash controllers to enterprise-class solid state drives, are used by world leading NAND flash manufacturers, consumer electronics vendors and storage solution providers. (Anobit Technologies 16.11)

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2.6 Celeno Closes $12 Million Investment Round

Celeno Communications has closed a $12 million funding round. The latest round includes new strategic investor Liberty Global, a leading international cable operator. In September, Liberty Global chose Celeno’s Carrier-grade Wi-Fi technology to power its multimedia home gateway. Previous investors; Cisco, Greylock Partners, Miven Venture Partners, and Pitango Venture Capital, also participated in the round. Celeno’s Wi-Fi chipsets, powered by the OptimizAIR technology suite, improves 802.11n Wi-Fi to deliver robust HD video with whole-home coverage. It achieves up to 10 times the range and throughput compared to legacy 802.11n solutions while maintaining a robust signal with effectively no packet loss. Celeno’s solution is client agnostic and delivers HD performance to any third-party Wi-Fi client devices. Celeno is helping to revolutionize home networks and powers them to distribute HD video content to any screen in the home - wirelessly: set top boxes, iPADs, wireless TV’s, digital video recorders, media streamers, laptops, and other devices. Ra’anana’s Celeno (http://www.celeno.com) is a leading provider of high-performance Wi-Fi chips for HD multimedia and entertainment home networking applications. Powered by Celeno's system-on-chip (SoC) and its OptimizAIR technology, home gateways, multi-room DVRs and media servers can distribute multiple and simultaneous HD video streams to standard set-top boxes, PCs, television sets and other Wi-Fi-enabled consumer devices. (Celeno 15.11)

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2.7 Makhteshim Agan Announces Acquisitions in Mexico and Korea

The Makhteshim Agan Group, the world leader in branded off-patent crop protection solutions, announced today two strategic acquisitions: Ingenieria Industrial S.A. de C.V. in Mexico and JK Inc. in Korea. MAI has signed a definitive agreement for the acquisition of 100% of Ingenieria Industrial S.A. de C.V. (BravoAg), and it has taken a 51% stake in JK Inc. Together, these new operations are expected to generate sales of approximately $40mm in 2010, and will contribute to MAI's sales starting in 2011. Both transactions, for which financial terms were not disclosed, have been signed. The acquisition of JK Inc. has closed. The acquisition of BravoAg enables Makhteshim Agan to realize its long-term growth potential by expanding into Mexico, one of the largest crop protection markets in the world with approximately $700 million in annual sales. The business combination with JK Inc. provides Makhteshim Agan with a direct presence in Korea's stable and profitable crop protection market. Makhteshim Agan's product range and global commercial and registration capabilities, combined with JK distribution network and local formulation facility, will enable MAI to better meet customer needs in the Korean market.

Tel Aviv’s Makhteshim Agan Industries (http://www.ma-industries.com) is a world-leading manufacturer and distributor of branded off-patent crop protection products. With sales of $2.2 billion in 2009, MAI ranks seventh in global agrochemical companies, fourth in Europe, with a global share of over 5%. The Company is characterized by its know how, high-level technological-chemical abilities, expertise in product registration, the observance of strict standards of environmental protection, stringent quality control and global marketing and distribution channels. (Makhteshim 17.11)

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2.8 Imaging Diagnostic Systems Installs Its CTLM in Israel

Fort Lauderdale, Florida’s Imaging Diagnostic Systems, a pioneer in laser breast imaging systems, announced it has installed its CT Laser Mammography (CTLM) system at the Chaim Sheba Medical Center at Tel Hashomer in the Meirav Center for Breast Radiology. The Medical Center is located in Tel Aviv, Israel. Chaim Sheba Medical Center is the largest, most comprehensive medical center in all of Israel and the Middle-East. It is home to the Israel National Center for Health Policy and Epidemiology Research, equivalent to the U.S. National Institute of Health and the internationally-acclaimed Israel National Center for Medical Simulation. Sheba is a major medical-scientific research facility that collaborates internationally with the bio-tech and pharmaceutical industries to develop new drugs, treatments and technologies, and the foremost global center for medical education. (IDS 23.11)

2.9 Israel Aims to Re-Attract Polish Tourists

The Tourism Ministry has launched a NIS 2 million advertising campaign in Poland, the largest ever in that country. The campaign, entitled "A vacation in the Holy Land," will not only appeal to the pilgrimage market, but will also emphasize Israel’s vacation, culture and leisure benefits. The potential in Poland is great, based on past experience. In 2008, after intensive marketing and PR activities by the Tourism Ministry, a record of 155,000 Polish tourists visited Israel, making Poland the fifth largest source country for incoming tourism. Last year, however, due to the global economic crisis, the numbers were down sharply. This year, with Poland’s economic recovery, more than 100,000 Poles have already visited Israel, as of September of this year. The figures are 38% more than the same period in 2009, but 16% less than the same period in 2008. The new campaign, which will be launched in the coming days and will run to the end of February, will target the cities of greatest potential and demand for tourism to Israel: Warsaw, Lodz, Katowice, Cracow and their environs. It will run in print, radio, posters and the electronic media, in cooperation with the Israel Government Advertising Agency and a Polish advertising agency. The Tourism Ministry, together with local wholesalers and airlines, will run workshops this month for travel agents in the main six cities in Poland. The workshops will feature the varied aspects of the Israeli tourism product, including business travel. (IsraelNN 12.11)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 UAE Pharmaceutical Market Analysis - A Future Outlook

Research and Markets’ (http://www.researchandmarkets.com) "UAE Pharmaceutical Market Analysis: A Future Outlook" says the UAE has started to make strides on the global pharmaceutical map. Although the pharmaceutical industry is still in its nascent stage in the country, it is the high per capita drugs consumption that has attracted a number of pharmaceutical companies to invest in UAE. Moreover, the government is promoting its domestic pharmaceutical industry as a major emerging force in the Gulf and Arab markets. These efforts are likely to take UAE domestic pharmaceutical industry to the next level, where it can compete with the foreign participants in the gulf and African region markets. According to the report findings, the pharmaceutical market in UAE was expected to reach more than $1 billion in 2009 end and will grow at a CAGR of over 15% in next few years. There has been a steady rise in non-communicable diseases in the UAE over the past 5-7 years and this is likely to be the biggest driver for of growth.

It is interesting to note that the manufacturing capacity of the domestic companies has increased considerably over the past few years. However, these companies are unable to meet the drugs demand of the country with their existing product portfolios and UAE has to depend on imports for their healthcare needs. Thus, large opportunities exist for foreign companies to tap this potential market. The report also found that 24% of the total population in the country is suffering from diabetes and this represents huge opportunities for the industry players to be tapped. The UAE government is keen to adhere the protection of IP rights in accordance with WTO and these probable regulatory changes are likely to boost the export of the drugs in the country. (R&M 17.11)

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3.2 Saudi Arabia Sending Seventh Most Students to United States

According to the Open Doors 2010 report, the Kingdom of Saudi Arabia is now ranked seventh among countries in sending international students to study in the United States. The Open Doors report is an annual study released by the Institute of International Education. The Kingdom moved up from tenth last year, reflecting the Saudi government's substantial investment in study abroad scholarships.

The King Abdullah bin Abdulaziz scholarship program is aimed at fostering human interaction at the most basic levels. Qualified Saudi students are sent to attend colleges and universities around the world to learn, make friends and experience foreign cultures. The Saudi government has already offered scholarships to more than 90,000 students to study in the United States, Canada, Malaysia, Australia, New Zealand, Japan and others. These students are exposed to ideas and ideals that will shape and inform their lives in the years to come, and Saudi Arabia will benefit from their experiences. In addition to providing education opportunities for Saudis around the world in 2009, King Abdullah established the King Abdullah University of Science and Technology (KAUST) a graduate-level research university that brings international students and professors to Saudi Arabia. KAUST is dedicated to inspiring a new age of scientific achievement in the Kingdom that will benefit the Middle East region and the world. During its inaugural year KAUST had students and professors from over 60 countries. (Qorvis 16.11)

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3.3 Saudi Automobile Market Increases Demand for Luxury European Cars

Research and Markets (http://www.researchandmarkets.com) "Opportunities in Saudi Arabia Automobile Market" says Saudi Arabia is the largest automobile market in Gulf Co-operation Council States. The country has experienced a strong revival in automobile demand over the past few months after recession. The factors that have contributed significantly to the revival include large fuel subsidies, increasing per capita income and limited public transport facilities. Supported by these factors the Automobile sale in the country was anticipated to reach around SR 34 billion in 2009. There exists a large secondhand cars market in the country, whereby 46% of vehicles owned in Saudi Arabia were bought secondhand in 2008. However, the market has been shrinking at an average rate of 4% for the last 3 - 4 years. Japan is the leading exporter of cars to Saudi Arabia followed by US and South Korea. However, in future, the scenario is likely to change with the demand for luxury European cars increasing. Most of the demand in the country is met through import as the domestic manufacturing capabilities are not very developed. There is a large demand of second hand luxury cars which are largely imported from European countries. (R&M 17.11)

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3.4 Egyptian Air Force Selects Goodrich DB-110 Airborne Reconnaissance System

Charlotte, N.C.’s Goodrich Corporation has received a contract from the U.S. Air Force to provide its advanced DB-110 airborne reconnaissance system for the Egyptian Air Force's new Block 52 F-16 fighter aircraft. The Foreign Military Sale (FMS) contract calls for Goodrich to provide one DB-110 reconnaissance pod. Work will be performed by the company's ISR Systems team in Chelmsford, Mass. Goodrich's DB-110 digital, real-time, tactical reconnaissance system captures images day and night using electro-optical/infrared sensor technology. Images can then be transmitted in real-time to analysts on the ground. Egypt is the eighth country to select Goodrich's DB-110 system. The DB-110 will provide the Egyptian Air Force a day/night high-resolution, wide area ISR imaging capability to support tactical reconnaissance operations. Imagery can be viewed on the F-16's cockpit video display as it is collected, enabling the pilot to verify targets and conduct tasks such as battle damage assessment. The cockpit display also gives the pilot the ability to collect new targets of opportunity during the mission. Egypt is acquiring 20 new Lockheed Martin Advanced Block 52 F-16 multi-role fighters under the Peace Vector Foreign Military Sale program. (Goodrich Corporation 19.11)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Bahrain Plans To Set Up Wind Energy Plant

Bahrain is to set up a wind energy plant to produce electricity soon, said the Oil and Gas Affairs Minister and National Oil and Gas Authority chairman Dr. Mirza. Dr. Mirza said a Japanese company had just concluded tests on wind velocity in Bahrain and would submit the evaluation results soon. The American company Petrosolar has also been engaged to explore the solar energy available in Bahrain. Bahrain's first fuel station selling low sulphur diesel for private vehicles is now being set up in Hamad Town. The minister had earlier said Bahrain was set to build two new 'hybrid' power plants for solar and wind energy at a cost of around $8 million. He said the two plants, to be initially set up on an experimental basis, would each produce five megawatts of energy. (TradeArabia 22.11)

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4.2 UAE & Saudi Arabia Top List of Carbon Emitters

A new study published on 17 November by British consultancy Maplecroft (http://www.maplecroft.com) rating 183 countries on their CO2 emissions from energy use has identified United Arab Emirates, Australia, USA, Canada, the Netherlands and Saudi Arabia as the six nations with the worst performance in relation to CO2 pollution. The poor performance of the UAE and Saudi Arabia is reflective of a near 100% reliance on fossil fuels and their use of energy intensive desalination plants to produce drinking water. Saudi Arabia was the 11th highest global emitter in 2008 with 466 MtCO2. However, the desalination process that produces 70% of the country’s drinking water accounts for 50% of CO2 emissions. The UAE dropped 15 places from last year to take the bottom spot due to a huge 25% jump in its overall carbon output between 2006 and 2008 and a 20% rise in per capita emissions. Maplecroft recognized that desalination is a positive way to address water security but high emissions underline the need to find more energy efficient innovations. Australia and the United States were trailed by Canada, the Netherlands and Saudi Arabia. The index gave a 50% weighting to current per capita emissions of greenhouse gases, 25% to total national emissions and the remaining 25% to cumulative historic emissions. African countries with low emissions were bottom of the list. Chad, where only about 2% of the population has access to electricity, was last in 183rd place. (Maplecroft 17.11)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordanian Inflation Hits 4.8% During First 10 Months

