TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Finance Ministry & Shas Agree on Mortgage Subsidies
1.2 Israel & Italy to Form Closer Commercial Ties
1.3 Industry Minister seeks to Boost Israeli Trade with Brazil
1.4 Finance Ministry Allocates NIS 2 Billion for Export Insurance
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Negev Foundation Helps Renew MOU Between Ohio And Israeli Universities
2.2 Akron Relationship with Israeli Incubator Targetech Shows Promise
2.3 Google to Pay NIS 17 Million for modu's Patents
2.4 Jive Acquires OffiSync
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Harley-Davidson Eyes Double-Digit Growth in Middle East
3.2 Jordan Mobile Subscribers Up 10% In 2010
3.3 Bahrain's Arcapita Acquires US Retail Chain J.Jill
3.4 Canadian Firm Wins $96 Million Saudi Airport Deal
3.5 US Firm Wins $171 Million Jeddah Flood Control Deal
3.6 Egypt's Automotive Market Drops By 35.8% In April 2011
3.7 VeriFone Enables Turkey's First Pay-at-Pump Systems
3.8 US Hamburger Chain Opens First Branch in Turkey
3.9 NavCom Technology Announces New Dealer in Turkey
3.10 McDonald's signs Malta's Premier for Greece
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Water Shortages Threaten Growth in Arabian Gulf States
4.2 GreenWorld Appointed to Assist Development of Solar Energy in Bulgaria
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Iraq to Boosts Oil Output & Offer New Blocks
5.2 Port Rivalries May Test Arabian Gulf Relations
5.3 GCC Welcomes Bids By Jordan & Morocco To Join Gulf Bloc
5.4 Kuwait Will See 'Minimal' Impact From Regional Unrest
5.5 Annual Inflation in Bahrain Falls in April
5.6 UAE Annual inflation Increases by 1.1% in April
5.7 UAE Replaces Saudi as Top GCC Market for US Exports
5.8 Dubai's Non-Oil Trade Sees 31% Growth in January – February 2011
5.9 Saudi Arabia's Inflation Rises to 4.8% in April
5.10 Saudi Arabia to Overspend Its Budget By Up To 15% In 2011
5.11 Finance Minister Says Unrest Costs Egypt Economy $3.5 Billion
5.12 Tourism to Egypt Down 46% in First Quarter
5.13 Egypt's April Inflation Accelerates As Food Prices Increase
5.14 No Revisions to Aid Received by Egypt's Military From the US
5.15 Egypt's Total Merchandise Exports Beat Estimates
5.16 Egypt May See the Injection Of More Than $10 Billion Of Qatari Investments
5.17 Egypt to Increase Diesel Fuel & Natural Gas Subsidies by 50% in FY11/12
5.18 Suez Canal Revenues Grew Strongly By 16.4% in April 2011 to Reach $436.4 Million
5.19 Tunisia Needs $25 Billion Over Five Years
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkish Economy Suffers Blow in Its Current Account Deficit
6.2 Regional Unrest Costly to Turkey
6.3 Italy Pushes Eurofighter as Turkey's 'Only Alternative' To US Options
6.4 Turkey Including Russia & China From Defense Competition
6.5 Cyprus Inflation Is Well Over 3% in April
6.6 Cyprus Unemployment Jumps 4.5% Over Previous Month
6.7 IMF Sees Bulgarian Economic Growth At 3%, Inflation -5.3% End-2011
6.8 Bulgaria Economy Grows 2.5% in First Quarter
6.9 Bulgaria Registers 4.6% Annual Inflation in April 2011
6.10 Bulgaria to Sign On Nabucco Pipeline In Turkey On June 6
6.11 Bulgaria's New Car Market Starts To Improve in First Quarter
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Yom Yerushalayim - Jerusalem Day to Be Celebrated
7.2 Shavuot Holiday to be Marked on Eve of 8 June
*REGIONAL:
7.3 Jordan Independence Day 65
7.4 Kuwaiti Parliament Delays Questioning of PM for a year, Pending Constitutional Court Ruling
7.5 Saudi Woman Held For Driving
7.6 Cairo Adjusts Election Laws
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8: ISRAEL LIFE SCIENCE NEWS
8.1 ILSI Says 43% of Israeli Biomed Companies Generate Revenue
8.2 Atox Bio Completes Phase 1 for AB103 for Severe Bacterial Infections and Sepsis.
8.3 Phillies Fans' Free Asthma Screenings at Teva Respiratory Asthma Awareness Night
8.4 Gelesis Raises $3.6 Million from 16 Investors
8.5 Can-Fite Promising Analysis Data of Its Phase I/II Liver Cancer Study with the CF102 Drug
8.6 Ortho Space Raise $2.6 Million
8.7 Compugen Drug Candidate Discovery Method Interferes With Protein Conformations
8.8 Pharma Two B Plans for Phase II Study of “P2B001” for Parkinson's Disease
8.9 Cheetah Medical's Noninvasive Hemodynamic Monitoring Technology Highly Accurate
8.10 Taro Receives FDA Approval for Cetirizine Hydrochloride Oral Solution
8.11 LifeBond Raises $20 Million in a Third Financing Round
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Silicom Secures 2 New Design Wins for SETAC-Derivative Modules
9.2 RADVISION's SCOPIA Selected for VideoVisit Cloud-Based HD Video Conferencing
9.3 Neebula Systems Named "Cool Vendor" by Leading Analyst Firm
9.4 Mellanox Message Software for Lowest-Latency for a Wide Range of Financial Apps
9.5 NICE Situator Enables Portugal's Millennium With Situation Management Capabilities
9.6 Mellanox Sets New Record for Real-time Market Data over 10GbE on IBM Systems
9.7 tracx Launches New Module for Greater Level of Social Engagement
9.8 TestShell Recognized as the BEST Network Test Software
9.9 AutoRek Selects Magic Software's iBOLT Integration Platform
9.10 Elbit Systems to Supply Electro-Optical Payloads for Maritime Patrol Aircraft
9.11 http://www.atid-edi.com/#9_11
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's CPI Rises 0.6% in April
10.2 Israeli Growth Continues, Though More Slowly
10.3 Israel's Trade Deficit Hits All-Time High
10.4 Israel 17th Most Competitive Economy
10.5 Israel's Economy Lost 168,864 Days to Strikes in 2010
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11: IN DEPTH
11.1 ISRAEL: Top 50 Israeli Startups for 2011
11.2 JORDAN: Membership pending
11.3 GCC: The GCC at 30 - Shaking off the Dust?
11.4 KUWAIT: A New Chapter
11.5 QATAR: Research on the Rise
11.6 UAE: IMF Executive Board Concludes 2011 Article IV Consultation
11.7 EGYPT: Risk: Alert – Political Uncertainty Adds To Economic Woes
11.8 EGYPT: Seeking Capital Injection
11.9 EGYPT: Egyptian Democracy and the Sectarian Litmus Test
11.10 MOROCCO: Groundbreaking Path - Morocco Investing in Solar Development
11.11 MAURITANIA: Mauritania's Days of Rage
11.12 TURKEY: The Month of One-Offs: Explaining the C/A Surprise
11.13 GREECE: Fitch Downgrades Greece to 'B+'; Rating Watch Negative Ratings
11.14 BULGARIA: Statement at the Conclusion of an IMF Article IV Mission to Bulgaria
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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Finance Ministry & Shas Agree on Mortgage Subsidies
As Shas threatened to quit the coalition over mortgages, Minister of Finance Steinitz met with Shas Chairman and Minister of Interior Yishai and Minister of Housing & Construction Atias to solve the coalition crisis. It was reported that when it was all over, Steinitz agreed that families in peripheral regions will receive NIS 110,000 - 130,000 each, including an outright grant of NIS 60,000, and rest as subsidies on land and development. In return for the subsidies, Shas withdrew its housing subsidies bill from consideration. For the first time, young couples and people who really need it will receive direct help. Yishai told his coalition partners over the past few days that this was an economic crisis that could turn into a coalition crisis. Earlier, Prime Minister Netanyahu met Atias and Deputy Minister of Finance Cohen (also a Shas MK). (Globes 16.05)
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1.2 Israel & Italy to Form Closer Commercial Ties
The Israeli Embassy in Rome plans in June, for the first time, to host a joint Italian-Israeli business conference with the goal of tightening commercial ties. Some 100 Israeli companies in the agriculture, water, medical devices, homeland security and other fields are scheduled to attend the two-day conference. At least 15 new commercial contracts are due to be signed during the conference, which will ensure closer commercial ties between Israel and Italy. One key agreement that the embassy is trying to promote will permit the reciprocal conversion of drivers' licenses of the two countries, which will allow greater use of licenses issued in Israel in Italy, and vice versa. Joint research agreements will be signed in agriculture, science, medical devices, the handling of welfare issues, such as youth unemployment and other areas. In February 2010, Italian Prime Minister Berlusconi and several ministers visited Israel. During the visit, Berlusconi asked Prime Minister Netanyahu to tighten economic relations with Italy, and invited him to make a reciprocal visit. Berlusconi also tried to persuade Netanyahu to buy a large number of Italy's jet trainers for training Israel Air Force cadets. Netanyahu is due to visit Rome in June. (Globes 16.05)
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1.3 Industry Minister seeks to Boost Israeli Trade with Brazil
Minister of Industry, Trade & Labor Simhon left for Brazil 11 may, leading a delegation from 20 Israeli telecommunications companies. Simhon met senior Brazilian economic officials and the executives of leading companies, including energy giant Petrobras and aircraft manufacturer Embraer, which has extensive business ties with Elbit Systems. Simhon said that he will try to promote the adoption of Israeli technologies in upcoming international sports events that Brazil will host in the next few years, including the 2014 World Cup and the 2016 Rio de Janeiro Olympic Games. (Globes 16.05)
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1.4 Finance Ministry Allocates NIS 2 Billion for Export Insurance
On 22 May, Accountant General Oren signed a NIS 2 billion deal with Israel's credit insurance companies, government owned ASHRA - Israel Export Insurance Corp. and Clal Insurance Enterprises Holdings unit Clal Credit Insurance.. Half the money will cover 1-5 year export deals. This is the first time that the government is providing support for private credit insurance for medium-term export deals. The plan aims to improve the competitiveness of Israeli exporters, by expanding the credit for medium-term export deals. Exporters can apply to private export credit insurance companies, and obtain a policy that will be partly backed by the government. This is an unprecedented step for the government to encourage medium-term export deals by leveraging state money to expand the supply of credit. The measure will also improve exporters' position, by making available private insurers' expertise while obtaining financing costs thanks to the government backing. (Globes 22.05)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Negev Foundation Helps Renew MOU Between Ohio And Israeli Universities
Thanks to the efforts of The Ohio-Israel Agricultural Initiative (OIAI) of The Negev Foundation, the landmark memorandum of understanding (MOU) between two giants of agricultural research has been renewed. The MOU, initially signed in 2005, is between The College of Food, Agricultural & Environmental Sciences (CFAES) at The Ohio State University, and The Robert H. Smith Faculty of Agriculture, Food and Environment (RSFAFE), at Israel's Hebrew University of Jerusalem. In addition to the MOU being renewed, it now has been broadened and deepened. The renewal of the MOU is a direct result of the Ohio trade mission to Israel in March 2011, sponsored by the OIAI. The mission's delegation visited Hebrew University's Faculty of Agriculture, Food and Environment. The Ohio-Israel Agricultural Initiative of The Negev Foundation is dedicated to improving agricultural trade and R&D ties between Ohio and Israel by working with growers and government, academic, and business entities in both regions. The OIAI's objectives are to foster greater collaboration between Ohio and Israeli government and research institutions, farmers and companies; develop joint R&D and educational activities; identify agribusiness ventures based on new technologies; introduce potential investors to the region's firms; and expand commercial ties and market access in both regions. (TNF 13.05)
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2.2 Akron Relationship with Israeli Incubator Targetech Shows Promise
The Targetech Innovation Center, supported by a strategic partnership with the City of Akron, Ohio, has a developing pipeline of biomedical device opportunities poised to begin commercialization partnerships in the United States. To assist developing companies in the Targetech pipeline, the incubator has broadened its strategic relationships in the Akron and Cleveland regions through a new relationship with BioEnterprise, the region's biomedical business development initiative. BioEnterprise will assist select Targetech portfolio firms in developing their U.S. strategies and supporting the establishment of their U.S. operations in Ohio.
Targetech Innovation Center (http://www.targetech.co.il) is a dynamic high technology Incubator located in Netanya, Israel and operating under the Israeli Chief Scientist High-Tech Incubator Program. Targetech has adopted a commercialization model focused on medical devices and biomaterial applications. Under this model Targetech engages US opinion leaders to provide early and ongoing guidance and strategic access to important world markets. In addition, Targetech provides financial and operating resources during the incubator period as well as access to follow-on financing. By combining early market input and ongoing guidance, access to leading clinical resources in Israel and in the US, the model reduces market and technical risk thereby increasing the likelihood of global success. BioEnterprise is a business formation, recruitment, and acceleration effort designed to support the growth of bioscience companies. Located in Cleveland, BioEnterprise provides management counsel and support services to health care companies. (Targetech 19.05)
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2.3 Google to Pay NIS 17 Million for modu's Patents
Google has purchased the patents of failed Israel modular mobile phone start-up modu for NIS 17 million, modu's receiver notified the Tel Aviv District Court on 19 May. modu, founded by Dov Moran, raised $125 million before it went into liquidation when debts and losses overwhelmed it. The company's employees petitioned the court to liquidate it. The sale of the more than 100 patents, obtained during the company's three years in operation, is part of this process. modu owes its creditors, including banks, tens of millions of shekels, and its cumulative losses were NIS 450 million. (Globes 19.05)
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2.4 Jive Acquires OffiSync
Palo Alto, California's Jive Software has acquired OffiSync Corporation, a leading provider of social solutions to the Microsoft environment, including Microsoft Outlook, Microsoft Office and Microsoft SharePoint. The acquisition will combine Jive's powerful Social Business platform with OffiSync's leading Microsoft integration products to deliver a breakthrough in how companies embrace social to transform the way they work. OffiSync's products make it possible for millions of Microsoft users to seamlessly integrate with Jive's leading Social Business platform directly from the Microsoft environment. With OffiSync, companies will be able to liberate and 'socialize' the content trapped in Microsoft Outlook, Microsoft Office and Microsoft SharePoint. Jive will then seamlessly integrate it within the larger enterprise social graph in its platform, bringing the right information to the right person at the right time.
