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TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Teachers Agreement Ends Strike
1.2 Israel's TV Tax Reduction Will Be Steeper But Delayed
1.3 Defense Budget Approved
1.4 New Bill Proposes 25% Cut In Greenhouse Gases By 2010
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 BIRD Invests $14 Million in 16 Joint Projects
2.2 Saifun Semiconductors Shareholders Approve Acquisition by Spansion
2.3 PineApp Acquires a $2 Million Credit Facility from Plenus Venture Lending
2.4 WorldMate Live's Mobile and Web 2.0 Travel Technology Draws Honor from BIRD Foundation
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Jordan to Host Chinese Automobile Factory
3.2 Dubai's Profile Group Agrees to Take Major Stake in Leisure Canada
3.3 Air Arabia Expects Rapid Growth Of Aviation Sector In Middle East
3.4 Campbell Agrees to Sell Godiva Chocolatier to Yildiz Holding for $850 Million
3.5 BAXL Technologies Partners With Epikinonia at Maternity Clinic in Athens, Greece
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Signs Free-Trade Accord With Mercosur
4.2 Delay In Resettling Gaza Expellees Cost State $1 Billion
4.3 Water Authority Sets Tertiary Purification Standard
4.4 Office of the Chief Scientist Approves New Ventures
4.5 New University City to Be Erected Near Safed
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Iraq Completes Early Repayment of Entire Outstanding Obligations to the IMF
5.2 EFG-Hermes Foresees UAE Revaluation by July
5.3 FDI Flow to UAE Exceeds $18 Billion
5.4 UAE Leads Arab World in Number of Internet Users Per Thousand
5.5 Saudi Arabia Unveils Its Largest Budget in Its History
5.6 Saudi Arabia's Inflationary Pressures Mount
5.7 Algerian Oil Revenues Reach $59 Million In 2007
5.8 Moroccan King Gives Go-Ahead to Completion Of 1st Tram Network
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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:
6.1 Unakitan Releases Ankara's Economic Targets
6.2 EU Opens Talks with Turkey on 2 New Areas
6.3 Turkish Privatization Revenues Drop In 2007 After Two Record Years
6.4 IMF Pushes Turkey For Fiscal Discipline
6.5 Turkey Plans to Move Central Bank Headquarters to Istanbul
6.6 Cyprus & Malta to Adopt Euro
6.7 Greece Revises Q3 GDP Growth up to 3.8%
6.8 Greece, Russia & Bulgaria Sign Protocol For Pipeline's International Development Firm
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Israeli Scientists Put Bible on Chip Smaller Than Pinhead
*REGIONAL:
7.2 Genetic Diseases Cost Arabs $13 Billion Annually
7.3 Bahrain Population to Grow By 76% By 2030
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Syneron Launches New Computer-Based Training Program to Assist Physicians
8.2 NasVax Agreement with SciGen to Develop Improved Hepatitis B Vaccine
8.3 Nanolymf to Advance Breakthrough Liver-Bypassing Oral Drug Delivery Technology
8.4 Compugen & Roche to Predict Drug Response in Rheumatoid Arthritis Patients
8.5 Tower & CMT Medical Partner to Develop Flat Panel X-ray Detectors for Medical Applications
8.6 Teva Announces Launch of Generic Protonix Tablets, 20 mg and 40 mg
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 InRob Supplies Customized Solution: Telephone Control System
9.2 Gilat Provides Satellite Backhaul Solution to Latin America's Largest Mobile Network Operator, Vivo
9.3 Packet8 MobileTalk International Calling Service Is Powered by MobileMax's Technology
9.4 eNom Protects Its Email Customers With Commtouch Zero-Hour Virus Outbreak Protection
9.5 ECI Telecom Adds Intelligent Control Capability to Optical Transport Networks
9.6 Metalink Announces Availability of its Leading 802.11n Home Networking Solution
9.7 Korean Military to Use Elbit Systems' Tactical UAV - Skylark II
9.8 IDO Security Completes Shoes-On Program at Israel's Ben-Gurion International Airport
9.9 Gilat Chosen by Mexico's Grupo Elektra to Provide a 1,964-Site Broadband Satellite Network
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10: ISRAEL ECONOMIC STATISTICS
10.1 November CPI Rises Much Higher Than Expected
10.2 Israelis' PPP Purchasing Power Rises
10.3 Israel's Unemployment Rate Lowest Since 1996
10.4 Israel's Tourism Increases 24% in January-November
10.5 Vehicle Theft in Israel Drops 8.4% in January-November
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In Depth
11.1 ISRAEL: UBS Sees Slower growth But Firm Shekel in 2008
11.2 JORDAN: Elections Have Poor Showing for Islamists
11.3 KUWAIT: Looking Abroad
11.4 UAE: Dubai's GDP Set To Grow At 7% Per Annum
11.5 SAUDI ARABIA: Reforms in Higher Education Raise Questions
11.6 EGYPT: Growing Pains
11.7 MAURITANIA: Fragility of a New Democracy
11.8 TURKEY: Fitch Upgrades Local Currency Rating to 'BB'
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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Teachers Agreement Ends Strike
On 13 December, Israel's secondary school teachers agreed to return to work voluntarily following a two-month strike. A 24-hour negotiation session ended in agreement in principle between the Secondary School Teachers Association the government. The agreement means that the teachers will not be forced to return to the classroom under a Labor Court back-to-work order that was due to come into force. The agreement is essentially the one put forward by the Histadrut and rejected by the teachers' union. The teachers will receive a 13.5% salary raise spread over three installments: 5% is the general wage hike for public sector employees, plus an extra 8.5%. The salary hike for the secondary school teachers will cost $202m a year. The increases for both the primary and secondary school teachers were already included in the education reform. The secondary school teachers will also receive the two months salaries withheld during the strike. In exchange, the teachers will hold classes during the upcoming Passover vacation and ten days during the summer vacation. The Ministry of Finance is now trying to link the new agreement to the wider education reform signed with the Histadrut Teachers Union. (Globes 13.12)
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1.2 Israel's TV Tax Reduction Will Be Steeper But Delayed
The Knesset Economics Committee has approved for the first Knesset reading a private member's bill by MK Oron (Meretz) to suspend the cut in the Israel Broadcasting Authority (IBA) fee (the TV tax) by one year. The committee also approved a proposal by committee chairman MK Erdan (Likud) to increase the cut in TV tax in 2009. The Israel Broadcasting Authority Law (5725-1965) was amended in 2003 in order to reform the IBA. At the initiative of then-Minister of Finance Benjamin Netanyahu, the TV tax was cut by 10% in 2004, 11% in 2005, 12% in 2006 and by 5% in 2007. Additional 5% cuts were due in 2008, 2009, and 2010. However, Oron's bill ensures that no cut in the tax will be made in 2008, however Erdan's rider means that the cut in 2009 will be 8%, instead of the originally planned 5%. The end result will still be a smaller two-year cut than under the original amendment to the law. (Globes 25.12)
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1.3 Defense Budget Approved
On 24 December, the Knesset Joint Defense Budget Committee approved the 2008 defense budget of $12.75b. Emergency civil defense spending will total $50m and the budget of the Coordinator of Government Activities in the Judea & Samaria is $36.25m. By law, discussions of the joint Finance and Defense and Foreign Affairs Committees are confidential because of the sensitivity of the topics. The Knesset plenum does not discuss the budget or its items for the same reason. (Globes 25.12)
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1.4 New Bill Proposes 25% Cut In Greenhouse Gases By 2010
Knesset Internal Affairs and Environment Committee Chairman MK Paz-Pines (Labor) has submitted a private members bill to set targets for the reduction of greenhouse gas emissions in Israel. The bill calls for Israel to reduce greenhouse gas emissions by 25% by 2010, and 50% by 2050. The minister of environmental protection will be required to formulate within six months of the bill becoming law a national action program to ensure emission reduction targets are met. Paz-Pines said that the targets were high and not easy to reach, but that they were achievable. (Globes 25.12)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 BIRD Invests $14 Million in 16 Joint Projects
Israel-United States Binational Industrial Research & Development Foundation (BIRD-F) said that its board of governors has approved $14m in investment in 16 new joint projects, with an aggregate budget of $45m. All the projects are collaborations between Israeli and US companies. Among the projects approved are ventures in homeland security, pharmaceuticals, and biotechnology, such as the joint development by Foamix (http://www.foamix.co.il) and Warner Chilcott of an innovative acne treatment. The latest round of projects receiving funding from BIRD-F also include several ventures in media and entertainment such as the joint development by Optium Corp., subsidiary Optium Israel and Sierrra Monolithics of a short-reach transponder for 100G Ethernet applications for internet video conferencing. Also receiving investment from BIRD-F is a joint development by Axxana (http://www.axxana.com) and EMC Corp. of a data recovery system, and collaboration between Human Monitoring (http://www.human-monitoring.com) and Texas Instruments on a high definition encoder for DaVinci digital signal processors. BIRD fosters, promotes and supports industrial R&D projects of mutual benefit to the US and Israel. Its board of governors has approved $250m in investment to date in more than 740 projects that have yielded direct and indirect revenue of more than $8b. (Various19.12)
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2.2 Saifun Semiconductors Shareholders Approve Acquisition by Spansion
Sunnyvale, California's Spansion, the world's largest pure-play provider of Flash memory solutions, and Saifun Semiconductors announced that the boards of directors and shareholders of each of Spansion and Saifun have approved, and Spansion and Saifun have executed, an amendment to their merger agreement providing for an approximately $31.4m increase in the cash distribution, which would result in a cash distribution of approximately $6.05 per share in cash based on Saifun's current capitalization. The merger remains subject to satisfaction of customary closing conditions that include Israeli court approval, regulatory approvals and the Saifun shareholders' approval and is expected to close in Q1/08. Netanya, Israel's Saifun (http://www.saifun.com) is a provider of intellectual property (IP) solutions for the non- volatile memory (NVM) market. The company's innovative Saifun NROM technology allows semiconductor manufacturers to deliver high performance, reliable products at a lower cost per megabit, with greater storage capacity, using a single process for all NVM applications. Saifun licenses its IP to semiconductor manufacturers who use this technology to develop and manufacture a variety of stand-alone and embedded NVM products. (Spansion 13.12)
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2.3 PineApp Acquires a $2 Million Credit Facility from Plenus Venture Lending
Plenus, the leading venture lending fund in Israel providing credit facilities to high-tech companies, granted a $2m credit facility to PineApp, a leader in securing networks and email systems that offer comprehensive appliance solutions for organizations of various scales. Since its founding, PineApp has had many successful installations worldwide. In the USA, PineApp has implemented its solutions in Telepak, a large ISP which receives a massive amount of over 1.5 million emails per day. In Israel, PineApp's products have been installed in many governmental and educational institutions. Herzliya, Israel's Plenus (http://www.plenus.co.il), an affiliate of Viola Partners, is the only Israeli Venture Lending Fund providing credit facilities to revenue stage technology companies. Plenus currently manages over $300m and is backed by Israel's largest financial institutions as well as US based investors. Nesher, Israel's PineApp (http://www.pineapp.com), a global leader in securing email systems, offers comprehensive appliance solutions for small, medium and large organizations. In the past five years, PineApp has specialized in email and content security systems and has a significant presence in more than 50 countries. PineApp has established itself as a pioneer in developing unique and innovative technologies to fight Internet and email threats. (PineApp18.12)
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2.4 WorldMate Live's Mobile and Web 2.0 Travel Technology Draws Honor from BIRD Foundation
MobiMate announced its newest mobile travel tool, WorldMate Live, has been awarded with a grant from the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation, due to its progressive technology and commercial success. MobiMate's partnership with Conducive Technology marries MobiMate's world-class expertise in building mobile applications and services for smartphones with Portland, Oregon's Conducive's superior grasp of the airline industry and best-of-breed flight status service. BIRD is highly selective with the projects and companies it chooses to cooperate with, and the organization's recognition is a boost to WorldMate Live's market-winning technology for providing an advanced business travel offering years ahead of the competition. The mobile travel application proactively aggregates and monitors all details from a user's travel bookings and Outlook meetings into a detailed itinerary, then pushes pertinent information to the user in real time. As a result, WorldMate Live accurately predicts travel conflicts for road warriors and automatically provides solutions, often before a traveler even knows there is a potential problem.
The Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation promotes strategic partnerships between Israeli and American companies in various technological fields. BIRD assists, free of charge, in the identification of strategic partners for development of joint products. Lod, Israel, privately-held MobiMate (http://www.mobimate.com) has been developing award-winning mobile travel software since 2000. The WorldMate product line provides frequent fliers and road warriors all the travel services they need at home, work or on the go. Like a traveler's guardian angel, MobiMate's mobile travel tools provide real-time trip information, tracking every trip and pushing vital details such as flight alerts and notifications and meeting updates directly to users. (WorldMate18.12)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Jordan to Host Chinese Automobile Factory A JD200 million Chinese auto factory planned to be set up in Jordan will be fully operational in 2008. The director general of Chery Jordan Company said that the construction of the factory will start early 2008 and production is expected to start by the end of the year. Other stakeholders include Al Hokair Holding Company and the Dallah Al Baraka Group. The company will sign an MoU with the Jordan Armed Forces (JAF) under which the military will become a partner in the plant, to be implemented in four phases. The agreement was signed in October on the sidelines of a visit to China by King Abdullah II. A new academy will be established within the project's third phase aiming to produce a skilled labor force in the fields of electronics and mechanics. The top executive pointed out that the last phase of the project will target the manufacture of luxury cars which will be marketed in local and regional markets. The plant will create around 500 job opportunities for Jordanians who will constitute 95% of the plant's manpower; this figure is expected to reach 2,000 upon the completion of the plant's four phases. Chery Jordan Company was established in 2004, in partnership with the Chinese SAIC Chery Automobile Company, as the exclusive supplier of automobile parts and their accessories for Chery vehicles. (JT25.12)
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3.2 Dubai's Profile Group Agrees to Take Major Stake in Leisure Canada
Vancouver, British Columbia's Leisure Canada (LCI) announced the approval of the signing of a conditional agreement with Profile Investments pursuant to which Profile and persons associated therewith will acquire 46% of the fully diluted issued capital of LCI as enlarged through the issuance of new shares to Profile, thereby raising C$15m. In addition, Profile and persons associated therewith have agreed to invest $5m in the Company's operating subsidiary, Wilton Properties. Profile is a Dubai-based investment company with global interests in real estate across India, the Gulf Cooperation Countries (GCC), Cape Verde and North Africa. Profile Investments is a member of the Dubai headquartered Profile Group which has substantial interests in Dubai, including projects on the "Water Front" and the internationally renowned "World" development. Its interests range from real estate consulting and engineering, design and architecture as well as partnerships with global real estate sales and development operations. The Profile Group holds substantial investments in prime properties in GCC countries, such as the U.A.E. (Dubai) and Oman, and also in Morocco, Europe, Spain and Cape Verde. Leisure Canada is a leading developer of luxury resorts in Cuba, with multiple properties currently under development, including five-star hotels, over 4,200 hotel rooms and PGA championship golf courses. (LCI21.12)
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3.3 Air Arabia Expects Rapid Growth Of Aviation Sector In Middle East
The Executive Director of the Sharjah based Air Arabia said on 23 December that the air transport sector in the Middle East has all the potential that could secure its long term sustainable growth. The region's aviation transport sector forms about 8% of the of the world's air transport industry, he said, adding that the aviation companies based in the region grow by the average of 10% annually, compared to 5% for the fellow world companies, according to a recent report by the Arab Air Carriers Organization. He expected the Middle East to witness a strong rapid growth especially in budget aviation over the coming years. According to the Air Arabia chief, the Middle East hosts many of the world's modern air companies than 600 aircrafts. (KUNA23.12)
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3.4 Campbell Agrees to Sell Godiva Chocolatier to Yildiz Holding for $850 Million
Campbell Soup Company entered into an agreement to sell its Godiva Chocolatier business for $850m to Yildiz Holding A.S., which is the owner of the Ilker Group, a diversified food company based in Istanbul, Turkey. Godiva will become part of the Ilker Group. The sale price represents a multiple of nearly 15 times EBITDA. Closing is expected within the next several months. With sales of $7.43b in 2006, Ilker is the largest consumer goods company in the Turkish food industry with biscuits, chocolate, confectionery, food and beverages, and dairy businesses. Ilker also has operations in packaging, industrial products, finance, telecommunications, information technologies and services, real estate, and trade and logistics sectors. The company has more than 25,000 employees worldwide. In August, Campbell announced it was exploring strategic alternatives for Godiva, including possible divestiture. At the time, Campbell indicated that Godiva did not fit with its strategic focus on simple meals, baked snacks, and vegetable-based beverages. One of the world's leading premium chocolate businesses, Godiva products are sold through company-owned and franchised retail stores, wholesale distribution points, including specialty retailers and finer department stores, and on the internet. (Campbell20.12)
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3.5 BAXL Technologies Partners With Epikinonia at Maternity Clinic in Athens, Greece
Bethel, Connecticut's BAXL Technologies, a leading technology solutions provider that enables the transmission of voice, data and video over existing wiring, has partnered with Athens-based Epikinonia (EPI) to provide hospital bedside services including high speed internet access (HSIA) and video on demand (VoD) in-room entertainment at the IASO Clinic located in Athens. The IASO Clinic is one of the largest and most advanced maternity clinics in Europe, with over 13,500 inpatient deliveries annually. It operates one of the most sophisticated Neonatal Intensive Care units in the World, as well as one of the largest cardio-tocography units in Europe. Each of the IASO Clinic's 100 rooms will be outfitted with BAXL's HSIA as well as a VoD system. Apart from the obvious in-room entertainment uses, the clinic will also use the system to introduce expecting and new mothers to infant care through a series of videos played over the VoD system. Partnering with EPI enables BAXL to broaden its reach into the Mediterranean region of Europe. EPI, headquartered in Greece, is a broadband systems integrator servicing the hospitality, health care, government and multi-tenant unit (MTU) / multi-density unit (MDU) markets. (BAXL19.12)
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Signs Free-Trade Accord With Mercosur
On 18 December, Mercosur, the South American trade bloc, signed a free-trade agreement with Israel, its first pact with a country outside of Latin America. The deal was announced during a two-day summit of Mercosur leaders in the Uruguayan capital and followed two years of negotiations to bolster trade ties between South American countries and Israel. Trade between Israel and Mercosur countries neared $1.6b in 2006. Mercosur is comprised of full members Argentina, Brazil, Paraguay and Uruguay, with Venezuela awaiting approval to join the trade group. Associate members include Bolivia, Chile, Colombia and Peru. Israel already has a number of trade agreements, including with the United States, European Union, Canada and Mexico. But Mercosur has struggled in attempts to reach a deal with the 27-nation European Union because of disagreements over how much to open up Europe's protected farm markets. Brazil also was instrumental in thwarting attempts by the U.S. to create a Free Trade Agreement of the Americas that would have stretched from Canada to Chile, becoming the world's largest free commerce zone. The talks in Geneva last month - the eighth round between Israel and Mercosur - built on previous discussions in Brazil, Israel and Uruguay. (Various18.12)
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4.2 Delay In Resettling Gaza Expellees Cost State $1 Billion
The delay in finding housing solutions for settlers expelled from Gush Katif (the Gaza Strip) has thus far cost the state about $1b, a new study states. The study was conducted by Professor Sadan, a former Finance Ministry director general, and Professor Plessner, a former deputy governor of the Bank of Israel. The study notes that while those evacuated from Sinai under the peace treaty with Egypt received compensation of about $2m per person, those evacuated from Gaza received only about $500,000 per person. Sadan and Plessner argue that this "stinginess" boomeranged on the government, because it caused most evacuees to opt for "communal resettlement" - meaning new housing built by the government - rather than relocating as individuals. Had the initial compensation been more generous, the study argues, the evacuees could have afforded to relocate their communities on their own - which they would have done far more efficiently than the state is doing in their stead. This, in turn, would have enabled them to return to work more quickly. Instead, the fact that so many are still in temporary housing has delayed their reentry into the job market. The study estimates that the lost work has cost the state some $615m, while additional payments to the evacuees to finance their extended stay in temporary housing have cost some $225m. In addition, the “Disengagement Administration” costs the state some $40m a year. Thus in total, the delay in resettling the evacuees has cost the state almost $1b, the study says. (Various16.12)
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4.3 Water Authority Sets Tertiary Purification Standard
The Israel Water Authority Council has approved the Inbar committee standard for treated wastewater formulated by the Ministries of Health and Environmental Protection. Implementing the standard will cost $250m, which will be invested in sewage treatment plant upgrades over the next ten years. The economy is expected to make a profit of $120m a year from the sale of treated wastewater for agriculture. The Inbar committee mandates that local authorities implement tertiary level sewage purification, up from the currently mandated secondary purification level. Tertiary treated wastewater is suited for unrestricted irrigation use for all types of crops. Where this treated wastewater is not used for agriculture, local authorities must ensure that it is clean enough not to damage river and sea water quality. The new standard will apply to local authorities, factories, and businesses, which will have to improve their sewage treatment. The new standard will raise the cost of water by NIS 0.30-0.50 per cubic meter.