Inflation in Jordan reached 4.8% during the first 10 months of this year, compared with 0.92% during the same period of 2009. According to Department of Statistics (DoS) figures, the rise in inflation was driven by increases in the prices of several commodities and services such as transportation, by 13.2%, fuel (7%), sugar (16.6%), rentals (3.6%), and meat and poultry (6.3%). Meanwhile, prices of telecommunications services dropped by 4.6%, and dairy products and eggs by 2.2%, according to the report, which showed that cooking oil prices also went down by 1.4%. According to the DoS report, the Consumer Price Index (CPI), a measure of inflation, rose 6.1% in October of this year compared to the same month last year, when inflation stood at 0.78%, driven mainly by a dramatic rise in the prices of vegetables by 49.6%, alongside price increases of 9.6% in transportation, 4.7% in rentals, 14.3% in tobacco and cigarettes, and 5.9% in education. When comparing October of this year with the preceding month of September, the report indicated that the CPI increased by 1% as a result of the prices of vegetables increasing by 10.7%, education by 1.4%, meat and poultry by 0.9%, dairy products and eggs by 1.6%, and sugar by 2.3%. (JT 15.11)

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5.2 Turner Investments Gives High Marks For Iraqi Oil

Oil reserves locked in Iraq are too big for Western exploration and production companies to overlook, a U.S. investment company announced. Iraq emerged from its second round of oil auctions in December with plans to rival Saudi Arabia in terms of oil production. Iraq sits on an estimated 115 billion barrels of crude oil reserves and much of the country is underexplored. U.S. investment company Turner Investments said despite political and security challenges associated with developing the third-largest oil reserves in war-torn Iraq, the risk is well worth taking. Iraqi oil reserves "may be too big of a prospective bonanza for Western oil exploration-and-production companies and energy-services companies to pass up," the investment company said in a review. The company said in its outlook on the Iraqi oil sector that oil production could increase from 2.5 million barrels per day to 4.1 million bpd by 2016. Six companies doing business in Iraq (BP, Occidental Petroleum, Baker Hughes, Halliburton, Schlumberger and Weatherford International) all stand to reap the benefits of early entry into the Iraqi oil sector, Turner Investments said. Turner said that "an oil-addicted world in which supplies are tight needs all the petroleum that Iraq can supply." (Turner 11.11)

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5.3 Bahrain Inflation Rebounds in October 2010 To Reach 2.1% Y-O-Y

Bahraini year-on-year inflation rebounded in October 2010 to reach 2.1%, compared to 2.0% in September 2010 and 1.5% in October 2009, official data on the Bahraini Central Informatics Organization announced. All sectors saw year-on-year positive growth, except the housing, water and energy sub-index, which fell by 1.5% y-o-y, and the communication sub-index, which declined by 0.8% y-o-y. The food and beverages sub-index grew y-o-y by 6.5%, and the alcoholic beverages and tobacco increased by 0.9% y-o-y. Month-on-month inflation slowed to 0.1% in October 2010, compared to 0.7% registered in September, decreasing due to the m-o-m declines in the prices of food and beverages, which depreciated by 0.5%. Governor of the Central Bank of Bahrain Al Maraj had previously said in May that annual inflation in Bahrain is expected to stand at 1.5% in 2010. (Beltone 22.11)

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5.4 Bahrain Plans $70 Million US Arms Deal

Bahrain plans to buy $70m worth of missiles from the US in a bid to counter major regional threats, the Defense Security Cooperation Agency (DSCA), a unit of the Department of Defense, announced to Congress. Bahrain plans to buy 30 missile units. Flush with petrodollars, the six countries of the Gulf have unveiled ambitious plans to modernize their small armed forces. The region is forecast to spend as much as $100b in the next few years in overhauling their military, in part to counter the perceived threat posed by Iran. Saudi Arabia, the wealthiest Gulf state, is to buy up to $60b in aircraft, helicopters and other arms from the US, in the largest deal of its kind. The UAE earlier this month closed two deals for missile systems, rockets and Apache helicopters from the US, in a transaction worth $5.14b. In July, the US-based Forecast International consultancy forecast that Gulf governments will spend $83b on the defense sector in 2015, up from an estimated $68.3b this year. (AB 15.11)

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5.5 Qatar's First Half Imports Value Drops 20%

The value of imports into Qatar fell 20.2% in the first half of the year compared with the same period last year, data from the country's statistics authority showed. Imports for the first half of 2010 totaled 37 billion riyals ($10.2 billion) compared with 47 billion riyals for the first half of 2009. Cars were the top commodity by value imported by Qatar in the first half of the year representing 5% of total import value, followed by parts and spare parts for aircraft at 4%. Electrical cables ranked third, representing 2.4% of import value, the data showed. The US was the top exporter to Qatar during both 2009 and 2010, accounting for about 11% of imports in both years, the authority said. China ranked second with 7.8% and 8.9% of total imports in 2009 and 2010. The economy of the world's top liquefied natural gas exporter is seen outperforming most of its fellow Gulf crude producers, mainly due to gas output expansion and government infrastructure spending. The IMF sees Qatar's real GDP growth at 16.0% in 2010 and 18.6% in 2011. (Various 12.11)

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5.6 Emirates Seek Alternative Oil Export Route

Amid continuing fears that Iran may seek to close the choke point Strait of Hormuz in the Persian Gulf, a vital oil artery for the world, the United Arab Emirates is seeking alternative export routes for its oil. The federation opened a naval base Oct. 20 at Fujairah on its east coast, south of the entrance to the strait in the Gulf of Oman. It will play a key role in plans to construct an overland route from Abu Dhabi, the emirate that contains more than 90% of the federation's oil, to the sea without using the narrow, horseshoe-shaped strait. Abu Dhabi is reported to be building two pipelines - one for oil, the other for natural gas - across the desert to Fujairah, where it plans to construct a huge export terminal and an oil storage facility. Tehran has threatened several times to close the strait if the United States launches pre-emptive attacks against Iran's nuclear facilities. This could be done by sinking large ships to block the waterway, in airstrikes or missile attacks, or by placing sea mines. On a typical day, around 15 tankers carrying up to 17 million barrels of oil and oil products, along with dozens of freighters, pass through the strait - two-fifths of the world's oil supply. This comprises most of the oil and liquefied natural gas exported by Saudi Arabia, the UAE, Qatar and Kuwait, as well as Iran and those from southern Iraq.

Going the other way, the Gulf Cooperation Council states (Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Qatar and Bahrain) import most of their food and consumer goods through the strait and a prolonged shutdown would cause serious economic and social disruption. The gulf region holds 55% of the world's known oil reserves. So a prolonged closure of the 112-mile strait, whose eastern shore is controlled by Iran, would send oil prices soaring, causing a global economic shockwave. The U.S. Energy Information Administration estimates that if the strait were closed, only about 3 million barrels of oil per day could realistically be redirected through Saudi Arabia through a trans-Arabian pipeline to the Red Sea port of Yanbu on the kingdom's west coast. There would no other way to transport the 31 million tons a year of LNG (18% of world consumption) that Qatar and the emirates export. However, the UAE and Saudi Arabia are planning to construct a major rail network across the peninsula that would allow them to move oil and gas exports overland to the west to the Red Sea or north through Iraq to Turkey to join the European energy grid, as well as to bring in imports. (Various 18.11)

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5.7 UAE Imports Rise As Demand Picks Up

Imports to the United Arab Emirates increased in August, pointing to stronger domestic demand, while non-oil export growth increased to key markets such as India. The Opec member's imports rose 9.8% year-on-year to $11 billion in August, a sharp rise after a 0.9% slump in the previous month, preliminary data from the UAE Federal Customs Authority (FCA) showed. Exports without crude soared 91.7% to 9.1 billion dirhams, after a 23.7% increase in July, while growth in re-exports accelerated to 21.5%. India, China and the United States topped the list of exporting countries to the UAE, while in the field of non-oil exports, Norway, India and Switzerland were the main importing countries from the UAE. India, Iran and Iraq ranked as the highest re-exporting countries. The Customs Authority did not release figures for oil exports. The UAE booked a trade surplus of $16 billion last year with exports and imports down 15.8% and 11.9% respectively from 2008 as the global crisis hit the second-largest Arab economy. The country expects the trade surplus for 2010 to be 15% higher. (Various 17.11)

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5.8 Egypt To Issue Tender For First Nuclear Plant By Year End

Egypt is set to offer an international tender for its first nuclear power plant in El-Debaa, according to Minister of Electricity and Energy Younis. The final draft of the tender for the plant on the country’s Mediterranean Sea coast is being put together and the power plant is scheduled to begin operations in 2019. Younis has earlier estimated that the 1,000MW plant would cost $4b. Younis travelled to Russia recently for talks with officials about boosting cooperation programs between the two nations, including the nuclear energy sector. Russia was also involved in Iran’s first nuclear power plant in Bushehr. French nuclear giant Areva and the US firm Westinghouse have already contributed towards the project as consultants. Egypt follows the UAE, which awarded a $20bn contract at the end of last year to a South Korean consortium led by KEPCO, and Jordan, which has also chosen South Korean firms to set up a research reactor near the city of Aqaba. Saudi Arabia and Kuwait have also expressed their interest in building nuclear power stations. (AB 14.11)

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5.9 Pakistani Defense Sector Expected To Grow by 10% Per Annum Until 2015

Research and Markets (http://www.researchandmarkets.com) "Pakistani Defense Sector - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015" says The Pakistani defense industry, which valued $6.3 billion in 2009, is expected to grow at a CAGR of 10.26% over the forecast period, to reach a value of $10.4 billion by 2015. Indeed, the increased internal instability of the country following the onset of its participation in the international military campaign against terrorism, which is widely referred to as the war on terror, will continue to drive Pakistani defense expenditure during the next five years; while its long-standing territorial dispute with neighboring India means that the Pakistani defense strategy will largely correspond with the Indian spending and development program.

Furthermore, Pakistan is expected to allocate 3% of its GDP for defense during the forecast period, despite its relatively small economy. However, while the country received an additional $7.6 billion of military aid from the US for its contributions towards the war on terror during the review period, it is expected to receive aid of $9 billion during the forecast period. Moreover, Pakistan has been subjected to more than 5,000 terrorist attacks in the past five years, which have not only resulted in the death of many civilians, but have also adversely affected the economy, as several foreign companies have close operations within the country and new ones are reluctant to establish new business in the country. Consequently, the US has established a Pakistan counter-insurgency fund, worth $1.2 billion annually (from 2011 onwards, currently it is $700 million), to provide the Pakistani Armed Forces (PAF) with counter-insurgency training and related defense systems. (R&M 22.11)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Turkey Unveils Wide Tax Relief

On 15 November, the Turkish government announced an extensive plan to relieve delinquent taxpayers, warning of tougher measures against evaders in the future to stamp out a large unregistered economy. Deputy Prime Minister Babacan, who unveiled the draft bill, declined to say how much revenue was expected from the scheme, dismissing as "rumor" media reports that the government was hoping for up to $34.6 billion. The plan, prompted by the global financial crisis last year, covers corporate, customs and other taxes, social security premiums, fines, water and electricity bills and university fees, which had been due before July 31. It allows for the payment of past-due taxes and outstanding arrears with a minimal interest rate, forgiving accumulated penalties, and in installments stretching over up to 36 months, on the condition that the beneficiaries do not default on their liabilities after July 31, Babacan said. Some fines would be slashed, and some small taxes and fines completely cancelled, he added. The revenue this plan will generate has not been included in the draft budget for 2011, the minister said, adding that the government would decide later how the money would be used. The ruling Islamist-rooted Justice and Development Party, in power since November 2002, will compete for a third straight term in office in general elections next year, expected in June. The legislation will take effect after it is passed by parliament, a process likely to take several weeks. EU-hopeful Turkey has staged a spectacular recovery from the global crisis, with gross domestic product growing by 11.7 and 10.3% in the first and second quarters respectively. But chronic problems such as unemployment and a large unregistered economy remain as major challenges for the government. (Various 18.11)