The OffiSync team, most of who are currently based in Tel Aviv, Israel, will join Jive's engineering organization. Jive plans to build upon OffiSync's engineering presence in Tel Aviv to launch a new R&D center. OffiSync is a long-standing partner of Jive. The two companies have collaborated and integrated their products for more than a year to deliver powerful social solutions to mutual customers. As a result of the partnership, the Jive integration with Microsoft Office is available immediately with Jive 4.5 and Jive 5. Integration with Microsoft Outlook will be released in Q3/11. OffiSync (http://www.offisync.com) was founded in 2010 by a team of Microsoft veterans. The company provides integration solutions that help deliver a complete social experience to Microsoft Office, enabling users to significantly improve the way they create, collaborate and share their documents. OffiSync is funded by Israel-based Vertex Venture Capital and by Seattle-based GTD Capital LLC. (Jive Software 23.05)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Harley-Davidson Eyes Double-Digit Growth in Middle East
American Motorcycle maker Harley-Davidson sees double-digit growth in the Middle East and North Africa and is in talks to open dealerships in Algeria, Pakistan, Iraq and Libya. The 108-year-old firm, which is ramping up its operations in the region, saw a 19% increase in sales in the region in the year-to-date, compared to the same period in 2010. Harley-Davidson has fifteen dealerships in the Middle East and North Africa and opened a subsidiary office in the UAE last year. Discussions are underway to open new regional dealerships in the region but have been postponed in Libya in the wake of the country's violent uprising, said Linley. Harley-Davidson is seeing renewed demand as the economy improves in many markets. The motorcycle maker saw a 3.5% increase in first quarter sales of new motorcycles, with net income of $119.3m for the period compared to $68.7m in 2010. Harley-Davidson will ship 215,000-228,000 motorcycles to dealerships and distributors in 2011, down from an early forecast of 221,000-228,000, the firm said. (AB 12.05)
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3.2 Jordan Mobile Subscribers Up 10% In 2010
Jordan's mobile subscribers rose by 10% in 2010 to reach 6.6 million, up from 6.01 million in 2009 and 3.1 million in 2005 Jordan's Telecommunications Regulatory Commission said. Market penetration rose to 108% in 2010, compared to 57% in 2005. On the other hand, the number of fixed-line subscribers dropped by 22.8% over 2005-2010 to reach 485,000 subscribers, with market penetration falling to 8% in 2010, from 11.6% in 2005. Zain, the Jordanian unit of Kuwait's Mobile Telecommunications Company has a 36.3% mobile-phone market share, while Jordan Telecom Corp. (Beltone 22.5)
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3.3 Bahrain's Arcapita Acquires US Retail Chain J.Jill
Arcapita, the Bahrain Islamic investment firm, said it acquired a majority stake in US retail chain J. Jill from San Francisco-based investment giant Golden Gate Capital. The company said Golden Gate would retain a minority stake in the women's fashion label, but declined to give a value for the deal. The retail chain, which operates 225 stores across the US supported by a catalogue business, was acquired for about $67m in 2009 from Talbots Inc. J. Jill saw revenues of $390m in fiscal 2010. In a statement, the Bahrain firm hinted the deal may be one of several planned in the US. Arcapita holds existing stakes in retail brands Loehmann's, Caribou Coffee and Church's Chicken. The Bahrain company in April exited its investment in Indian healthcare group MedPlus Health Services but said it maintained a positive outlook on India for investment opportunities. Arcapita was badly hit by the financial crisis as it struggled to exit its investments due to global investor woes and its fee income from raising fresh funds in the Gulf Arab region collapsed. It expects to exit more investments to allow it to return to profit. The firm also has a $1.1b loan due in April 2012. (AB 17.05)
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3.4 Canadian Firm Wins $96 Million Saudi Airport Deal
Bombardier Transportation signed a $96m deal to build and operate a people mover system at King Abdulaziz International Airport (KAIA) in Saudi Arabia. Bombardier Transportation has signed a contract with construction giant Saudi Bin Laden Group to design, build, operate and maintain a Bombardier Innovia APM 300 system to ferry passengers between terminals at the Jeddah airport. The deal is part of the KAIA Development Project which aims to expand existing facilities, including the construction of a new terminal building, to meet demand from rising passenger numbers. Saudi Bin Laden Group is the contractor responsible for the design and construction of the airport project and was awarded its contract by the Saudi Arabian General Authority of Civil Aviation (GACA) earlier this year. Bombardier will also provide operation and maintenance services for four years followed by a two-year discretionary option to extend to 2020. Much of the technology will be supplied from Bombardier's facility in Pittsburgh, Pennsylvania. (AB 17.05)
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3.5 US Firm Wins $171 Million Jeddah Flood Control Deal
US-based Aecom Technology Corporation announced that it had won a $171m order to work on a new flood control system in Jeddah, Saudi Arabia. Aecom said it will provide project management services including a consultancy, engineering, and construction services contract for a citywide storm water, flood-control, and wastewater infrastructure improvement program. Floods in Jeddah in November 2009 resulted in the deaths of more than 120 people and rendered about 10,000 people homeless while thousands of homes, buildings and vehicles were also destroyed. Under the contract, Aecom will supervise emergency and long-term solutions against natural disasters, especially flooding. The tasks to be undertaken by Aecom include building dams and other flood control barriers; constructing drainage canals and storm water reservoirs and resolving Jeddah's most vulnerable flood points. The contract also involves preparing comprehensive studies for undeveloped areas; implementing comprehensive infrastructure improvements to solve the sewerage problems in Jeddah; and establishing a disaster-management center for Makkah Province. The program will be executed over the course of several years with the completion of the flood control improvements scheduled for 2013. (AB 11.05)
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3.6 Egypt's Automotive Market Drops By 35.8% In April 2011
According to the Automotive Marketing Information Council (AMIC), Egypt's automotive market dropped by 35.8% y-o-y to amount to 12,419 vehicles in April 2011. Passenger car sales witnessed the sharpest fall, dropping by 41.3% y-o-y in April 2011 (and 3.4% m-o-m versus March 2011) to 8,830 cars, while bus sales dropped by 30.4% y-o-y (almost flat versus March 2011) to reach 988 buses in April and truck sales dropped by 9.8% y-o-y (but grew by 26.8% m-o-m over March 2011). From January - April 2011, the total automotive market dropped by 41.9% y-o-y to reach 44,833 vehicles; passenger car sales dropped by 46.2% y-o-y to 32,055 cars, while bus and truck sales dropped by 22.1% y-o-y and 29.1% y-o-y to reach 3,981 buses and 8,797 trucks, respectively. Pundits feel that this news comes as no surprise as the Egyptian automotive market continues to be affected by the events in the country. (Beltone 19.05)
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3.7 VeriFone Enables Turkey's First Pay-at-Pump Systems
San Jose, California's VeriFone Systems announced a contract to supply the first unattended pay-at-the-pump and digital media solution in Turkey. Petline Petroleum, a leading petroleum distributor, will begin implementing VeriFone's MX760 unattended payment solution at its SELFSTOP self-service dispensers beginning in May. Turkey is one of Europe's leading credit card markets, but until now consumers have not been able to utilize pay-at-the-pump technologies. VeriFone is first to deliver automated payment solutions for Turkey's retail petroleum market, which has an estimated 75,000 fuel dispensers. Petline can utilize the payment system screens to display commercials and promotional videos as customers are fueling their vehicles. VeriFone delivers a variety of payment solutions designed to meet the needs of petroleum retailers worldwide and make it easy for marketers to accept credit, debit, check, EBT and smart card payments. The VeriFone MX760 is designed for both outdoor and indoor unattended environments like petro, ticketing, kiosks, QSRs and ATMs. (VeriFone 18.05)
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3.8 US Hamburger Chain Opens First Branch in Turkey
The first Turkey branch of U.S.-based fast food chain Carl's Jr. has been opened at the Cevahir Shopping Mall in central Istanbul. CKE Restaurants, the owner of the Carl's Jr. and Hardee's brands, operates 3,159 restaurants around the world. There were 1,259 Carl's Jr. restaurants around the world at the end of 2010, while the company's global revenue exceeds $3.3b. The company waited many years to find the right domestic companies to cooperate with before entering the Turkish market, observing it for six or seven years. The company has contracted Namet for red meat and Banvit for poultry, two prominent domestic suppliers. Some 85% of what is used is supplied locally. The chain aims to open 100 stores in Turkey, the executive said, noting that an initial 25 were planned in the first three or four years. (Hurriyet 22.05)
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3.9 NavCom Technology Announces New Dealer in Turkey
Torrance, California's NavCom Technology, a wholly owned subsidiary of Deere & Company, announced that it has formed a strategic partnership with Anka Geographic Information Technologies Industry Trade (Ankageo). As a member of NavCom's Global Dealer Network, Ankageo will bring NavCom's GNSS product and positioning solutions, including the recently released SF-3040, StarFire/RTK GNSS Pole-mount Receiver, to the Turkish market. Ankageo is one of Turkey's leading providers of GIS and Mobile Mapping Solutions specializing in 360 degree video capture. Ankageo is based in Istanbul, Turkey with overseas operations in Europe, Central Asia and the Middle East. NavCom Technology is a leading provider of advanced GNSS products for OEMs, VARs and system integrators requiring high performance RTK systems, global decimeter level GNSS satellite corrections, geodetic quality GNSS receivers, wireless communication products and engineering consulting in the areas of precise positioning, wireless communications and robotics. (NavCom 12.05)
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3.10 McDonald's signs Malta's Premier for Greece
McDonald's Europe has selected Malta's Premier Capital to develop its network in Greece in a bid to boost its presence in the country. Premier Capital, which has been operating McDonald's stores in Malta, Estonia, Lithuania and Latvia since 2005, will operate 19 company owned McDonald's restaurants in Greece, with the remaining 11 branches in the country being kept by existing franchisees. No financial details were disclosed. Premier Capital will take ownership and operate the 19 branch network as of June 1. (ekathimerini 23.05)
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Water Shortages Threaten Growth in Arabian Gulf States
Four of the six Arabian Gulf states have been named countries most vulnerable to a shortage in water supply, risking disruptions to operations and investments, risk consultants Maplecroft said. The oil and gas-rich states Bahrain, Qatar, Kuwait and Saudi Arabia are at “extreme risk” of interruption to their water supply, topping a list of 186 nations, the firm said in a report. With the least available water per capita, Gulf states have opted to buy up large tracts of farmland in developing countries in a bid to safeguard their food supplies – a strategy that risks exporting their water shortages to other nations. Also squeezing resources will be climate change and population growth, which is likely to have a snowball effect on the food security of governments across the world. One of the most controversial ‘land grabs' by a GCC country has been seen in Kenya, following a 2008 deal between Qatar and the African country. As part of the agreement, Qatar will provide the funds for construction of a Kenyan deep-water port in exchange for 40,000 hectares of prime agricultural land on which to grow food for the Qatari market. Other countries named among the top 10 most at-risk nations included Libya, Yemen and Jordan. In emerging economies such as India, South Korea and China, water shortages have the potential to curb economic development and spur social unrest, the report said. (AB 18.05)
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4.2 GreenWorld Appointed to Assist Development of Solar Energy in Bulgaria
West Palm Beach, Florida based GreenWorld Development, the American-Irish “Green and Health Technologies” conglomerate has been appointed as consultants with regard to a 194 MW solar supply in Bulgaria. Ireland based EGI Energy Generation, a supplier of renewable energy, has appointed Greenworld Development as consultants. EGI agreed with Bulgarian interests for 194 MW of solar electricity supply, of which the first 25 MW plant is contract ready. EGI is providing energy solutions for all sectors through the appropriate use of Turbine, Solar Panels and Solar PV system. GreenWorld Development is negotiating with various funding groups for "turnkey" finance for the project ($4.5 million per MW). Bulgaria State Electricity Board is guaranteeing a 20 year Feed-In-Tariff of 37.3 cent (Euro) per KW/hours. Greenworld will receive a commission of 0.75% per MW investment, which will amount (once all of the 194 MW are installed), to $6.5 million plus 5% equity participation.
Bulgaria, an emerging economy, has been a member of the European Union since 2007 and is best positioned for solar energy production. The average annual yield of sunshine in Bulgaria is about 2150 hours; the average solar radiation resource is 1517 KWh/m². This yields an overall potential solar energy for the country of approximately 13103 Ktoe per annum. These results underpin the expected solar plant profitability with an approximate IOR of 19%. (GreenWorld 23.05)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Iraq to Boosts Oil Output & Offer New Blocks
Iraq has boosted oil production to the highest level in a decade and is preparing to auction off oil and gas exploration contracts to develop potentially big new fields, part of its accelerating drive to challenge Saudi Arabia as the world's top producer. The auction, scheduled for January 2012, will involve 12 exploration blocks covering 31,500 square miles. The focus will be on opening up the country's underdeveloped gas production and bringing in new oil fields to boost reserves of 143 billion barrels to replace steadily rising output. The contracts to be awarded to international companies will differ from those issued for 15 oil and gas blocks in three previous auctions following the overthrow of Saddam Hussein's dictatorship in March 2003. These were 20-year production contracts, under which the companies developed existing, long-neglected fields to boost production for a share of the output at a fixed price. The exploration contracts with the Oil Ministry will be based on technical services, with companies receiving a flat fee rather than a share of the production.
Because Iraq's current oil reserves are easy to tap because of favorable geological conditions, with production costs low, the ministry has made little effort to explore untapped reserves, which industry analysts say could exceed another 100 billion barrels. These are mostly located in remote regions in the provinces of Babil, Basra, Dhi Qar, Muthanna, Najaf, Diwanioyah and Wasit in the energy-rich south, Diyala and Nineveh in the north and Anbar in the west. (UPI 11.05)
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5.2 Port Rivalries May Test Arabian Gulf Relations
Major port developments in the Arabian Gulf region are likely to lead to tensions between countries as they battle to become the region's top trading hub, Business Monitor International has said. Analysts said that although port expansion projects are planned in Kuwait, Qatar, Saudi Arabia and Iraq, demand is insufficient to accommodate them all. It said relations between Kuwait and Iraq were currently strained because of Kuwaiti plans to build the $1.1b Mubarak al-Kabir port, close to the Iraqi border. The foundation stone for the new Kuwaiti port of Mubarak al-Kabir was laid this month, but BMI analysts said that the port's success is likely to rely on thwarting Iraqi ambitions to claim the same business.
Following the lead set by Dubai's Jebel Ali port, BMI said every country in the region now has eyes on creating a similar transshipment hub, with developments and expansions planned not only in Kuwait and Iraq, but also Qatar (New Doha Port) and Saudi Arabia (Dammam). BMI said this has already been demonstrated by Bahrain's new Khalifa bin Salman port, which it said "has struggled to attract transshipment custom and is currently operating well below capacity". Kuwait's new port is to be situated on Bubiyan Island, close to the Iraqi port of Umm Qasr. It is expected that by 2015 Mubarak al-Kabir will have an annual handling capacity of 1.8m 20ft equivalent units (TEUs). The potential loss of business is of such importance to Iraqi plans that Iraqi Prime Minister Nuri al-Maliki has order the formation of an emergency committee to take up the dispute in Kuwait, BMI said. (AB 21.05)
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5.3 GCC Welcomes Bids By Jordan & Morocco To Join Gulf Bloc
The six Gulf monarchies Tuesday responded to Arab uprisings by agreeing to expand their regional grouping to include pro-Western and urged a quick political deal in Yemen. The Gulf Cooperation Council (GCC) welcomed bids by Jordan and Morocco to join the six-nation grouping of Gulf monarchies, its secretary general al-Zayani said. His remarks came after a summit in Riyadh of the GCC, which groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, discussed relations with Iran, the unrest in Yemen -- the Arabian Peninsula's only quasi- republican state -- and the tensions sweeping the region. The heads of state demanded that all sides in Yemen, which has limited observer status in the GCC, sign a transition plan brokered by the bloc. (BI-ME 11.05)
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5.4 Kuwait Will See 'Minimal' Impact From Regional Unrest
Kuwait's economy will see "minimal" impact from the unrest elsewhere in the Middle East region, with oil prices ensuring large fiscal surpluses over the coming years, Business Monitor International has predicted. Analyst said they were holding their forecast of 3.4% real GDP growth in 2011, despite the recent troubles in neighboring Bahrain and Oman, as well as uprisings in the wider region. It said elevated oil prices will ensure that Kuwait continues to run large current and fiscal account surpluses over the coming years. But they added that given the $5b fiscal stimulus package announced by the government at the start of 2011, a ramp up in government spending is also expected, so budget surplus projections remained unchanged. On the down side, BMI warned that "persisting political tensions" between parliament and the government could "act as a drag on the country's investment climate". Earlier this month, preliminary data showed Kuwait's net budget surplus increased to $23.67b in its 2010/11 fiscal year as oil income jumped. The budget included spending on a four-year, $109.26b development plan, which is aimed at diversifying the crude-reliant economy and increasing the role of the private sector. (AB 18.05)
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5.5 Annual Inflation in Bahrain Falls in April
Annual inflation in Bahrain fell for a second consecutive month in April as political unrest hit tourism and domestic demand. Prices in Bahrain fell by 2.3% year-on-year in April from -2.1% in March, data from the Central Informatics Organization showed, their lowest level since online records began in 2007. Analysts said the deflation was linked to unrest in the Sunni-ruled island kingdom, inspired by popular protests that toppled the leaders of Egypt and Tunisia, that had hit economic activity and brought tourism to a virtual standstill. The small non-OPEC oil producer declared martial law and invited troops from Gulf neighbors into the country to help quell the unrest in a crackdown on a protester camp near Manama's financial district on 16 March. On a monthly basis, consumer prices edged higher to 0.4% in April after a 3.5% plunge in March. Housing costs, accounting for 23.5% of the basket, remained flat month-on-month in April, while food prices rose by 1.4% after a 1.2% increase in the previous month. Transport prices, which make up 12.1% of the basket, decreased by 0.4% in April after a 3.2% fall in the previous month.
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5.6 UAE Annual inflation Increases by 1.1% in April
The UAE annual inflation rate has inched up 1.1% in April 2011 from 1.2% in March 2011, largely affected by a 1.4% y-o-y contraction in the CPI's housing component. Meanwhile, food prices have risen 5% y-o-y in April 2011 from another 5% y-o-y increase in March 2011. On a monthly basis, inflation had fallen for the fourth consecutive month in April 2011, dropping 0.1% m-o-m in April from 0.2% m-o-m contraction seen in March 2011. Housing costs continued to decline, falling 0.71% m-o-m in April from -0.4% in March 2011. The prices of clothes and shoes also decreased by 1.1% in April 2011 compared to a 0.7% m-o-m rise in March 2011, mainly due to a decrease in the raw material costs. The prices of food increased by 1.25% m-o-m in April 2011 after falling, marginally, by 0.4% m-o-m in March due to an increase in the prices of fruit, vegetables, meat, poultry, sugar and its products, eggs, tea, and other products.
Inflation in the UAE continues to reflect weak property sector dynamics, which is taking its toll on the overall level of CPI, with housing costs being the largest component of the Index. Inflation in Abu Dhabi alone had contracted 0.3% m-o-m in April 2011 and the new data released now show that Dubai had seen a deflation of 0.7% m-o-m in April 2011, which explains the overall movements and drivers of UAE inflation with weakness in rental prices in both emirates largely weighing down whatever recovery that is seen in prices elsewhere. In future, rising food prices in line with international trends may pull monthly growth in UAE food price inflation, especially over the months of July and August, which will coincide with the holy month of Ramadan. The overall UAE inflationary environment should remain tame for the remainder of 2011, with annual average inflation rising 1.8% in 2011, as weak rental growth weighs down rising food price inflation and imported inflation (especially in light of a weakening dollar). (Beltone 18.05)
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5.7 UAE Replaces Saudi as Top GCC Market for US Exports
The UAE has replaced Saudi Arabia as the largest GCC market for US exports, according to the latest study by Dubai Chamber of Commerce and Industry. US exports to the UAE reached a total of $11.64b in 2010, compared to $11.59b to Saudi Arabia, the study found. The study, citing the US Census Bureau, showed that US trade with GCC countries increased by 21% during 2010, as US demand for oil rose with the economic recovery. The recovery followed a dramatic 42% slump in trade between the US and GCC in 2009 as the global economic crisis took hold. A resurgence in US imports of crude mineral fuel contributed significantly to the increase in US trade with the GCC in 2010, with these products accounting for 92% of the total. Saudi Arabia was the largest import market during 2010, supplying 79% of the $41.2b imports of crude mineral fuel from the GCC region. Exports to the GCC accounted for 2.5% of total US exports to the world in 2010, with machinery and transport equipment accounting for about two-thirds of exports to the GCC. While the largest market for machinery products in the GCC was Saudi Arabia, the UAE was the largest market for most other exports. The study also said that US presence in the Gulf was expected to continue to be "substantial", with US technology in the oil industry set to remain in high demand in the coming years. (AB 18.05)
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5.8 Dubai's Non-Oil Trade Sees 31% Growth in January – February 2011
Dubai's non-hydrocarbon trade saw 31% y-o-y growth during the January - February 2011 period, reaching AED113 billion. This growth was driven by a boost in all trade activities; exports (increased 48% y-o-y to AED13.2 billion), re-exports (rose 40% y-o-y to AED29.6 billion) and imports (rose 26%y-o-y to AED70 billion). India remained a key trade partner, with the value of trade during the period between Dubai and India reaching AED36 billion, followed by China with AED7.4 billion worth of trade and the US with AED4.8 billion. Singapore, Thailand, Iran and Iraq were other key export destinations for Dubai. The total value of trade between Dubai and GCC countries stood at around AED4.5 billion. These figures are in line with recent anecdotal evidence that have been pointing that Dubai has been capitalizing on its regional and global commercial and service hub status, and advanced port infrastructure and capacity in place, and benefiting from the pick-up in global trade movements and stronger demand, particularly that coming from Asia, with activities in the trade and logistics sectors seeing the biggest gains (and most recently tourism and retail activities, on the back of regional political turmoil). This will largely contribute to an acceleration in UAE non-oil hydrocarbon growth in 2011, together with Abu Dhabi's ongoing infrastructure investments, leading to an overall level of real GDP growth of 3-3.5% in 2011 for the UAE from 1.4% in 2010.
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5.9 Saudi Arabia's Inflation Rises to 4.8% in April
Saudi Arabia's annual inflation rose to 4.8% in April due to a rise in food and transport costs, and analysts expect price pressures will grow in the next few months. Inflation in the world's top oil exporter had been falling since touching an 18-month high of 6.1% in August. It had slowed to 4.7% in March. On a monthly basis, living costs in the biggest Arab economy rose by 0.4% in April, up from 0.3% in March, the data from the Central Department of Statistics showed. Food prices, which have the largest 26% weight in the consumer basket, rose 0.9% on a monthly basis, after a 0.1% decrease in the previous month. Food inflation traditionally climbs during the holy month of Ramadan, which this year starts in early August, when families enjoy larger and more elaborate meals after daylight fasting. Housing and energy costs, which represent 18% of the basket, rose by 0.5% after a 0.8% increase in the previous month. Saudi's Central Bank governor al-Jasser said in March that handouts by the king to boost wages, create jobs and build houses were not likely to exacerbate inflation. Worried by spreading unrest across the Gulf region, the government plans to spend nearly 30% of the annual economic output to ease social tensions in the kingdom, where over 10% of nationals are out of work. Saudi Arabia, a major US ally and the world's top oil exporter, is an absolute monarchy that does not tolerate dissent. (AB 14.05)
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5.10 Saudi Arabia to Overspend Its Budget By Up To 15% In 2011
Saudi Arabia will overspend its budget by up to 15% in 2011 due to spending on construction and job-creation measures, Finance Minister Alassaf said on 17 May. Worried by unrest sweeping the Arab world, Saudi Arabia has pledged to spend an estimated $130 billion, or around 30% of its annual economic output on new houses, creating jobs, unemployment benefits and other measures. The OPEC member, which relies on hydrocarbons for around 85% of budget revenue, has not said how the expenditure will be spread. The largest Arab economy, which tends to heavily overspend when oil prices are higher, had originally planned to spend SAR580 billion in 2011 in its third consecutive record budget. Robust oil prices near $98 per barrel should enable Saudi Arabia to cover the additional spending without having to tap into its record high net foreign asset reserves of $461 billion and could generate a budget surplus in 2011. (AB 18.05)
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5.11 Finance Minister Says Unrest Costs Egypt Economy $3.5 Billion
The price tag for the labor unrest and political protests that have roiled Egypt since the outbreak of the mass demonstrations that ousted President Hosni Mubarak has reached E£ 20.5 billion ($3.5 billion), the country's finance minister said. The total was a fresh indication of the bruising taken by the economy since Mubarak's ouster in February. Worker demands for higher wages and ensuing strikes have compounded problems caused by the near-daily protests that continue in the Arab world's most populous nation. Finance Minister Samir Radwan said that E£ 13.5 billion ($2.2 billion) of the losses were in the tourism sector - an Egyptian mainstay that has been damaged badly since the start of the Jan. 25 Revolution. The remainder is the cost incurred by the Treasury. The government, following the uprising, pledged several billion pounds in compensation and unemployment insurance to mitigate the losses sustained by Egyptians during the almost three-weeks of chaos before Mubarak was pushed from power. The finance minister, who has been shuttling to the US and other countries trying to secure financial aid and lure investors back to the country, said Egyptian exports have dropped 40% from pre-Jan. 25 levels while manufacturing is limping along at 50% of its capacity. (Various 12.05)
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5.12 Tourism to Egypt Down 46% in First Quarter
The number of tourists visiting Egypt slumped 46% in the first quarter when mass protests ousted President Mubarak, the government's statistics agency said 22 May. The unrest that began on 25 January prompted embassies to issue travel warnings and many tour groups cancelled trips, throwing an industry that is a major source of foreign currency into crisis. Foreign reserves fell to $28b in April, the lowest in four years. 'The tourism industry is still affected by the recent events in Egypt causing a great decline in the number of tourists ...which reached 1.9 million tourists,' the Central Agency for Public Mobilization and Statistics (CAPMAS) said. Egypt's economy contracted an estimated 7% in the January-March quarter. The International Monetary Fund has projected growth of 1.0% this year, down from 5.1% in 2010. (CAPMAS 22.05)
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5.13 Egypt's April Inflation Accelerates As Food Prices Increase
Egyptian inflation accelerated in April on rising food prices, one of the causes of the unrest that toppled President Mubarak. The inflation rate in urban parts of Egypt, the gauge that the central bank monitors, rose to 12.1% from 11.5% in March, CAPMAS announced. Prices increased 1.2% in the month. The central bank will probably disregard higher prices and keep interest rates steady in an effort to support investment. Core inflation, which excludes the prices of fruits and vegetables as well as regulated prices, rose to an annual rate of 8.76% in April from 8.54% in the previous month. The prices of food and beverages, the biggest component in the consumer price index, rose 21.7% this year. Egypt's net international reserves fell for a fourth month in April to $28 billion from $30.1 billion in March, the lowest level since April 2007. (BI-ME 11.05)
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5.14 No Revisions to Aid Received by Egypt's Military From the US
No revisions will be made to the US-Egyptian security partnership, US Ambassador to Egypt Scobey reiterated in a press conference on 21 May. Egypt's military receives $1.3 billion in support from the US in the framework of a security partnership initiated after the signing of the Camp David peace accords with Israel in 1979. Recurrent reports of human rights violations committed by the military has prompted questions on whether this could affect US support. Scobey said that budget changes are subject to congressional decisions, but there is no intention to change the agreement. (Al Masry Al Youm 22.05)
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5.15 Egypt's Total Merchandise Exports Beat Estimates
Egypt's total merchandise exports beat estimates and grew a record 16% y-o-y in February 2011, while merchandise imports fell 8.4% y-o-y, significantly improving Egypt's trade deficit to post $1b in February 2011 CAPMAS announced. Egypt's exports reached $2.3b in February 2011, after recording $2b in January 2011, growing by a record 11% m-o-m. Exports in February 2010 had reached $1.99b, leading to the annual growth rate of 16% in February 2011. Imports declined, significantly, by 8.4% y-o-y to reach $3.3b in February 2011, and declined by a record 29.8% m-o-m in February 2011. Consequently, the trade balance improved, significantly, posting a deficit of $1b in February 2011, compared to $2.6b deficit in January 2011.