Israel's household sector currently consumes 800m cubic meters of water a year, of which 560m cubic meters is then sent to sewage treatment plants. Some 80% of the sewage is treated to some degree, and 65%, or 300m cubic meters, is reused for agriculture. Upgrading the treated wastewater will make it possible to increase its use in irrigation as a proportion of total water used, replacing fresh water, which can then be used for households and industry. (Globes 19.12)
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4.4 Office of the Chief Scientist Approves New Ventures
Chief Scientist Dr. Opper has approved a number of new life sciences, cleantech and software incubator projects in its latest financing round. One project is for the development of selective biological drugs for the treatment of liver and pancreatic cancers by a project at Ofakim Hi-Tech Ventures. The project is based on the discovery of the apotosis (cell suicide) mechanism, and seeks to apply it to cancer cells. The venture's target market is estimated at several billion dollars. A second project at Ofakim Hi-Tech Ventures aims at developing a pain monitoring system by multidimensional analysis of physiological signals. The project will develop technology for continuous and objective monitoring of pain on the basis of proprietary algorithms that analyzes signals obtained from non-invasive sensors. The venture's target market is estimated at $1.7b. A cleantech project at Yozmot Granot Initiative Center aims to exploit hydrostatic pressure to develop an undersea liquid natural gas (LNG) storage system. The system aims to free up land and minimize the risk of storing LNG in population centers. (Globes 24.12)
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4.5 New University City to Be Erected Near Safed
An American real estate magnate and other investors plan to invest $3 – 4b into a new college town in the Galilee in northern Israel. The 800 acre city, which will be located near Safed, will include Israel's fifth public medical school. The school will be funded by a donation of approximately $500m, making it the first Israeli academic institution funded as part of a business enterprise. The Higher Education Council of Israel will publish a tender for the new medical school. Bar-Ilan and Haifa Universities both hope to win the bid and build the medical program. Bar-Ilan University, located near Tel Aviv, is already working closely on plans for the school. The contributors will donate $200m to upgrade existing Israeli hospitals by enabling 350 more students to intern and engage in research at the hospitals. Another $300m will be contributed to establish the school and its facilities. The entire city will cost approximately $3.5b to build, and will include housing, shopping centers, cultural establishments, and a hesder yeshiva which combines military training and higher Torah education for young Israeli men. Extensive music and cultural educational programs will be offered in the University town. Scholarships will be granted to attract top students to the new Galilee town. Incentives will be offered to leading professors around the world to join the teaching staff. (IsraelNN25.12)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Iraq Completes Early Repayment of Entire Outstanding Obligations to the IMF
On 12 December 2007, Iraq completed the early repayment of its entire outstanding obligations to the International Monetary Fund (IMF) amounting to about $470.5m. The outstanding obligations of Iraq had been contracted under the Emergency Post-Conflict Assistance that was approved by the Executive Board on 29 September 2004. The repayment was made in advance of Iraq's request for a new Stand-By Arrangement. IMF Managing Director Dominique Strauss-Kahn commended the Iraqi authorities for the implementation of their macroeconomic policies and reforms over the last several years, noting that "Iraq's ability to repay the IMF ahead of schedule reflects its strong international reserve position against a background of high oil prices." Oil-rich Iraq does not really need the money. But it values the IMF seal of approval it gets under the facility as part of a wider effort to modernize the country's economy, despite the challenges of an extremely fragile security situation. US and Iraqi forces battling a simmering insurgency and sectarian bloodshed have made progress since thousands of extra US troops were rushed to Iraq earlier this year. (IMF14.12)
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5.2 EFG-Hermes Forsees UAE Revaluation by July
The United Arab Emirates was 60% likely to revalue its dollar-pegged dirham unilaterally or in conjunction with other Gulf oil producers in the first half of next year, according to a prediction by EFG-Hermes. The UAE could allow its dirham to rise between 3% and 5% "if GCC countries decide to continue coordinating their policies," the Egypt-based EFG-Hermes said in an annual country research report. "A lack of consensus ... could lead the UAE to move independently to a currency basket," EFG said. Gulf Arab oil producers are considering allowing their currencies to appreciate after agreeing to keep pegs to the dollar, UAE Central Bank Governor Sultan Nasser al-Suweidi was quoted as saying in London-based al-Hayat on December 15. Suweidi had triggered a spell of intense market speculation about the imminent demise of the Gulf's fixed exchange rates, after he said last month he was under mounting social and economic pressure to sever the dirham's dollar peg. He backtracked on those remarks after Gulf rulers agreed at a summit in Qatar to retain dollar pegs and keep any talks on currency reform secret. If the US currency were to weaken further and the US Federal Reserve to continue to cut interest rates, the UAE would be more likely to act alone in currency reform, EFG said. Dollar pegs force the UAE and four of its neighbors, including Saudi Arabia, to track US monetary policy at a time when the Fed is cutting rates to contain the fallout of a mortgage crisis. Inflation in the Gulf, the world's biggest oil-exporting region, is hitting decade highs, including a 19-year high of 9.3% in the UAE last year. (Various23.12)
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5.3 FDI Flow to UAE Exceeds $18 Billion
Foreign direct investments (FDI) in the UAE reached $18.688b in 2006, up 10.8% from the previous year's $16.9b. The figures were announced by Sheikha Lubna bint Khalid Al Qasimi, UAE Minister of Economy, from a survey conducted by the Ministry of Economy (MoE), in coordination with the Economic and Social Commission for Western Asia (ESCWA) and the United Nations Conference on Trade and Development (UNCTAD). The survey covered companies with at least one non-resident, regardless of nationality, having invested 10% or more of the company's capital. According to the field survey, which gathered data for the years 2005 to 2006, the main economic sectors instrumental in the substantial FDI growth were the financial intermediation and insurance (34.4%), construction (29%), domestic trade (14%), and manufacturing (10.1%). Dubai posted the largest share at 62%, followed by Abu Dhabi at 24%, while Sharjah contributed 10%. The rest of the emirates contributed 4% to the total FDI.
The survey identified financial intermediation and insurance (35%), building and construction (35%) and domestic trade (14%) as the main economic contributors for Dubai. Financial intermediation and insurance (42%), building and construction (21%) and manufacturing (17%) were the top three for Abu Dhabi; while financial intermediation and insurance (27%), building and construction (26%), and transport, storage and communication (21%) accounted for the biggest shares in Sharjah. The UAE is considered one of the best global locations for FDI as a result of progressive economic liberalization policies and a strong collaboration between the public and private sectors. Its willingness to welcome foreign capital, particularly for the oil and gas industries, has led to a vibrant and continuously evolving economy, differentiating it from other less-open countries in the region, it said. (TradeArabia 24.12)
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5.4 UAE Leads Arab World in Number of Internet Users Per Thousand
A 2007/2008 human development report issued by the United Nations Development Program (UNDP) says that the UAE tops all Arab countries in the area of world wide web access, with 308 users per every 1000 persons, Kuwait places second with 276 per 1000 persons, followed by Qatar with 269, then Bahrain with 213. Lebanon places at fifth position with 196 users per every 1000 persons, Oman at eighth position with 111 users and Saudi Arabia at 11th position with 70 users per every 1000 persons. On the use of cellular phones, Bahrain tops the Arab world with 1,030 subscribers per every 1000 persons, the UAE follows at second position with 1,000 subscribers, Kuwait at third position with 939 subscribers, followed by Qatar with 882 subscribers, Saudi Arabia, Tunisia and other Oman trail with 575, 566 and 519 respectively. With regard to standard telephone (landline), Lebanon tops the Arab world with 277 telephones per 1,000 persons, the UAE follows with 273 telephones, followed by Bahrain, Qatar, Kuwait and Saudi Arabia with 270, 253 201 and 164 respectively, while Oman placed 12th with 103 telephone lines per 1000 persons. In view of the above, member states of the Gulf Cooperation Council have occupied almost all the leading positions in the Arab world in the use of modern means of telecommunication. (WAM25.12)
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5.5 Saudi Arabia Unveils Its Largest Budget in Its History
On 10 December, Saudi King Abdullah on Monday unveiled the kingdom's largest budget in history, earmarking expenditures at $109.33 billion and revenues at $120 billion. It has allocated a record SR105 billion for education and training. King Abdullah noted that more than a quarter of the new budget has been set aside for human resource development including higher education, and technical and vocational training. “The budget will also boost scientific research and technological development,” the monarch said. Special allocations have also been made to train teachers, develop academic curricula and improve education atmosphere, with SR39 billion set aside for building schools, universities and training centers and institutes. The new budget has allocated SR44.5 billion for health and social development as well as for fighting poverty and supporting sports and youth welfare projects. The king also disclosed plans to establish a number of new hospitals, health centers, medical colleges and university hospitals.
Speaking at the budget session, Finance Minister Dr. Ibrahim Al-Assaf predicted that the gross domestic product in 2007 would reach $377b on current prices. He said the private sector would make a growth rate of 5.9% in 2007 at stable prices with non-oil industries making a growth of 8.6%, telecom, transport and storage sectors 10.6%, construction 6.9%, electricity, gas and water 4.4%, wholesale and retail trade, hotels and restaurants six%, and financial services, real estate and insurance four%. He also announced that public debts would fall to 19% of the GDP or SR267 billion by the end of 2007, compared with 28% of the GDP in 2006.
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5.6 Saudi Arabia's Inflationary Pressures Mount
A group of 19 prominent Saudi Muslim clerics has issued a rare warning to Saudi leaders that they must take action to curb increasing prices of basic commodities, which has prompted public anger at the kingdom. A near five-fold increase in oil prices over the past five years has helped the government post large budget surpluses, but Saudis are feeling the pinch from a rise in prices of basic foodstuffs in recent months mainly due to a drop in the US dollar to which the riyal currency is pegged. Annual inflation accelerated to 5.35% in October, its highest in at least a decade and Saudis are looking to their rulers to take action. Rents and food costs were the main drivers of inflation, the Saudi Central Department of Statistics announced. Inflation was running at 4.89% in September. Several of the signatories teach at Islamic universities. The statement, posted on Islamic Web sites, did not ask for an increase in public wages, a route Saudis have seen other Gulf Arab countries follow. Some major companies have decided to raise wages by up to 40% to offset the impact of rising prices. This December, the government raised subsidies on rice and baby milk. The clerics' statement also warned merchants against exploiting the situation by hoarding commodities and said consumers should rein in spending and give more Islamic alms. (Mena Report 19.12)
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5.7 Algerian Oil Revenues Reach $59 Million In 2007
Algerian oil revenues for 2007 have reached $59b, Algerian Minister of Energy & Mining Khelil said on 23 December. Some $2b out of total revenues is from additional charges paid by foreign companies, Khelil said. The Minister also noted that Algeria made 41 discoveries, six of them were made by Algerian national oil company (SONATRACH) alone. Opec-member Algeria is also planning to invest $10b from this year revenues for petrochemical industries. (KUNA23.12)
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5.8 Moroccan King Gives Go-Ahead to Completion Of 1st Tram Network
On 23 December, Moroccan Monarch Mohammed VI gave the go-ahead to complete the first tram network linking the cities of Rabat and Sala with the rest of the towns. The Abi Reqraq Valley agency, the body supervising the project, said that the cost of the project, which will include two lines at a distance of 19 kilometers amounting to about $400m. The initial phase of the project will connect the suburb of Karima with the city of Sala and Akdal in Rabat and is expected to be complete by 2010. Some 400,000 people from both cities will benefit from the project's services, which will solve transport crisis in the capital and suburbs. The agency had announced in an earlier statement that the French Alstom company specialized in the field of transport and communications won international manufacturing tram carriages deal. (KUNA23.12)
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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS:
6.1 Unakitan Releases Ankara's Economic Targets
Turkish Finance Minister Unakitan recently announced that per capita income in Turkey would exceed $7,000 by the end of 2008. Speaking at "the Turkish-Italian Media Forum: Understanding Turkey," Unakitan said Turkey's economy grew by an average of 7.3% over the last four years. "Turkey has become a country which has grown for the last 23 consecutive quarters, a first in the history of the country," he said. "Turkey's gross national income would reach $489b in 2007, which was just $181b in 2002. The figures will reach $520b, which means a 3% growth by the end of 2008." Recalling that Turkey has seen an average 70% inflation rate between 1990 and 2000, Unakitan stressed current inflation rate was 8.4%. "And now our goal is first to reduce the inflation rate to 4% and bring it well under that figure. We are continuing our fight against inflation very tightly," he explained. Finance minister also said Turkey's exports reached $105b in 2007 from $36b in 2002. "And we are targeting $200 billion for 2013 and $500 billion for 2023," he said. Unakitan invited foreign companies to Turkey for their research and development investments, adding that the government was planning to introduce new legal arrangements that would bring new facilities for research and development. Unakitan said Turkey has already met the Maastricht Criteria by reducing its government deficit to 1%, a figure well under EU's 3% as compared to GDP. (TNA17.12)
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6.2 EU Opens Talks with Turkey on 2 New Areas
On 19 December, the European Union opened negotiations with Turkey on two more reform areas as part of Ankara's bid to join the bloc despite stalling tactics by France. This brings to five the number of "chapters" Turkey has opened of the 35 that must be completed to conclude the accession process. The EU said it hoped to open talks on two or three others in the first half of 2008. EU Enlargement Commissioner Rehn said the opening of the chapters on health and consumer protection, and trans-European transport networks, showed accession talks were on track despite difficulties. Rehn, who said he was concerned by the "political atmospherics" in EU-Turkey relations, said "the opening of these two chapters indicates the EU accession process of Turkey continues and it delivers results". Asked what progress could be expected in the first half of next year, Rehn told a news conference it would be realistic to expect two to three areas to be opened, but declined to name which ones. Ankara began EU entry talks in 2005 but they have moved very slowly because of rows over Cyprus and human rights. Eight chapters have been blocked since the end of last year because of Turkey's refusal to open its ports and airports to ships and planes from EU member Greek Cyprus. This was demanded by French President Sarkozy, who opposes Turkey's EU membership. (TNA20.12)
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6.3 Turkish Privatization Revenues Drop In 2007 After Two Record Years
After two consecutive years of record privatization revenue, Turkey has started to see a sharp decline in the sale of state properties. In 2007 the government has thus far received $4.23b from privatizations, whereas the funds earned from transferring state-owned companies to private enterprises was $8.01b last year and $8.22b in 2005. These are still high figures considering that the total turnover from all privatization tenders since 1986 amounts to only $30.16b.
For some analysts, this drop is seen to stem from a decrease in the number of valuable state assets available for sale. Additionally, the number of state companies that are really worth billions of dollars has dropped. The sale of Turkey's unique telecommunications operator for $6.55b to Saudi Oger in 2005 was the largest sale of the state in history, and it was accompanied by the sales of other extremely valuable assets, such as iron and steel manufacturing giant Erdemir. Petkim, the Turkish Petroleum Refineries Corporation (TUPRAS), Halkbank, Turkish Airlines (THY) and many others have been privatized by block sales, initial public offerings (IPO) or asset sale methods. Today, only a few such valuable assets remain under state ownership, such as Turkey's alcohol and tobacco monopoly TEKEL, electricity distribution rights and highways.