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6.2 Cyprus 2010 GDP Growth Seen at 0.5 - 1.0%

Finance Minister Stavrakis said on 15 November that the island’s economy is seen growing between 0.5 and 1.0% in 2010. The economy grew 0.6% in Q3/10, its third quarter of growth after five quarters of contraction. Authorities reported an upturn in banking and tourism, while construction remained in negative territory. The finance ministry's main scenario sees nominal GDP expanding to €17.5b in 2010, from €16.9b in 2009. Stavrakis said the island's budget deficit could fall to 5.5% of GDP without any unforeseeable expenses in the last two months of the year. Its deficit reached 5.96% of GDP in 2009. The island was placed under the EU's excessive deficit procedure and must incrementally cut its deficit to 4.5% of GDP in 2011 and below 3.0% in 2012. (FM 15.11)

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6.3 Greece’s 2011 Budget Sees Spending Cuts & Revenues

A reduction of the public deficit to 7.4% of GDP is envisaged in the draft 2011 budget tabled by the Greek government on 18 November, via a fiscal consolidation program of spending cuts and higher revenues amounting to €14.3 billion. Measures taken by the government in 2010 plus new measures in 2011 are seen increasing state revenues by €7.83 billion, while action to cut costs is expected to yield savings of €6.5 billion. The measures raising revenues include the 2010 measures for higher special taxes on tobacco, cigarettes and fuel, higher VAT rates and the 'maintenance fines' imposed for ubiquitous building permit violations in Greek buildings (projected to raise €1.5 billion). A further €4.05 billion are expected to be raised through additional measures in 2011. The new measures in 2011 include an increase in the lower VAT brackets - from 5.5% to 6.5% and 11% to 13% - that is expected to yield an additional €800 million in taxes, offset by a €250 million reduction in tax revenues caused by moving tourism services and pharmaceuticals to the lower 6.5% VAT rate. A further €600 million is expected to enter state coffers by making tax on heating fuel the same as for diesel, while at the same time paying out €200 million in heating benefits.

The above two measures will replace that of moving 30% of all products from the 11% VAT rate to the 23% VAT rate, originally envisaged under the Memorandum for the bailout loans to Greece. A levy on businesses making a profit is seen yielding €1 billion, while taxation of undistributed business profits at 20% instead of 24% is seen reducing revenues by €320 million. Another €948 million will be raised through the new income tax framework, €300 million from the taxation of unauthorized buildings, €270 million by increasing land values for tax purposes, €150 million in green taxes and €1.59 billion from measures to combat tax evasion and sale of contraband goods.

Of the cost-cutting measures envisioned, €1.15 billion in savings is expected to arise by transferring the repercussions of measures taken in 2010 to 2011 and another €1.5 billion from measures foreseen under the Memorandum for public-sector incomes, the impact of the Kallikratis plan redrawing the boundaries of local government and savings achieved by the Single Payments Authority.

The remaining €3.85 billion are expected to arise from new measures in 2011, chief of which is a reduction in health sector spending by €2.1 billion. This is seen arising from lower costs for pharmaceutical spending by state hospitals and social insurance organizations, lower prices for pharmaceuticals and a new system for purchasing hospital supplies.

A further €800 million in savings is to arise by restructuring state utilities and enterprises, €500 million by reducing defense spending, €200 million by reducing state-sector operating costs, €150 million by introducing income criteria in the payment of family benefits and €100 million by further reductions in the number of those employed by the state with temporary contract. (ANA 19.11)

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6.4 Greek Jobless Rate Hits Record High

On 11 November, the Hellenic Statistical Authority (ELSTAT) announced that Greece’s unemployment hit a record high in August. The unemployment rate jumped to 12.2% from 12% in July as austerity measures aimed at slashing the budget deficit led to job cuts. It is the highest reading since Greece started compiling monthly jobless data in 2004. A record 613,108 people were without work, 35% more than in August 2009. Unemployment has hit young people the hardest, with the jobless rate reaching 30.8% in the 15-24 age group and 16.4% for those aged 25 to 34. Workers in construction, tourism and retail businesses have been particularly affected. Greece’s jobless rate was the fourth highest in the 16-member eurozone after Spain, Slovakia and Ireland and 2.2%age points above the bloc’s average. The EU and IMF expect Greek unemployment to rise to 14.5% next year. Employment is expected to suffer as the Greek economy goes through its deepest recession in almost 40 years, partly due to austerity policies needed to shore up the country’s finances and avoid a debt default in exchange for an €110b EU-IMF bailout. (Various 11.11)

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6.5 Bulgaria & Russia Sign South Stream Agreement

Bulgaria and Russia have signed an intergovernmental agreement for the construction of the Bulgarian section of the South Stream gas transit pipeline in the presence of their Prime Ministers Borisov and Putin in Sofia. The two state delegations of Bulgaria and Russia formally signed the South Stream agreement, consisting of two documents, which had been prepared in advance in the past few weeks.

The deal stipulates the establishment of a joint venture, South Stream AD, which will manage the construction and the operation of the South Stream gas transit pipeline on Bulgarian territory – which will be the most crucial land section of the pipe. BEH and Gazprom will each have a 50% share. The South Stream gas transit pipeline is supposed to be ready by 2015. Its construction is expected to cost between €19b and €24b. It will be transporting 63 billion cubic meters of natural gas annually, or 35% of Russia's total annual natural gas export to Europe. The South Stream pipe will start near Novorosiysk on the Russian Black Sea coast, and will go to Bulgaria's Varna; the underwater section will be 900 km long. In Bulgaria, the pipe is supposed to split in two - one pipeline going to Greece and Southern Italy, and another one going to Austria and Northern Italy through Serbia, Croatia and Slovenia.

The project was initiated by Gazprom and the Italian company Eni, and the French company EdF is also planned to join as a shareholder. It is seen as a competitor to the EU-sponsored project Nabucco seeking to bring non-Russian gas to Europe. The ownership of the Russian-Bulgarian joint company to build and manage the Bulgarian South Stream section will be split 50-50%. (SMN 14.11)

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6.6 Bulgaria Revamps Euro Bid Plans – Looking to H2/11 For ERM II

Bulgaria's center-right government has revived its plans to apply to join the bloc's exchange-rate mechanism, the so-called Eurozone waiting room, after it was forced to drop the euro bid in April this year over a larger than expected 2009 deficit. Earlier this year the government touted plans for the country to join the euro-zone entry mechanism ERM II no later than next year with adoption of the single currency slated for 2012. It had to put off plans to join the euro area entry mechanism after its 2009 revised budget gap exceeded the 3% EU threshold. Finance Minister Djankov, a World Bank economist, hoped to offset a possible reluctance to admit Bulgaria into the ERM, stemming from the global crisis, by garnishing the application with a targeted balanced 2010 budget, small 2009 deficit and laws overhauling the inefficient health-care and social-security systems. Entry into the so-called Eurozone waiting room would have brought Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and was conditional on whether the new government would succeed to restore Brussels trust and the budget deficit that the country has posted. Countries must be members of ERM II for two years before they can formally join the eurozone. The lev is already linked to the euro in a currency board that keeps the Bulgarian currency at 1.9558 to the euro. (SMN 18.11)

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6.7 Unemployment in Bulgaria Falls to 8.9 % in October

The unemployment rate in Bulgaria has continued its gradual fall for an eighth consecutive month in October, reaching 8.9%. In the same month, 334,671 was the total number of people registered in employment bureaus. This indicates a drop by 4,300 in comparison to September. According to the Labor Minister, the 2010 over-the-year unemployment rate will be 9.5%, which is approximately 2% lower than the initially expected 11.4% by the Bulgarian state budget. After the Bulgarian unemployment rate peaked in February 2010 at 10.2%, it has been decreasing slowly but steadily in the last 8 months. (SMN 12.11)

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6.8 Bulgaria Opens Way To Start LNG Talks With Qatar

Bulgaria and Qatar have signed a confidentiality deal paving the way for talks on LNG deliveries from the Arab country, state gas company Bulgargaz said on 19 November, as Sofia seeks to cut dependence on Russian gas. Bulgaria, the poorest European Union member, has stepped up efforts to reduce its almost complete reliance on Russian gas by diversifying routes and supplies after a dispute between Russia and Ukraine in 2009 left it, and much of the region, without gas for weeks in freezing temperatures. A lack of separate gas links with neighbors and the inability to reverse gas flows in pipelines that bring Russian gas to Greece and Turkey, worsened the crisis for the Balkan country. Since then, Sofia has announced plans to link its gas network with those of Greece, Romania, Serbia and Turkey and has signed a memorandum of understanding for gas deliveries from Azerbaijan. Under a project between Azeri state oil company Socar and Bulgaria's Bulgartransgaz, Azeri gas would be transported via a pipeline to Georgia to be compressed and shipped by tankers to Bulgaria's Black Sea port of Varna. Sofia is also supporting the EU-backed Nabucco pipeline which is planned to run through its territory and has expressed concerns over delays in its development. (Various 20.11)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Chanukah Celebrated in Israel & the World Over

On Wednesday evening, 1 December, the Jewish world begins the observance of the eight day Chanukah holiday. From the Hebrew word for "dedication" or "consecration", Hanukkah marks the rededication of the Temple in Jerusalem after its desecration by the forces of Seleucid Greeks and commemorates the "miracle of the container of oil". The re-dedication followed the liberation of Jerusalem by the Jewish forces, or Maccabees, who were fighting to regain their independence against the Greek invaders. There was only enough consecrated olive oil to fuel the eternal flame in the Temple for one day. Miraculously, the oil burned for eight days, which was the length of time it took to press, prepare and consecrate fresh olive oil. The holiday also celebrates the military victory and the restoration of Jewish independence. The holiday lasts until 9 December.

Though business is permitted during this holiday, the week in Israel is marked by many leaving work early to be with the family at nightfall, in time to light the menorah, or eight branched candelabra. The primary ritual, according to Jewish law and custom, is to light a single light each night for eight nights. As a universally practiced "beautification" of the mitzvah, the number of lights lit is increased by one each night. There is also a custom of eating foods fried in oil as a culinary way of commemorating the Chanukah miracle after the Maccabees won the battle against the Greeks ruling Israel. While the favored fried Chanukah treat of Israelis is the jelly doughnut, most North American Jews prefer latkes, a grated potato-and-onion pancake fried in oil and served with sour cream or apple sauce.

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7.2 Islamic New Year Falls on 7 December

The Islamic New Year is a cultural event which Muslims observe on the first day of Muharram, the first month in the Islamic calendar. Islamic New Year is based on the revolutions of the Moon. Thus, the Hijra year is only 354 days long. Muslims celebrate Islamic New Year's Day (Al-Hijra) in very different manner from other celebrations. Muslims gather in mosques and offer special prayers and listen to special readings from the Koran. Many Muslims use the day to remember the significance of this month, and the Hijra, or migration, Islamic prophet Muhammad made to the city now known as Medina. Recently, in many areas of Muslim population, people have begun exchanging cards and gifts on this day, though this is not commonly done. For Shia Muslims, Muharram is the month grief and sorrow because they mourn the death of Imam Hussain and his companions on the day of Ashura, 10 Muharram.

*REGIONAL:

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7.3 Jordanian Loyalists Sweep Election

Loyalists of King Abdullah II have won a majority of seats in Jordan's next parliament, in an election that the opposition Islamic Action Front (IAF) boycotted in protest against electoral laws they said were unfair. The 9 November vote saw 763 candidates vying for 120 seats in the lower house of parliament, in which they will serve a four-year term. The official results showed that most of the house will be filled by loyalists and tribal-linked candidates likely to continue Abdullah's pro-Western policies. The figures showed 17 of those elected were from opposition political parties, not including the IAF, and that 78 MPs were newcomers to the house. Officials said the turnout was 53%, but the IAF, the political wing of the Muslim Brotherhood in Jordan, disputed the figure, saying most voters had stayed away. Turnout in Amman, the capital, was just 34%. The outcome of the election ensures Abdullah will encounter little opposition in the legislature but there are signs of growing unrest on the streets.