The fall in February imports was expected, due to the slowdown in production activity and private consumption following the political instability. However, the significant increase in exports is surprising. One possible explanation behind the surge in exports is that exporters have met prior commitments by exporting items from a backlog in January 2011. Exports had contracted significantly in January 2011 m-o-m and y-o-y, by 5% and 1.6%, respectively. This contraction was mainly on the back of a disruption in transportation and closure of banks rather than the insufficient amount of products to export. That said, products that were not exported in January 2011 were probably exported in February 2011; hence, the unexpected monthly growth rates. Exports may contract by around 17.5% during FY10/11. External demand (demand for Egypt's exports) has remained buoyant and, therefore, once production returns to normal, exports should rebound. It is expected that imports will contract by 8% y-o-y during FY10/11, on the back of the slowdown in domestic demand, particularly private consumption and investment. Imports may rebound in FY11/12, as sentiment improves and private consumption growth picks up more rapidly. (Beltone 11.05)
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5.16 Egypt May See the Injection Of More Than $10 Billion Of Qatari Investments
Egypt may see the injection of more than $10 billion of Qatari investments to support the economy and broaden avenues of cooperation between both countries, according to Qatari and Egyptian officials. Discussions between a Qatari delegation, which will include a number of businessmen and representatives of large Qatari corporates, and headed by Qatar's Minister of International Cooperation and his Egyptian counterpart and a number of other Egyptian officials, are to begin on 28 May, to set the overall framework of cooperation between both countries, going forward. A number of agreements, worth more than $10 billion in different forms of investments, would be signed at the upcoming meeting that aims at supporting the Egyptian economy, the Qatari ambassador to Egypt was quoted as saying. This meeting, and the planned investments, would also materialize a previous agreement between General Hussein Tantawi, head of Egypt's SCAF, and the Qatari Emir, which aimed at preparing a package of joint projects to be implemented in Egypt to support the economy. The meeting also follows Egypt's Prime Minister Sharaf's visit to Doha earlier in May 2011. (Beltone 24.05)
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5.17 Egypt to Increase Diesel Fuel & Natural Gas Subsidies by 50% in FY11/12
Egypt plans to increase diesel fuel and natural gas subsidies by 50% in FY11/12. In recent days, drivers have been forced to form long queues in front of the country's petrol stations as diesel supplies fall short of demand. The prime minister's spokesman said the new budget would include E£60 billion for diesel and gas subsidies for FY11/12 up from E£40 billion in FY10/11. Of the E£60 billion, E£45 billion will be allocated to diesel and E£15 billion to gas. The comments came after a cabinet meeting that reviewed the broad outlines of the new budget, which was aimed at a market economy within a framework of social justice.
In FY10/11, E£67.6 billion were budgeted for the total petroleum subsidy bill, of which E£31.9 billion were in the form of natural gas and diesel subsidies. Actual natural gas and diesel subsides reached E£40 billion, surpassing the budgeted by only 2.3%. Increasing the natural gas and diesel subsidy in the FY11/12 budget would have been necessary anyway, in light of the increase in global oil and gas prices. However, the supply shortages problem that has interrupted economic activity in Egypt during May 2011, leading to the doubling of the diesel and natural gas subsidy will add more pressure on the fiscal budget, which is already expected to widen by more than 10% in FY11/12. In addition, diesel subsides and the way they are structured are fuelling the existence of a black market, whereby the subsidized supply is absorbed and sold at a much higher price in the shadow market. The system itself will require major reforms to avoid the diesel shortage crisis next year. (Beltone 19.05)
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5.18 Suez Canal Revenues Grew Strongly By 16.4% in April 2011 to Reach $436.4 Million
Suez Canal revenues grew strongly by 16.4% y-o-y in April 2011 to reach $436.4m, the Suez Canal Authority announced. Annual revenue growth of 16.4% in April 2011 compares very well to the 8.1% annual growth recorded in April 2010 and 9% recorded in March 2011. Suez Canal revenues grew m-o-m by 5.5% in April 2011, maintaining its strong monthly growth recorded in March 2011 of 6.4%. The annual increase in revenues in April 2011 follows an annual increase of the total tonnage of passing vessels by 16.3%. The number of vessels has only increased y-o-y by 1% in April 2011 and by 5% on a monthly basis. Oil tankers represented 25% of total vessels that passed through Suez Canal in April 2011, compared to 21% in April 2010. Oil tankers have increased by 14% y-o-y in April 2011, compared to an annual decrease of 3% in March 2011. Suez Canal revenue and traffic data since January 2011 indicate that monthly activity in the Suez Canal has been left unaffected by the political events in Egypt, in line with expectations. The impact of the current political events in Egypt on the Suez Canal is marginal, if any, with the military and government continuing to ensure its smooth operation (which is, anyhow, within a military zone), and in view of the continued flow of traffic activity. Suez Canal monthly revenues have been increasing since the beginning of the current fiscal year, and are well on the way to our forecast level of $5b for FY2010/2011. (Beltone 11.05)
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5.19 Tunisia Needs $25 Billion Over Five Years
Tunisia needs $25 billion over the next five years and is counting on donor nations to help make up the budget shortfall, Prime Minister Beji Caid Sebsi said in a newspaper interview. Sebsi said Tunisia had put forward its case for aid ahead of a meeting next week of the Group of Eight countries in Deauville, northwestern France, focusing in part on helping countries in North Africa recover after recent uprisings. 'We estimate $25 billion over five years, which is $5 billion per year. That's very reasonable,' he added. The revolts spreading across the Arab world started in Tunisia, where President Zine Al-Abidine Ben Ali was ousted in January after 23 years of autocratic rule. Tunisian Finance Minister Jalloul Ayed told Reuters in April that the country would need $4 billion in foreign loans to help it recover in the aftermath of the revolution. (Trade Arabia 20.05)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkish Economy Suffers Blow in Its Current Account Deficit
Turkey's current account deficit, which in past decades has triggered violent financial crises, is booming once again. The gap reached an all-time high of $9.8b in March, while the cumulative annual figure surpassed $60b. However, the figure owes much to a repatriation of $1.8b in profits by foreign companies' operations in Turkey. Turkey's current account deficit, regarded as the Achilles' Heel of its economy, surged to an unprecedented level in March, boosted by an exceptionally high level of profit transfer by foreign operations to their parent companies abroad. The $9.8b monthly figure, which was above market expectations of $8.2b, more than doubled from $4.3b in March 2010. It was the biggest deficit since the Turkish Central Bank began releasing monthly figures in 1984.
A current account deficit occurs when a country's total imports of goods, services and transfers is greater than its total export of goods, services and transfers. The gap makes the country a net debtor to the rest of the world. When the deficit is financed by short-term capital inflows, such as investments in stocks and bonds, financial stability hangs in the balance – and a sudden exit of that capital or failure to attract more of it could trigger a crisis. Indeed, many crises that Turkey has gone through in the past five decades were preceded by a booming current account deficit. The cumulative deficit for the 12 months including March was $60.5b, or about 7.7% of forecast gross domestic product, or GDP, for 2011. In contrast, the government foresees a gap of $39.3b and predicts a deficit of 5.4% of GDP this year. (TDN 11.05)
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6.2 Regional Unrest Costly to Turkey
Figures released on 11 May showed the negative effects of the turmoil in the Middle East and North Africa on Turkey. Construction revenues fell by 52% in Q1/11 to $100m. This trend will probably continue because of Turkish contractors' business in the region, which is mostly in Libya. Turkey's average annual income from construction work abroad stood at $900m in the 2006 - 2010 period. Nearly half of this income is from activities in the Middle East and North Africa. (TDN 11.05)
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6.3 Italy Pushes Eurofighter as Turkey's 'Only Alternative' To US Options
The Italian Defense Ministry continues pushing Turkey to join the Eurofighter aircraft project as an alternative to its present fleet of US-made jets. 'Turkey wants part of its fighter aircraft fleet to remain outside the technological and other influence of the United States,' says a Turkish defense analyst. Turkey, whose present fighter fleet is comprised of U.S.-made aircraft, also plans to buy the F-35 Joint Strike Fighter Lightning II planes, a next-generation, multinational program also led by the United States. But Turkish officials privately say they want another future jet fighter to be developed with a country or countries other than the United States, in an effort to reduce Ankara's over-dependence on Washington. Most of Turkey's present fleet of F-16 fighters is being modernized by the United States. Lockheed Martin and the planned future F-35s are open to U.S. influence. Only its older F-4 aircraft, modernized by Israel, and its oldest F-16s, being modernized by Turkey itself, are technologically free from this influence, the officials believe. But these older aircraft are expected to be decommissioned around 2020. The members of the Eurofighter consortium include Germany, Italy, Britain and Spain. As an influential member of the group, Italy is leading the efforts to add Turkey to the consortium. (Hurriyet 11.05)
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6.4 Turkey Including Russia & China From Defense Competition
Turkey's bid to acquire long-range missile and air defense is triggering hot debates as the NATO member country includes Chinese and Russian options on the list of probable buyers. Western experts insist the Russian and the Chinese systems are not compatible with NATO systems. Chinese and Russian companies considering Turkey's multibillion-dollar program to acquire long-range missile and air defense will not be excluded from the contest despite Western criticism, Turkey's procurement chief has said. Western critics have claimed that the selection of either the Chinese or the Russian firm could compromise NATO's intelligence and security procedures. Turkey's choice on this large program is expected to be announced late this year or early next year.
One of the competing companies in the ongoing contest for Turkey's national contract is the U.S. partnership between Raytheon and Lockheed Martin, with their Patriot Advanced Capability-3, or PAC-3, systems. Russia's Rosoboronexport is marketing the S300 and S400 while China Precision Machinery Export-Import Corp., or CPMIEC, is offering its HQ-9. The Italian-French Eurosam, maker of the SAMP/T Aster 30, is also trying to market its product. Some Western experts say that since the Russian and the Chinese systems are not compatible with NATO systems, their victory could provide them with access to classified NATO information, and as a result may endanger the alliance's procedures.
Separately, under a NATO plan approved during a summit meeting in Lisbon in November, the Western alliance will create a collective defense system against potential incoming ballistic missiles from rogue countries. Ankara agreed to the decision only after NATO accepted a Turkish request that Iran or other countries would not be specifically mentioned as potential sources of threat. NATO now seeks to deploy special X-band radars in Turkish territory for early detection of missiles launched from the region. Ideally, in the event of such a launch, U.S.-made SM-3 interceptors – based on U.S. Aegis destroyers to be deployed in the eastern Mediterranean and possibly in Romania – would then be fired to hit the incoming missile mid-flight. Turkey's national air defense system will be independent and separate from the NATO missile shield. But since both systems are, by nature, anti-ballistic missile schemes and both are supposed to protect Turkish soil, they will have to be integrated in some way. (Hurriyet 16.05)
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6.5 Cyprus Inflation Is Well Over 3% in April
The annual consumer price inflation rate leapt to 3.3% in April, from 2.8% in March 2011 and 2.4% in April 2010. Doubtless the reason was high international oil prices, which have taken their toll on an economy that remains dependent on oil for electricity production. Compared with the previous month the index increased by 1.16%. The Statistical Service reported that this was mainly due to increases in the prices of certain clothing and footwear items, electricity and petroleum products. Decreases were recorded in the prices of certain fresh vegetables and fresh lamb's meat. For the period January-April 2011, the annual consumer price inflation rate is 2.9%. (FM 08.05)
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6.6 Cyprus Unemployment Jumps 4.5% Over Previous Month
The rise of unemployment in Cyprus seems to be relentless, with registered unemployment rising on a seasonally adjusted basis by 4.5% compared with the previous month in April. The absolute number of unemployed persons was reached 26,911 persons, a rise of 5,278 or 24.4% compared with April 2011. The Statistical Service reported that the increase was mainly in the sectors of wholesale and retail trade (an increase of 1.05), construction (704), accommodation and food services (629), education (418), manufacturing (389), and transportation and storage (an increase of 260). There was an increase of 1,273 in the number of newcomers in the labor market. (FM 08.05)
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6.7 IMF Sees Bulgarian Economic Growth At 3%, Inflation -5.3% End-2011
The IMF expects Bulgaria's economy to grow 3% at the end of this year as a global recovery boosts exports demand in the EU. The IMF forecast for the Bulgarian economy in 2011 is below the 3.6% growth projected by the Bulgarian government in its 2011 budget. It set the year end's inflation at 5.3%. IMF experts have recommended further steps to reduce the deficit and create budget buffers. Europe-wide estimates are for growth of gross domestic product from 1.8% this year and 2.1% in 2012. Average annual inflation is seen at 2.7% in 2011 and 1.9% in 2012 across Europe. A mission of the International Monetary Fund is on a visit to Bulgaria's capital Sofia during the period May 10-20 to hold regular bilateral discussions on economic policies with the Bulgarian authorities. (SMN 19.05)
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6.8 Bulgaria Economy Grows 2.5% in First Quarter
Driven by strong exports, the Bulgarian economy expanded by 2.5% in the first quarter on an annual basis, well above analysts' forecasts. The country's GDP grew by 0.4% quarter-on-quarter, following a 0.5% expansion in the previous quarter, downwardly revised from 2.1%. The data, which marks the first considerable increase in economic growth since the country plunged into a recession, exceeds analysts' forecasts, which set the GDP growth levels at about 1.5%. The economy expanded on an annual basis for the second straight quarter. Exports increased by 22.2% from January through March in comparison with the same period a year ago, but domestic demand and investments dropped by 2.1% and 2.7% respectively. The government expects an export-led recovery to push up growth to 3.6% this year. (SMN 14.05)
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6.9 Bulgaria Registers 4.6% Annual Inflation in April 2011
Bulgaria's April consumer price index (CPI) 0.2%. The group 'food and non-alcoholic beverages' had the largest upward impact on the total CPI. The inflation rate since the beginning of the year (April 2011 compared to December 2010) was 2.7% and the annual inflation in April 2011 compared to April 2010 was 4.6%. The annual average inflation, measured by CPI, in the last 12 months (May 2010 - April 2011) compared to the previous 12 months (May 2009 - April 2010) was 3.7%. In April, 2011, compared to the previous month the prices of goods and services in the main consumer groups have changed as follows: food and non-alcoholic beverages - an increase of 0.7%; alcoholic beverages and tobacco - a decrease of 0.1%; Clothing and footwear - an increase of 3.4%; housing (rentals, maintenance and repair), water, electricity, gas and other fuels - the prices have remained at the level of the previous month; furnishings, household equipment and routine maintenance of the house - a decrease of 0.2%; Health - an increase of 0.1%; transport - a decrease of 1.3%; communications - the prices have remained at the level of the previous month; recreation and culture - a decrease of 1.9%; education - an increase of 0.2%; restaurants and hotels - an increase of 0.3%; miscellaneous goods and service - an increase of 0.2%. (SMN 13.05)
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6.10 Bulgaria to Sign On Nabucco Pipeline In Turkey On June 6
Bulgaria's Bulgargaz, a subsidiary of the Bulgarian Energy Holding, will participate in the official signing of an agreement on the Nabucco gas transit pipeline in Turkey on 6 June. Besides the Bulgarian company, the shareholders which will sign the agreement are OMV (Austria), BOTAS (Turkey), Transgaz (Romania), Mol Natural Gas (Hungary) and RWE (Germany). Each shareholder holds an equal share of 16.67% of Nabucco Gas Pipeline International GmbH. Nabucco is estimated to cost €8b and Bulgaria, as a partner with 1/6 of the shares, will be expected to provide 1/6 of the total sum, or about €1.3b, rather than finance just the section on its territory. Bulgaria plans to finance its share in Nabucco with a €1.2b loan from the European Investment Bank. The sides engaged in the project are waiting for a decisive answer from Azerbaijan on its possible participation. The Nabucco gas pipeline is supposed to reduce EU's energy dependence on Russia by bringing in natural gas from the Caspian region, Central Asia and the Middle East. The direct investments in the Bulgarian economy from the construction of Nabucco will be about €400m and a few hundred jobs. Another about 1,000 jobs will be created indirectly by the project. (SMN 23.05)
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6.11 Bulgaria's New Car Market Starts To Improve in First Quarter
The market of new cars in Bulgaria has registered a modest but nonetheless tangible year-on-year growth in the first quarter of 2011. A total of 4,638 new cars were sold in Bulgaria in January-March 2011 vs. 3,956 sales in the same period of 2010, a growth of 17%, according to data of the Association of Car Importers. In March, a total of 1,816 new cars were sold, compared to 1,358 in February and 1,464 in January. Bulgaria's all time record first quarter in terms of new car sales was in 2008 when a total of 15 224 new cars were sold in the country, just months before the economy got into a depression and the market collapsed. The total number of vehicles, including cars, trucks, buses, and motorcycles, sold in the first quarter of the year is 4,888 vs. 4,116 in Q1/10. The most popular brand in Q1/11 in Bulgaria was Volkswagen with 567 new car sales, followed by Toyota with 427 sold vehicles. Ford is third with 414 sales, Peugeot comes in fourth with 369 sales, followed by Dacia with 357 and Skoda with 302. Mercedes is the leader in the sales of new buses and trucks – a total of 45 in the first quarter. Peugeot has the lead in the sales of new motorcycles – 42, or 67% of all motorcycles sold in Bulgaria in this period. (SMN 13.04)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Yom Yerushalayim - Jerusalem Day to Be Celebrated
On 31 May/1 June, Israel and the world will celebrate Jerusalem Day (Hebrew: Yom Yerushalayim), an Israeli national holiday commemorating the reunification and liberation of Jerusalem's Old City in June 1967. The day is marked by state ceremonies, memorial services for soldiers who died in the battle for Jerusalem, parades through downtown Jerusalem, reciting the Hallel prayer in synagogues, lectures on Jerusalem-related topics, singing and dancing, and special television programming. Schoolchildren throughout the country learn about significance of Jerusalem, and schools in Jerusalem hold festive assemblies. The day is also marked in Jewish schools around the world. Some religious Zionists in Israel regard Yom Yerushalayim as even more important than Israel Independence Day. In Jerusalem, a public reception by the mayor of Jerusalem, state ceremonies and memorial services for those who died in the Six-Day War are also held. In Israel, some people mark the occasion by traveling or even hiking to Jerusalem.