There are currently seven privatization projects worth $3.5b waiting to be approved. According to the latest figures provided by the Privatization Administration (OIB), the amount of money collected from facility and asset sales has hit $2.3b. Transfers of real estate belonging to state-owned enterprises have come to $96.2m. These transfers include the sale of property belonging to the Black Sea Copper Works, TEKEL, the Turkish Electricity Distribution Company (TEDAS) and Petkim. In addition to these figures, some $1.84b was earned from the IPO of 24.98% of Halkbank in 2007. The key state sales this year were the Port of Mersin for $755m, the General Directorate of Highways' land in Istanbul's Levent district for $800m and the motor vehicle inspection stations for $613.5m. (Various18.12)
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6.4 IMF Pushes Turkey For Fiscal Discipline
The International Monetary Fund (IMF) is working with Turkish authorities on a "strong package of measures" needed for the release of a fresh installment of IMF funds of more that $1.1b, effectively urging the government to resume financial discipline amid some deteriorating economic indicators. A series of economic reforms supported by tens of billions of IMF funds has helped Turkey recover from its worst post-World War II financial crisis in 2001. But many analysts see 2007 as a lost year, with a dropping growth rate and rising inflation coupled with an international credit crunch amid fears of a U.S. recession. In addition, the IMF has already warned that fiscal discipline has worsened considerably in a year of double elections (parliamentary and presidential) in which Prime Minister Erdogan has strengthened his position. In one major indication, Turkey failed to meet this year's primary surplus target of 6.7% of gross national income. The figure is only 4.25%, well below the target. Primary surplus is a key criterion for a nation's ability to pay its debts.
Meanwhile, the IMF also called on Turkey to put its long-awaited social security reform into effect as soon as possible. The Constitutional Court has annulled an earlier reform law, citing discrepancies between some of its elements and the constitution. Turkey's present three-year stand-by arrangement is due to expire in May, and the government has not decided on the format of relations with the IMF after that. One of the IMF's concerns is over Turkey's current high account deficit, which is being boosted by a rising energy bill. (TDN15.12)
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6.5 Turkey Plans to Move Central Bank Headquarters to Istanbul
Turkey's ruling AKP government plans to move the headquarters of the central bank to Istanbul as part of a bid to make the country's largest city a regional financial hub, Economy Minister Simsek announced. The AKP has already announced plans to move some of the financial regulatory bodies to Istanbul, a city of some 14 million connecting Europe and Asia, against the background of a wave of Turkish banking acquisitions by major foreign banks. Some Turkish central bank officials have raised concerns about moving the bank from the capital where the seat of power is. (Various17.12)
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6.6 Cyprus & Malta to Adopt Euro
Cyprus and Malta will adopt the euro on 1 January, bringing to 15 the number of European Union countries that share the same currency. The final practical preparations are well under way and banks, retailers and consumers seem to be ready for the changeover, announced the European Commission. From January, the euro area will include 15 out of the 27 EU countries and a population of 320 million out of the EU's total of 495 million. Cyprus and Malta will adopt the euro at the rate of 0.585274 Cyprus pounds and 0.429300 Maltese lira to one euro. This means that one Cyprus pound corresponds to €1.71 euro and one Maltese lira to €2.33. (KUNA22.12)
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6.7 Greece Revises Q3 GDP Growth up to 3.8%
The Greek economy expanded more than previously estimated in the third quarter, following a general revision of the country's economic data since 2000. Gross domestic product grew at an annual rate of 3.8% in the three months through September from the year-earlier period, the Athens-based National Statistics Service said on 17 December in a report. That compares with a preliminary estimate last month of 3.6%, which was the slowest pace in more than two years. First-quarter GDP growth was revised to 4.3% from 4.6%, according to the statement. Strong domestic demand and investment will drive the Greek economy to expand an annual 4.1% this year from 4.3% in 2006, the European Commission estimated on November 9. (Bloomberg17.12)
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6.8 Greece, Russia & Bulgaria Sign Protocol For Pipeline's International Development Firm
On 18 December, Greece and Russia signed a protocol in Moscow on establishing the international project development company for the Burgas-Alexandroupolis oil pipeline project, shortly before the commencement of formal talks between visiting Greek Prime Minister Karamanlis and his host, Russian President Putin. In statements after the signing of the protocol, Greek Development Minister Folias said it was "a special day", adding that a new era was being launched not only in energy relations among Russia, Bulgaria and Greece, but also at many more levels. He expressed deep conviction that the projects will have commenced by the end of summer 2008, adding that the pace launched was "very fast". According to the protocol, the international company will be headquartered in the Netherlands. After the signing ceremony, Greek and Russian officials departed for the Kremlin to join Karamanlis and Putin in a wide-ranging meeting following private talks between the two leaders. (HRI18.12)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Israeli Scientists Put Bible on Chip Smaller Than Pinhead
On 18 December, Israeli scientists announced they have created the world's smallest Bible, fitting a Hebrew-language version of the holy book on a gold-coated silicon chip smaller than a pinhead. Researchers from Technion, Israel's Institute of Technology, were able to pack the 308,428-word Hebrew Bible (the Old Testament) on a 0.5 millimeter square. The Guinness Book of World Records has a Bible 50 times bigger. The scientists managed their feat by sending focused beams of tiny particles, called gallium ions, onto the surface of the silicon chip. The nano-Bible was developed by the Haifa-based institute as part of an educational program aimed at increasing interest in nanoscience among teenagers. The scientists now want to take pictures of the miniature Bible and blow it up to a seven-by-seven meter poster, which will make it "possible to read the entire Bible with the naked eye," he said. (AFP18.12)
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*REGIONAL:
7.2 Genetic Diseases Cost Arabs $13 Billion Annually
Patients with genetic diseases cost the Arab world $13b annually, a medical expert said on 22 December. The Assistant director of the Centre for Arab Genomic Studies (CAGS), affiliated to the Sheikh Hamdan Bin Rashid Al Maktoum Award for Medical Sciences, said genetic diseases in the Arab region had increased the burden on the health institutions. In his lecture on genetic diseases in the Arab countries delivered at the Arab Gulf University, he noted that health figures show that such diseases were on the rise in the UAE, Bahrain and Oman. There are more than 240 genetic diseases in the UAE, 114 in Bahrain and 250 in Oman, a matter that prompts fresh ideas on the genetic variation of that geographically small region. More data will be gathered about the rest of the Arab countries over the coming years. Interim statistics suggest there are about 850 genetic diseases in the Arab world, that could exceed 1,000 when data collecting is completed, he said. (KUNA22.12)
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7.3 Bahrain Population to Grow By 76% By 2030
Bahrain's population is expected to increase by 76% by 2030, according to a top government adviser. The anticipated population explosion has prompted authorities to launch a major expansion of the country's infrastructure, head of the Central Planning Unit (CPU) at the newly named Works Ministry announced. A national plan was in place to deal with the rapid growth, which will see the population almost double in just over 20 years from 742,000 to over 1.29 million. On top of the 76% increase in population by 2030, Bahrain foresees 118% increase in housing, 70% increase in industrial lands and a 272% in office space. (TradeArabia 13.12)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Syneron Launches New Computer-Based Training Program to Assist Physicians
Syneron Medical announced the introduction of the Syneron Learning Management System. This online educational system provides Syneron customers with comprehensive training and tracking in areas of basic science, clinical procedures and practice management. The first modules, now available, assist practices with basic marketing skills ranging from phone skills to incentive programs. With the Syneron Learning Management System, physicians can make certain each and every employee has core skills for practice improvement. What's more, this is a great way to get new employees up to speed and help existing employees refine and remember important skills. Much like university courses, progress and reward completion is tracked. Participants take a quiz at the conclusion of each module and get a certificate of completion after they complete all four modules.
Syneron Medical (http://www.syneron.com) manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented elos combined- energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative elos technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. is located in Israel. (Syneron13.12)
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8.2 NasVax Agreement with SciGen to Develop Improved Hepatitis B Vaccine
NasVax entered into a partnership agreement with SciGen, a Singaporean biotechnology company, to develop and market a vaccine administered through the intranasal route for preventing Hepatitis B disease. This development product combines SciGen's Hepatitis B antigen with NasVax's VaxiSome that improves the immune response to vaccines and enables both intramuscular and intranasal administrations. NasVax' unique VaxiSome platform utilizes CCS/C, a novel adjuvant and delivery system that has been shown to stimulate both an increased antibody response as well as a T-cell response, hence providing improved potency. In addition, SciGen has an option to obtain a non-exclusive license to VaxiSome to develop an improved intramuscular Hepatitis B vaccine. Successful development of the novel intramuscular Hepatitis B vaccine might enable a reduction in the number of injections (currently three during 6 months). Success in intranasal vaccination would avoid the need for injection, as currently practiced.
Ness Ziona, Israel's NasVax (http://www.nasvax.com) engages in the development of improved vaccines. Its technology platform is based on proprietary polycationic sphingolipid-derived molecules that serve both as a potent adjuvant for stimulating enhanced immune responses via the Th1 and Th2 pathways as well as an efficient delivery system. The platform enables intranasal as well as intramuscular and subcutaneous administrations and also may be applied to augment the bioactivity of established adjuvants and cytokines. The Company was founded in August 2004 within the Meytav Technology Incubator and went public in December 2005. (NasVax17.12)
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8.3 Nanolymf to Advance Breakthrough Liver-Bypassing Oral Drug Delivery Technology
Yissum (http://www.yissum.co.il), the technology transfer company of the Hebrew University of Jerusalem, announced the formation of Nanolymf, a biotechnology start up company dedicated to advancing a nanotechnology controlled release drug delivery platform that increases the bioavailability of orally administrated lipophilic drugs. Nanolymf was founded as a subsidiary of Shizim, a leading group of life science companies in Israel. Per the terms of the agreement, Nanolymf has acquired exclusive rights and Yissum will receive royalties, sublicense fees, and an equity stake in Nanolymf.
The ability to deliver lipophilic drugs orally while bypassing specific potent barriers in the intestine and the liver carries tremendous potential. Lipophilic drugs are poorly soluble in water, seriously limiting their bioavailability and clinical efficacy. In addition, when administrated orally 25% of these sensitive drugs cannot be absorbed because they activate an intestinal pump barrier and are metabolized in the intestines and liver. Therefore, currently many drugs present limited oral bioavailability or else are injected. Nanolymf developed a breakthrough controlled release drug delivery system that is able to bypass intestinal and liver metabolic filters, resulting in increased bioavailability following oral administration, without any alteration of the drug molecules. This unique system allows changing the route of administration of highly lipophilic drugs from injectable to oral with high bioavailability and low side effects without affecting the normal physiological activity of the metabolic filters.
Nanolymf, a subsidiary of Shizim (http://www.shizim.com), a holdings group, is dedicated to change the route of administration of many highly lipophilic drugs from injectable to oral with high bioavailability and low side effects. The company has developed a breakthrough controlled release drug delivery system that is able to bypass intestinal and liver metabolic filters, resulting in increased bioavailability following oral administration, without any alteration of the drug molecules. (Shizim19.12)
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8.4 Compugen & Roche to Predict Drug Response in Rheumatoid Arthritis Patients
Compugen signed a collaborative discovery and license agreement with Roche for the identification and validation of genetic variations for the prediction of response to drugs used for the treatment of rheumatoid arthritis. According to the agreement, Compugen, utilizing its proprietary GeneVa platform, will analyze DNA samples and clinical data provided by Roche, in order to identify and validate non-SNP (single nucleotide polymorphism) genetic variations that could serve as biomarkers for the predicted response or non-response to selected drugs for treatment of rheumatoid arthritis. Financial terms of the agreement were not disclosed. Compugen's GeneVa platform incorporates an in silico database of approximately 200,000 predicted non-SNP genetic variations, including insertions, deletions and copy-number variations in the human genome. GeneVa utilizes special purpose algorithms and other computational biology tools to select from this database those genetic variations that are predicted to be associated with the specific clinical phenotypes of interest, such as response or non-response to a specified drug of interest, or predisposition to a specified disease.