Many Jordanians are grappling with poverty and are increasingly coming to resent the government's failure to confront Israel more forcefully over stalled Middle East peace efforts. There were violent incidents across the country during the voting and police in Amman had to use tear gas to disperse crowds of clashing political rivals.

Among the winners were 20 former cabinet ministers, with many of the newcomers from Bedouin tribal families that form the bedrock of support for Abdullah. Jordan's flagging economy, the crawling pace of political reforms and the stalled Israeli-Palestinian peace effort were some of the main campaign issues. The new parliament will help Abdullah keep a steady course on his central foreign policy goals: continuing his strong alliance with the US and limiting criticism of Israel.

The IAF boycott surrounded an electoral law adopted in May that it said gave less weight to votes cast in areas where it has the most support. Only one of its candidates, Ahmed Qudah - who went against the boycott and ran as an independent - won a seat in the new parliament. The group had six seats in the previous parliament, its power far reduced from the majority it last held in 1989. Jordan has been without a parliament since November 2009 when Abdullah dissolved a 2007 legislature and called an election two years early after press allegations about ineffectiveness and corruption among MPs. (Various 12.11)

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7.4 Iraq's Talabani Upbeat On New Government

There is a consensus on a national unity government in Iraq, leaving only the distribution of ministers left as an obstacle, the Iraqi president said. Iraq agreed on 10 November to a power-sharing deal that divides power among Sunnis, Shiites and Kurds. Shiite Iraqi Prime Minister Nouri al-Maliki secured a second term through a nomination process in the Iraqi Parliament after lawmakers nominated Osama al-Nujaifi, a Sunni member of the Iraqiya slate as the speaker. Jalal Talabani, a Kurd, retains his position as president of Iraq. Iyad Allawi, the leader of Iraqiya, walked out of the 11 November parliamentary session following concerns over issues related to the outlawed Baath Party. Talabani said the top nominations were final and a new government was expected soon. The 10 November agreement ended eight months of political deadlock in Iraq. Talabani, however, said the impasse was technically only five months because the first three months were spent on legal measures and ratifying the results of the inconclusive vote. Allawi led Iraqiya to a two-seat victory over Maliki's State of Law coalition, though both fell well short of the 163-seat majority needed to form a new government alone.

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7.5 Egyptian Parliamentary Elections Of 2010

The Egyptian parliamentary elections of 2010 will be held in Egypt on 28 November 2010 while the second round of the elections will be held in the 5 December 2010. The scheduled three-stage election is to determine its lower house membership. The elections formed the Eighth Assembly since the adoption of the 1971 Constitution. Egyptian authorities have arrested hundreds of Muslim Brotherhood members in advance of the November 28 parliamentary elections. Some 600 have been arrested in various raids, including those detained for hanging campaign posters displaying the group’s slogan "Islam is the solution," now banned. Those jailed are often released within weeks, although those still in detention (approximately 250) include several regional Muslim Brotherhood leaders. Others arrested include members, campaigners, party lawyers and parliamentary candidates. The Muslim Brotherhood is attempting to field 135 candidates for a total of 508 elected seats in parliament, though so far at least 28 are being barred from registration by the Higher Electoral Commission. The Muslim Brotherhood, Egypt's largest opposition group, ignored early calls for an election boycott, saying the best way to usher in reform was by taking part in the political process. The group took 20% of the parliamentary seats in 2005 elections by fielding its candidates as independents because they are barred from competing openly. Ruling National Democracy Party officials, meanwhile, said they wouldn't allow outsiders to monitor the Nov. 28 poll, describing it is foreign interference.

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7.6 Alevis Seen As ’Threat’ To Religious Education In Turkey

Demands from some members of Turkey’s Alevi community to eliminate mandatory religious classes constitute a "threat" to the Religious Affairs Directorate, according to the institution’s strategic plan document. The institution included the demands to abolish the classes under its threat subcategory in a document that delineates its aims and vision for the years 2009-2013. The ruling Justice and Development Party, or AKP, has previously highlighted the directorate as the body best able to solve the Alevi issue. Alevis argue that only Sunni Islam is being taught in compulsory religion classes. Alevis, who some see as a liberal branch of Islam, remain divided over the classes, with some community groups demanding that the lessons be eliminated, while others have demanded that Alevi topics be included in course material. In 2009, in the first step of the government’s Alevi opening, Prime Minister Erdogan participated in a fast-breaking meal with Alevis, promising that the content of religion class books would be changed. (Hurriyet 22.11)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 SleepQuest Purchases Additional WatchPAT Devices by Itamar for Home Sleep Diagnostics

SleepQuest, an American provider of comprehensive sleep apnea services, has purchased additional units of Itamar-Medical’s WatchPAT as it extends its sleep testing and diagnosis program across the US. WatchPAT is the most convenient, portable sleep testing device on the market today easily installed by the patient in the comfort of their own home. With thousands of WatchPAT systems in use at the world’s prominent clinical institutions diagnosing sleep apnea, including Veteran Hospitals (VA), Kaiser Permanente, and Aleris FysiologLab (Sweden), WatchPAT is the ambulatory sleep testing unit of choice for convenient and accurate diagnosis. Diagnosing patients in their own bed at home is more convenient to the patient and more accurately reflects the patient’s actual sleep environment. With over 250,000 tests worldwide, WatchPAT is the only portable device providing Apnea-Hypopnea Index (AHI), Respiratory Disturbance Index (RDI), and Oxygen Desaturation Index (ODI) based on actual sleep time and sleep states without a cumbersome nasal cannula or belt around the chest. This gives the patient greater comfort, more natural sleep, as well as an amazingly low failure rate. Sleep physicians use Itamar’s intuitive software to review the data channels and manually override the automatic suggested scoring (the actual sleep data cannot be changed). WatchPAT’s newest features include multi-night capability, tamper-proof occupational testing, and seamless, web-based study upload to Electronic Medical Records. Caesarea’s Itamar Medical (http://www.itamar-medical.com) is a publicly-traded medical technology company (TASE: ITMR) utilizing PAT (Peripheral Arterial Tone) signal technology and applications. The PAT signal is a non-invasive "window" to both the cardiovascular and autonomic nervous systems. (Itamar Medical 16.11)

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8.2 EarlySense’s EverOn Contact-Free Patient Supervision System Wins Popular Science Best Award

EarlySense announced it is a winner of a 2010 Popular Science Best of What's New award in the health category. The Best of What’s New Award is the magazine’s top honor and the 100 winners, chosen from among thousands of entrants, represent the highest level of achievement in their fields. The EverOn System is an FDA and CE cleared, automatic, continuous, patient monitoring system, approved for use in hospitals and homes. The system activates the moment the patient enters the bed using a contact-free sensor that slips under the mattress and never touches the patient. The system records and documents cardiac, respiratory, and motion parameters for up to 36 patients at a time and alerts staff when thresholds are crossed, as well as if a patient needs turning to avoid pressure ulcers or is leaving the bed and is in danger of falling. Nurses are informed of patient status changes on the patient’s bed side monitor, at the nurse’s station, on their mobile phones and on a large screen display mounted in a prominent spot on the wall in the department.

Ramat Gan’s EarlySense (http://www.earlysense.com) is bringing to market an innovative technology designed to advance proactive and preventive patient supervision to enable better patient outcomes. The company’s flagship product, EverOn, is an automatic, continuous, contact-free patient supervision device that follows and documents a patient’s vital signs and movement. There are no leads or cuffs to connect to the patient, who has complete freedom of movement and is not burdened by any irritating attachments. (EarlySense 17.11)

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8.3 BioCancell Successfully Raises $5.1 Million in Public Offering

Excess demand in BioCancell’s public offering of shares and warrants generated immediate proceeds of $5.1 million, 18% above its stated minimal fundraising goal of $4.3 million. Units offered to the public included ten shares, five Series 3 Warrants and five Series 4 Warrants, and were offered at a minimum price of NIS 29.50 ($8.08), with the offer closing with all successful bidders paying NIS 33.00 ($9.03), a premium of 12% on the minimum price and 24% on the market price at the day of the offering (NIS 2.66, or $0.73). The offering was led by Israeli distributor Clal Finance Underwriting.

The proceeds will support BioCancell’s efforts to accelerate its clinical pipeline, with emphasis on a Phase IIb pancreatic cancer clinical trial. BC-819, BioCancell’s lead drug, recently completed a Phase I/IIa pancreatic cancer clinical trial, showing an excellent safety profile and significant preliminary efficiency. BioCancell is preparing an FDA application to commence an advanced, international Phase IIb clinical trial of BC-819 given in sequence with the FDA-approved cancer drug Gemzar, a combination that has shown better efficiency on animals than either of these drugs alone. BC-819 is also undergoing clinical trials for bladder cancer (Phase IIb) and ovarian cancer (Phase I/IIa).

Jerusalem’s BioCancell (http://www.biocancell.com), founded in 2004, specializes in developing treatments for a wide range of types of cancer. BioCancell has developed a series of drugs that use plasmids (biological material) as a targeted treatment for cancer. Lead drug candidate BC-819 is based on the use of the H19 gene, expressed only in cancerous cells, to synthesize a toxin in the cancerous cells only, causing cancer cell destruction without significant side effects or damage to surrounding tissue. (BioCancell 22.11)

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8.4 Compugen Discovers Platform for Protein Families with Known Therapeutic Applications

Compugen announced the development of its Protein Family Members Discovery Platform, designed for the discovery of novel protein members belonging to various known and clinically important protein families. Analysis of the in silico prediction and selection results for the B7/CD28 protein family, the first of three such families selected for validation activities for the new platform, resulted in the identification of nine molecules predicted to be currently unknown members of this intensely and widely studied protein family. Five of these nine molecules were identified in the initial analysis, and an additional four were subsequently identified with the benefit of additional insights gained due to those initial discoveries. The other two protein families selected for platform validation activities have not been disclosed. In many cases, when a protein belonging to a specific biological family is found to show promise as a drug or drug target for therapy for a specific disease or a group of diseases, this leads to a substantial effort by the biopharmaceutical industry and academic community to find additional members of such family that could serve as new drugs or drug targets. However, traditional experimental or bioinformatics-based approaches are often not sensitive enough to detect new members. Therefore, Compugen used its proprietary predictive biology capabilities to develop a platform designed for the systematic discovery of novel protein members belonging to clinically important protein families.

Proteins belonging to the B7/CD28 co-stimulatory family are known to play a key role in regulating immune response, and therefore are expected to have significant clinical potential in many pathological conditions, including autoimmune diseases and cancer. Although of significant industry interest, when relying on traditional discovery methods, the discovery of new B7/CD28 protein family members has, in general, proven to be a very challenging task. Therefore, the B7/CD28 family was one of the three protein families selected for development and validation of the Protein Family Members Platform; the other two protein families were selected for similar reasons. CGEN-15001, the discovery of which was recently disclosed by Compugen, was one of the nine molecules predicted to be members of the B7/CD28 family, and was the first of these predicted molecules to undergo extensive validation. In initial studies under the direction of Professor Stephen Miller from Northwestern University, a world expert in the field of multiple sclerosis, CGEN-15001 demonstrated significant therapeutic potential for multiple sclerosis.