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7.2 Shavuot Holiday to be Marked on Eve of 8 June
On 7/8 June, the Jewish world will observe the holiday of Shavuot. Shavuot is the second of the three major pilgrim festivals (Passover being the first and Sukkot the third) and occurs exactly fifty days after the second day of Passover. This holiday marks the anniversary of the day when the Jewish People received the Torah at Mount Sinai. This is a biblical holiday complete with special prayers, holiday candle lighting and kiddush, with many forms of work and labor are prohibited. The word "Shavuot" means "weeks": It marks the completion of the seven-week counting period between Passover and Shavuot. During these seven weeks the Jewish people cleansed themselves of the scars of Egyptian slavery and became a holy nation ready to enter into an eternal covenant with G d with the giving of the Torah. Before the giving of the Torah the Jews were a family and a community. The experience of Sinai bonded the Jews into a new entity: the Jewish people; the Chosen Nation. This holiday is likened to their wedding day - beneath the wedding canopy of Mount Sinai, G d betrothed the Jews.
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*REGIONAL:
7.3 Jordan Independence Day 65
Jordanian Prime Minister, Marouf Bakhit issued a communiqué declaring Wednesday, 25 May as the date of the upcoming Independence Day non-working public holiday throughout Jordan. Independence Day is celebrated in the Hashemite Kingdom of Jordan on 25th May each year, marking the date in 1946 when Britain granted independence to what was then called Transjordan. Transjordan had been ruled as a semi-autonomous state by as-Sayyid Abdullah bin al-Husayn, whom the British had appointed as Emir in 1921. Upon independence, he was proclaimed King Abdullah I, also known as Abdullah the Founder. King Abdullah I was assassinated in 1951 and was succeeded by his son King Talal, later removed due to mental illness. Because King Talal's son Hussein was too young to rule, a committee took over the business of government until he reached the age of majority in 1953, when he was crowned King, and ruled until his death in 1999. The current ruler of Jordan is King Abdullah II, son of King Hussein.
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7.4 Kuwaiti Parliament Delays Questioning of PM for a year, Pending Constitutional Court Ruling
The Kuwaiti Parliament has approved the government's request to postpone discussing the questioning of the Prime Minister for a year unless the Constitutional Court (CC) rules otherwise. Of the 47 attendees of the 17 May Parliamentary session, 37 MPs approved the request while 10 opposed it. The government had submitted a request to delay the discussion until the Constitutional Court had reviewed and ruled on the validity of issues that are subject of the questioning. Commenting on the government's move, Kuwait's Minister of Petroleum and State for Parliamentary Affairs al-Basiri has indicated that the previous government had faced more than seven questioning requests and dealt with them in a legal and proper manner, even though the constitutional validity of some of these requests was doubtful. Despite the government's re-iteration of Parliament's right to question government members, continuing with such doubtful questioning cannot continue (noting that the latest request for questioning of the PM was submitted on the day the newly formed made its oath) which is why the government has opted to first refer the request to the CC to rule on its validity, al-Basiri explained. (AB 18.05)
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7.5 Saudi Woman Held For Driving
On 22 May, Saudi authorities arrested a female activist who launched a campaign to challenge a ban on women driving in the kingdom and posted a video on the internet of her driving. The YouTube video, posted on 19 May, has attracted more than 500,000 views and shows Manal Alsharif, who learned to drive in the United States, driving her car in Al Khobar in the Eastern Province. An Eastern Province police spokesperson declined to comment and an interior ministry spokesperson was not immediately available for comment. Women in Saudi Arabia are not allowed to drive and must have written approval from a designated guardian - a father, husband, brother or son - to leave the country, work or travel abroad. The campaign Alsharif launched is aimed at teaching women to drive and encouraging them to start driving from June 17, using foreign-issued licenses. While there is no written law that specifically bans women from driving, Saudi law requires citizens use a locally issued license while in the country. Such licenses are not issued to women, making it effectively illegal for them to drive. (Various 22.05)
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7.6 Cairo Adjusts Election Laws
The ruling military council in Egypt backed a new law that would eliminate voting rights for expatriates and the quota for women in Parliament. Al-Masry Al-Youm reported that the ruling security council didn't see why expatriates would want to vote. The council also wanted to do away with a parliamentary quota for women. After November parliamentary elections, more than 41 million people registered to vote for the 508 seats in the country's Parliament. Of those, 64 seats were reserved for women. A new government to replace the deposed regime of Hosni Mubarak will be ushered in during elections later this year. (UPI 12/05)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 ILSI Says 43% of Israeli Biomed Companies Generate Revenue
The Israel Life Sciences Industry (ILSI) said Israel has 700 biomed companies, including 401 medical devices companies, 130 biotechnology companies, 76 drug development companies and 53 medical computerization companies. Some 16% of the life sciences companies (110 companies) are early-stage start-ups, 11% (74 companies) are seed-stage start-ups, and 21% (146 companies) are conducting preclinical or clinical trials of their products. No small achievement for a fairly young and small industry, 43% of Israel's biomed companies generate profits. While 214 companies were founded by 2001, the rest are less than a decade old. Some 8% of the revenue-generating companies were founded in the past five years.
Israel's life sciences industry grew by 12% in 2001-05, and has subsequently been stable, with 40-45 new companies a year. The last three years have been weak years for the industry, due to the global financial crisis and 200 companies ceased operations. There are 169 companies focusing on cardiovascular treatments, 57 are developing oncology therapies and 44% are developing therapies for disorders of the central nervous system and brain.
Israel continues to stand out in the number of life sciences patents on both an absolute and per capita basis. Israel is in first place worldwide in medical devices patents per capita and fourth place in absolute terms. It is in second place in all biopharmaceuticals patents per capita and eighth place in absolute terms. Israel is also in first place worldwide for patents in the life sciences as a proportion of total patents awarded in the country. (Globes 17.05)
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8.2 Atox Bio Completes Phase 1 for AB103 for Severe Bacterial Infections and Sepsis.
Atox Bio successfully completed a phase 1 clinical study of AB103, a novel therapy for the treatment of severe bacterial infections and sepsis. The study was conducted at the University of Maryland in Baltimore, US. AB103 was safe and well tolerated without any significant drug-related adverse events. Ex vivo analysis has demonstrated that AB103 does not alter the normal immune response. PK analysis indicated a dose proportional response in all kinetic parameters. Atox Bio is now working diligently to initiate a phase 2 proof of concept study in necrotizing soft tissue infections, a severe and life threading infection. AB103, a novel immunomodulator, offers a unique approach in the treatment of infectious diseases by modulating but not inhibiting the host immune system. This approach of targeting the host immune response rather than the pathogen precludes the rapid generation of drug resistance and provides a multisystem solution for bacterial infections with broad-spectrum coverage, independent of pathogen type. The phase 1 was supported by a grant from the Israel-U.S. Binational Industrial Research and Development (BIRD) foundation.
Ness Ziona's Atox Bio (http://www.atoxbio.com) is a clinical stage biotechnology company that develops peptides and small molecules therapeutics for diseases mediated by an excessive inflammatory response. Atox Bio focuses on novel modulators that act broadly to attenuate excessive cytokine responses, with therapeutic applications ranging from infectious to inflammatory/autoimmune diseases. These applications represent areas with major unmet medical need.
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8.3 Phillies Fans' Free Asthma Screenings at Teva Respiratory Asthma Awareness Night
The Phillies and Teva Respiratory are teaming up to raise awareness of asthma, which continues to be a widespread issue in the city of Philadelphia. For the second year in a row, Teva Respiratory hosted Phillies Asthma Awareness Night in partnership with the American College of Allergy, Asthma and Immunology (ACAAI) on 19 May at Citizens Bank Park. As part of the event, free asthma screenings were available for all fans at the First Base, Third Base and Left Field Gate entrances. Screenings will take place once the ballpark gates open until the 7th inning. Adults and children who may experience symptoms such as coughing, shortness of breath or wheezing can stop by any location to be screened by a local healthcare professional and find out if they are at risk for asthma or exercise-induced bronchospasm (EIB).
Teva Respiratory (http://www.tevarespiratory.com) is the U.S.-based respiratory subsidiary of Teva Pharmaceutical Industries (http://www.tevapharm.com). Teva Pharmaceutical Industries, headquartered in Israel, is a leading global pharmaceutical company and the world's largest generic drug maker. Teva has a global product portfolio of more than 1,450 molecules and a direct presence in 60 countries. (Philadelphia Phillies 16.05)
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8.4 Gelesis Raises $3.6 Million from 16 Investors
Obesity treatment start-up Gelesis (http://www.gelesis.com) has raised $3.6 million from 16 investors, whose names it did not disclose in a filing with the US SEC. It has raised $20 million to date. Gelesis' investors include PureTech Ventures, Queensland Biocapital and OrbiMed Advisors, which won the tender to set up the government biomed funds. Gelesis is a Boston-based company developing a breakthrough treatment for obesity and other related co-morbidities. Gelesis was formed in 2006 with technology developed and still manufactured in Israel. It was co-founded with ExoTech Bio Solutions, an Israeli maker of polymers for health care and other markets. The Gelesis team of scientific advisors includes the world's top experts in obesity research and clinical development; former regulatory leaders; and innovators in advanced biomaterials. Gelesis was co-founded in 2006 by PureTech Ventures and has raised over $16m in financing to date. The company has developed Attiva, a superabsorbent hydrogel designed to swell in the stomach, reducing appetite. The gel also makes food more viscous, so its stays longer in the stomach. The company began preclinical animal trials of the gel, but it has not yet begun human clinical trials. In 2010, FierceBiotech included Gelesis in its "Fierce 15" list, as one of the top emerging biotech companies of the year. (Globes 17.05)
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8.5 Can-Fite Promising Analysis Data of Its Phase I/II Liver Cancer Study with the CF102 Drug
Can-Fite BioPharma announced promising Phase 1/2 interim analysis data regarding its drug candidate CF102 in the treatment of hepatocellular carcinoma (HCC). This trial included 18 patients with HCC, most of whom had failed prior treatment with Sorafenib (Nexavar), the only currently approved drug for this indication. The primary study objectives were to evaluate the safety profile of long-term administration of CF102 at 3 different dose levels in patients with HCC, and to determine the pharmacokinetic behavior of CF102 in this population. The secondary objective of the trial was to document evidence of clinical efficacy in this patient population. The interim analysis data demonstrate the trial successfully achieved its objectives, showing a very favorable safety profile for CF102 in a patient population with primary liver cancer and Child-Pugh cirrhosis classes A and B. CF102 is a small molecule drug, agonist at the A3 adenosine receptor that has a favorable safety profile, which emerges from its selective activity on diseased cells. The latter over-express the receptor while normal cells express very low levels of the A3 receptor. Petah Tikva Can-Fite Biopharma (http://www.canfite.com) focuses on the development of small molecule-based drugs that bind to A3 adenosine receptors of cancerous or inflammatory cells and inhibit their development. (Can-Fite 11.05)
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8.6 Ortho Space Raise $2.6 Million
Ortho Space has raised $2.6 million at a company value of $11.5 million, after money. TriVentures LP led the round. Ortho Space is a subsidiary of Bioprotect. Both companies are graduates of Xenia Venture Capital incubator. Founded in 2009, Lod's OrthoSpace (http://www.orthospace.co.il) is developing simple-to-implant, biodegradable balloons for the orthopedic market. The Company has developed unique, minimally invasive products with innovative technologies using biodegradable materials. Over 3 years of R&D and clinical studies enabled OrthoSpace to develop our advanced product with the potential reduction of shoulder pain and improved range of motion. This short procedure offers an alternative to patients who suffer from rotator cuff injury. (Various 17.05)
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8.7 Compugen Drug Candidate Discovery Method Interferes With Protein Conformations
Compugen announced the development of a method to identify novel therapeutic candidates to interfere with disease associated protein conformations and protein-protein interactions. This new in silico method relies on the prediction of hidden conformations of the proteins of interest. Proteins are dynamic entities and can adopt a series of different conformations. However, some of these conformations are “hidden”, since they are short-lived or difficult to study experimentally for other reasons. Since this dynamic property of proteins is important for their function in healthy and diseased states, a broad view of a protein's conformational space is crucial in many aspects of drug discovery. Tel Aviv's Compugen (http://www.cgen.com) is a leading drug and diagnostic discovery company providing novel product candidates addressing important unmet therapeutic and diagnostic needs to pharmaceutical, biotech and diagnostic companies under milestone and royalty bearing or other revenue sharing agreements. Unlike traditional high throughput trial and error experimental based discovery, Compugen's discovery efforts consist of in silico (by computer) hypothesis-driven product candidate prediction and selection followed in vitro and in vivo experimental validation. Compugen's unique in silico prediction and selection capabilities are based on a broad and continuously growing infrastructure of proprietary scientific understandings and predictive platforms, algorithms, machine learning systems and other computational biology tools. (Compugen 19.05)
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8.8 Pharma Two B Plans for Phase II Study of “P2B001” for Parkinson's Disease
Pharma Two B is planning a Phase II study of its new combination therapy, P2B001, in development as a treatment for the early stages of Parkinson's disease. Assuming regulatory approval and the necessary financing, the company plans to commence the Phase II trial in Q4/11. This activity follows a recently completed Phase I trial of P2B001 whereby a very encouraging safety profile was demonstrated. Following a US regulatory pathway of 505(b)2 submission, intended for new products based on previously approved drugs, the combination could be approved in as little as three years. In the past few months, Pharma Two B sponsored a four-way comparative pharmacokinetics study to test the absorption, metabolism and elimination in humans of its P2B001 in comparison to the commercially available components. The study, which was conducted in Israel, also reviewed possible interactions between the two drugs. The results of the study were very encouraging regarding the PK properties and the safety profile of the combination product.
Rehovot's Pharma Two B (http://www.pharma2b.com) is a drug discovery company developing innovative products, with clinical and commercial added value, based on previously approved drugs. The company develops synergistic combinations of two drugs, acting in complementary biological mechanisms that enable the use of unique low doses, while maintaining high therapeutic benefit. The company also has a line of select generic products in new formulations. To date, Pharma Two B has completed the development and licensing out of five generic products. The company has a very experienced and dedicated management team, with both generic and innovative drug development experience. (Pharma Two B 18.05)
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8.9 Cheetah Medical's Noninvasive Hemodynamic Monitoring Technology Highly Accurate
Results from a study validating Cheetah Medical's noninvasive NICOM system specifically for use in patients with pulmonary hypertension were presented 18 May at the 2011 American Thoracic Society Annual Meeting in Denver. Clinicians have been seeking better ways to monitor disease progression in order to refine treatment. However traditional methods to asses patients' hemodynamic parameters, and most notably patients' cardiac output (CO), are highly invasive and thus suboptimal for routine serial assessment of PH. In this study, the Cheetah Medical NICOM Noninvasive Cardiac Output & Hemodynamic Monitoring System was used to monitor the hemodynamic performance of 25 pulmonary hypertension patients. University of Chicago researchers compared the results obtained with NICOM to those obtained with two gold-standard methods which are also invasive, the pulmonary artery catheter, also known as Swan-Ganz catheter and the Fick method. The NICOM system provided equally accurate and precise measurements to the standard methods, but was completely non-invasive.
Researchers hope that these findings will encourage use of CO monitoring not only into routine clinical practice to provide objective means of tracking changes in disease status and response to therapy, but will also pave the way to explore the utility of this technique in clinical trials as an early screening tool for differentiating effective versus non-effective treatments for PH.
Tel Aviv's Cheetah Medical's (http://www.cheetah-medical.com) NICOM Noninvasive Cardiac Output and Hemodynamic Monitoring System uses the company's proprietary BIOREACTANCE Technology to deliver continuous, accurate, noninvasive cardiac output (CO) and other vital hemodynamic monitoring parameters, useful for fluid management and drug titration. The system is US FDA cleared and CE Marked, and since its commercial launch in 2008 has been adopted by a growing number of clinicians worldwide. (Cheetah Medical 18.05)
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8.10 Taro Receives FDA Approval for Cetirizine Hydrochloride Oral Solution
Taro Pharmaceutical Industries received approval from the U.S. FDA for its Abbreviated New Drug Application for Cetirizine Hydrochloride Oral Solution, 1 mg/mL (Sugar Free Bubble Gum) (“Cetirizine Oral Solution”). Taro's Cetirizine Oral Solution is an over-the-counter antihistamine used for the relief of sneezing, runny nose, itchy, watery eyes and itchy throat or nose due to indoor and outdoor allergies and for the relief of itching due to hives and is bioequivalent to Children's Zyrtec Syrup, 5mg/5mL of McNeil Consumer Healthcare. Israel's Taro Pharmaceutical Industries (http://www.taro.com) is a multinational, science-based pharmaceutical company, dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products. (Taro 23.05)
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8.11 LifeBond Raises $20 Million in a Third Financing Round
LifeBond has completed a $20m fund raising, which was led by Giza Venture Capital and Aurum Ventures. Also participating in the round were existing investors: Pitango Venture Capital and Mr. Robert Taub, GlenRock Israel and The Zitelman Group. The start-up company LifeBond, which is developing a line of products in bio-surgery, has raised $20million in a third financing round. This financing round was led by Giza Venture Capital and Morris Kahn's Aurum Ventures. Caesarea's LifeBond (http://www.lifebond.com) is developing surgical sealants and hemostats intended for preventing leakage and bleeding. Proceeds from the round will be used for completion of the pre-clinical and clinical phases of the Company's initial product: LifeSealGI, a sealant indicated for reinforcement of gastro-intestinal anastomoses. Post-surgical leakage from anastomoses is currently a significant risk factor that can result in life threatening complications and costly re-operations. In certain surgical procedures the risk of leakage is up to 20% of overall procedures. (Giza 22.05)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Silicom Secures 2 New Design Wins for SETAC-Derivative Modules
Silicom has achieved two important Design Wins for Networking Modules, a product line that Silicom developed as a part of its SETAC Server-to-Appliance Converter strategy. Silicom expects that its sales of such products to the two customers will total approximately $3 million per year. Silicom achieved these wins with a dominant player in the global security market, one of Silicom's major customers. This firm will use Silicom's Modules in several appliances to enable the reconfiguration of their ports without opening the appliance chassis. Also, a leading company in the Traffic Management and Policy Enforcement industry who has decided to standardize on Silicom connectivity modules within its custom-built appliances.