Tel Aviv, Israel's Compugen's (http://www.cgen.com) mission is to be the world leader in the discovery and licensing of product candidates to the drug and diagnostic industry. The Company's powerful discovery engines enable the predictive discovery of numerous potential therapeutics and diagnostic biomarkers. This capability results from the Company's decade-long pioneering efforts in the deeper understanding of important biological phenomena at the molecular level through the incorporation of ideas and methods from mathematics, computer science and physics into biology, chemistry and medicine. (Compugen 20.12)
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8.5 Tower & CMT Medical Partner to Develop Flat Panel X-ray Detectors for Medical Applications
Tower Semiconductor and CMT Medical Technologies established a partnership to develop and market X-ray detectors for medical applications. The detectors intended use is for Radiography/Fluoroscopy, Cardiology, Angiography, Mammography and similar large-size X-ray modalities. Large size detectors require the manufacturing of up to one die per eight-inch wafer, at high yields. Delivery of the first Flat Panel Detectors is expected to begin in 2009. The CMOS image sensor technology, for these X-ray detectors, is superior to the currently existing technologies in all aspects providing significantly better performance (speed, resolution, power consumption and sensitivity) and a lower cost, due to higher yields and system on chip capabilities.
Migdal Ha'Emek, Israel's Tower Semiconductor (http://www.towersemi.com) is an independent specialty foundry that delivers customized solutions in a variety of advanced CMOS technologies, including digital CMOS, mixed-signal and RF (radio frequency) CMOS, CMOS image sensors, power management devices, and embedded non-volatile memory solutions. Tower's customer orientation is complemented by its uncompromising attention to quality and service. Its specialized processes and engineering expertise provides highly flexible, customized manufacturing solutions to fulfill the increasing variety of customer needs worldwide.
Yokneam, Israel's CMT Medical Technologies (http://www.cmt-med.com) is a leading provider of advanced digital X-ray imaging systems for medical diagnosis. Having been at the forefront of innovation for more than 25 years, CMT now has an installed base of over 5,000 systems worldwide. CMT designs, develops, manufactures and markets high-resolution digital imaging solutions for General Radiography, R&F rooms and Angiography special procedures suites. The Company is distinguished by its advanced technology, the flexibility of its solutions, and its responsiveness to individual customer needs. (Tower19.12)
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8.6 Teva Announces Launch of Generic Protonix Tablets, 20 mg and 40 mg
Teva Pharmaceutical Industries has commercially launched Pantoprazole Sodium Delayed Release (DR) Tablets, 20 mg and 40 mg, which are AB-rated to Wyeth's erosive GERD treatment Protonix DR Tablets. As one of the first companies to file an Abbreviated New Drug Application (ANDA) containing a paragraph IV certification for this product, Teva has been awarded a 180-day period of marketing exclusivity. Teva is currently involved in patent litigation with Wyeth and Altana concerning this product in the U.S. District Court for the District of New Jersey. A trial date has not been set. In September 2007, the District Court denied a motion filed by Wyeth and Altana for a preliminary injunction related to Teva's Pantoprazole Tablets. Wyeth and Altana have filed a notice of appeal. Following the denial of the preliminary injunction, and a thorough review of the Court's opinion, Teva accelerated launch preparations for its product, which had already been granted final approval by the U.S. Food and Drug Administration (FDA) on 2 August 2007. Teva and Wyeth/Altana have commenced settlement discussions regarding this product and, to facilitate such discussions, have entered into a standstill agreement pursuant to which Teva agreed not to ship additional product for a period of 30 days. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. (Teva20.12)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 InRob Supplies Customized Solution: Telephone Control System
InRob Tech announced the Telephone Control System (TCS), the Company's latest example of a customized solution developed to specific user requirements. The TCS is designed for control and command tasks for broadcasting sites. The system links reception and broadcasting stations nationwide to a single base. Remote site operators can see the relevant indicators of the broadcasting site directly on their monitor. These operators can then perform any necessary adjustments of the broadcasting equipment, such as changing the frequency, output, or antennas. As a result, downtime is significantly minimized as maintenance personnel do not have to physically reach each site for operation and servicing. InRob (http://www.inrobtech.com) is an Israeli-based high-tech company specializing in the planning, manufacturing and service support of advanced wireless and remote control systems, operating all types of robots and other vehicles. The Company is Israel's leader in its field, and supports the IDF (Israeli Defense Forces), Israeli police and other military and civilian companies dealing with security. (InRob14.12)
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9.2 Gilat Provides Satellite Backhaul Solution to Latin America's Largest Mobile Network Operator, Vivo
Gilat Satellite Networks has successfully completed the first phase of a turnkey satellite network solution for Vivo, a customer of Telecomunicacoes de Sao Paulo (Telesp). Telesp is the largest subsidiary of Brazil's Telefonica Group and Vivo is Latin America's largest mobile network operator. Vivo recently deployed a major GSM network and Telesp is using Gilat's SkyAbis technology to provide cost-effective backhaul and trunking (DCME) to remote Vivo sites in the north, northeast and central west of Brazil. As part of the turnkey satellite network, Gilat provided a fully redundant SkyAbis GSM solution to meet Vivo's high reliability requirements. SkyAbis features traffic optimization and dynamic bandwidth allocation enabling low cost of ownership for mobile network operators. Gilat Satellite Networks is a leading provider of products and services for satellite-based communications networks. Petah Tikva, Israel's Gilat (http://www.gilat.com) was founded in 1987 and has shipped over 670,000 Very Small Aperture Terminals (VSATs) to more than 85 countries across six continents. (Gilat18.12)
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9.3 Packet8 MobileTalk International Calling Service Is Powered by MobileMax's Technology
MobileMax and 8x8, provider of Packet8 broadband Voice over Internet Protocol (VoIP), videophone and mobile VoIP communication services, have successfully launched a user-friendly mobile calling service that offers a simple, affordable and high quality digital voice solution to overseas calling. The new service, called “Packet8 MobileTalk” (http://mobiletalk.packet8.net), is based on MobileMax Residential Edition software for carriers and service providers. MobileMax's solution utilizes a downloadable software application that can reside on any smart phone (Windows, Palm, Blackberry and Symbian-based mobile phones) to automatically route international calls from the mobile phone through the Packet8 digital VoIP network. This will enable cell phone users to significantly reduce their international phone bills while maintaining high international voice quality and the ability to enjoy the convenience and flexibility of mobile calling. Unlike calling card, callback and other reduced-rate international phone services, which require the user to dial numerous key strokes in addition to their destination number or make their calls through cumbersome software applications, Packet8 MobileTalk users can dial calls directly and comfortably from a mobile handset, contact list or speed dial directory with no additional keystrokes - a significant advantage, for example, when placing a call while driving. Once a destination number is dialed or selected, the Packet8 MobileTalk software application identifies the international prefix being called and redirects the call to a local Packet8 network access.
Herzliya, Israel's MobileMax (http://www.mobile-mx.com) develops markets and supports a unique technology that enables carriers and service providers to dramatically increase usage and ARPU while substantially reducing cost for mobile users (patent-pending). (MobileMax18.12)
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9.4 eNom Protects Its Email Customers With Commtouch Zero-Hour Virus Outbreak Protection
Commtouch announced that Bellevue, Washington's eNom has selected Commtouch Zero-Hour Virus Outbreak Protection to protect eNom's email customers. eNom, a wholly owned subsidiary of Demand Media, Inc., is the largest ICANN-accredited wholesale domain registrar with over 9 million domain names on its platform, and over 3 million customers of email services. Integrating Commtouch Zero Hour Virus Outbreak Protection into eNom's email services adds real-time protection against email-borne malware threats. Commtouch Zero-Hour Virus Outbreak Protection blocks malware in the early moments of the outbreak, and is licensed by messaging and security vendors worldwide. It uses patented Recurrent Pattern Detection technology, rather than relying on the time-consuming process of developing signatures or heuristics.
Headquartered in Netanya, Israel, Commtouch Software (http://www.commtouch.com) is dedicated to protecting and preserving the integrity of the world's most important communications tool - e-mail. Commtouch has over 16 years of experience developing messaging software and is a global developer and provider of proprietary anti-spam, Zero-Hour virus protection and Reputation Service solutions. Using core technologies including RPD (Recurrent Pattern Detection), the Commtouch Detection Center analyzes billions of email messages per week to identify new spam and malware outbreaks within minutes of their introduction into the internet. (Commtouch 18.12)
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9.5 ECI Telecom Adds Intelligent Control Capability to Optical Transport Networks
ECI Telecom announced the availability of Automatically Switched Optical Network (ASON) capabilities for its XDM Multi-Service Provisioning Platform (MSPP) family of products, from metro access to core networks. Advanced control plane architecture offers new protection schemes to assure service continuation. The ITU ASON architecture, along with the GMPLS common signaling and routing protocol, enables the introduction of an extra layer of virtual management plane for differentiated service support based on Class of Service (CoS). Differential services can be implemented in existing and new transport networks by adding a control plane card to the XDM platform and using ECI's unified LightSoft end-to-end network management system. Successful dealing with multiple network failures is enabled by full auto discovery package, new protection schemes and automatic prioritized restoration. Petah Tikva, Israel's ECI Telecom (http://www.ecitele.com) delivers innovative communications platforms to carriers and service providers worldwide. ECI provides efficient platforms and solutions that enable customers to rapidly deploy cost-effective, revenue-generating services. (ECI18.12)
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9.6 Metalink Announces Availability of its Leading 802.11n Home Networking Solution
Metalink announced that its award winning 802.11n WLANPlus chipset is now commercially available and featured in cutting-edge products such as Residential Gateways, Set-top boxes and Video Bridges by major companies worldwide. Metalink offers a wide array of reference designs for best-performing wireless products to enable the most demanding applications for wireless home networks. Since its introduction in 2006, Metalink's WLANPlus has gained recognition as the industry's best-performing 802.11n solution offering the highest-performing transmission technology for video-grade wireless home networks. Its implementation of advanced technologies such as a Maximum Likelihood (ML) decoder combined with Low Density Parity Check (LDPC), advanced Forward Error Correction (FEC) scheme enable it to support up to 300Mbps transmission speeds and more than twice the reach of competing 802.11n solutions - over both the 2.4GHz and 5GHz bands, assuring reliable and robust home coverage. Yakum, Israel ‘sMetalink (http://www.MTLK.com) is a leading provider of high performance wireless and wireline broadband communication silicon solutions. Metalink's WLAN and DSL technologies are designed to enable true broadband connectivity in every home, and its products revolutionize the broadband experience by facilitating the convergence of telecommunication, networking and entertainment. (Metalink 18.12)
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9.7 Korean Military to Use Elbit Systems' Tactical UAV - Skylark II
Elbit Systems announced that Skylark II, was selected by the Korean military as a preferred solution in a tender involving extensive technical tests and including UAV manufacturers from all over the world. The first phase of the contract includes a comprehensive Skylark II system while additional systems are expected in the future. The Skylark II mini UAV system is designed for data collection, observation and target marking missions for ranges exceeding 60 kilometers. Its silent, electric propulsion system, allows for optimal performance during day, night and adverse weather missions. The system IT offers a full cycle operation that is possible with a 2 person crew only. Skylark II is based on the combat experience of the Skylark I, which is already used in various battlefields by numerous customers worldwide
Haifa, Israel's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Elbit Systems Group, which includes the company and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. (Elbit17.12)
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9.8 IDO Security Completes Shoes-On Program at Israel's Ben-Gurion International Airport