Tel Aviv’s Compugen (http://www.cgen.com) is a leading drug and diagnostic product candidate discovery company. Unlike traditional high throughput trial and error experimental based discovery, Compugen’s discovery efforts are based on in silico (by computer) product candidate prediction and selection utilizing a broad and continuously growing infrastructure of proprietary scientific understandings and predictive platforms, algorithms, machine learning systems and other computational biology tools to address important unmet therapeutic and diagnostic needs - either for Compugen or its partners. Compugen’s growing number of collaborations covering the further development and commercialization of Compugen discovered product candidates all provide Compugen with potential milestone payments and royalties on product sales or other forms of revenue sharing. (Compugen 22.11)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Alvarion Selected by 4G Africa to Deploy 4G Network in Cameroon

Alvarion was chosen by 4G Africa AG to deploy the first Mobile WiMAX network in Cameroon. The deployment in the cities of Douala and Yaounda, two of Cameroon’s largest metropolitan areas with a total population 5 million people, will provide coverage using Alvarion’s end-to-end Mobile WiMAX 4Motion solution at the 2.5 GHz frequency band. The deployment is expected to provide connectivity to over 10,000 users within the first year. 4G WiMAX presents an ideal business case for enabling mobile broadband to mass consumers. By building a network based on Alvarion’s leading platform, 4G Africa can cost-effectively offer a wide range of data services to consumers in Cameroon. Sub-Saharan Africa is considered to be one of the world’s fastest growing economies, yet lacks the proper infrastructure. 4G Africa, a Swiss company based in Zurich, was founded by a team of telecom entrepreneurs who were actively involved in emerging markets for the last decade. Tel Aviv’s Alvarion (http://www.alvarion.com) is a global 4G communications leader with the industry’s most extensive customer base, including hundreds of commercial 4G deployments. Alvarion’s industry leading network solutions for broadband wireless technologies WiMAX, TD-LTE and WiFi, enable broadband applications for service providers and enterprises covering a variety of industries such as mobile broadband, residential and business broadband, utilities, municipalities and public safety agencies. Through an open network strategy, superior IP and OFDMA know-how and ability to deploy large scale end-to-end turnkey networks, Alvarion is delivering the true 4G broadband experience today. (Alvarion 10.11)

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9.2 Texas Advanced Computing Center Selects Mellanox for New Large-Scale Lonestar 4 Cluster

Mellanox Technologies announced that the Texas Advanced Computing Center (TACC) has selected Mellanox’s full range of end-to-end 40Gb/s InfiniBand products, including ConnectX-2 adapter cards, IS5600 648-port switch systems, blade switches and cables for its upcoming 1,888-node Lonestar 4 cluster. Expected to be online in February 2011, the 40Gb/s InfiniBand Lonestar 4 cluster is expected to be the third largest cluster in the National Science Foundation TeraGrid. Mellanox’s end-to-end InfiniBand connectivity, consisting of the ConnectX-2 line of I/O adapter products, gateways, cables and comprehensive IS5000 family of fixed and modular switches, delivers industry-leading bandwidth, efficiency, reliability and scalability. Mellanox provides its worldwide customers with the broadest, most advanced and highest performing end-to-end networking solutions for the world’s most compute-demanding applications. Yokneam’s Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox 16.11)

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9.3 Discretix CPRM Content Protection Client Shipping on Selected Mobile Phones in Japan

Discretix announced that its CPRM Client has been shipping on selected mobile phones in Japan since June 2010. Discretix’ CPRM Client, part of the company’s globally deployed Multi-Scheme DRM Client, protects the distribution of music, video and other premium content on SD memory cards and mobile handsets using the handset’s processor, thus eliminating the need for dedicated CPRM hardware. Building on the proven track record of Multi-Scheme DRM Client, Discretix’ CPRM is ideally suited to the mobile devices due to its exceptional performance and low power consumption. CPRM, promoted by the 4C Entity, is the most widely deployed content protection system for SD memory cards in Japan. The Discretix solution implements CPRM without the need for a dedicated CPRM hardware chip. It also supports all CPRM formats including SD-Binding, SD-Audio, SD-Video and SD-Separate Delivery (SD-SD).

Kfar Netter’s Discretix’ (http://www.discretix.com) security solutions are deployed in a wide range of consumer electronics devices enabling services and applications, while protecting the device and its contents. Discretix’ products include embedded security co-processors and a broad range of security applications. The solutions are tightly integrated into the device, enhancing security without compromising the user experience. Discretix, a privately-owned company, serves the needs of some of the world’s best-known semiconductor and device manufacturers and has been consistently ranked among the leaders of the embedded security market. (Discretix 15.11)

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9.4 Mellanox Announces Next Generation InfiniBand Technology

Mellanox Technologies announced the company’s support for the InfiniBand Trade Association’s (IBTA) FDR specification. The combination of Mellanox adapter, switch, software and cables will deliver complete end-to-end FDR InfiniBand interconnect solutions in 2011. The added bandwidth and features will be utilized by supercomputers and mega warehouse data centers to deliver the highest performance, efficiency and scalability for applications in high performance computing, cloud computing, database, financial services, virtualization and Web 2.0 market segments. For over 10 years and five generations of products, Mellanox has been the leader in bringing InfiniBand technology to market. Mellanox InfiniBand solutions, delivering industry-leading performance and scalability, connect the world’s leading high-performance computing systems and storage networks. Mellanox interconnect offloading technology, application accelerations, end-to-end integration and advanced capabilities deliver the highest efficiencies to end-users in HPC, enterprise and cloud computing. Yokneam’s Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox 15.11)

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9.5 Voltaire Announces FDR InfiniBand Switch Development Plans

Voltaire announced plans to deliver FDR (fourteen data rate) InfiniBand switching platforms that adhere to the InfiniBand Trade Association’s (IBTA) specifications for next generation InfiniBand. The new platforms will deliver an 80% increase in server-to-server throughput and improved scalability for faster application runtime. The switches will also have full compatibility with Voltaire’s unique portfolio of application acceleration and fabric orchestration software to enable even greater fabric performance, scalability and management. The Voltaire switches are expected to be available in the second half of 2011, aligned with the anticipated release of next generation server platforms and PCIe 3.0. Voltaire Grid Director switches provide high-performance InfiniBand connectivity and low latency to enable high-performance applications to run on distributed server, network and storage resources. Moreover, the switches’ power-efficient design offers low power and cooling requirements. They are used by customers worldwide in industries including financial services, manufacturing, energy, life sciences and HPC.

Ra’anana’s Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire’s family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. Used by more than 30% of the Fortune 100 and other premier organizations across many industries, including many of the TOP500 supercomputers, Voltaire products are included in server and blade offerings from Bull, Fujitsu, HP, IBM, NEC and SGI. (Voltaire 15.11)

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9.6 RADVISION Gateway Connects Microsoft Lync with Telepresence Solutions

RADVISION announced the SCOPIA Unified Communications (UC) Gateway for Microsoft Lync 2010 delivering interoperability for Lync with standards-based video conferencing solutions. The SCOPIA UC Gateway is a result of RADVISION working with Microsoft Corp. to develop video conferencing solutions with Microsoft Lync. It is based on a newly developed architectural platform designed to meet the scalability and affordability requirements of the UC market. The SCOPIA UC Gateway will allow customers to realize the benefits of Lync in conjunction with their existing deployments of room-based video conferencing systems and visual communication solutions such as telepresence and video on mobile devices. The SCOPIA UC Gateway for Microsoft Lync is expected to be generally available in Q1/11. 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 communications solutions 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. (RADVISION 17.11)

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9.7 Altair Chipsets Selected by Mobyland to Power Poland’s First Commercial-Grade LTE Solution

Altair Semiconductor has been selected by Mobyland to power the first commercial-grade deployment available on a 1800MHz LTE network in Poland. The solution, an LTE-USB modem based on Altair's FourGee-3100/6200 technology, is manufactured by IPWireless, and has already successfully conducted extensive interoperability testing and completed rigorous field testing, allowing for immediate deployment on Mobyland's network. The LTE USB modem is equipped with two internal antennas and two antenna connections for an external MIMO antenna. The modem currently operates in the 10 MHz band and is software upgradeable to operate in the 20MHz band as well, and allows for download speeds of up to 73mb/s and uploads of 25mb/s. The modem may be used with computers operating Windows 7, Vista, XP, 2000 and Mac OS systems. Mobyland's 1800MHz LTE network in Poland was built in partnership with CenterNet and is based on Huawei's end-to-end LTE/EPC technology. The LTE network covers Poland's largest cities, including Warsaw, Katowice and Lodz, allowing Mobyland to provide unparalleled mobile broadband service to operators and their end users with peak downlink speeds of more than 146 Mb/s per user.

Hod Hasharon’s Altair Semiconductor (http://www.altair-semi.com) is the world's leading developer of ultra-low power, small footprint and high performance 4G semiconductors. The company's products provide device manufacturers integrating 4G LTE technology into their products with a highly power-optimized, robust and cost-effective solution. Altair's comprehensive product portfolio includes baseband processors, multi-band RF transceivers for both FDD and TDD bands, and a range of reference hardware and product level protocol stack software. Based on a novel, proprietary Software Defined Radio (SDR) processor, codenamed "O2P", Altair's products are the smallest and most highly power optimized in the industry, offering an unmatched combination of flexibility and performance. (Altair 17.11)

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9.8 Incapsula Launches Cloud-based Web Application Firewall Service

Incapsula announced the debut of its cloud-based Web Application Firewall (WAF) service. Incapsula offers businesses an easy and affordable way to manage website security and performance in-house. For hosting and other service providers, Incapsula enables website security to be extended to an entire customer base and can serve as a platform to offer additional IT services. Adding a website to Incapsula is a simple five-minute process that does not require installation of hardware or software, just a simple DNS change. Incapsula inspects all incoming traffic to any subscriber's website, keeping hackers out while accelerating outgoing traffic. The Incapsula service is suitable for the SMB and cloud market, requiring minimal setup with monthly subscriptions starting at only $50 a month. Incapsula is also designed to enable hosting companies, MSSPs and other service providers an effective platform for managing the security and performance of their customers' websites. Incapsula is currently in Beta and already protecting dozens of websites that are using the service. Tel Aviv’s Incapsula (http://www.incapsula.com) is a cloud-based service that makes websites safer, faster and more reliable. Incapsula provides websites of all sizes with capabilities that so far, have only been consumable by the very large internet websites. Founded by a group of industry veterans with rich backgrounds in web application security, online safety and identity theft, the company's mission is to provide every website, regardless of its size, with enterprise-grade website security and availability. (Incapsula 17.11)

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9.9 TraceSpan Adds Enhanced TR-156 Support to Its GPON Xpert Analyzer

TraceSpan Communications announced a new version of the GPON Xpert analyzer, which includes new network efficiency (DBA) analysis tools, additional VLAN routing analysis tools and various other powerful capabilities. GPON Xpert is a passive multi-layer protocol analyzer for GPON networks, designed for engineers engaged in the development, testing and deployment of GPON solutions. GPON Xpert cuts significant time from GPON development, deployment, debugging, and interoperability testing, thus accelerating time-to-market and return-on-investment. For network operators and equipment developers interested in the network efficiency and utilization, GPON Xpert's newly introduced DBA analysis tools enable monitoring of bandwidth allocation and efficiency of the network activity. Various parameters, including the transmitted vs. idle traffic ratio and the ONU and T-CONT queue lengths, are displayed in charts and graphs, along with statistics and information about peak traffic. For those interested in service provisioning, troubleshooting and standard conformance, the newly introduced VLAN routing analysis tools provide a convenient graphical display of the VLAN flow through the GPON network as defined in the Broadband Forum TR-156 and TR-167 standards. With its unique multi-layer analysis capability, GPON Xpert is the only tool in the market today which can also compare the VLAN tagging and filtering information defined in the OMCI with that in the actual Ethernet traffic and clearly indicate any mismatch between them.