Kfar Sava's Silicom (http://www.silicom.co.il) is an industry-leading provider of high-performance networking solutions designed to increase the throughput and availability of networking appliances and server-based systems. Silicom's large and growing base of OEM customers includes most of the market-leading players in the areas of WAN Optimization, Security and other mission-critical gateway applications. Silicom's products include a variety of multi-port 1/10 Gigabit Ethernet server adapters, innovative internal and external BYPASS solutions and advanced Smart adapters, including SSL encryption solutions and Redirector adapters. (Silicom 11.05)
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9.2 RADVISION's SCOPIA Selected for VideoVisit Cloud-Based HD Video Conferencing
RADVISION announced that Helsinki, Finland's Netpresence has selected RADVISION's SCOPIA video conferencing platform for its patent pending VideoVisit cloud-based HD video conferencing services. Netpresence delivers state-of-the-art cloud-based HD video conferencing applications through its VideoVisit portal powered by RADVISION's SCOPIA video conferencing platform. Through the Book VideoVisit widget, a business web site can be easily enabled for HD video conferencing, providing a new channel of communications to clients and prospects, improving interaction and fostering commitment. With the VideoVisit calendar, businesses can also present themselves as video capable, allowing customers and business partners to directly schedule video conferences with them. Back-end billing processes are additionally automated by VideoVisit for a complete turnkey platform. VideoVisit users can instantly create and attend video meetings from any Internet connected PC or Mac with a web cam. By simply clicking on a web link, users attend meetings through RADVISION's SCOPIA Desktop browser plug-in technology, making HD video conferencing and data collaboration available to users without investing in video conferencing hardware.
RADVISION's SCOPIA platform including mobile and browser plug-in technology, robust Internet and wireless performance, high scalability and a patented distributed architecture offers unique capabilities well suited to deliver cloud-based services. Flexible APIs allowed Netpresence to quickly develop their VideoVisit services allowing end users the benefits of fast deployment, low initial investments, minimal support requirements and predictable costs. 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 11.05)
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9.3 Neebula Systems Named "Cool Vendor" by Leading Analyst Firm
Neebula Systems been included in the list of "Cool Vendors in IT Operations Management, 2011"(1) report by Gartner, Inc. Gartner's listing does not constitute an exhaustive list of vendors in any given technology area, but rather is designed to highlight interesting, new and innovative vendors, products and services. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness of a particular purpose. Neebula (http://www.neebula.com) aims to resolve the IT management challenges that are caused by virtualization and cloud computing. Neebula's mission is to provide a new generation of Business Service Management (BSM) tools that are built by design to support real-time dynamic environments. Neebula's BSM software utilizes a unique service modeling technology that automates the process of service modeling and keeps the model up to date in real-time dynamic environments. (Neebula Systems 12.05)
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9.4 Mellanox Message Software for Lowest-Latency for a Wide Range of Financial Apps
Mellanox Technologies announced the general availability of Mellanox VMA 5.0 with enhanced TCP acceleration support, providing a unified messaging acceleration platform for all popular networking communications methods such as TCP, Multicast and UDP unicast. Mellanox's VMA message accelerator has been deployed and is providing immediate return-on-investment benefits in multiple stock exchanges, trading firms and capital market institutions worldwide. Mellanox VMA 5.0 delivers sustainable latency under loads of over 2.5m packets per second and dramatically improves UDP latency to under 2.0 microseconds and transparent sockets TCP latency to under 2.5 microseconds, nearly two times better than competitive offerings. Mellanox VMA 5.0, in conjunction with ConnectX-2 adapters, delivers the lowest latency and boosts performance for a wide range of finance/trading and Web 2.0 data center applications.
Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end InfiniBand and Ethernet connectivity solutions and services for servers and storage. Mellanox products optimize data center performance and deliver industry-leading bandwidth, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof architecture. The company offers innovative solutions that address a wide range of markets including HPC, enterprise, mega warehouse data centers, cloud computing, Internet and Web 2.0. (Mellanox 16.05)
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9.5 NICE Situator Enables Portugal's Millennium With Situation Management Capabilities
NICE Systems announced that Portugal's largest private bank, Millennium, has launched production of the NICE Situator open situation management solution to increase the effectiveness and efficiency of its physical security monitoring and response. The NICE solution is enabling the bank to reduce operational costs and optimize the alignment of its corporate physical security policies, standards and procedures across hundreds of branches in Portugal. NICE partner Diebold Portugal is the system integrator for the project. The security situation management needs of banks are many. Among these are intrusion, invalid access control and tampering, robberies, alarm panel communications failure and 'Early Disarm' and 'Late Arm' Situations. With NICE Situator, Millennium addresses these situations by receiving automatic alarms with information on what has occurred. The NICE solution does this by leveraging the existing Alarm Panels infrastructure and extracting additional intelligence from already available data. The solution also automatically connects a call between control room personnel and the appropriate individual at the relevant branch. It also automatically places calls to external agencies if needed, such as local city police. Furthermore, it presents step-by-step instructions to the bank's security personnel on how to handle the situation.
Ra'anana's NICE Systems (http://www.nice.com) is the worldwide leader of intent-based solutions that capture and analyze interactions and transactions, realize intent, and extract and leverage insights to deliver impact in real time. Driven by cross-channel and multi-sensor analytics, NICE solutions enable organizations to improve business performance, increase operational efficiency, prevent financial crime, ensure compliance and enhance safety and security. (NICE 16.05)
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9.6 Mellanox Sets New Record for Real-time Market Data over 10GbE on IBM Systems
Mellanox Technologies announced a new record in low-latency messaging performance for Ethernet networks based on the latest STAC-M2 benchmark test conducted by Mellanox on IBM systems. The record was achieved using Mellanox ConnectX-2 EN 10GbE NICs with RDMA over Converged Ethernet (RoCE), the IBM BNT RackSwitch G8264 10GbE switch and IBM x3550 servers running IBM's WebSphere MQ Low Latency Messaging (LLM) technology. The Mellanox and IBM solution outperformed the most recent record holder (based on a comparable configuration), achieving a 30% improvement over results that were announced just two months ago. The benchmark results highlight an enhancement in latency reduction and scaling of messaging performance, validating Mellanox's and IBM's performance leadership for high-performance connectivity to data centers in the financial services industry.
Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end InfiniBand and Ethernet connectivity solutions and services for servers and storage. Mellanox products optimize data center performance and deliver industry-leading bandwidth, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof architecture. The company offers innovative solutions that address a wide range of markets including HPC, enterprise, mega warehouse data centers, cloud computing, Internet and Web 2.0. (Mellanox 19.05)
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9.7 tracx Launches New Module for Greater Level of Social Engagement
Tel Aviv's tracx (http://www.tra.cx), a social media management system (SMMS), announced its new content distribution and analytics module. What sets tracx apart from other social media solutions is the company's ability to process a virtually unlimited stream of social data, to analyze, understand and categorize the volumes of data and present the results as actionable insights. tracx is able to analyze all levels of social data from the brand to the campaign and everything in between, including competitor, influencer and conversation level data. tracx has developed a social media management system which, according to the IDC, the premier global provider of market intelligence, answers every marketer's burning question: how to measure a social media ROI. The company's solution accomplishes this task through its patent-pending technology, which is able to recognize, analyze, understand, categorize and present social data, providing clients with deep social insights and campaign ROI. tracx follows the natural flow of the social media lifecycle; from planning, to campaign execution, to tracking of the most important conversations, all the way through to reporting and ROI. (tracx 19.05)
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9.8 TestShell Recognized as the BEST Network Test Software
TestShell Test Automation software framework has been declared the winner in Test & Measurement World's 2011 Best in Test Award, in the Network Test Software category. The Best in Test Awards highlight innovative new products and services in the test and measurement industry. As a rapidly expanding player in the global test and measurement market, QualiSystems has consistently demonstrated its customer-focused innovative ethos by addressing some of the key challenges of the field; including the need for scalable enterprise-wide automated test solutions that are flexible, durable and easy to deploy and integrate. TestShell offers a complete test management and test automation framework, which helps Network Equipment Manufacturers (NEMs), Network Service Providers (SPs) and enterprises overcome business-critical networking test and validation challenges, significantly boosting test coverage while shrinking testing cycle time, time to market and overheads.
QualiSystems TestShell is an end-to-end test automation and lab management software framework for hardware, device and system testing automation. While providing advanced test management, code free test authoring, automatic test execution and comprehensive test reporting and analysis, TestShell helps manufacturers and service providers to improve product quality, shorten time to market, significantly reduce capital and operational expenditures and streamline compliance and audit trails.
Ganey Tikva's QualiSystems (http://www.qualisystems.com) is a test automation pioneer providing organizations with unparalleled Test Automation solutions that drive innovation, efficiency and ROI. QualiSystems TestShell Framework is used by market leaders from a wide spectrum of industries including electronics and flash memory device manufacturers, network equipment manufacturers and telecom operators. (QualiSystems 18.05)
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9.9 AutoRek Selects Magic Software's iBOLT Integration Platform
Magic Software Enterprises and Scotland's AutoRek Financial Data Management announced the release of the new AutoRek powered by iBOLT offering. AutoRek has decided to sell its leading financial controls solution (AutoRek) together with Magic Software's code-free integration platform (iBOLT), to enable the seamless integration of financial management data with other enterprise applications. iBOLT enables users to integrate AutoRek with existing applications, databases, and third-party external systems, such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) systems and accounting packages, enabling finance professionals to access and process data much faster and with fewer errors. Or Yehuda's Magic Software Enterprises (http://www.magicsoftware.com) is a global provider of mobile, cloud and on-premise application platform and business integration solutions. (Magic 18.05)
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9.10 Elbit Systems to Supply Electro-Optical Payloads for Maritime Patrol Aircraft
Elbit Systems was awarded a contract to supply an Asian country with dozens of CoMPASS (Compact Multi Purpose Advanced Stabilized System) payloads for maritime patrol aircraft. The Asian country, which operates one of the largest maritime patrol fleets in the world, has selected the CoMPASS payload as a solution to protect its coastlines. The contract, valued at approximately $20 million, is scheduled to be completed within two years. The CoMPASS payload, developed and manufactured by Elbit Systems Electro-optics Elop (Elop), is already installed onboard hundreds of platforms including Unmanned Aircraft Systems (UAS). Belonging to the 15-inch payload family, the CoMPASS includes an advanced thermal imaging system, laser range designator and a day channel, allowing optimal ISTAR (intelligence, surveillance, target acquisition and reconnaissance) capabilities even in adverse weather conditions. The payload, integrated into the aircraft's mission systems, such as the maritime patrol radar and the Command and Control systems, provides the crew with enhanced mission capabilities.
Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems (UAS), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. (Elbit 18.05)
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9.11 Do@ Launches Revolution in Mobile Search at TechCrunch Disrupt
Do@ announced immediate availability of its breakthrough mobile search experience. The do@ platform changes mobile search in three fundamental ways -- the way results are delivered (apps instead of links), the sources delivering the results (direct from publishers) and the manner in which results are ranked (via do@'s "social radar"). The company also announced a $7m investment led by Draper Fisher Jurvetson with participation of DFJ Tamir Fishman and Seed investor BRM Group. Do@ deconstructs the traditional search paradigm of web links and instead merges search and apps in real-time, delivering the top web apps that specifically answer any query a user posts. The result is a fundamentally different experience of search that shatters old concepts. Israel's Do@ (http://www.doat.com) is the first search solution designed for mobile. Do@'s mission is to change the paradigm of mobile search and deliver results that give consumers and content creators a better experience. (Do@ 23.05)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's CPI Rises 0.6% in April
On 15 May, the Central Bureau of Statistics announced that the consumer price index for April rose by only 0.6%, slightly lower than analysts' expectations. As a result of this increase, the inflation rate over the past 12 months totals 4%, 1% higher than the government's annual inflation ranges of 1-3%. The April CPI was mainly affected by price hikes in the following categories: Leisure and vacation (9.4%), clothing (6.7%), fresh fruit (4.2%), housing services (0.8%) and fresh fruit (4.2%). These price hikes were partially compensated by reductions in the prices of fresh vegetables (1.4%) and cars (0.6%). (CBS 15.05)
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10.2 Israeli Growth Continues, Though More Slowly
On 16 May, the Central Bureau of Statistics announced that in Q1/11, Israel's GDP grew by an annualized rate of 4.7%, after rising by a rate of 7.6% in the fourth quarter of 2010 and 4.8% in the third quarter. The Bank of Israel predicts 4.5% growth in 2011. GDP growth in Q1/11 was driven by private consumption, exports of goods and services, and investment in fixed assets. However, public consumption fell. The business product rose by an annualized 5.8% in Q1/11, after rising 8.7% in the preceding quarter and 5.1% in the third quarter of last year. Imports of goods and services rose by an annualized 15.9% in the first quarter, after rising at a rate of 15.6% in the preceding quarter. Imports of goods and services (except for ships, planes, diamonds and defense goods) rose by an annualized 13.6% in the first quarter, after rising at a rate of 12.9% in the preceding quarter. Uses of resources showed that private consumption rose by an annualized 6.8% in the first quarter. This amounts to an annualized 4.8% rise in the standard of living, after a rise of 6.6% in the preceding quarter and a fall of 1.2% in the third quarter. (CBS 16.05)
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10.3 Israel's Trade Deficit Hits All-Time High
Israel's trade deficit was $1.83 billion in April, the highest on record, reported the Central Bureau of Statistics. Imports of goods totaled $5.8 billion last month, while exports of goods totaled $4 billion. In the first third of the year, January to April, the trade deficit was over $4.9 billion, three times the deficit in the corresponding period in 2010. Exports rose by an annualized 28% in February-April 2011, after rising 28.2% in November 2010-January 2011. This runs counter the Manufacturers Association complaints that the shekel's appreciation against the dollar was killing exports. The shekel-dollar exchange rate fell to a three-year low in April. The trade deficit averaged $1.2 billion a month in January-April, amounting to an annualized $14.8 billion. 84% of exports in February-April were manufactured goods, 13% were diamonds and 3% were agricultural products.
High-tech exports (including pharmaceuticals, electronics and avionics), 47% of total industrial exports (excluding diamonds), rose by an annualized 29.3% in February-April, after rising 17.9% in November-January. Mixed high-tech exports (including chemicals), 30% of total industrial exports, rose by an annualized 38.3% in February-April, after rising 45.5% in November-January. Mixed-low technology exports, 17% of total industrial exports, rose by an annualized 20.6% in February-April, after rising 42.4% in November-January. Low technology exports, 5% of total industrial exports, bucked the trend, rising by an annualized 20% in February-April, after rising 14% in November-January.
In April, 34% of imports were raw materials (excluding diamonds and fuel), 14% was machinery and vehicles, 14% were consumer goods, and 38% were diamonds, fuel, ships, and planes. Imports of investment goods rose by an annualized 34.6% in February-April, after rising 60% in November-January. (CBS 12.05)
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10.4 Israel 17th Most Competitive Economy
Israel remains in the 17th place among the world's 59 leading economies in terms of competitiveness, according to the 2011 World Competitiveness Yearbook of the International Institute Management Development in Lausanne, Switzerland. The annual report ranks countries according to difference economic parameters and is based on data collected from different business organizations in the world. This year's list is led by Hong Kong, the United States, Singapore, Sweden and Switzerland. Bulgaria, Greece Ukraine and Croatia were placed at the bottom of the ranking, with Venezuela in the last place. Israel received a score of 81.6.
The Israeli economy ranked first in the central bank's positive impact and is the world's top investor in R&D, similar to 2010, but ranked only 54th in workforce participation. Israel fell in the level of dependence between supporting and dependent population from the 56th place to the 58th, and in the cost of living ranking from the 47th place to the 49th. In the technological infrastructure category, Israel went up to the fourth place from the fifth place in 2010. (Various 22.05)
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10.5 Israel's Economy Lost 168,864 Days to Strikes in 2010
The Israeli economy lost 168,864 work days to strikes in 2010, down from 208,691 work days in 2009, the Ministry of Industry, Trade & Labor reports. However, the opening of new labor agreements in early 2011 has resulted in a turning point in industrial action by some unions, including the Israel Medical Association and the Israel Association of Social Workers. Their strikes were preceded in 2010 by the prosecutors and Foreign Ministry workers' strikes. There were 24 full strikes in 2010, in which 35,844 employees participated, up from 15 strikes in 2009, in which 50,866 employees participated. There were also 13 partial strikes (labor sanctions) in 2010, in which 56,564 employees participated, down from 18 partial strikes in 2009, in which 27,562 employees participated. Most of the strikes in 2010 were over pay (46%), the signing of a new labor agreement (17%), and layoffs (17%). 68% of lost work days to strikes were caused by strikes in the public sector, while 32% were due to strikes in the private sector. More than half the strikes lasted for only one day, and one third lasted for up to two weeks. The longest was the 49-day strike by the prosecutors, while 13% of all strikes lasted for more than two weeks. (Globes 23.05)
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11: IN DEPTH
11.1 ISRAEL: Top 50 Israeli Startups for 2011
For the third consecutive year, Israeli financial newspaper Calcalist put together a list of the top 50 startups in Israel. VC Cafe (http://www.vccafe.com) took note and below is the full listing.
The list was compiled with the help of both Israeli and foreign VC funds, taking into account the startups' current estimated valuation as well as potential for exit. The top 15 companies were selected for their “health” – they all make north of tens of millions in sales, employ a large number of people and measure themselves in business fundamentals rather than exit dreams. They aren't all young and don't all wish to be acquired quickly.