IDO Security announced that the MagShoe Pilot Program at Israel's Ben-Gurion International Airport has been completed successfully. The one month pilot program at Terminal 3, Israel's main international terminal, was conducted and managed by the Security Technologies Division of the Israel Airport Authority - IDO personnel were present only as observers. During the pilot program the MagShoe was tested both at passenger security screening checkpoints and at one of the Airport's employee and provider checkpoints. Rishon Lezion, Israel's IDO (http://www.idosecurityinc.com) is engaged in the design, development and marketing of devices for the homeland security and loss prevention markets for use in security screening to detect metallic objects concealed on or in footwear, ankles and feet through the use of electro-magnetic fields. These devices were designed specifically for applications in the security screening to complement the current methods for the detection of metallic items during security screenings and at security checkpoints in venues such as airports, prisons, schools, stadiums and other public locations and other venues requiring individual security screening. (IDO Security 19.12)
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9.9 Gilat Chosen by Mexico's Grupo Elektra to Provide a 1,964-Site Broadband Satellite Network
Gilat Satellite Networks has been selected by Mexico's Grupo Elektra to provide a SkyEdge satellite hub station and 1,964 VSATs for use in several Latin American countries including Mexico, Guatemala, Honduras, Peru, El Salvador, Panama and Argentina. Grupo Elektra is one of Latin America's leading specialty retailers and financial service companies. This agreement represents an expansion of Gilat's business relationship with Grupo Elektra, which began more than a decade ago with the deployment of Gilat's SkyStar Advantage VSAT network and later with a SkyBlaster 360e network. The network, based on Gilat's SkyEdge IP VSATs, will enable cost-effective and reliable broadband communications for point-of-sale data management, fast credit card processing, software downloads, high-speed Internet access, corporate communications and terrestrial backup connectivity. SkyEdge is customized for highly efficient transaction communications, such as those required by credit card applications. Petah Tikva, Israel's Gilat Satellite Networks (http://www.gilat.com) is a leading provider of products and services for satellite-based communications networks. Gilat has shipped over 670,000 Very Small Aperture Terminals (VSATs) to more than 85 countries across six continents. Gilat markets the SkyEdge and SkyEdge II Product Family which includes the SkyEdge Pro, SkyEdge IP, SkyEdge Call, SkyEdge DVB-RCS and SkyEdge Gateway. In addition, the Company markets numerous other legacy products. (Gilat21.12)
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10: ISRAEL ECONOMIC STATISTICS
10.1 November CPI Rises Much Higher Than Expected
The Central Bureau if Statistics announced that Israel's consumer price index for November 2007 surpassed estimates and reached 101.9 points, or a monthly increase of 0.4%. Expectations for the traditionally low November inflation figures were in the zero range, since between 2002 to 2006, November CPIs were all negative. The CPI reading for December 2007 is now forecast to also reach 0.4%, which can bring the increase for the year as a whole to over the government's target range of 1% to 3%. The CPI has increased 2.8% over the previous 12 months. The component in the CPI with the biggest jump was shoes and clothing, rising 3%. The housing component fell 0.8%. (CBS14.12)
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10.2 Israelis' PPP Purchasing Power Rises
According to a comparative study by the Central Bureau of Statistics with 55 other advanced countries, Adjusted for purchasing power parity, Israelis' per capita GDP rose to $24,500 as a result of rapid economic growth and the shekel's appreciation against the dollar. Israel's per capita purchasing power is expected to climb to $27,000 by the end of the year. Nevertheless, Israel is still ranked 23rd in the list, and its per capita GDP is still 18% below the OECD average. Luxembourg is ranked in first place in the Central Bureau of Statistics study, with per capita GDP of $71,300, 2.9 times the level in Israel. Norway is in second place, with $48,600, followed by the US with $43,000, and Ireland, with $39,000. Ten years ago, Ireland's per capita GDP was the same as Israel's. Other top ranking countries in the list were Austria, Australia, Iceland, Belgium, the UK, Germany, the Netherlands, Japan, Canada, France, and Switzerland, whose per capita GDP is 25% higher than Israel's. Israel is ranked with a group of countries that includes Italy, Greece, New Zealand, Slovenia, Spain, and Cyprus. Cyprus' per capita GDP is $25,400 and New Zealand's is $25,100. (Globes 12.12)
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10.3 Israel's Unemployment Rate Lowest Since 1996
For the first time in 11 years, unemployment has fallen below 7% of the workforce. The Central Bureau of Statistics announced on 19 December that the employment rate fell to 6.9% of the civilian labor force in October 2007 from 7% in September and 7.1% in August. The October unemployment rate is the lowest since the 6.7% rate in 1996. Israel had 200,000 unemployed persons in October, the lowest number in twenty years. The unemployment rate fell by 1% in January-October, with a 13% drop in the number of unemployed - 30,000 persons. The unemployment rate has been falling by a tenth to two tenths of a percent per month. At the present rate, the unemployment rate will reach 6.7% of the civilian labor force by the end of the year. The decline has exceeded the most optimistic scenarios of both the Ministry of Finance and the Bank of Israel, which had predicted that the current level of unemployment would only be reached in 2008. During the height of the recession in 2003, unemployment touched 11% of the civilian workforce. (CBS19.12)
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10.4 Israel's Tourism Increases 24% in January-November
It was announced that 2.1 million tourists entered Israel in January-November 2007, 24% more than during the corresponding period in 2006. Estimated revenue from tourism amounted to some $2.75b and the tourism industry now employs 100,000 persons, after hiring 20,000 people since January. During November, 209,000 tourists entered Israel, almost double the 117,000 who entered in November 2006, and compared with 164,000 in November 2005. Another 143,000 tourists entered by air and 65,000 by land, four times the number in November last year. Most of the tourists entering by land were Polish and Russian tourists making day trips from Sinai. Minister of Tourism Aharonovitch said that the ministry set a goal of 2.8 million tourists in 2008 and five million in 2012, which would create an additional 100,000 jobs over the next five years. (Globes 17.12)
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10.5 Vehicle Theft in Israel Drops 8.4% in January-November
The Israel Insurance Association announced that 27,500 vehicles were stolen in January-November 2007, 8.4% fewer than in 2006, and about the same number stolen in 2004. This was based on information supplied by the Israel Police Etgar (Challenge) anti-vehicle theft unit data published by. Vehicle theft fell in every district, including Jerusalem. Some 2,580 vehicles were stolen in November, 20% fewer than a year earlier. According to the Etgar unit, a third of car thefts occurred in the central district, and 62% of stolen vehicles were private cars, 20% were trucks and 13% were motorcycles. Subaru was the most frequent car stolen in January-November, followed by Mitsubishi and Volkswagen. (IAI13.12)
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In Depth
11.1 ISRAEL: UBS Sees Slower growth But Firm Shekel in 2008
In a recent announcement, UBS (http://www.ubs.com) has predicted slower growth in 2008 for Israel, but strong balance of payments and a firm shekel for Israel in its new report on emerging markets. It warns, "Growth has been impressive, but a US-related slowdown is now underway. The large external surplus is a crucial buffer in a more uncertain global environment and also helps to keep the shekel strong, and thus anchor inflation."
The bank also notes that elections are unlikely since opposition head Likud MK Benjamin Netanyahu "remains the most popular politician to win fresh elections", and given his "great performance as finance minister is 2003-05, the markets have not been too concerned about the likelihood of fresh elections, so far."
UBS notes, "Israeli growth has continued to surprise on the upside in recent quarters, with real GDP growth accelerating to 6.4% year-on-year in the third quarter, after 4.9% year-on-year in the first half. This rendered an aggregate growth rate of 5.4% year-on-year for the first through third quarters. While exports were the main engine of growth in the earlier years of this business cycle, domestic demand is now the driving force.
"Export growth has held up respectably at 9.3% year-on-year in the first through third quarters, but, given buoyant domestic demand, imports grew by 13.2% year-on-year resulting in a rising trade deficit and an overall negative contribution of net exports to growth. Given the first through third quarter growth performance, our 2007 growth forecast of 4.8% looks too conservative now, and we lift our projection to 5.2%."
Looking ahead, UBS is more cautious. "We expect growth to slow down from here and rely even more heavily on domestic demand. With around 37% of its exports going to the US, Israel is more reliant on the US economy than most other EMEA countries. Given the likely fallout from the US housing sector, our colleagues from the US economics team have turned increasingly cautious on the US growth outlook." The bank warns that sluggish US private consumption and fixed investment are likely to affect the Israeli economy through lower exports, especially high-tech, a possible drop in tourism, and potentially lower venture capital inflow to high-tech.
UBS has therefore cut its 2008 GDP growth forecast to 4.2% from 4.5%, but predicts an increase to 4.4% growth in 2009.
On the fiscal side, UBS notes, "Israel's fiscal performance continues to surprise positively, thanks to structural improvements implemented in recent years and ongoing budget discipline." It adds that the likely NIS 18.7 billion budget undershooting (2.9% of GDP) "is an outcome few observers would have considered likely at the beginning of 2007, in light of the significant rise in military expenditure that followed the 2006 war against Hezbollah." The 2007 deficit might be less than 0.5% of GDP.
UBS's biggest surprise relates to the shekel. "At current levels, we still do not regard the shekel as overvalued, or as a serious burden on Israeli competitiveness. Given UBS's cautious view on the US dollar and our bullish outlook on Israel's balance of payments, we expect the shekel to strengthen even further to NIS 3.90/$ by end-2008 (previously forecast NIS 3.95) and NIS 3.85/$ by end-2009."
UBS explains, "We expect the external balance to remain an important source of support for the shekel, particularly against the US dollar. The 10% weakening against the dollar in June and July - triggered by outflows from the local currency bond market was recovered over the late summer and in recent weeks, the shekel has reached new highs against the dollar. Although the shekel has appreciated by more than 17% against the dollar since the first half of 2006, the real effective exchange rate of the shekel has remained remarkably steady. This is mainly for two reasons: Firstly, the shekel's appreciation against other currencies, such as the euro, has been much less pronounced. Secondly, Israeli inflation has remained rather low, and in fact lower than in most of Israel's trading partners."
As for inflation, UBS notes that after the jump in prices in summer caused by the shekel's weakness, it expects zero or lower inflation in the coming months. However, given the low baseline in 2006, inflation will rise to close 3% in Q1/08, before falling back to around 2%. (Globes13.12)
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11.2 JORDAN: Elections Have Poor Showing for Islamists
During last month's elections in Jordan, the Islamists suffered an unprecedented defeat. Previously, the Islamic Action Front (IAF) -- Jordan's largest political party -- controlled an impressive bloc of 17 of 110 seats. But the IAF ran only twenty-two candidates in the latest contest and won just six seats. This stunning defeat has generated recrimination among the Islamists, providing insight into the internal politics of this secretive party. The following is an analysis of the dynamics within the IAF and Jordanian society that caused this electoral collapse, and the implications of these developments for the kingdom's Islamist trend.
Recent Relations between the Islamists and Amman
Hamas's victory in the 2006 Palestinian legislative elections energized Jordanian Islamists. Immediately following the Hamas triumph, Azzam al-Hneidi, head of the IAF bloc in parliament, announced that Jordanian Islamists were ready to assume power. This and similar statements from IAF leaders set off alarm bells, generating significant tension between the party and the monarchy. Authorities feared that the ties between Hamas and the Muslim Brotherhood in Jordan would spill over and impact the IAF's conduct.
This tension has increased since the "Fourth Trend" - the IAF's nickname for its faction of Hamas sympathizers - took over the party's leadership in March 2006. This takeover was solidified by the election of Zaki Bani Irsheid - an extremist known for his close ties with Hamas's political head Khaled Mashal - as IAF secretary-general. Based on these ties, the Jordanian monarchy believes that Hamas controls the IAF. Not surprisingly, Jordan, which stood firmly against Hamas and Islamist extremism for years, perceived this development as a threat.
Although Irsheid was no doubt aware of these sensitivities, his conduct has not defused the situation. In fact, many in Jordan see him as a reckless leader who prioritizes links with Hamas over good relations with the state. As a result, the government has taken measures to restrict the IAF. In the July 2007 municipal elections, for example, the government was determined to forestall Islamist victories in major cities by encouraging the military to vote en masse against the Islamists. Some independent observers in Jordan even claimed that government-sponsored irregularities further undermined Islamist chances in the municipal contest.
Divisions Weaken the IAF at the Ballot Box
Against this backdrop, the Hamas faction within the IAF called for a boycott of the November parliamentary elections. This demand, however, placed Irsheid's supporters at loggerheads with the party's more moderate faction, which argued that a boycott would only undermine the IAF. This "dovish" faction - which advocates Islamization of the kingdom as a long-term project - has traditionally sought to avoid confrontation with the monarchy. The Hamas faction lost the debate, and the IAF agreed to participate in the elections.