Ra’anana TraceSpan Communications (http://www.tracespan.com) develops and manufactures innovative broadband monitoring solutions. Empowered by patent-pending breakthrough technology, TraceSpan's performance analysis and Lawful Interception products enable non-intrusive monitoring of data in broadband networks. TraceSpan's multi-layer analyzers are accepted worldwide as the industry's first passive analyzers for vendor-independent testing of VDSL2, ADSL2Plus, ADSL2, ADSL and GPON networks. (TraceSpan 22.11)

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9.10 Siano Launches Integrated Receiver Chip for Latin America's Emerging Digital TV Market

Siano Mobile Silicon announced the launch of a new product, targeting the digital TV markets of Latin America and Japan. The SMS2270 supports the ISDB-T high definition DTV technology, also known as ISDB-T "full-segment". After remarkable success in the mobile segment of the DTV market in Latin America, the new Siano product now addresses the home TV market, car TV, and high-definition portable TV applications. Introducing best-in-class performance, the integrated RF tuner and demodulator single chip from Siano allows crystal-clear reception even in tough conditions, such as when using a sub-optimized antenna, deep-indoor locations, and noisy electronic environment. ISDB-T DTV services already cover most of the populations in Brazil, Argentina, Chile, and other countries. In addition to the ISDB-T DTV format, deployed in Latin America and Japan, the SMS2270 also supports the DVB-T format, which is deployed in Europe, Australia, and some places in the Middle East and Southeast Asia. This allows manufactures of TV sets and set-top boxes to efficiently make products for multiple target markets using the same design and same component inventory. With a built-in USB 2.0 core as well as an MPEG2 Transport Stream interface, the SMS2270 is ideal for PC cards and motherboards, as well as for TV sets and set-top boxes. Kfar Netter’s Siano Mobile Silicon (http://www.siano-ms.com) is the leading mobile digital TV chip maker in the world. Pioneers of the multi-standard approach, Siano's highly integrated silicon receiver chips enable high-performance, fast time-to-market mobile TV solutions for handheld device makers. Siano offers a complete family of MDTV receiver chips for the key emerging mobile TV markets in Europe, South America and China and works closely with global tier-1 PC and mobile handset manufacturers. (Siano 23.11)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s October CPI Increases by 0.3%

On 15 November, the Central Bureau of Statistics announced that October's Consumer Price Index rose by 0.3%, as predicted. The annual inflation rate stands at 2.5%, slightly above the government's annual inflation target (1 -3%). The inflation trend over the past four months indicates a higher annual inflation rate of 3.2%. The October index was mainly influenced by significant price rises recorded in the following fields: Clothing and apparel (7.5%); fresh vegetables (7.3%); hotels (5.5%); toiletries and cosmetics (4.5%). Meanwhile, drops were recorded in the cost of housing (1.1%) and overseas travel (4.2%). (CBS 15.11)

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10.2 Israel’s GDP Growth Stronger Than Expected

On 16 November, the Central Bureau of Statistics announced that Israel’s GDP grew at an annual pace of 3.8% in Q3/10, well above the pundits’ predictions of 2.5 - 3%. This follows 4.5% growth in Q2/10 and 3.9% growth in Q1. These figures are a preliminary estimate of third quarter GDP. The rise in GDP in the third quarter reflects a notable rise in public expenditure and investments in fixed assets. On the other hand, there was a modest rise of 1.3% in private consumption, and a 9.6% fall in exports of goods and services in the third quarter of 2010. The 1.3% fall in private consumption means that there was a 0.5% in GDP per capita expenditure.

Business output grew 3.9% on an annualized basis in the third quarter of 2010, after climbing 5.1% in the second quarter and 4.8% in the first quarter. Imports of goods and services fell 4.6% in the third quarter on an annualized basis after rising 5.9% in the second quarter. The 9.6% fall in exports in the third quarter came after a 13.9% rise in the preceding quarter. The fall in exports was felt across the spectrum of goods and services. Industrial exports (excluding diamonds) were down 5% on an annualized basis in the third quarter, diamond exports were down 27.2%, tourist services were down 42.9%, agricultural exports were down 44.2%, and other services (mainly software, R&D and transport) were down 12.3%. (CBS 16.11)

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10.3 Israel Enjoys 6th Straight Quarter Of Growth

Israel's economy grew for a sixth straight quarter in the July-September period, but falling exports stemming from weak US and European economies slowed the rate and are expected to dampen growth into 2011. The Central Bureau of Statistics said in an initial estimate on 16 November that the GDP grew an annualized 3.8% in Q3/10. Growth slowed from a 4.5% pace in Q2/10, but the economy has expanded at least 3.6% in every three-month period since the third quarter of 2009, as Israel rebound from a brief recession in the wake of the global financial crisis. The Bank of Israel forecasts 4% growth in 2010, easing to 3.8% in 2011. The economy grew 0.8% to about $210 billion in 2009. (CBS 16.11)

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10.4 High Tech Leads Drop In Exports

On 11 November, the Central Bureau of Statistics released data showing Israeli exports are declining. Industrial exports, the economy's primary growth engine, fell 12% in seasonally adjusted figures from $3.6 billion in July to $3.18 billion in October. High-tech sectors accounted for most of the fall in industrial exports, declining by 15% in seasonally adjusted figures from $1.87 billion in July to $1.58 billion in October. Mixed high-tech industrial exports fell from $980 million in July to $849 million in October. A breakdown of industrial exports by subsector (in original figures), shows that high-tech exports fell 17% to $1.5 billion in October from $1.79 billion in October 2009. Most of the drop was due to lower exports of electronic components, which were halved over the 12 months. Pharmaceuticals exports fell from $500 million in October 2009 to $412 million in October 2010. (CBS 11.11)

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10.5 Israel’s Unemployment at its Lowest Since 1990

On 11 November, the Israeli Employment Service announced that during September, 194,206 job seekers turned to employment agencies, which is 14% fewer than the number of job seekers in September 2009. The figure constitutes a 2.5% reduction in the number of job seekers since August. According to the Employment Service, more than 20,000 job openings were registered at the service in September, 8,883 of them for non-professional positions. The number of unemployed individuals, which stood at 160,000 in the beginning of 2008, reached 208,000 in July 2009 (an unemployment rate of 7.9%) caused by the global financial crisis. It has been declining since. Dark predictions have circulated in the job market over the past two decades, warning that immigration, reproduction, privatization, globalization and outsourcing will bring on massive unemployment. The data reported by the Employment Service show that the opposite has happened.

In 1990, the number of the unemployed stood at 158,000, while in Q2/10, it stood at 182,000. Figuring in the growth of the population and the employment market, the figures constitute a sharp decline from an unemployment rate of 9.6% in the beginning of the '90s to 5.9% in Q3/10, the lowest rate in 20 years. However, the rate of people who do not work in Israel is still high compared to other nations, largely because of the number of people who are not seeking work at all. (12.11)

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11: IN DEPTH

11.1 ISRAEL: Summary of Israeli Private Equity Deals – Q3 / 2010

The following are the findings of the IVC-GKH Quarterly Private Equity (PE) Survey conducted by IVC Research Center (http://www.ivc-online.com), which for more than 14 years has been at the forefront of private equity, high-tech and venture capital research and data in Israel. The Survey reviews Israeli private equity deals, involving Israeli and foreign PE funds. The Survey is based on the activity of 33 private equity funds of which 14 are Israeli and 19 are foreign.

A total of eight private equity (PE) deals were closed in Israel in Q3 2010, representing an aggregate deal value of $277 million. This is a 90% increase from Q2 2010's eight PE deals with an aggregate value of $146 million. Third quarter 2010 figures were 54% above the $180 million reported for the 13 private equity deals concluded in Q3 2009.

In the third quarter of 2010, private equity deals valued at over $50 million accounted for 66% of total aggregated deal value; deals valued at $20 million to $50 million accounted for 16%; and deals valued at under $20 million accounted for the remaining 18%. In the second quarter of 2010, as well as in the third quarter of 2009, all deals were valued at under $50 million each.

In Q3 2010, clean tech - the most attractive sector for private equity funds - represented 43% of total deal value. The infrastructure sector followed with 27%, and then the retail sector with 16%. In the previous quarter, real estate attracted 56% of capital invested, followed by semiconductors with 24%, and the retail sector with 9%. In Q3 2009, the most attractive sector was real estate with 25% of total deal value, followed by industrial technologies with 19% and life sciences with 17%.

The average deal value in the third quarter of 2010 was $35 million, compared to $18 million in the previous quarter and $14 million in the third quarter of 2009.

Israeli Private Equity Deal types

Straight equity investments accounted for 50% of total deal value in Q3 2010, with five deals valued at $137 million. This compares to the $57 million (three deals) of Q2 2010, and the $164 million (10 deals) of Q3 2009. In Q3 2010, the average straight equity investment was valued at $27.5 million, compared to $19 million in Q2 2010 and $16 million in the third quarter of 2009.

One buyout valued at $75 million represented 27% of the aggregate deal value in Q3 2010, which compares with $48 million or 33% in Q2 2010 and $6 million or 3% in Q3 2009.

One mezzanine financing accounted for $50 million, or 18% of the aggregate deal value, compared to $7 million (two deals) or 5% in the previous quarter, and $10 million (one deal) or 6% in Q3 2009.

One distressed debt deal accounted for $15 million, or 5% of the aggregate deal value, compared to $34 million (two deals) or 23% in the previous quarter. No distressed debt deals were reported in Q3 2009.

In the first three quarters of 2010, the five largest Israeli private equity deals accounted for 40% of aggregate deal value. Tene closed a buyout of thermostat manufacturer Fishman Thermo for $85 million. Israeli Infrastructure Fund (IIF) followed with a buyout of toll highway operator Derech Eretz for $75 million. Ergasol's $58 million deal with solar systems installer Inbar Solar was the third largest. FIMI closed a $50 million mezzanine financing with civil engineering company Tahal, while Beresheit and KCPS completed a $48 million buyout of Mishkenot Clal, an operator of residential centers.

Israeli Private Equity Funds

"Currently, there are 27 active Israeli private equity funds, with total managed capital standing at $6 billion in 2010," observes Marianna Shapira, Research Manager at IVC Research Center. "Three new Israeli PE funds were established both in 2010 and in 2009. Among the active funds, eight are fully invested, but continue to manage their portfolio companies. There are five typical types of financing in the Israeli private equity arena: buyouts, mezzanine, distressed debt, turnaround/ distressed equity and straight equity reviewed in this survey," concluded Shapira.

IVC Research Center is Israel’s leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC products and services are used regularly by high-tech companies, venture capital and PE funds, private investors, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of Israel and the Office of the Chief Scientist.

IVC owns and operates the IVC Online Database (http://www.ivc-online.com) containing over 8,000 Israeli high-tech companies, venture capital funds, investment companies, angels and technology incubators, as well as news updates and lots more. Among IVC products and publications are the IVC Quarterly Survey, which examines capital raising trends by Israeli high-tech companies, and the most comprehensive guide to Israeli high technology and venture capital – the IVC 2011 Yearbook due in April 2011. (IVC 22.11)

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11.2 BAHRAIN: Economic Freedoms

The Oxford Business Group cited a series of international surveys published recently point towards the Bahrain’s open and conducive investment environment as a key competitive advantage. On November 2, the Canadian public policy research the Fraser Institute released its latest study on economic freedom in the Arab world, with Bahrain ranked the most liberal of the 22 economies covered in the report. Published in conjunction with Germany’s Friedrich Naumann Foundation for Liberty and the Oman-based International Research Foundation, the report used data collected under broad headings such as size of government, commercial and economic law and security of property rights, and access to sound money. It also covered freedom to trade internationally and the regulation of credit, labor and business. Of the five categories, Bahrain was first or second in three, only missing out on a top spot in the areas of size of government and security of property rights.

Bahrain’s performance in 2010 may come as no surprise to many observers, as the Kingdom was placed first in the rankings in each of the research group’s six previous studies on regional economic freedoms. Overall, out of a maximum of 10, Bahrain was given a score of eight, with Kuwait next on the ladder with 7.8, Lebanon with 7.6 and Jordan and Qatar tying with an average of 7.4.

Commenting on the report on the day of its release, Sheikh Mohammed bin Essa Al Khalifa, the chief executive of the Bahrain Economic Development Board (EDB), said the consistent top of the table ranking by the study was a reflection of a decade of social and economic reforms. "The link between economic freedom, economic growth, development and other positive outcomes is well documented," he said, "and individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity and greater individual freedoms. This report reflects the prudent steps that we in Bahrain have taken to build an open economy based on ethical values."

This year’s Index of Economic Freedom, produced by the conservative Washington-based policy research centre the Heritage Foundation and the Wall Street Journal, also ranked Bahrain top in the Middle East and North African region, and 13th globally.