Amongst the funds that participated in the ranking are Plenus, Benchmark, Norwest Ventures, GlobeSpan, Blumberg, Rhodium, Tamir Fishman DFJ, Vertex, Genesis, Battery, Carmel, The Time, Evergreen, Gemini and Cedar.
|
Company Name
|
Product Description
|
Funding Raised
($ millions)
|
Link
|
| PowerMat |
Wireless charging of electronic devices |
30
|
http://www.powermat.com/ |
| Broadlight |
Fabless semiconductor company supplying IC devices and solutions to equipment vendors for FTTH applications |
55
|
http://www.broadlight.com/ |
| Conduit |
Community toolbars for publishers and browser apps |
10
|
http://www.conduit.com/ |
| PrimeSense |
Leading provider of low-cost, high-performance 3D machine vision technologies for the consumer market. The technology behind Microsoft's Kinnect device |
80
|
http://www.primesense.com/ |
| Objet |
3D printing for rapid prototyping and additive manufacturing |
28
|
http://www.objet.com/ |
| Kenshoo |
Search engine marketing technology platform for automation of SEM campaigns |
32.7
|
http://www.kenshoo.com/ |
| Imperva |
Web Application Security in the cloud |
54
|
http://www.imperva.com/index.html |
| Anobit |
Flash solid state storage solutions for mobile computing devices and complete enterprise-class solid state drives (SSDs) |
70
|
http://www.anobit.com/ |
| DoubleVerify |
Verify the correct placement and display of every single impression of a verified online advertising campaign |
13.5
|
http://www.doubleverify.com/ |
| Wix |
Platform for creating free and hosted flash websites |
60
|
http://www.wix.com/ |
| SuperDerivatives |
Provides a functionality-rich, real-time front office solution for derivatives that includes extremely accurate pricing, online trade execution tools, workflow automation, customized reports and risk management of all derivatives in all asset classes |
60
|
https://www.superderivatives.com/ |
| AeroScout |
Market leader in Unified Asset Visibility (UAV) |
|
http://www.aeroscout.com/ |
| Siano |
Highly integrated silicon receiver chips for the mobile digital TV (MDTV) and terrestrial TV (DTT) markets. |
|
http://www.siano-ms.com/ |
| Waze |
Real-time maps and traffic information based on the wisdom of the crowd |
|
http://world.waze.com/ |
| TaKaDu |
Software-as-a-Service solution for monitoring water distribution networks |
|
http://www.takadu.com/ |
| ExLibris |
Library management software |
*
|
http://www.exlibris.co.il/ |
| SolarEdge |
Chips to manage photo-voltaic cells |
59.8
|
http://www.solaredge.com/ |
| Adsmarket (Matomy) |
An online marketplace for advertising placement |
13.3
|
http://www.matomymarket.com/ |
| dbMotion |
Software that enables communication across different medical devices |
46
|
http://www.dbmotion.com/ |
| RADWIN |
Network management systems to reduce broadband bottlenecks |
33
|
http://www.radwin.com/ |
| cVidya |
Fraud detection and identity theft protection in mobile networks |
40
|
http://www.cvidya.com/ |
| Boxee |
An open-source media center, combining streaming software for Internet TV and a hardware set top box |
29.5
|
http://www.boxee.tv/ |
| N—trig |
Multi-touch screens for tablets and mobile devices |
105
|
http://www.n-trig.com/ |
| Cotendo |
A content delivery network (CDN) to distribute digital media |
22
|
http://www.cotendo.com/ |
| Varonis |
Data security for patents |
28.5
|
http://www.varonis.com/ |
| Kontera |
Contextual advertising (similar to Adsense) |
40
|
http://www.kontera.com/ |
| Outbrain |
Content distribution and recommendation for online publishers |
29
|
http://www.outbrain.com/ |
| RedBend |
Enables mobile carriers to remotely install applications on their mobile customers’ devices |
40
|
http://www.redbend.com/ |
| Mobixell |
Mobile advertising software |
39
|
http://www.mobixell.com/ |
| Celeno |
Chips for multi media communication in the 'connected home' based on Wifi network communication |
43.7
|
http://www.celeno.com/ |
| AMIMON |
Chips for wireless TV in the home |
65.6
|
http://www.amimon.com/ |
| Pontis |
Software that enables mobile carriers to recommend bespoke packages, upgrades and promotions to the mobile subscribers based on behavioral usage |
44.85
|
http://www.pontis.com/ |
| Gigya |
Creates commercial and social widgets for content and video sites |
29.5
|
http://www.gigya.com/ |
| Clarizen |
100% Cloud-based project management software |
36
|
http://www.clarizen.com/ |
| Mobileye |
Accident-prevention system that detects objects on the road while driving |
157
|
http://www.mobileye.com/ |
| Celtro |
Mobile backhaul switching solutions for 3rd and 4th generation networks |
48.2
|
http://www.celtro.com/ |
| Altair |
Developer of ultra-low power, small footprint and high performance 4G chips for LTE |
74
|
http://www.altair-semi.com/overview |
| Amobee |
Mobile advertising marketplace |
54
|
http://www.amobee.com/ |
| WhiteSmoke |
Software for English language enrichment in emails/documents |
7
|
http://www.whitesmoke.com/ |
| Cyber—Ark |
Manage and update privileged user and administrative accounts |
29
|
http://www.cyber-ark.com/ |
| OpTier |
Network errors monitoring in the organization |
112.6
|
http://www.optier.com/ |
| Wanova |
Hybrid Desktop Virtualization |
13
|
http://www.wanova.com/ |
| ConteXtream |
Routes users in the corporate network to free servers, transforming internal networks into Smart Clouds |
24.1
|
http://www.contextream.com/ |
| eXelate |
Marketplace connecting data buyers and sellers buying demographic data in the advertising market |
20
|
http://exelate.com/ |
| Peer39 |
Semantic content matching to publishers |
22.45
|
http://www.peer39.com/ |
| Netformx |
Automates the end-to-end process of designing networks and enables collaborative workflows within and across organizations |
46.1
|
http://www.netformx.com/netformx/index.php |
| Tradonomi (eToro) |
Online trading in currencies, commodities and indices, designed as a game/social network |
20.3
|
http://www.etoro.com/ |
| Surf |
High-density, multimedia DSP resource processing boards for telecommunication infrastructure and CTI applications |
50.3
|
http://www.surfsolutions.com/ |
| Zend |
The largest provider of PHP code libraries on the net |
64.3
|
http://www.zend.com/ |
| Soluto |
Monitors low-performance software and operating system errors on the PC |
8.5
|
http://www.soluto.com/ |
(Source: VC Café 16.05)
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11.2 JORDAN: Membership pending
The Gulf Cooperation Council's (GCC) warm reception of Jordan's membership application to join the wealthy six-member bloc could have a positive impact on the kingdom's economy. The GCC's welcoming of both Jordan and Morocco, which is also being considered for membership, is widely seen as a response to expanding unrest across the region and a way to bring together like-minded governments. For Jordan, joining an alliance of oil-rich Arabian Gulf states could mean economic growth potential.
Membership would allow financial support from the GCC to flow to the kingdom, which relies heavily on tourism, foreign investment and worker remittances for its revenue. Though Jordan has managed to stave off the unrest some of its neighbors have seen, the country is saddled with a nearly $2bn deficit and growing foreign debt and unemployment . The IMF recently predicted that Jordan's economic growth this year would be 3.3%, down from its October 2010 estimate of 4.2%.
The GCC makes a habit of helping its members, most recently when it pledged a total of $20bn to Bahrain and Oman to alleviate the economic troubles that were a cause of unrest in those countries. Being a member of the GCC could see Jordan also benefit from such financial support. “Jordan is in desperate need of the GCC's umbrella to ease its economic hardships, while the GCC wants Jordan's security and military expertise at a time of regional instability,” Jordanian political analyst Labib Kamhawi told international media recently. “If anything happens in any GCC country, like the unrest that engulfed Bahrain, Jordan cannot intervene militarily if it's not a GCC member.”
In addition, tourism could also see a boost: figures from the Ministry of Tourism's 2010 statistical newsletter showed that visitors from the six GCC states was up 11.5% between 2009 and 2010, to some 1.65m visitors. If Jordan were to become a member of the GCC, eased visa restrictions and greater travel freedoms could increase that number over the coming years. Freer movement of labor would also be a benefit, as foreign worker remittances make up about 20% of GDP, with many Jordanians working in neighboring states.
The economic benefits of more tourists and remittances might be offset by capital outflows from Jordan, as local businessmen will likely take advantage of low cost production centers in GCC countries, such as Saudi Arabia. Taking steps to maximize its competitiveness and provide fiscal incentives before it removes the barriers in line with membership requirements will help avoid this situation.
It is still unclear if Jordan would be accepted as a full member or one with partial membership rights, such as Yemen and Iraq. Jordan's foreign minister, Nasser Judeh, said in early May that he was in contact with his counterparts in the GCC to discuss the kingdom's membership requirements, though he declined to specify what they might be.
This is not the first time Jordan has applied for GCC membership. The kingdom first did so in the mid-1980s after it had run up a multi-billion dollar foreign debt financing its army, but was rejected from the bloc with no explanation. Since then, the kingdom's interests have run parallel to those of the GCC: it is allied with the US, determined to uphold the monarchy system, opposed to Iran's growing Shia influence in the region and concerned about the wave of protests in the region. It is possible, as some analysts have opined, that the move to bring in Jordan and Morocco could signal an intention to group together countries run by a monarchy or semi-monarchies as a way to show that they can stand in peaceful contrast to republican governmental systems. Waleed Al Khatib, head of the public opinion polling unit at Jordan University's Centre for Strategic Studies, told local media, “Political systems in the GCC countries are either monarchies or semi-monarchies.” The GCC's acceptance of Jordan's membership request could help send a message that “Arab countries that have monarchical political systems are more stable than the republican countries, and this is clear on the ground,” Al Khatib said.
For their part, Jordanians appear to be enthusiastic about the news of the country's joining the GCC. In addition, newspapers across the Gulf seemed to take the news of the GCC's welcoming of Jordan positively, according to a May report in The Jordan Times, which quoted a number of papers saying they foresaw increasing economic prospects and a strengthening of regional ties. For many, Jordan's membership could signal not only increased economic stability but also the added security and regional standing that would come from allying with a set of established wealthy nations. “Since the collapse of Iraq [in 2003], Jordan has been very much left out in the cold,” Nawaf Tell, the director of the Jordanian Centre for Strategic Studies and a former diplomat, told The Financial Times. “This move means that Jordan would become part of a collective – economically, politically and strategically.” (OBG 24.05)
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11.3 GCC: The GCC at 30 - Shaking off the Dust?
Yoel Guzansky wrote in the INSS Insight (http://www.inss.org.il) on 22 May that in May 1981 the leaders of Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and Oman approved the Gulf Cooperation Council (GCC) charter with the objective of increased "coordination, integration and interconnection between member states in all fields." Although security was a key factor in the alliance's formation, the GCC has so far been unable to present a united stance on this central issue, which has affected its ability to deal with the growing threats from Iran.
The fear of revolutionary Iran and the potential spillover of the Iran-Iraq War made the Gulf countries realize that they needed to counter regional threats through alignment. Since then, GCC countries have conducted themselves relatively passively and for the most part have remained on the sidelines of the effort to curb Iran's march towards nuclear weapons. Yet the current instability in the area has brought this tension to the surface, and one can even identify an adjustment in strategy and the adoption of more assertive stance that has reinvigorated this loose alliance.
The entry of the joint Peninsula Shield Force into Bahrain (along with a generous aid package), besides trying to protect the regime and prevent the spread of the protests to the Saudi Shiite population, was intended to signal that Bahrain is deep within the GCC's sphere of influence, and to make it clear that the GCC states are, as they said: "not Lebanon or Iraq." In turn, the Iranian parliament warned that the GCC was “playing with fire” by sending “occupation” troops to Bahrain, setting the stage for the paramilitary Basij (best known for its role in suppressing demonstrations in Iran after the June 2009 elections) to throw Molotov cocktails at the Saudi Arabian embassy in Tehran while shouting “death to the Saud family.”
In other points of friction, Kuwait and Bahrain identified separate Iranian espionage cells and withdrew their diplomats from Tehran while expelling Iranian diplomats, and a letter signed by all six GCC countries was sent to the Security Council calling on the UN "to halt Iranian interference in Gulf affairs." In addition, Prince Turki al-Faisal, former Saudi ambassador to the US and to Britain, said the GCC should "prevent others [i.e., Iran] from dictating its options... and for the first time since its formation the GCC is forced to rethink its strategy". In a few extraordinary meetings in April and May the foreign ministers of the GCC publicly denounced “blatant Iranian interference” in their internal affairs and Tehran's “plotting against their national security."
This is no small matter because the GCC countries generally tend to restrain their public remarks on Iran and because they previously had no uniform policy on the matter. Outside the Gulf, the GCC is also showing greater unity. The six backed a no-fly zone in Libya with the UAE joining Qatar in sending fighter jets and also intensively mediating in Yemen, trying to ease the transition of power from the embattled president, Ali Abdullah Saleh.
While concerns about Iran are shared, each Gulf country so far has conducted its own cost-benefit analysis, leading each to adopt a different policy for the containment of Iran's ambitions. Qatar and Oman, for example, while acknowledging the severity of the threat from Tehran (as the leaked State Department cables have shown) prefer to appease rather than confront Iran. However, the situation may be changing. Cooperation appears more important than ever in light of the increased threats in and around the Gulf and some adjustments in the GCC states' traditional policies can be identified.
First, the Arab Gulf is in the midst of one of the biggest conventional arms races it has ever experienced, with an emphasis on acquisition of advanced fighter planes and anti-missile defense systems, possibly totaling more than $120 billion over the next several years. This goes hand-in-hand with America's containment policy vis-à-vis Iran and points to the need to respond to Iran's arsenal of menacing surface-to-surface missiles. These systems would help the Gulf states repel a future Iranian attack.
Second, in recent years there has been a "nuclear renaissance" in the Gulf, where the primary motive for the GCC civilian nuclear programs is Iran's nuclear ambitions, even if for obvious reasons there has been no public acknowledgment of this. The GCC countries have so far progressed transparently and in cooperation with the UN nuclear watchdog. To this end, most have signed agreements waiving nuclear fuel cycle capabilities, which may serve as an alternative model to Iran's. This effort is primarily meant to signal that the GCC states are capable – even if they are not necessarily interested in doing so at this time – of developing nuclear programs as a deterrent to Iran's advancing nuclear weapon program. Though this may also be motivated by considerations of prestige and modernization, it represents a symbolic response to Iran and is meant to send the latter a clear message of “we can, too.”
Third, the GCC states have declared their intention to strengthen the Peninsula Shield Force. According to recently announced plans, the PSF's primary function will be “to provide a response to security threats in the Gulf." Despite the PSF's relative weakness, it has had some successes: establishment of a joint headquarters with a permanent command, joint exercises, and a few deployments, the most recent of these in Bahrain, to tackle – for the first time – an internal threat.
Fourth, the "Arab spring" pushed the GCC to try to immunize the regimes from potential risks and bolster their legitimacy. In recent weeks there are indications that Saudi Arabia, in many ways the driving force behind the GCC, hopes to invite Jordan and Morocco, which are conservative, pro-Western monarchies, "to apply for membership" in the alliance.
The GCC can still do more, from containment of a large share of illegal trade with Iran to the increase of oil production in the event of a future crisis with Iran. In any case, they need clear US backing, as doubts about America's commitment to the region's future security are rising. The last 30 years have shown that when external threats grow, tensions between the GCC countries decrease and more cooperation is visible. This is also the case now when the monarchs understand that if they want to preserve their regimes they need to maintain some unity and make a concerted effort to let go of their disagreements.
An adoption of a joint security and foreign policy is needed – a move, as some in the Gulf suggest, from cooperation to confederation and from a sub-regional to a regional organization (with the possible addition of Jordan and Morocco). Indeed, an assertive stance may signal a more decisive role for the GCC and have the potential to strengthen its contribution to regional security at a time when it is most critically needed. (INSS 22.05)
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11.4 KUWAIT: A New Chapter
Iraq and Kuwait appear to be laying the foundations to rekindle economic relations, with businesspeople and political leaders from both countries recently meeting to discuss opportunities for bilateral trade and investment.
On 27 April, a seminar was held in Kuwait City to discuss strengthening commercial ties between the two nations. The event, organized by the Gulf Studies Centre of the American University of Kuwait, was entitled “Kuwait and Iraq Together Towards a Bright Future”. Attendees included business leaders, academics and public officials from both countries.
The seminar focused on the role of the private sector in enhancing Kuwaiti-Iraqi economic cooperation. According to Mansour Aboukhamseen, the chairman and managing director of Kuwait Energy Company, the participants “shared views on how Kuwaiti and Iraqi companies can work together on building Iraq, especially in the areas of project finance, technical expertise, logistical support, tourism and social ties”.
The energy sector may well be an area in which Kuwait could offer financial and technical support to Iraq. As Paul Landers, the group chief executive of AGG International, an oilfield services company, told OBG, “Iraq is pivotal for the future of exploration and production of oil and gas. It has immense reserves comparable to those in Saudi Arabia, but they are underdeveloped. Kuwait has the potential to be the entrance point for this development.”
A recent visit to Kuwait by an Iraqi trade delegation underscored the importance of the country as a possible source of investment capital. On April 13 the Kuwait Chamber of Commerce and Industry (KCCI) hosted a group from Iraq that included the governor of Basra, the head of Basra Investment Commission (BIC) and the Iraqi ambassador to Kuwait. A number of Kuwaiti businesspeople also attended the meeting.
Haidar Fadhel, the head of BIC, spoke at the event, highlighting some of the ways in which Iraq's legal framework provides economic incentives for foreign investment. According to Iraq's National Investment Law, foreign investors who apply for and receive an investment license from either the national or a regional investment commission are eligible for benefits. Incentives include an exemption from certain taxes, as well as the right to import equipment and machinery for a period of three years without paying duty.
Kuwaiti businessman Jawak Bukhamseen, who attended the KCCI meeting, told Kuwait Times that Iraq is a good destination for investment because it allows 100% foreign ownership, unlike Egypt, Syria and Lebanon. Another participant, Mazin Abdulzahra, the acting head of Basra Chamber of Commerce, pointed out that investment was possible in sectors other than hydrocarbons. “The real resource for development lies in industries, not oil alone,” he said, noting that there is “a good opportunity to establish new factories in Iraq”.
Strengthening economic ties is not necessarily limited to direct foreign investment – it could very well also involve boosting bilateral trade. Kuwait currently imports liquefied natural gas (LNG) during the summer months to generate electricity during this period of peak demand. In January, Abdullatif Al Houti, the managing director of international marketing for the state-run Kuwait Petroleum Corporation (KPC), announced that the Ministry of Electricity and Water had asked KPC to begin LNG imports in mid-March and continue them up to mid-November, an extension over last year's period of April to October.
Iraq could, at least in theory, sell natural gas to Kuwait. Iraq currently flares much of the gas produced at its oilfields, but in April 2011 Shell, Mitsubishi and South Gas Company of Iraq announced that they had received approval to establish a joint venture to capture the natural gas that would otherwise have been burned off. Revenues generated by the deal could also help Iraq upgrade its infrastructure for the processing and distribution of natural gas. According to market research firm Datamonitor Group, Iraq has proven gas reserves of 3.15trn cu meters.
Although some Kuwaiti businesspeople may be sanguine about investment opportunities in Iraq, barriers to revitalizing economic relations remain, including long-term disputes over reparation payments and territorial borders. However, with significant upside potential, both countries may be able to put aside their differences. As Mohammad Akbar, the director of the Gulf Studies Centre of the American University of Kuwait, said, “Kuwait and Iraq have started a new chapter in political and economic relations.” (OBG 23.05)
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11.5 QATAR: Research on the Rise
On April 3, 2011, Qatar officially launched the National Health Strategy (NHS) 2011-16, the government's plan to upgrade and improve the country's health care sector. Based on principles originally outlined in National Vision 2030, Qatar's long-term development program, the NHS has the potential to bring about substantial changes to the sector.
In addition to improving services at home, the government hopes the NHS will help to turn Qatar into a center for medical research in the Gulf. This is not a new objective – the state has been working to improve its medical research facilities for almost two decades now, as part of a broader research program. Still, the NHS is the most comprehensive and ambitious version of this plan that the nation has yet seen.
The NHS is the latest in a long line of health development plans that have included a medical research component. The main vehicle for investing in this segment is the Qatar Foundation (QF), a government-funded non-profit organization that is involved in education, research and community development projects in the country. Since 1995 the foundation has taken the lead on a number of major research projects, including the Qatar National Research Fund, the RAND Qatar Policy Institute, the Qatar Science and Technology Park, and the Qatar Computing Research Centre.
The QF is in the process of developing a major medical research cluster on the outskirts of Doha, the first phase of which is already in place. In 2002 Weill Cornell Medical College in Qatar (WCMC-Q) opened its doors in Education City, a QF development that houses a number of educational institutions, including branch campuses of a handful of leading international research universities. A joint partnership between US-based Cornell University and the QF, WCMC-Q offers medical degrees and a variety of nursing and health-related training programs in a 31,000-sq-metre facility. “The Qatar Foundation, by attracting international universities to the country, has positioned Qatar as a center for local and international talent development,” Dr. Hanan Al Kuwari, the managing director of the Hamad Medical Corporation (HMC), told OBG.
Carrying out medical research is central to WCMC-Q's mandate. The institution is currently in the middle of implementing a five-year plan to build research capacity, including the development of five core facilities that can be used by researchers to obtain preliminary data for grant applications, as well as for carrying out projects. These core facilities include, among other things, a genomics laboratory, microscopy equipment and a vivarium.
According to Dr. Javaid Sheikh, the college's dean, WCMC-Q has so far received 33 research grants from the Qatar National Research Fund, a member of the QF that supports original research to advance knowledge and education. Major projects currently under way include a large-scale study of diabetes, obesity and metabolic syndrome, as well as a smaller-scale investigation into infectious diseases and epidemiology. These projects relate to current public health issues in Qatar and the larger GCC region.
Medical research in Qatar will receive a major boost when the Sidra Medical and Research Centre begins operations next year. Launched in 2004 with an endowment of $7.9bn from the QF, Sidra is expected to be a cornerstone of the country's health care sector. Facilities will include a 400-bed teaching hospital (expandable to 550 beds) with a focus on comprehensive care for women and children, as well as a large-scale, forward-funded research program. Initial undertakings will focus on diabetes, cancer, epidemiology and neonatal health.