Although the Hamas faction and the IAF "moderates" ostensibly agree on Islamist goals, their differences are more pronounced on foreign policy issues, the traditional preserve of the king. For instance, Irsheid wants the kingdom to pursue alliances with Hamas, Hezbollah, and Iran instead of with the United States. The dovish trend seeks to keep the same national reformist line, both on these alliances and issues related to internal reform.
Amid this unprecedented internal wrangling, the IAF entered the November elections with a list of twenty-two candidates. Once the Irsheid camp lost the battle on the boycott, it began a subtle campaign to undermine the party's more moderate candidates by asserting the existence of a deal between them and the government. This assertion discouraged many voters from turning out at the polls; given this internal disarray, a defeat was a foregone conclusion.
The IAF rationalized its defeat by accusing the government of vote rigging and fraud - an assertion that may have an element of truth. After all, the government excluded the IAF from the Islamic Center Association, a key economic resource for the Muslim Brotherhood. Additionally, the government turned a blind eye when voters were transferred from one constituency to another in an attempt to support independent and tribal candidates. The practice of vote buying in Jordan may have also worked against Islamist candidates in some districts.
Even with these explanations, one cannot ignore the key role played by the party's internal battle. The divisions between hawkish and more moderate Islamist factions within the IAF have darkened the political atmosphere for Islamists in Jordan. Equally problematic for Islamists, the moderate candidates did not enjoy the support of the IAF leadership. Indeed, IAF declarations in the run-up to election implied that the leadership was seeking to distance itself from the list of candidates in the hope that they would fail miserably, potentially helping the Fourth Trend regain the initiative.
Implications for Islamists
Pundits in Jordan speculate that the future of the Islamist movement is on the line. Muhammad Abu Ruman, a top Jordanian expert on Islamists, made the case that the most important battle is yet to come. "The hawkish trend will feel that their opposition to participate in the election from the get-go is vindicated, and therefore they will try to sideline the moderates," he wrote in the Jordanian daily al-Gahd on November 22.
The Hamas camp will argue that the better option would have been either to boycott the elections or to put forward more effective and hawkish candidates. Indeed, they are already arguing that the moderate candidates fielded in the contest led to the IAF's colossal failure. Likewise, the moderates will find it difficult to defend their position, especially when accused of having made a deal with the government. The dual-track tactics by the Irsheid camp will leave the moderates in an uncomfortable position between the rock of the government and the hard place of the party's pro-Hamas leadership. The failure to chalk up a reasonable performance will undoubtedly shape the internal Islamist debate for some time to come. The IAF has never experienced this degree of fissure, and preparations are already underway for a tense battle for dominance.
It remains to be seen how the IAF will deal with its defeat, but clearly some soul searching would be appropriate. Although the monarchy helped fuel the current crisis, it did not lose this election for the IAF. Unbeknownst to the Islamists, the Jordanian people have changed. The public is gradually coming to resent the Islamists for their failure to present themselves as a proper, genuine, responsible political movement. Despite Islamist claims to the contrary, the electoral defeat should be taken as a symbol of their shattered popularity.
Hassan Barari is a Lafer international fellow at The Washington Institute and a professor of Middle Eastern politics at the University of Jordan. (CEIP13.12)
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11.3 KUWAIT: Looking Abroad
There have been a number of recent visits by high-ranking Kuwaiti officials to both Europe and Africa, as the country seeks to further cement its economic and political bonds abroad and boost its own importance as an international investment base. These visits can be seen as part of an increasingly successful global strategy, with the country both beginning to attract more inward foreign direct investment and extending its own ventures across the world.
As part of Kuwait's continuing drive to attract foreign investment, Mustafa Jassem Al Shimali, the minister of finance, visited Luxembourg with a view to completing and signing an agreement between the two countries that will exempt capital from double taxation, an important incentive for increased inward investment. Continuing Kuwait's efforts to strengthen ties with Europe, the two countries are also discussing reducing other taxes.
Fawzi al-Qassar, undersecretary for financial and taxation affairs, highlighted the importance of having Luxembourg as an ally, saying the country was "a centre for international banks [and] is part of a network of agreements Kuwait has signed with the majority of European countries", such as the double taxation agreement that has existed with the UK since 2000. Without such agreements, Al Qassar said, European investors might be put off or simply "exhausted" by having to negotiate two different national tax systems.
Kuwait is now looking even farther a field to strengthen its international ties, making concerted efforts to solidify trade relations in Africa. Sheikh Mohammad Sabah Al Salem Al Sabah, the Kuwaiti deputy prime minister and minister of foreign affairs, visited both Ethiopia and Kenya to discuss bolstering bilateral relations in a number of fields, including politics and development, with an emphasis on investment.
The deputy prime minister will be inspecting the international airport in Addis Ababa, one of the major development projects to be financed by the Kuwait Fund for Arab Economic Development (KFAED). The KFAED is intended to provide loans for projects in emerging economies and to establish positive economic and political relations with key strategic partners in various regions. After visiting Ethiopia, Sheikh Mohammad flew to Nairobi to oversee yet another KFAED loan agreement, this one with the aim of financing an extensive improvement of irrigation facilities in the Kenyan region of Bora.
Several joint economic accords have been signed between Kuwait and Turkey; Turkey is now seeing substantial input from Kuwaiti investors, including plans to finance the building of retail units and the National Bank of Kuwait's (NBK) plans to acquire a bank in Turkey. The Kuwaiti bank is the third-biggest lender by market value in the Gulf region. George Nasra, the chief executive of NBK's investment banking unit NBK Capital, has previously stated that Turkey's sophisticated banking sector would suit Kuwait's economic expansion interests.
The Turkey-Kuwait connection will be emphasized when finance minister Sheikh Mohammad leads a high-profile trade delegation to Ankara in January 2008. With a combination of bi-national agreements, talks, treaties and acquisitions across several continents, Kuwait's global investment landscape is looking increasingly healthy. (OBG14.12)
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11.4 UAE: Dubai's GDP Set To Grow At 7% Per Annum
The UAE's real gross domestic product will grow at an annual average of 7% over five years between 2008 and 2012, while inflation is seen to gradually drop and will average five% for the same period. But these medium-term prospects can only be "sustained into the future" if inflation is reduced and UAE monetary and exchange rate policies are addressed in the run-up to GCC monetary union by 2010. This is according to the Dubai Chamber of Commerce & Industry.
The UAE has been undergoing intense pressure to revalue the dirham, currently pegged at 3.67 to the tumbling US dollar, and move to a currency basket to help tame high inflation which, the government insisted, is due to skyrocketing rental fees. Dubai Chamber also said that UAE's external debts would grow at an annual average rate of 61% of GDP for 2008-12 while its budget balance would fall to 24%. The country's debts, which are mostly foreign liabilities of commercial banks and private institutions, have almost tripled the past two years.
Its external debt doesn't make the UAE vulnerable, however, since the country's external positions is that of a net creditor, or that its foreign assets are much higher than its liabilities. "But it would need to be monitored," the Dubai Chamber said. Quoting data from the International Monetary Fund, Dubai Chamber said the UAE economy looks rosy for the next five years, as it has been expanding steadily with non-oil GDP growth averaging over 10% since 2003.
"This rapid economic growth is attributed to an outward economic development strategy, favorable business climate and rising oil prices, among others," it said in the 3rd subject of its Economic Bulletin entitled UAE Economy: Medium-Term Outlook. It added that economic diversification would fuel growth dependent on non-oil sectors such as construction, financial services, manufacturing, transport, tourism and trade services. "Real domestic demand growth is expected to remain strong, reflecting the rapid population growth, sustained private consumption as well as robust investment in large infrastructure projects," it stressed.
It also said that a restraint in government fiscal spending and the easing of housing shortage would bring the medium-term fall in inflation, which the IMF estimated to have exceeded nine% in 2006. "The danger of such high inflation is the risk of undermining the competitiveness of the economy and therefore jeopardizing the long-term growth prospects of the economy," it said.
The Dubai Chamber said that investments and savings in the UAE would increase in the medium-term, noting a large number of infrastructure and oil projects being planned or undertaken by the government. It added that both public and private sectors are also carrying out massive projects in real estate, tourism, transportation and manufacturing. "An important issue for the government is to ensure that overall public investment is consistent with the absorptive capacity of the economy and this necessitates fiscal coordination between the federal and the emirates governments," it stressed. It said that investment by the private sector would account for 20% of GDP between 2008 and 2012 while the government's investment rate would be 3%. It added that private investment rate would exceed savings while government savings would be more than its investment. (DCCI24.12)
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11.5 SAUDI ARABIA: Reforms in Higher Education Raise Questions
Zvika Krieger of the Carnegie Endowment writes that in a lavish ceremony in November in the remote port town of Thuwal, a three-hour drive from Mecca, King Abdullah of Saudi Arabia laid the cornerstone for a new Western-style science and technology university. "Based on Islam's eternal values, which urge us to seek knowledge and develop ourselves and our societies, and relying on God Almighty, we declare the establishment of King Abdullah University of Science and Technology, and hope it will be a source of knowledge and serve as a bridge between people and cultures," he told the crowd of over 1,500 national and foreign dignitaries. Observers, however, are skeptical about the viability of such new institutions.
The King Abdullah University of Science and Technology (KAUST) is at the forefront of Saudi Arabia's new efforts to reform an antiquated higher education system. The country's Ministry of Higher Education—established in 1975—has been mainly controlled by the Wahhabi elite, who emphasize religious instruction over liberal arts or sciences. As recently as 2003, Saudi Arabia had only eight universities for a population of over 22 million people—75% of them under 30—and spent less than a quarter of 1% of its GDP on research, as opposed to 10% spent on the military.
Under the leadership of reform-minded King Abdullah, the country has begun a massive overhaul of its higher education system. The Ministry of Higher Education has opened more than 100 new universities and colleges in the past four years, funded by a $15-billion budget, which has tripled since 2004. KAUST's $10-billion endowment makes it the sixth richest university in the world before even opening its doors. King Saud University, the nation's largest, recently announced the hiring of twenty-four Nobel laureates. The government has also lifted its ban on private universities, and will be providing $10-million toward scholarships and building costs for the half-dozen private institutions already in the works.
As a personal project of the King—and under the aegis of the relatively secular Saudi oil company Aramco rather than the Ministry—KAUST will push social boundaries by becoming the Kingdom's first co-educational university. Some of the new private universities are hoping to follow in its path. Among KAUST's advisors are high-ranking administrators from Cornell University, Imperial College of London, and the National Academy of Sciences. Private universities have already teamed up with consultants from Harvard University, the Massachusetts Institute of Technology, and the University of Cambridge.
Education reform is also part of a set of broader efforts to diversify the Saudi economy and “Saudify” the Kingdom's companies, a strategy to address the staggering youth unemployment rate of 30%. In turn, most of the reforms are directed toward the sciences, high-tech, and other lucrative fields. "We've tailored most of out new programs—I'd say close to 80% of them—to the labor market needs," says Mohammed al-Ohali, deputy minister of higher education. Many university administrators also admit that focusing on the sciences—rather than politics, literature or history—will help them escape the scorn of the Saudi religious elite.
One of the primary challenges facing these new universities will be attracting Western faculty to a country known for its severe social restrictions, such as the ban on alcohol, most public entertainment, and women's driving as well as restrictions on women's dress. To overcome these challenges, KAUST is planning on spending $100-million a year on international research grants and academic prizes, and will shoulder the costs of jointly hiring professors at foreign universities who will split their time between the partners. The university also hopes to create a steady pipeline of graduate students by funding 250 undergraduates every year to complete their studies abroad in exchange for commitments to enroll in KAUST as graduate students.
But critics both inside and outside the Kingdom are skeptical that these new universities, even with Western faculty and Western-designed curricula, will be able to flourish in the restrictive Saudi environment. "It's not only about buildings and labs and big names and throwing money at everything," says Khalid al-Dakhil, a former professor at King Saud University who was forced to retire early because of his controversial research about Saudi history. "If you want to build a Western-style university in Saudi Arabia, you have to remember that these institutions prospered because of the freedom of those societies. You have to be comfortable asking questions."