According to the Heritage Foundation’s index, structural reforms and openness to global commerce have made Bahrain a financial hub and a regional leader in economic freedoms. "One of the region’s least oil-dependent economies, it has a competitive tax regime and a sophisticated financial sector that facilitates the flow of capital and foreign investment," the Heritage Foundation said in April. "The government has modernized the regulatory framework and continues to focus on diversifying the productive base." The report said that while there had been a slowing of the economy due to the international financial crisis, Bahrain had managed to improve its average on the index by implementing reforms that saw improvements in trade freedom, investment freedom, labor freedom and freedom from corruption.

However, another report, the World Economic Forum’s (WEF) Arab World’s Economic Competitiveness Review 2010, issued in October, drew different conclusions, commenting that the Kingdom still had work to do in terms of strengthening its economy. The WEF recommended that Bahrain do more to promote business and research innovation in order to support its efforts to broaden the base of the economy, including doing more to encourage collaboration between business and academia.

While there are undoubtedly some issues that need to be addressed, the findings of the surveys of Bahrain’s economy suggest the long-term economic reform program being implemented by the government is well on track – and bearing fruit. (OBG 10.11)

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11.3 QATAR: Meeting the Challenges

Recent reports from the IMF and Qatari authorities confirm that Qatar is on track to be the fastest-growing economy in the Middle East, and may be among the fastest in the world. The Oxford Business Group said Qatari officials are well aware though that the broader global economic environment remains volatile and are therefore looking to make adjustments to secure steady growth; a primary part of this will be preventing a sudden surge in interest that could cause the economy to overheat.

The economies of many countries have faced the challenge of a slower than desirable recovery from the downturn of 2008-2009. However, having expanded by 8.6% last year, local officials estimate the Qatari economy will expand by between 16% and 21% this year. The IMF and other agencies support these expectations, with projections of GDP approaching an increase of 18.5%.

The most pertinent issue facing the Qatari economy is volatility in oil and gas prices. Any significant decline in hydrocarbons prices would result in a parallel drop in earnings - the country remains very reliant on these reserves for the bilk of revenue generation. Qatar’s diverse client list includes importers from Western Europe and the Far East, providing some insulation from fluctuations in the hydrocarbons market. However, the market for Qatar’s oil can also change given the macroeconomic factors at play in client’s economies. The nation’s hydrocarbons production is set to peak in 2012, with liquid natural gas output expected to reach 77m tonnes that year.

The impact of future fluctuations, it is hoped, will also be mitigated increasingly by the growing diversity of the economy. While hydrocarbons remain the largest single sector in the economy, there has been a significant shift away from this historic dependence on oil and gas, to the extent that last year the industry contributed only 45% of GDP, down from 60% in the five years up to 2008.

State spending has helped increase the projected growth of GDP, and the focus of the spending is to stimulate the economy within the parameters of broader diversification aims. The government is looking to make investments of more than $123.5bn over the next ten years inside the country, with additional investments abroad also building on the extensive progress already made.

While central banks around the world have been forced to slash interest rates in order to encourage borrowing, Qatar’s reserve bank lowered its base rates in August in an attempt discourage high levels of capital inflow, seen as having the potential to fuel overheating. In mid-October, the central bank said it was essential to manage liquidity and maintain stable conditions in the financial market, with any large interest rate differential between Qatar and advanced economies potentially encouraging these heavy inflows of capital. In response the bank said it had adopted a "flexible approach in the conduct of monetary policy … complementing it with measures that strengthened financial stability". Included, a part of this approach was the 50 basis point reduction in its overnight interest rate, which took its key rate to 1.5%, the first cut since May 2008.

There are concerns that inflationary pressure could be fed by this strong growth and rising consumer demand. Recent figures suggest the baseline figure, while not currently rising, could reverse and increase. Data issued by the Qatar Statistics Authority in late October showed that the consumer price index fell by just 0.9% year on year in September, the slowest rate of deflation in 2010 to date.

According to John Sfakianakis, chief economist at Banque Saudi Fransi, while inflation may be negative for the year, due to the strong deflationary trends in the first half of 2010, there will be a flattening out of any pricing troughs. "Deflation should now begin to bottom out, given that we are seeing two consecutive months of no deflationary trends," he said in an interview with the Reuters news agency on October 27. Though price increases may occur in 2011, Qatar’s measured handling of what was the worst economic crisis in 60 years has showcased its strong fiscal management credentials. (OBG 16.11)

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11.4 UAE: Abu Dhabi 'AA/A-1+' Sovereign Ratings Affirmed by S&P

On 22 November, Standard & Poor's Ratings Services (http://www.standardandpoors.com) affirmed its 'AA' long-term and 'A-1+' short-term sovereign credit ratings on the Emirate of Abu Dhabi, a member of the United Arab Emirates (UAE). The outlook is stable. Their Transfer & Convertibility assessment is unchanged at 'AA+'. "The ratings on Abu Dhabi are supported by the government's very strong asset position, which provides significant financial flexibility, and that has allowed the emirate - through strong countercyclical policies and preemptive support to the financial sector - to face the global economic downturn with a high degree of resilience," said Standard & Poor's credit analyst Luc Marchand.

The ratings are also underpinned by the country's domestic political stability and wealth, reinforced by its rich resource endowment, and policies that reinforce Abu Dhabi's integration with the global economy. The ratings are constrained by the geopolitical risks that face all sovereigns in the region, the lack of transparency, and limited availability of financial and economic data, particularly regarding the government's assets, as well as the contingent liabilities arising from the banking system and the public sector of the UAE as a whole. "The stable outlook on Abu Dhabi balances the Emirate's strong financial position and prudent policies against geopolitical risks, high contingent liabilities, and potential impediments to growth stemming from undeveloped institutions," said Mr. Marchand.

Furthermore, significant improvements in transparency and availability of financial and economic data, and progress on institutional reforms such as institutions necessary to improve the functioning of a market economy, could have a favorable impact on the ratings in the coming years, as would a lasting reduction of geopolitical risk. Conversely, and although we deem such a scenario as currently unlikely, we could lower the ratings by several notches if regional geopolitical risks escalate sharply, threatening Abu Dhabi's political and economic stability, or if domestic events comprise political stability. (S&P 22.11)

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11.5 EGYPT: Egypt’s Electoral Commission: Who’s Running the Show?

Bahey Eldin Hassan wrote on 22 November in the Carnegie Arab Reform Bulletin (http://www.carnegieendowment.org/arb) that the Higher Electoral Commission is an independent, neutral body capable of performing its functions, according to Egyptian government officials and high ranking members of the National Democratic Party (NDP). An analysis of the commission’s actual composition and behavior reveals, however, that it is not independent, functions only intermittently and has limited legal authorities, funding and manpower. Its main function is to announce the results of an electoral process that it lacks the means to manage or supervise.

Meanwhile, there is a wide-ranging, no-holds-barred regime campaign to repress the supporters of certain opposition candidates, alongside an unprecedented level of intimidation of the media, civil society, and human rights groups attempting to monitor the electoral process. The commission is powerless to utter a single word about these developments, which will have a profound effect on the elections’ freeness and fairness.

Composition of the Commission

An amendment to Article 88 of the Egyptian Constitution in March 2007 transferred parliamentary election oversight from the judiciary to "an independent, neutral commission." This body includes two commissioners by virtue of their positions: the heads of the appeals courts in Cairo (who chairs the commission) and in Alexandria. Also on the panel are two other judges chosen by the Supreme Court and the State Council, as well as seven members (three former judges and four public figures) selected by the People’s Assembly and the Shura Council. Because the NDP has an overwhelming majority in both houses of parliament, the ruling party effectively chooses 7 out of 11 commissioners. These seven serve three-year terms, whereas the chairman and the three other active judges serve much shorter terms; by virtue of their seniority they tend to be close to mandatory retirement age.

This rapid turnover in the commission’s leadership has seriously impeded its competence; current chairman al-Sayyid Abdul Aziz Omar assumed his position only eight weeks before the elections and is the third chairman in one year. Whatever limited institutional memory does exist within the electoral commission resides in its NDP-appointed members and permanent staff: six Ministry of Justice employees and one from the Ministry of Interior.

The electoral commission is entrusted, in theory, with a wide range of tasks including determining the polling stations and vote-counting centers, laying down the rules for preparing voter lists (although the Ministry of Interior actually prepares the lists), making proposals for electoral district boundaries (however the Ministry of Interior actually sets the districts) and setting the rules regulating campaigning (but the commission cannot stop the Ministry of Information from imposing its own rules on the media). The law also states that the electoral commission "receives and investigates the veracity of reports and complaints" and "contributes to election awareness and education efforts." The commission, however, has neither the human nor the financial resources to undertake these tasks with such a tiny permanent staff, which are supplemented by tens of thousands of state bureaucrats on temporary loan only during elections.

Given these limitations, the electoral commission has been unable to implement some of the decisions it has issued recently. The commission announced that campaigning could not start before November 15, for example, but was unable to stop several serving ministers and other candidates from campaigning openly well before that date. The electoral commission also capped campaign spending at $35,000, but some candidates had passed that limit even before campaigning officially started. Places of worship are supposedly off-limits for campaigning, but several top NDP candidates have been disregarding this rule, even as the electoral commission berates Muslim Brotherhood candidates for campaigning under the slogan "Islam is the solution." Furthermore, the electoral commission seems to have relinquished to the security forces its power to enforce the conditions it had set for accepting thousands of observers from local human rights organizations.

Role of the Ministry of Interior

Besides preparing the voter lists and drawing the electoral district boundaries, the Ministry of Interior also registers candidates, issues regulations for the exercise of political rights, and oversees a quarter of a million employees working in polling places and vote-counting centers.

According to reports by human rights groups, the Ministry of Interior effectively dominated the process of registering candidates and denied dozens of nomination requests - many from the Muslim Brotherhood - without any stated justification. Some of the rejected candidates promptly complained to the administrative court, winning rulings in their favor, but so far the Ministry of Interior has refused to carry out the rulings, circumventing them with appeals to other courts. This has been a common delaying tactic, used to ensure that the limited time available (only a few weeks between candidate registration and the elections) runs out. It has been particularly effective this year considering that the administrative court issued many rulings on the eve of the five-day Eid al-Adha holiday.

A struggle is now shaping up between the commission and the ministry on this issue, as the commission announced on November 18 that it would implement administrative court rulings in favor of several candidates, including some who had broken off from the NDP. So far it is not clear whether the rulings will be implemented.

The Electoral Commission Chairman

According to the assessments of a number of prominent judges defending judicial independence (and who played a groundbreaking role in previous struggles for free and fair elections), electoral commission chairman al-Sayyid Abdul Aziz Omar is an independent, honest judge who realizes what his job entails—to market results for which the commission cannot bear responsibility - and what it does not entail - intervening in the election process itself. For this reason, during the two interviews Omar has given to the press, with al-Wafd and al-Shurouq, he seemed to be trying to clear his conscience early on.

The chairman during these interviews acknowledged that the commission cannot possibly play a vital role, "as it is the Ministry of Interior that prepares the voter rolls and sets the polling centers" and "the Ministry of Justice that prepares the list of judges who will head the general commissions." Omar indicated that he could not promise that the elections would be fair, as this "depends on the government’s intentions" - meaning that if the government has bad intentions, the electoral commission’s hands are tied. Omar also expressed his regret that he was incapable of forcing the ministers to take down their own campaign posters that were put up before the official start of the campaign season and that he had no alternative to government bureaucrats in staffing the electoral commission.