The overlapping research areas between Sidra and WCMC-Q are no accident – the two institutions are located adjacent to each other and will share facilities and collaborate on projects. Additionally, medical students at WCMC-Q will benefit from on-the-job training at the hospital, and doctors employed at Sidra could potentially teach or lecture at the school.
This relationship is important to the college, where clinical placement, in addition to teaching and research, is a central objective. According to Sheikh, WCMC-WQ already enjoys a strong relationship with HMC, its primary partner, and is expanding its ties with Sidra. The two medical centers will likewise look to work together and to develop complementary research agendas.
Once Sidra is operational, it will employ around 5000 people, including doctors, nurses, technical staff, biomedical researchers, administrators and support staff. Only 5-10% of the nation's existing health care workforce is Qatari, a proportion that the government would like to increase as time goes on. In the meantime attracting highly qualified foreign medical professionals to work at Sidra and other facilities is an important part of the NHS. As a first step in this direction, the center is working to establish professional connections and joint research projects with scientists at similar facilities in Europe, North America and Asia.
At the same time, the government intends to boost Qatar's domestic human capital from the ground up, with plans to expand scientific education at the country's primary, secondary and tertiary schools. The goal is to familiarize students with major research concepts early on. In the long run, the government hopes that locals will make up the majority of the Qatar's growing research workforce.
The nursing school at the University of Calgary – Qatar, where faculty is Canadian and some 23% of students are Qatari, is a good example of international partnerships working to develop the labor pool with a focus on national talent. According to Dr. Carolyn Byrne, the dean and CEO, the university has a strong relationship with HMC for clinical placements for students. The university is also host to research projects, and has been granted some $2m for these programs.
Given the facilities already in place and those on the way, Qatar looks to be making steady progress towards its ambition of becoming a regional center for medical research. In addition, the country's health care system is likely to benefit as local educational institutions train tomorrow's medical professionals, with these developments helping to keep Qataris – and the wider economy – in good health. (OBG 11.05)
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11.6 UAE: IMF Executive Board Concludes 2011 Article IV Consultation
On April 21, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates (U.A.E.), and considered and endorsed the staff appraisal without a meeting.
Background
The economic recovery in the U.A.E. is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. Real nonhydrocarbon GDP growth is projected to accelerate to 3.3% in 2011 from 2.1% in 2010, reflecting stronger tourism, logistics and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government-Related Entities (GREs). Higher oil prices are also contributing to a marked improvement in the fiscal and external positions. Despite higher international food prices, the CPI inflation rate is expected to remain moderate at 4.5%, as property rents continue to decline. At 4.2%, the U.A.E's unemployment rate is low, though unemployment among nationals remains high (at 14%), and concentrated in the northern emirates.
The Dubai World (DW) debt restructuring was completed, but other GREs entered in restructuring negotiations. Nevertheless, the successful restructuring of DW's debt improved market confidence, allowing top-grade Dubai issuers to regain market access. However, Dubai spreads remain high reflecting the risks posed by further potential debt restructuring needs. Many Dubai GREs initiated DW-style debt restructuring talks with banks, while Abu Dhabi stepped up its support to some GREs.
The banking sector has high capital buffers - including from the government - and remained profitable in 2010, but nonperforming loans have doubled since the crisis. The Central Bank of the U.A.E. (CBU) has made important progress in strengthening its financial stability analysis, revamping the regulatory framework and developing macro-prudential policies, with the view to improve bank risk management practices.
Risks to the recovery remain, including from possible economic spillovers of regional events. In particular, the current re-pricing of geopolitical risk in the region could lead to more challenging market conditions, which may put pressure on the entities that need to roll over external borrowing. The excess supply of property in Dubai, and the uncertainty regarding the scale of oversupply in the emirate, will continue to weigh on growth in the U.A.E. At more than 100% of GDP, Dubai's GRE debt is large and roll-over needs are expected to l remain substantial for the medium term, posing continued fiscal and financial risks to the U.A.E. overall.
Executive Board Assessment
In concluding the 2011 Article IV consultation with the United Arab Emirates, Executive Directors endorsed staff's appraisal, as follows:
The U.A.E. economy is recovering in an increasingly uncertain regional environment. Benefiting from high oil prices and strong demand from traditional trading partners, nonhydrocarbon GDP growth is projected to accelerate from 2.1% in 2010 to 3.3% in 2011. The real estate overhang and short-term refinancing needs from overleveraged GREs continue to weigh on the near-term outlook. Downside risks to the recovery relate to possible economic spillovers of regional events, including the re-pricing of risk.
In light of the still fragile recovery, short-term policies should focus on supporting domestic demand, and adjust to the economic spillovers from the unfolding regional events. An overall neutral fiscal policy stance following last year's fiscal contraction would support the economic recovery, while Dubai should consolidate. To ensure efficiency of spending, the government should undertake cost-benefit analyses and implement the projects that have high economic return. While the central bank will maintain its accommodative monetary policy stance, it should also stand ready to provide liquidity to the market in case the re-pricing of risk in the region triggers a reversal of the recent deposit inflows to the banking sector.
The authorities' response to the unfolding events in the region is appropriate. Improved infrastructure in the northern emirates will help raise the standards of living in these areas. Staff also advises the authorities to consider replacing the subsidies on water and electricity with explicit cash transfers to lower-income households. The authorities' active labor market policies will help create jobs for nationals, and should be complemented by strengthening the skills mix. Given the concentration of unemployment in the northern Emirates, the government could also consider locating some of its agencies/entities in the North to create further employment opportunities for nationals in these areas.
The exchange rate is broadly aligned with fundamentals, and the dollar peg continues to serve as an effective nominal anchor for the economy.
Mitigating GRE risks should remain a policy priority. In the short term, the authorities should complete the restructuring of GRE debt, ensure the viability of these entities through writing-off impaired assets and communicate their strategy on GRE debt refinancing. Going forward, limiting overall GRE borrowing by emirate, developing a GRE risk management framework and reporting contingent liabilities arising from GREs in the fiscal accounts will help reduce GRE risks. GRE governance also needs to be improved, including by clarifying ownership, government support strategy, and delineating commercial and noncommercial operations carried by the GREs. Finally, better information disclosure about GRE financial accounts would improve investor confidence and ultimately translate into lower funding costs.
The CBU should continue to prepare the banking system for further possible deterioration in asset quality and future risks. The central bank has taken a number of steps that would help improve the resilience of the banking sector to future shocks. Given the likelihood of further increase in NPLs, the central bank should continue to ensure that banks provision adequately, while monitoring the performance of restructured loans. Higher capital charges on risky GREs, and continued retained earnings by banks would also limit the potential financial risks posed by the GREs.
The recent boom-bust underscores the need for strong demand management over the cycle. Under a pegged exchange rate regime, this requires mutually-supportive countercyclical fiscal and macroprudential policies, and the federal structure of the U.A.E. makes a close coordination between various governments imperative. Staff is encouraged by the authorities' decision to deepen further the intergovernmental cooperation, including the CBU.
Developing the domestic capital markets will reduce U.A.E.'s dependency on external markets. In this context, given the limited scope for federal securities in the short term, the authorities should explore stable funding from non-traditional sources, such as term deposits from government sources.
The progress made by the NBS in establishing macroeconomic statistics and the ministry of finance in preparing consolidated fiscal accounts is an important step towards developing statistical capacity. However, further efforts are needed for the timely compilation and dissemination of key statistics, including on national accounts, balance of payments, and fiscal accounts. This will also require harmonization of methodologies across emirates. Staff encourages the authorities to move ahead with further developing the capacity to produce leading indicators and to collect and disseminate data on U.A.E.'s International Investment Position. (IMF 23.05)
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11.7 EGYPT: Risk: Alert – Political Uncertainty Adds To Economic Woes
On 11 May the Economist Intelligence Unit said that the political turmoil that has accompanied the overthrow on 11 February =of Hosni Mubarak, the former president, has had both an immediate and dramatic economic impact, with several indicators down sharply compared with the previous period. Although the overall economic picture is normalizing, political uncertainty in the run-up to September's elections is affecting the business operating environment, as investors hold off investment until the extent and implications of a recent onslaught in legal investigations become clearer.
The worst is over
In the aftermath of the popular protests that brought political change to Egypt after 30 years under Mr. Mubarak's rule, the closure of ports, factories and roads in the early weeks of the year brought industrial output to a standstill. Tourism revenue fell 73.3% year on year in February 2011, with hotel occupancy rates falling to below 10%. Foreign direct investment (FDI) was put on hold and Samir Radwan, the finance minister, has said that FDI in the 2010-11 fiscal year (July-June) is expected to be 40% lower than in the previous year. Overall, the economy contracted by almost 7% in the third quarter (January-March) and economic growth in 2010-11 is forecast to average 3.5%, slowing from 5.1% in 2009-10.
Now, however, industrial production has resumed, travel bans have been lifted and tourists are cautiously returning to the country. Oil and gas output and traffic in the Suez Canal - two of the country's largest revenue earners - have proved robust even through the worst period of political crisis, and high oil prices will boost hydrocarbons income.
Hazy outlook
Nevertheless, a great deal of political uncertainty persists. The country will not have permanent executive or legislative bodies until after the elections in September, and even then it will only be at the beginning of a long road to redrawing the country's constitution. Although Egypt's political revolution may have achieved its main aim (the overturning of Mr Mubarak) there is still much debate as to how much further the process of political exorcism should go. There are those who wish to see every trace of influence of the old regime eradicated from the political system, and every case of corruption investigated. Then there are those who want a return to stability as quickly as possible.
In this context, the economy is likely to continue to suffer. Although the transition government is currently focusing on stabilizing the economy, it lacks the legitimacy and time to put in place a new investment strategy, meaning that the country's economic priorities will remain unclear until September at the earliest.
Frozen direct investment
In the meantime, with the Muslim Brotherhood, a political opposition group, expected to take a significant proportion of the seats in the new parliament, there are fears that the government will move away from the business-friendly policies of the previous regime. International investment is likely to remain on hold as investors assess their operating environment, amidst concerns over restrictions on capital outflow and whether the government's economic strategy will make room for liberal policies or take on a more populist stance.
This comes despite the 5-day visit by Essam Sharaf, Egypt's prime minister, to the Gulf at the end of April, where he sought to attract investment to the country. A few days earlier, the Kuwait Investment Authority, a sovereign wealth fund, announced that it had set aside E£1bn ($170m) to invest in Egypt. However, compared with the $10bn-$12bn that Samir Radwan claims the country needs to rebuild its economy, this is just a drop in the ocean.
The climate of uncertainty is exacerbated by ongoing investigations into privatization deals done by Mubarak's government with private investors, particularly in the industrial and real estate sectors. Some of the largest companies in the country are implicated, including Palm Hills Development, the second-largest listed real estate company in the country, Sodic, the third-largest, and Ezz Steel.
Under the lens
The investigation into Ezz Steel revolve around its acquisition of state-owned Al-Dekheil Steel in early 2010. Although the company denies that the investigation is affecting it, local press reports claim that National Bank of Egypt (NBE) and Banque Misr have decided to review financing agreements signed with Ezz Steel early last year. The two banks were set to supply the company with a syndicated loan of E£2.2bn over seven years in order to finance future projects.
Palm Hills and Sodic are also under investigation, although both companies deny any wrongdoing. In early April, Palm Hills said that it is considering returning to the government a 183-acre site in Sixth of October city, near Cairo, in an effort to reduce its liabilities and improve its cash flow. The value of Palm Hills shares on the Cairo and Alexandria Stock Exchange fell 59% between 1 January and 7 April.
Broader implications
The exposure of the country's banks to companies that are either already implicated in the investigations or are potential candidates for investigation means that the financial sector is also affected. In late April, Moody's, an international ratings agency, revised its outlook for Egypt's banks downwards from stable to negative, reflecting political uncertainty, risks to asset quality and profitability, and the relatively high exposure of local banks to sovereign debt.
The lack of clarity over how far the government's investigations are likely to go, or how long they will last, threatens to magnify their economic impact even further. The business environment as a whole in the country could suffer, with banks withholding credit and stock valuations being affected, if investigations extend to every company irrespective of whether it has had direct dealings with Mubarak or not. (Risk Briefing 11.04)
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11.8 EGYPT: Seeking Capital Injection
On 20 May the Oxford Business Group wrote that To help offset a rising budget deficit — amid falling foreign investment resulting from recent political upheaval — Egypt is looking for international funding. The economic effects of events of early 2011, though predictable, have prompted some short-term concerns over public financing.
There is no doubt that the long-term benefits of the uprising in February have the potential to provide a tangible boost to Egypt's socioeconomic indicators. However, the temporary disruption to the economy nonetheless had an impact on forecasts for 2011. While the low levels of foreign investment and underperformance of major economic earners such as tourism were widely anticipated, inflation is also on the rise, linked to the weakening Egyptian pound, higher oil prices and imported inflation at a time of globally elevated commodities prices. With food staples out of the reach of a growing number of Egyptians, the government is asking for international assistance in filling its coffers to stave off additional social unrest.
In mid-May, the IMF announced that Egypt was looking for $10b - 12b in financing from international lenders up to mid-2012. “They've approached bilateral and multilateral partners, including the IMF, to provide the financial support for what is their home-grown program,” Caroline Atkinson, a spokeswoman for the IMF, told international press.
She added that an IMF team will soon go to Cairo to discuss lending options but declined to cite a figure the agency would be able to lend. “The size and scope of fund support will be defined as discussions progress,” Atkinson said.
In late April Egypt's finance minister, Samir Radwan, indicated that the country was seeking $3b - 4b from the IMF to cover the gap caused by the budget deficit, which is likely to reach some 10% of its total national output in the coming fiscal year. Egypt is also expected to seek financial assistance from its neighbors, including the Kuwait Fund for Arab Economic Development, media reported.
Social welfare concerns were one of the main drivers for the political upheaval of early 2011, but with Radwan saying that the budget deficit is likely to increase to 9.4% of GDP in 2011-12, up from 8.5% this fiscal year, the slashing of social programs may be necessary if significant international funding does not materialize.
Foreign investors withdrew en masse during the unrest, and the government has dipped into its coffers to offset capital outflows. Between December 2010 and April 2011, international reserves dropped $8b to a three-year low of $28b, although the September parliamentary elections and November presidential elections may help reassure investors.
Speaking to international press, John Sfakianakis, the chief economist at Saudi investment bank Banque Saudi-Fransi called the drop in reserves a wake-up call for the government but predicted, “Now that there is a little bit more clarity due to the announced parliamentary elections, there should be a little bit more moderation in capital outflows.”
The Egyptian economy, which had seen strong expansion in recent years, proved resilient through the global slowdown. GDP growth fell to 4.7% at the height of the crisis in 2008-09, then rebounded to 5.1% in 2009/10. The revolution, however, has dealt a more severe blow: between January and March 2011, the economy contracted by 7% over the same period in the previous year, and the IMF has predicted that the annual growth rate will slow to 1% this year. The Egyptian government forecasts that growth in 2010/11 will be 2.5-3%, compared to a projection of 6% before the upheaval, and that it will see a 4% expansion in 2011/12.
Tourism — traditionally a major breadwinner, accounting for 11% of GDP in 2010 — is one area that has taken a hit. Local press reported the minister of tourism, Mounir Fakhry Abdel Nour, as saying in May that the country had lost LE 13.5b ($2.3b) since January 25 and that hotel reservations in the main tourist areas had dropped by 15%.
According to the Central Agency for Public Mobilization and Statistics, consumer inflation reached 12.1% year-on-year (y-o-y) in April, up from 11.5% in March. Food and drinks were the greatest source of inflationary pressure, with prices for these commodities rising 21% y-o-y in April, up from 20.5% the preceding month.
Given the low winter crop output of the US and China, the UN's Food and Agriculture Organization has forecast global food prices will rise this summer. This could be bad news for Egypt, which imports nearly half of its food supply. Luckily, the domestic wheat crop has proved strong this spring, with the US Food and Drug Administration (FDA) predicting a record harvest of 8.7 million tons for Egypt in 2011-12. “The agricultural sector has provided a ray of sunlight in a generally poor, post-revolution economic environment,” the FDA's Cairo attachés wrote in a May report.
Strong fundamentals propelled the Egyptian economy in the years leading up to 2011, and should continue to do so as the country returns to normality. A capital injection from international donors and upcoming elections would provide the signs of stability needed to woo back foreign investors. (OBG 20.05)
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11.9 EGYPT: Egyptian Democracy and the Sectarian Litmus Test
Mariz Tadros wrote in 11 May in the Carnegie Arab Reform Bulletin (http://carnegieendowment.org) that the burning of two churches and the death of 12 people in May 7 clashes in the Cairo neighborhood of Imbaba suggest that Egypt is sitting on a sectarian volcano. At present there seems to be no political will to address the problem at its roots or even to name it for what it is: neither the work of external actors and the remnants of the former regime only, nor even a symptom of post-revolution security laxity, but rather a crisis of the normative values pervasive in Egyptian society, which makes it possible to mobilize political action under the guise of defending religion.
Egypt's military leadership reacted to the May 7 clashes by arresting some 180 people and pledging to refer them to speedy military trials, an approach strongly criticized by local human rights groups. The Imbaba incident was the latest in a chain of Muslim-Christian conflicts, some of which took place well before the January 2011 revolution. Some manifestations of tension have been less violent but no less revealing, such as the continuing crisis in the Upper Egyptian province of Qena.
Life came to a virtual standstill in Qena and surrounding areas for ten days following the 14 April appointment of Emad Mikhail, a Copt and a general from the security apparatus, as governor. Qenawis halted railway transport and organized mass protests calling for his resignation, which only subsided - but did not stop altogether - following a 26 April announcement that there would be a three-month freeze on the appointment and that General Maged Abd al-Karim (a Muslim) would undertake the governor's responsibilities. The protestors have continued to lobby for Mikhail's resignation and to demand the appointment of a Muslim governor, for example during a May 3 visit by Prime Minister Essam Sharaf.
A Painful History
Mikhail's appointment initially provoked protests due to his association with the regime of former President Hosni Mubarak. Mikhail had served as deputy head of Central Security of Giza and was believed to be responsible for violence against protestors during the uprising that began on 25 January. Three days after protests against Mikhail's appointment erupted, Prime Minister Sharaf sent Minister of Interior Mansour al-Issawy (a Qenawi) and Minister of Local Administration General Mohsen al-No'many to listen to their grievances. Delegating the responsibility of mediating between the government and the people of Qena to two security generals was reminiscent of the old regime's way of treating political crises as security cases.
The meeting did not produce any resolution and although Mikhail presented his resignation, Deputy Prime Minister Yehya al-Gamal refused to accept it. The protestors stepped up the pressure by threatening to close the water supply from Qena to the Red Sea governorate and electricity to the sugar-processing factories; some also threatened to assassinate Mikhail.
Most media commentators expressed sympathy for the Qenawis' stance, seeing the incident as part of a pattern of neglect and exclusion by the central government. Renowned novelist Alaa al-Aswany wrote, “the message that [Deputy Prime Minister] el-Gamal conveyed to the people of Qena [is] that [their] opinion is without value or influence.”
Coalition of the Faithful
But to read the events in Qena as a straightforward case of citizens for democratic governance being ignored by a recalcitrant government would be to ignore the agendas behind the protests. The Qena protests have involved a complex constellation of actors: tribal leaders, Salafis, the Muslim Brotherhood, leaders from the dissolved National Democratic Party, and officers from the dismantled State Security Investigations apparatus who, according to some reports, helped block the railways. Their common objective was not to get a governor who would respect human rights, but rather a Muslim governor.
Mikhail's predecessor as governor, Magdy Ayoub, was also Christian. Christian Qenawis loathed Ayoub, who was seen as discriminating against his coreligionists in an effort to give the image of being non-partisan. During his tenure Egypt witnessed one of its bloodiest sectarian attacks, the January 2010 shooting of parishioners leaving church after Coptic Christmas Eve in Naga Hammadi.