Even the special status accorded to KAUST by the King's sponsorship may not be enough to protect it from adversarial forces in Saudi society. Hassan al-Husseini, a former administrator at the King Fahad University of Petroleum and Minerals, which was Saudi Aramco's first attempt at starting a Western-style university, cautions that "when something is established by royal edict, then that same thing can be reversed by another royal edict. It's not like you have legal protection for such things in Saudi Arabia." (CEIP12 2007)
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11.6 EGYPT: Growing Pains
The Oxford Business Group reports that Egypt's agriculture sector has witnessed impressive development in recent decades and businessmen are bullish about the future for value-added agricultural exports. However, less affluent domestic consumers have been hit by the global rise in wheat and other staples. At the same time the country's once-strong cotton industry is waning, with producers failing to match demand and traders being accused of underhanded practices.
Agriculture is extremely important for the Egyptian economy. It employs 34% of the workforce, which in turn supports 55% of the total population, and contributes 20% to the country's GDP. Production has generally kept pace with population growth. Egypt has the world's most productive cultivation of rice (3.8 tons per acre), cane sugar (50 tons/acre) and sorghum (1.9 tons/acre).
Agriculture has played an important role in boosting Egypt's exports, a key priority of the reformist government of Prime Minister Ahmed Nazif. Agricultural exports are expected to be worth $1.8bn this year up from $1.3bn in 2004-2005, and account for almost 13% of all non-petroleum exports.
According to recent reports in the international press, in the desert, a cubic meter of water will produce 12 times what it would in the Nile Delta, traditionally Egypt's agricultural heartland. This is due to problems with plant disease, fragmented, overcrowded farm holdings and inefficient transport in the region.
Egypt's success in developing its agricultural sector has been due in part to irrigation programs, price incentives for farmers and technology transfer throughout the country's agricultural sector. Advances in technology mean that crops can now be grown in the desert in silica "glass pebbles", which greatly reduces the need for water. Flowers and indoor and medicinal plants are growth areas Egypt is looking to exploit. Industrial farmers are eagerly developing areas such as the Cairo-Alexandria and Cairo-Suez corridors, the Mediterranean coast and the northern Sinai desert.
However, Egypt is still reliant on imports for many important foodstuffs; almost all its meat and much of its grains come from abroad. This year's global food price inflation has therefore carried through into the Egyptian market, disquieting domestic consumers.
Egypt's wheat import volumes are such that a December decision to purchase 60,000 tons from Russia instead of the US caused a significant drop in the American wheat futures market. As Egyptians are one of the world's leading consumers of bread, rising global wheat prices have had a detrimental effect on the purchasing power of less affluent Egyptian families.
Egypt also imports the lion's share of the fava beans used in making a staple dish, the bean paste fuul. In November, Egyptian agricultural expert Mohamed Al Borei warned that the price of a simple fuul sandwich has risen by 25% this year, due to the climbing cost of beans and the wheat used to make bread. While some have blamed multinational companies for the rising prices, global climatic conditions and the shift of cultivation in Egypt from staple crops such as beans to more profitable crops including sugar cane and citrus fruits have been more important factors.
Even as other areas of export-oriented agriculture grow, Egypt's cotton industry, long seen as the jewel in the crown of its agriculture, has also been in a decline that some fear may be terminal. In the last financial year, exports of extra-long and long-staple cotton reached only $540m out of a total of $1.8bn in agricultural exports. This summer, the Alexandria Cotton Exchange, the world's oldest and one of only two still in operation, was closed. The government accused traders of creating inefficiencies in the market, asking too high a price of consumers and offering too little to farmers, as well as mixing good and poor quality cotton.
In addition, producers have been slow to keep up with demand, with many still growing long-staple cotton instead of medium- and short-staple, which are increasingly used by the textile industry and the majority of textile firms within Egypt. Consequently, Egypt has been importing Syrian, Indian and Pakistani short-staple cotton, which is less expensive than most of the cotton grown in Egypt.
However, it is natural in a free economy that some sectors decline as demand decreases, as has been the case with Egyptian cotton. Equally, jobs and markets can be secured in growing sectors, as is happening with the development of large-scale farms in the northern part of the country. Egypt's export-oriented economic policy, coupled with a free market, should encourage the development of replacements to cotton production and the redirection of what remains. Unfortunately, poorer consumers are likely to continue to feel the pinch of global food prices. The high prices may encourage some Egyptian farmers to switch back to staples, easing pressure to an extent. (OBG13.12)
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11.7 MAURITANIA: Fragility of a New Democracy
Salma Waheedi, Assistant Editor of the Arab Reform Bulletin, writes that Mauritania, an often-ignored country in the western periphery of the Arab world, surprised observers two years ago by undertaking one of the most forthcoming advances toward democracy in the region. Democratic reforms came as a result of a 2005 bloodless military coup led by Colonel Ely Ould Muhammad Vall. Vall demonstrated enlightened leadership by pledging to restore democracy and ensure a constitutional transfer of power through free and fair elections. A swift political transition process culminated in credible legislative and presidential elections. President Sidi Muhammad Ould el-Sheikh Abdullahi, an independent, formerly exiled economist who served in previous cabinets, was elected in March 2007 in the country's first peaceful transfer of power. Abdullahi pledged to fight corruption, guarantee freedom of speech, alleviate poverty, eliminate slavery, and promote justice and national reconciliation.
The new government has taken some positive political steps, including passing a law that criminalizes slavery, requiring senior officials to declare their assets, and requiring 20% female representation in electoral lists. Freedom of speech and the press have also registered significant improvements. Mauritania ranked fiftieth out of 169 countries in Reporters without Borders' Press Freedom Index 2007, the highest among Arab countries.
Consolidation and progress toward democracy in Mauritania, however, depend on the government's ability to address its people's most pressing concerns, namely poverty and unemployment. Progress on those fronts has been slow and signs of strain are already apparent. In what the opposition called a “revolution of the hungry,” thousands took to the streets in the Eastern impoverished regions in early November to protest sharp increases in the prices of basic food staples, electricity, and fuel. At least two people were killed after police forces used violence to disperse the protestors. In October, a coalition of five opposition parties led by Ahmed Ould Daddah, president of the Coalition of Democratic Forces, staged a mass protest in the capital Nouakchott and called for the government's resignation, citing “ineffectiveness” and “lack of serious efforts to improve people's lives.” Recent unpopular initiatives—such as the privatization of the National Industrial and Mining Company and plans by political and military elites close to the president to establish a political party—added to the tensions.
Despite a spike in economic growth with the start of oil production, Mauritania continues to struggle with deeply-entrenched socio-economic challenges. Over 46% of the population lives below the poverty line. High unemployment, high food prices, scarcity of water, insufficient road networks and public transportation, and poor healthcare and education services are among the main problems.
The government, which inherited a troubled, corruption-ridden economy, has placed high hopes on the recent discovery of oil. Mauritania began oil production in February 2006, but output is so far lower than expected. The Chinguetti field is currently producing around 20,000 barrels per day, versus a projected 75,000 barrels. Lower production levels also afflict the fishing industry, and agricultural production is vulnerable because of unstable weather conditions. Manufacturing industries also suffer due to unreliable power supplies. While oil-driven economic growth in 2006 was 11.7%, non-oil GDP growth was only 4.1%, marking a decline from the 2005 rate of 5.4%. According to the World Bank, Mauritania's income per capita in 2006 was only $740, while the inflation rate was 29.8%.
Yet a further challenge to democratic consolidation in Mauritania are the socio-economic divisions arising from the country's complex ethnic composition, which includes Arab White Moores (Bidan), former Black Moore slaves (Harratin), and Afro-Mauritanians. Despite the president's pledge to promote national unity and equality, the country's African population continues to suffer from a historically disadvantaged socio-economic position exacerbated by the continuation of slavery practices, illiteracy, and weak central government institutions. Furthermore, an estimated 25,000 Afro-Mauritanian refugees displaced after a wave of ethnic violence in 1989 remain in Senegal and Mali. The return of the refugees has faltered in the past two years mainly due to lack of sufficient funds. The government's November 22 announcement that it is allocating nearly $8 million to ensure the refugees' safe return and reintegration may signal that some sort of breakthrough has been reached
In the midst of this sobering overall situation, one ray of hope lies in the fact that government efforts to obtain external economic development aid are showing signs of success. In March-July 2007, the World Bank endorsed a new Country Assistance Strategy for Mauritania and approved a total of $1.14 billion in credits and grants to support various economic reform and infrastructure development projects. In FY 2008, U.S. economic aid to Mauritania will be $5.23 million. In a Consultative Group Meeting in Paris December 4-6, the Mauritanian government succeeded in securing $2.1 billion dollars in additional aid for its 2008-2010 investment program from Saudi Arabia, Kuwait, and various European countries and development organizations. (CEIP12 2007)
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11.8 TURKEY: Fitch Upgrades Local Currency Rating to 'BB'
On 12 December, Fitch Ratings (http://www.fitchratings.com) upgraded the Republic of Turkey's Long-term local currency Issuer Default ratings (IDR) to 'BB' with a Stable Outlook from 'BB-' (BB minus). The Outlook is Stable. At the same time, the agency has affirmed Turkey's Long-term foreign currency IDR at 'BB-' (BB minus) with Stable Outlook, Short-term foreign currency IDR at 'B' and Country Ceiling at 'BB'.
"The local currency upgrade reflects secular improvements in the public finances, income levels and the structure of the economy, as well as some easing in political risks since the summer," says Edward Parker, Head of Emerging Europe sovereigns at Fitch. "However, the country's sizeable external financing requirement currently constrains its foreign currency rating against the backdrop of a more challenging global financial environment."
Fitch forecasts Turkey's real GDP growth at 4.3% in 2007, and it has averaged 6.7% since 2002, while GDP per capita is expected to reach $6,615 this year, double the 'BB' range median. Following its re-election in July, the Justice and Development Party (AKP) government has made a slow start to its structural reform agenda. Nonetheless, the agency expects some progress in areas such as social security, the energy sector and privatization.
Turkey's strengthening public sector balance sheet underpins its LCIDR upgrade. A record of fiscal discipline helped to reduce the public sector budget deficit to 0.7% of GDP in 2006 from 17.6% in 2001. The government expects slippage in the public sector primary surplus to 4.3% of GDP in 2007, below the IMF-definition of 6.5%, but is targeting a tightening to 5.5% in 2008. Debt dynamics are favorable, driven by primary surpluses, privatizations, GDP growth and real exchange rate appreciation. Fitch expects general government debt to fall to 54% of GDP at end-2007 (48% net of cash deposits), from 61% at end-2006.
Nevertheless, Turkey's general government debt/GDP ratio remains above the 'BB' range median of 41% and relatively sensitive to market risk. Fitch views political risk as a material factor weighing on Turkey's ratings. Tensions between the moderately Islamic AKP and the secular establishment have eased since the summer, following conclusive parliamentary and presidential elections. But planned changes to the constitution could stir up tensions and there is a risk that Turkey could become embroiled in a military conflict in northern Iraq.
Turkey's external finances are a key rating weakness. Fitch forecasts gross external debt at 55% of GDP at end-2007 (including non-resident holdings of domestic debt), above the 'BB' range median of 31%. For 2008, it forecasts a widening in the current account deficit to 7.7% of GDP ($46bn), while medium-term amortization is estimated at $33bn. Foreign direct investment has increased to around $20bn a year and foreign reserves have risen to $75bn, but Turkey's substantial external financing needs mark it out as exposed to global sentiment. This feeds back to wider risks to macroeconomic stability: even though GDP growth was weak in Q307, the Central Bank's policy stance of cutting high local interest rates when inflation is double its 4% target runs the risk of a setback to disinflation. (Fitch12.12)
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- Israeli Shekel conversions done at a rate of NIS 4.00 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.20 = $1.00
- Cypriot Pound conversions done at a rate of C£ 1.00 = $1.60
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.70 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 60 = $1.00
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