Perhaps nothing better embodies the electoral commission’s sad state than its Chairman Omar’s description of his feelings during the two interviews: impotence, grief, regret, and anguish. In a decision that perhaps was not surprising, the electoral commission moved in its first meeting after the interviews were published to appoint a senior Ministry of Justice employee as its spokesperson. Bahey Eldin Hassan is director of the Cairo Institute for Human Rights Studies. (ARB 22.11)

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11.6 MALTA: 2010 Article IV Consultation Concluding Statement of the IMF Mission

The IMF reported that Malta weathered the global recession relatively well. Output fell less than the euro area average and unemployment rose only modestly, also reflecting government support. At the same time, the fiscal deficit remained relatively contained. Driven by external demand, a cyclical upswing is now underway and growth is projected at around 3% this year but lower next year. To achieve strong and sustainable growth over the medium term, policy makers need to adopt a strategic approach that includes growth friendly and ambitious fiscal consolidation and continued progress in establishing high value export activities. It also requires prudent macroeconomic and financial risk management and prevention policies. Here, efforts need to be stepped up to protect financial stability and safeguard against systemic and fiscal risks.

Outlook

1. Malta is experiencing a cyclical upswing driven by strong external demand, but momentum is expected to fade. Manufacturing and tourism activity, hit hard by the global recession, have recovered with the latter near pre-crisis record levels. However, the recovery is not yet broad based and some sectors are lagging behind. On the back of softer real estate prices and somewhat higher unemployment, consumption growth slowed but is supported by very low interest rates. Investment, especially in construction, decelerated sharply and remains sluggish. Inflation has picked up as the ongoing rebound allows firms to rebuild profit margins and pass on higher energy prices but underlying inflation is expected to remain contained. Over the medium term, economic growth may exceed the euro area average if reform momentum and diversification into high value export activities is sustained.

2. Uncertainty remains high and the risks tilted to the downside. Real estate market weakness could turn out deeper and more protracted than expected as excess supply in segments of the real estate market and some debt overhang need to be worked off. If the fragile economic and financial situation in parts of the euro area worsened, negative spillovers might occur. Moreover, Malta’s attractiveness as a business location and some of its new high-growth export activities (e.g. some business and financial services, pharmaceuticals, etc.) could be adversely affected should EU or member state regulations or taxation change. On the upside, low interest rates and stronger demand for Malta’s exports could sustain growth momentum longer than anticipated.

The Policy Agenda

3. Strong, balanced and sustainable growth requires a strategic policy approach and prudent risk management. Fiscal consolidation should be growth friendly, supported by increased public sector efficiency and accompanied by the necessary reforms to raise productivity and employment rates. Recent international experience underlines that prudent financial regulation and supervision is indispensable, especially in view of rising vulnerabilities associated with high domestic credit risk and the growing linkages of Malta’s financial sector with the rest of the world in the context of volatile international financial markets.

Ensuring sustainable fiscal consolidation

4. The government’s goal of reducing the fiscal deficit to 1.4% by 2013 is welcome. Malta’s high vulnerability as a small and very open economy calls for particularly prudent debt management which should also anticipate the tightening of EU-wide rules on high debt. The increase in public debt, guarantees and implicit liabilities also related to state-owned enterprises, necessitates ambitious fiscal consolidation. Consolidation should be expenditure based and not impede further progress in attracting high value added export activities. Setting expenditure priorities and containing entitlements are crucial for lasting fiscal consolidation.

5. However, there are significant risks that adjustment may fall short of targets, especially in outer years. The government seems on track to stay within its deficit target for 2010. Past revenue performance was boosted by tax amnesties, relatively strong bank profits, and, more recently, the sharp economic rebound. Economic growth and financial activity may slow more than currently expected by the government and future tax revenue turn out lower than the latest targets. On the expenditure side, the intention to contain government wages and spending on goods and services over the next years is welcome but slippages are likely. A more strategic approach that protects spending priorities, identifies areas to cut, is fully backed up with concrete measures and accounts for contingencies would raise the credibility of adjustment plans. This would limit the chance of last minute cuts, often at the expense of investment, or missing deficit targets.

6. A strengthening of fiscal institutions would safeguard the government’s consolidation plans. Ongoing initiatives to enhance accountability and transparency of the financial and budgetary framework are welcome. Progress on these and additional action should be supported by the recent EU directive on requirements for budgetary frameworks of Member States. The implementation of a legally anchored, strong fiscal rule to better control public expenditure growth should be considered. Further tax amnesties may harm tax collection over the medium term.

7. A bold and comprehensive pension reform is critical to contain future fiscal costs of the system. Under the current system, Malta’s age-related public spending is projected to increase significantly over the long term and by more than the EU average. Much of this reflects higher subsidies for the pay-as-you-go pension system due to an expected sharp rise in old-age dependency ratios. A timely but gradual introduction of an additional mandatory and privately funded pillar would allow the government to reduce further the benefits of the pay-as-you-go system over time. Another option would be to gradually transition from a pay-as-you go to a notionally defined contribution system under the condition it delivered the needed cost saving.

Safeguarding Financial Stability

8. Vulnerabilities are rising in Malta’s financial sector. Conservative funding models and a focus on domestic assets kept spillovers from the global financial crisis to banks in Malta at bay. However, the past real estate boom led private debt to increase significantly. The household debt-to-GDP ratio remains below euro area average but the non-financial corporate sector appears highly leveraged. Banks have tightened lending policies and bank credit growth has decelerated, although it remains relatively strong on the basis of continued household mortgage lending. Capital market activity has picked up markedly reflecting issuance of bank and other corporate bonds, also by large companies active in the commercial real estate market. After an extended period of high growth, real estate prices experienced some correction and appear to have stabilized more recently, but excess supply remains in segments of the market. Experience from other countries in the euro area underscores the importance of treating such potential imbalances proactively.

9. Profitability in the banking sector is coming increasingly under pressure. The sharp price recovery of equity and debt securities boosted profitability in 2009. But provisions and non-performing loans are on an upward trend, with both mortgage-backed household loans and commercial real estate loans being key drivers, weighing on profitability. Also, some banks have benefited from higher capital markets activity in Malta which may slow.

10. The authorities need to step up efforts to protect financial stability and safeguard against systemic and fiscal risks. Growing linkages in financial markets require that the central bank’s financial stability assessment includes all banks operating in Malta. This should be discussed in an appropriately differentiated manner in the central bank’s stability reports which should also include thorough assessments of the real estate and capital markets. For the latter, transparency should be raised as credit rating for domestic corporate bond issuance is absent and often involves retail investors. A strengthening of supervisory and regulatory arrangements to better link macro and micro prudential regulation is warranted, for both the banking sector and capital markets as is also being implemented at the European level. The crisis management framework should also be enhanced.

11. High credit risk and growing exposure to securities in parts of the Maltese banking sector call for heightened vigilance and determined supervisory action. Domestic credit risk is rising on the back of softer real estate prices and other sectors with still sluggish activity. Concentration risk is quite significant and many banks remain highly exposed to the real estate sector where variable mortgage rates prevail. Low coverage ratios and high uncertainty associated with real estate collateral valuation require a more conservative supervisory approach to ensure appropriate provisioning. At the same time, capital buffers need to strengthened, preferably through equity injections and retained earnings. Some banks are highly invested in foreign debt securities making full use of ECB enhanced credit support and low refinancing rates. The authorities should discourage bank business models that are overly reliant on ECB facilities for financing large investment portfolios. Supervisors should employ all available tools, including the issuance of directives, to aggressively reduce leverage in these cases.

Furthering the structural agenda towards a more sustainable growth model

12. The ongoing reallocation of employment and investment towards higher value-added production and services is improving external competitiveness and resilience to shocks. As a small and very open economy, Malta is adjusting to the challenges posed by globalization. Progress is being made in diversifying the economy into higher value-added activities, including aircraft maintenance, pharmaceuticals, financial and accounting services, ICT and more. Flexible and pragmatic polices played a crucial role and need to continue. Further upgrading and promoting synergies between the various economic clusters would reduce the risks stemming from potentially unfavorable changes in the international regulatory and taxation framework.

13. Raising productivity, skills and employment rates simultaneously is a challenge but necessary for catching up with incomes of richer European countries. State divestment has boosted economic efficiency and should be continued. Wages should follow productivity developments. Employment rates, in particular for women, remain low and more flexible arrangements for part-time work and flexible working practices could help. Support for higher education should increase, but a high quality public primary and secondary education system is also critical to reduce skill mismatch and ensure good employment and income opportunities for all. (IMF 22.11)

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11.7 TURKEY: Syria Talking Turkey

The Oxford Business Group writes that improving political and business ties with former adversary Turkey have had a positive impact upon Syria’s trade volumes this year, contributing to the latter’s rise as a regional and international player. The warming of relations has culminated in plans for a free trade zone that is expected to dominate regional economic cooperation.

Bilateral trade between Syria and Turkey is expected to this year exceed $2b in 2010, a 162% rise from levels in 2006. This figure is expected to rise next year, particularly if a free-trade zone between Turkey, Syria, Lebanon and Jordan is launched in early 2011 as planned.

"This free trade area will surely help remove obstacles to trade and further develop multi-faceted economic ties in our region," Turkish Foreign Minister Ahmet Davutoglu told OBG in an interview. "These agreements enable businesses to acquire capital, fueling production and fostering the development of new industries … This is a win-win scenario for peoples of our countries." The four nations agreed in June to launch the zone, which is expected to be officially unveiled in January as the leaders of the quartet gather for a summit in Istanbul.

"Enhancing economic integration and mutual interdependence among the four countries [in the new trade zone] would facilitate an optimum use of collective resources, promoting mutual trade and investments, and accelerating the economic liberalization processes," added Davutoglu.

Apart from progress on the free-trade zone, Turkish Prime Minister Recep Tayyip Erdogan hailed advances in bilateral ties when he met with Syrian President Bashir al-Assad in October. "Syria and Turkey are brother countries bound by historic and deep-rooted relations, and they have passed very important stages in political, cultural and economic domains recently," said Erdogan in Damascus.

In the same month, Syria’s finance minister, Mohammad al-Hussein announced on the sidelines of a Syrian-Turkish conference in the Mediterranean resort of Latakia that Turkey would be extending $247m in loans to its southern neighbor. The loan will be accessed on a project-by-project basis and partly directed towards urgent infrastructural upgrades. It comes after a raft of trade deals were signed by the countries in recent years. In 2007, the two countries signed a free trade agreement, while in 2009 visa requirements were scrapped and some 50 bilateral agreements were signed.

Also in Latakia, Syrian Economy and Trade Minister Lamia Assi said Turkey and Syria have agreed on the principles for establishing a joint bank and setting trade standards, as well as for establishing a trade arbitration centre to deal with commercial disagreements and support land, naval and air transportation. Minister of Transport Yarub Suleiman Badr also called for an increase in daily flights between the two countries - the number of Turkish tourists visiting Syria increased by 170% between January-July 2010 compared to the same period of 2009, according to Syrian tourism officials.

The thawing of relations with Ankara alongside cuts in custom tariffs has also boosted Syria’s ties with Europe and regional countries. Customs fees have fallen from 35% to 13.5% over the last decade, helping Syria’s export earnings increase by an average of 16.8% in the last five years, reaching S£720b ($15.9b) in 2009. The EU and the Arab states now account for almost 80% of Syria’s exports, but it is trade agreements with the latter, as well as Turkey, that have recently topped the agenda.

Syria had traditionally eyed its powerful neighbor to the north, which ruled the country during the Ottoman Empire, with suspicion. While Syrians now see Turkey – with its Islamist-leaning government and modern outlook – in a new light, Turkish officials are looking beyond Syria’s past support of Kurdish rebels.

Dubbed by the Economist as the "China of Europe" Turkey is emerging as a regional powerhouse, with the OECD projecting its economy will grow 6.8% this year and 4.5% in 2011. The country’s young population - with a median age of 29 - is set to expand to 82.6m by 2015, according to UN figures.

Syria’s economy is also showing signs of progress, with the country’s non-oil trade deficit falling to S£107b ($2.3b) by 2008 from S£190b ($4.1b) in 2004, and the Exports Development and Promotion Agency, in its 2010 strategy paper, targets a trade surplus by the year 2015.

Syria may well use its trade ties with Turkey as a template for links with other countries. The Exports Development and Promotion Agency noted in its 2010 strategy paper that Syria expects to sign free trade agreements with Iran, Russia, Belarus, Azerbaijan, Malaysia, the Mercosur countries, Switzerland and Sweden over the coming months. (OBG 16.11)

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