The rapid mobilization of protests following Mikhail's appointment showed the role of political movements in transforming the opposition into a sectarian one. According to press reports, the mosques of Qena were transformed into platforms for the Muslim Brotherhood and Salafis to call upon the people of Qena to reject the appointment of a Christian governor because there should be no wilaya (authority/governance) of a non-Muslim over a Muslim. Reportedly, among the most popular slogans raised in the Qena protests were “Islamic, Islamic, not Christian, not Jewish,” “Raise your head up, you are a Muslim,” and “There is no God but God; the Nazarene [the Christian] is the enemy of God,” and “Salafis and Brotherhood are one hand against the Nazarene governor!”
While prominent commentators such as Fahmy Howeidy emphasize the conflicts within and among different Islamist groups, the Qena crisis showed that in some cases they can and do work together toward a common goal. The Muslim Brotherhood, Gama'a al-Islamiyya and Salafis set up speakers in front of the provincial capital and threatened to take up arms collectively if the central government did not respond to their demands for a Muslim governor. Political commentator Diaa Rashwan pointed out that Christians were among the first to oppose Mikhail's appointment, citing this as evidence that the protests were not motivated by sectarian sentiments. But the political clout of the Salafis and other Islamist forces was conspicuous from the early days of the protests, when the Ministers of Interior and Local Administration visited and met mainly with Salafi representatives. The sectarian nature of the crisis was also evident in the protestors' response to the decision to freeze Mikhail's appointment: they stated that they did not want Qena “to be the quota for Copts.”
The Qena and Imbaba crises show the difficult dilemmas facing the transitional government should the Salafis, Gama'a al-Islamiyya, the Muslim Brotherhood and other Islamist political forces continue to grow, using the mobilizing power of religion. It raises the troubling question of how the government will respond if a future majoritarian democracy calls for the espousal of illiberal and even undemocratic values and principles.
Mariz Tadros is a fellow at the Institute of Development Studies, University of Sussex. (CARB 11.05)
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11.10 MOROCCO: Groundbreaking Path - Morocco Investing in Solar Development
The snow-capped peaks of the Atlas Mountains punch a bright blue sky above the plains of Ouarzazate in Morocco and on any given day you might spot a famous actor hanging out at the latest "it" moviemaking location—not Holly, Bolly or Nolly, but Ouallywood.
The bright lights of tinsel-town glamour may soon be eclipsed by a far brighter light in the desert: the light of thousands of shining mirrors soaking up the sun's glare and transforming solar energy into electricity. A planned 500 megawatt concentrated solar power (CSP) plant at Ouarzazate is the first big piece of a greater vision for the expansion of this renewable energy technology across North Africa and the Middle East, a vision engaging Algeria, Egypt, Jordan, Morocco and Tunisia and multiple global partners with names like Desertec and Medgrid.
Clean fund supports region's solar potential
The Clean Technology Fund has endorsed the Investment Plan for MENA CSP with a commitment of $750 million and the aim of mobilizing nearly $6 billion. Ouarzazate, planned in phases, will be one of the biggest CSP plants in the world but, perhaps more importantly, will begin to build the MENA region into a major global climate change mitigation player with the installation of over 1GW of CSP generation capacity in the next five years, doubling worldwide capacity. By 2020, capacity could reach 5GW, according to a progress report made to the Clean Technology Fund (CTF) Committee in November last year.
The CTF is designed to finance transformational actions with global impact and MENA's unique geography makes it the perfect spot for more than picturesque movies. These are the factors in MENA's favor: abundant sunshine, low humidity and plenty of flat, unused land near to road networks and transmission grids; the fact that CSP is easy to integrate into conventional electricity systems and is relatively simple technology; and, that MENA is one of the fastest-growing electricity consumers in the world looking to scale up its supply, diversify away from hydrocarbons, and increase its energy security.
Further, the region's existing industrial base and established business community make local CSP equipment manufacturing a good prospect. As this is a young industry, MENA should also benefit from a "first-mover" advantage as the industry scales up to meet Mediterranean Basin and Gulf Region opportunities in "green" electricity trade stimulated by the "de-carbonization" of Europe. "As with any emerging industry there are risks and imponderables and some of this can still sound a little sci-fi in its complexity," says Jonathan Walters, World Bank energy specialist. "But Morocco is leading the way with a real vision and other MENA countries are not far behind. The MENA region can shape the course of the global CSP market."
Morocco on groundbreaking path
Different countries have different imperatives of course. Morocco imports 97% of its energy needs, currently dominated by coal. Its forward-looking energy policy, according to Walters, focuses on two key objectives: improving energy security while addressing climate change mitigation, but also ensuring energy access for all citizens and businesses at the lowest possible cost.
The Ain Beni Mathar solar plant is an early pilot in eastern Morocco that is already supplying electricity to the grid and offering lessons to the development of the Ouarzazate plan. "Morocco's clear intention is to rise to the challenge of commitments made under the Copenhagen Accord and the Union for the Mediterranean," says Walters. "This ambitious push for both concessional financing and private investment is in essence a test of these commitments and at the World Bank we are doing as much as we can to help Morocco with the mobilization of the funds needed." The rest of the region, says Walters, is watching closely to see if Morocco succeeds on its groundbreaking path and comes up with the support to realize Ouarzazate, the real thing, not the Ouallywood version. (The World Bank Group19.05)
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11.11 MAURITANIA: Mauritania's Days of Rage
On 18 May, Khalid Lum wrote in the Carnegie Arab Reform Bulletin (http://www.carnegieendowment.org/arb) that inspired by the success of the uprisings in Tunisia and Egypt, Mauritanian youth began organizing protests in early February which have continued through into May, in the hopes of forcing the government of President Mohamed Ould Abdel Aziz to implement political and social reforms. While it is still unclear whether these efforts will succeed, they have crystalized a new opposition narrative that rejects tribalism, calls for a stronger civilian voice in politics, and emphasizes national as opposed to ethnic loyalties as well as social justice.
The Protests
The protest movement drew many university students and middle class young people from across the political spectrum. In mid-February a coalition of the youth sections of Mauritania's main opposition parties – particularly the Regroupement des Forces Démocratiques, Union des Forces du Progrès (UPR), and Rassemblement pour l'Unité et la Démocratie – joined student activists, young professionals, and others to create dozens of Facebook groups in the hopes of turning out a mass protest at the symbolic Place d'Bloques in central Nouakchott on 25 February. The Place d'Bloques, home to buildings sold to businessmen close to the president and demolished last year, symbolized for the protesters regime corruption and nepotism.
Protester demands focused on political reforms and social policies. While political party leaders endorsed their young members' participation in the demonstrations, protest organizers avoided direct association with specific party agendas and asked party officials to stand back from associating themselves too closely with the movement or attempting to take credit for it.
The 25 February protest stretched on for days while security forces attempted to obstruct marches and arrest protesters. The result was a commitment by the organizers to continue their protests with marches to the Place d'Bloques beginning on 1 March.
The protest organizers distributed a list of seven core demands, including (1) the withdrawal of the military from politics; (2) a firmer separation of powers; (3) the establishment of a national agency to combat slavery; (4) constitutional reforms affecting the electoral system; (5) the reform of the process by which officials publicly declare their assets; (6) the reform of local administration and the empowerment of elected mayors, and; (7) media law reforms.
It is notable, though not surprising, that the protesters' top demand concerns civil-military relations, given Mauritania's history of coups. Mauritania had two coups in the last ten years, one in 2005 resulting in the country's first democratic transition period and a second in 2008 to remove democratically-elected President Sidi Ould Sheikh Abdellahi. He was replaced by General Mohamed Ould Abdel Aziz, who won a 2009 presidential election disputed by the opposition and Arab human rights groups, although generally accepted as valid by the international community. Activists complain that foreign powers pretend Mauritania is governed by an elected civilian government while in reality the military dominates politics and undermines civilian rule.
The protests have drawn mainly from the urban middle class so far. Much of the political elite have come to accept the presidency of Mohamed Ould Abdel Aziz and the central role of the military in the country's politics. Many of the participants in this winter and spring's protests have come of age over the last ten to fifteen years, which were marked by the fall of the twenty-year-old dictatorship of Maouiya Ould Tayya in 2005 in a military coup whose leaders promised democracy and development. Young people view the 2008 military coup as a betrayal, a sentiment intensified by a sense that the president has failed to reign in corruption and to improve living conditions, after running on the slogan “The President of the Poor.” The decision to postpone indefinitely this year's scheduled elections for the upper house of parliament reinforced this view.
Splits in the Youth Coalition
Divisions grew among members of the youth coalition in March due to factionalism and accusations that some party leaders were attempting to manipulate the youth movement. A new youth group, incorporating some of the previous youth leaders, mobilized for a 25 April protest, using Facebook and YouTube to distribute videos featuring Mauritanians of Arab and black African backgrounds. They worked to build a narrative that rejected party ideology, tribalism, and ethnic partisanship (especially after the results of student union elections caused fighting at the University of Nouakchott).
Facebook groups laying out the objectives of the march proliferated widely, along with a new list of twenty-eight grievances and demands. SMS blasts with logistical details went out in the lead-up to the protest. The plan was to march to and occupy the Place d'Bloques. Opposition parties agreed to assist by bringing water and food to the demonstrators once they occupied the Place. On 25 April as many as 5,000 youths took to the Place d'Bloques, which was blocked off by police who beat and arrested 15 youths and used tear gas to suppress the crowds. In the northern town of Zouerate a demonstrator was shot in the foot and taken to the hospital. Young men packed into cars and chased police shouting “Huriyya! Hurriya!” (Freedom! Freedom!).
Prospects
It is uncertain whether the protest movement will make serious gains in the coming months. The youth movement faces latent internal divisions that risk exposing it to co-optation by the regime. The ruling party (UPR), which controls a majority of the seats in parliament, announced plans to form a youth section. The protest movement is also relatively narrow in its composition, owing in part to its choice of communication techniques, with reduced participation from members of the lower classes whose support would be key in any truly mass demonstration in the capital. Expanding and deepening the network of organizers and protesters outside the major cities and into the medium-sized towns is another challenge for the protesters. Additionally, success could also pose trouble for Mauritania's protest movement.
At the present time the government is unlikely to increase the level of repression it has used against protesters in part because it fears provoking popular and international outrage. However, it has shown little interest in making significant concessions to the ongoing demonstrations. A larger uprising might cause the government to respond more harshly. As it stands the government has been put on the defensive, with small parties ending their alliance with the ruling party. Perhaps the most important result of the Arab Spring in Mauritania is an increasingly bold and defiant posture among student organizers and other youth demonstrators on campus and throughout the country, as this is likely to affect the tone and direction of politics significantly in the months ahead.
Khalid Lum is an independent writer and analyst based in Boston. (CARB 18.05)
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11.12 TURKEY: The Month of One-Offs: Explaining the C/A Surprise
Tevfik Aksoy wrote on 13 May for Morgan Stanley (http://www.msdw.com/) that Turkey's headline deficit exceeded forecasts significantly, but there is a reason behind this: Turkey's current account deficit is high and it has been widening decisively over the past year. A deficit of approximately 7.5% of GDP this year is very likely, and we believe that it is fully priced in. With the recent rise in commodity prices, Turkey's C/A came under the spotlight and all numbers are being heavily scrutinized, given the unorthodox monetary policy approach by the CBT. There is nothing new here. However, when the March headline current account deficit came out at a record $9.8b against the expected $8.2b, there was a significant negative reaction in the market and the currency weakened some 1%.
Likely to be a one-off issue: Looking at the details of the balance of payments data, we noticed two issues that made the weak headline number look somewhat less worrisome. First, the income account posted a sharp outflow of $1.9b in March that was highly unusual, reflecting the repatriation of profits (such as dividends) on foreign investors' investments in Turkey. We do not know details of any specific transactions. However, we know that under normal circumstances the monthly reading of this account should have been around $0.5b. Hence, the $1.4b deviation here resulted in the main surprise about the headline. We think that this will be a one-off issue and will not be repeated any time in the near future. Second, foreign direct investment (FDI) posted the highest monthly inflow of the past three years at $2.6b in March, more than offsetting the adverse impact of the outflow posted in the income account. Since there were some banking sector-related transactions in March, we associate this FDI inflow with that. Indeed, there is a possibility that the high FDI inflow and the surprise outflow in the income account might have been related. At any rate, the high FDI inflow is also likely to be a one-off matter, as we do not expect any sizeable FDI transactions to materialize soon.
Looking at the details of the balance of payments, we see the following points to be noteworthy to mention:
1) The headline deficit: At $9.8b, the deficit was a record high, but as we mentioned earlier this is likely to be a one-off matter and will correct starting with April data. That said, even the consensus expectation of $8.2b would be considered a very high monthly print, and it seems clear to us that Turkey's current account deficit is too high. The 12-month rolling current account deficit reached a massive $60.6b (around 7.5% of GDP) and is unlikely to decline any time in the next six months, in our view.
2) The non-energy component of the deficit is reaching worrisome levels and should be addressed more forcefully: It is a fact that Turkey's widening current account deficit had been on the back of rising energy prices. However, with March data at hand, we see the non-energy component also hitting a record-high number (even if the one-off factors are corrected for).
3) FDI inflows reached a 40-month high: At $2.6b, FDI inflows helped financing to a significant extent and was a partial relief to the pain associated with the headline print. However, this is likely to be a one-off jump in the near term and not the beginning of a trend, we think.
4) Portfolio inflows also posted an all-time high: At $5.2b, there was a massive inflow of capital that funded the current account deficit to a significant extent. At first sight, the number might look worrisome and suggest that the deficit was being financed by ‘hot money'. This is not the case, in our view. Out of the $5.2b figure, $2.2b was associated with the recent 10-year Samurai bond issue by the Republic of the Turkey. We would not consider this financing as short term or hot. Hence, this was also a one-off jump, in our view.
5) Net errors went through some revision: The unaccounted flows in the first two months of the year stood at a significant $5.5b. With the March data release these were revised down to $3.4b and spread around certain capital account items. The March net error term was also positive but slightly lower at $950m, which brought the Q1/11 cumulative number to $4.3b.
6) Reserve accumulation at record high as well: Overall, despite the record-high current account deficit, the inflows from FDI, portfolio flows and other financing (corporate and banking sector borrowing) were very strong and resulted in a monthly rise of $3.1b in reserves. The 12-month rolling cumulative reserve rise amounted to $15.8b. (MorganStanley 13.05)
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11.13 GREECE: Fitch Downgrades Greece to 'B+'; Rating Watch Negative Ratings
On 20 May, Fitch Ratings (http://www.fitchratings.com) downgraded Greece's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'B+' from 'BB+ and the Short-term IDR remains at 'B'. All three ratings have been placed on Rating Watch Negative (RWN). The agency has simultaneously affirmed the euro area Country Ceiling at 'AAA', which is applicable to all euro area member states, including Greece.
The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery. Implementation and political risk have risen as further fiscal austerity measures are required to realize the 2011 budget deficit goal of 7.5% of GDP due to the under-performance of tax receipts and higher deficit outturn for 2010 than originally targeted. Moreover, the greater emphasis on privatization has heightened the risk that the policy conditional funding under the EU-IMF program will be delayed given the political and technical obstacles to the realization of €50b of asset sales. Nonetheless, Fitch does expect some assets sales by year-end, albeit relatively modest, and continues to believe that the Greek government remains committed to the program and to honoring its sovereign debt obligations.
The 'B+' rating incorporates Fitch's expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a 'soft restructuring' or 're-profiling' that would trigger a 'credit event' and default rating from Fitch.
An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly. If contrary to Fitch's expectations, private sector 'burden sharing' as a condition for new money extends beyond exhortation and is coercive, the credibility of policy commitments regarding the European Stability Mechanism and EU-IMF programs for Ireland ('BBB+'/Negative) and Portugal ('BBB-'/RWN), as well as Greece, would be severely diminished and in Fitch's opinion would adversely impact financial stability across the euro area.
New money is required in order to address the fiscal funding shortfall that would otherwise emerge in 2012, a key weaknesses of the current EU-IMF program highlighted by Fitch following its previous rating action on Greece at the turn of the year. Fitch expects the uncertainty regarding the volume and terms of new money, as well as the role of private creditors, to be resolved with the completion of the current fourth review of Greece's EU-IMF program expected in the latter half of June.
The RWN will be resolved in light of the conclusion of the current review of the EU-IMF program. In Fitch's opinion, additional financial support for Greece would only be credible in providing a path to solvency if it is fully funded beyond the end of the current program of mid-2013, implying substantial additional EU-IMF financial support over and above the €110b already committed. Fitch will also incorporate into its review of Greece's sovereign ratings under the RWN the terms upon which new money is provided and the credibility of the associated policy conditionality.
The current 'B+' rating would likely be affirmed if an extended and fully-funded EU-IMF program is articulated, backed by credible policy targets and, as Fitch expects, private sector participation will not be 'involuntary' or require a change in the terms and conditions of existing Greek sovereign bonds.. In the absence of a fully funded and credible EU-IMF program, the rating would likely fall into the 'CCC' category indicating that a Greek sovereign debt default was highly likely. (Fitch 20.05)
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11.14 BULGARIA: Statement at the Conclusion of an IMF Article IV Mission to Bulgaria
A mission from the International Monetary Fund (IMF) visited Sofia during May 10–20, to undertake the 2011 regular Article IV consultations. Ms. Catriona Purfield, IMF Mission Chief for Bulgaria, made the following statement at the end of the visit:
“The Bulgarian economy has adjusted swiftly following the recent crisis. The challenge going forward will be to accelerate ongoing reforms to recover growth potential, create jobs, raise incomes, and address age-related pressures, while also maintaining and rebuilding buffers with a view to enhance macroeconomic resilience against shocks.
“Exports have rebounded above pre-crisis levels and are expected to propel real GDP growth to 3% in 2011, as growth rebalances towards the export sector. This is helping offset weaknesses in domestic consumption stemming from increases in inflation and in precautionary savings in the context of heightened external uncertainty. Imports remain subdued and the current account is moving closer to balance. Higher food and fuel prices are projected to increase inflation (harmonized consumer price index) to 4% in 2011, before easing to 3% in 2012.
“The structural reforms listed in the National Reform Program will be key to lift growth potential. Already, a good start has been made in implementation. Tailoring training and education to employer needs, while strengthening job search services will help tackle unemployment and raise labor productivity over time. Noticeable progress has recently been made in absorbing EU structural funds. The envisaged amendments to the Public Procurement Law are expected to further accelerate the absorption. More predictable contract enforcement will also help improve Bulgaria's reputation as a good destination for foreign direct investments.
“The authorities' proposal of a Financial Stability Pact will send a strong signal of Bulgaria's commitment to prudent fiscal policies, which we endorse. To complement the new framework, a rule that guides expenditures to create savings in upswings should be included in the organic budget law. The government is on track to meet its 2011 budget deficit target. However, it will be important to sustain on-going efforts to counter tax evasion, while refraining from new or ad-hoc spending increases to permit timely exit from the excessive deficit procedure. Improving public spending efficiency will create space to reallocate funds towards growth-enhancing education and capital investment spending. While reform of the public administration should continue, it will be important to strengthen the efforts to improve healthcare and make it more cost efficient. Preserving the fiscal reserve and rebuilding it would enhance confidence and counter future shocks. Accelerated privatization would be an important contribution to increased fiscal reserves, which should also be supplemented by increased debt issuance.
“The banking system continues to weather the economic crisis well and banks remain well-capitalized. The capital adequacy ratio at end-March was 17.7% (more than twice the EU minimum). As expected, non-performing loans are increasing, albeit at a slower pace, and the trend is projected to reverse in the second half of 2011. We expect lending to begin to recover this year. Credit growth would be facilitated through greater clarity and certainty about the outcome of legal disputes on reposition of collateral, particularly regarding the problem of back dating insolvencies.” (IMF 20.05)
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