• Nano Israel 2010 – The International Technology Conference and Exhibition
• Israeli Tourists Renounce Turkey & Choose Greece
• Israel Enjoys Clean Air On Yom Kippur
• Bulgaria Plans To Issue Bonds Worth €1 Billion in 2011
• NasVax Initiates Phase 2a Clinical Trial for Oral Anti-CD3 Immunotherapy
• LIBYA: Energy Profile - Largest African Proven Oil Reserves
• MAURETANIA: Statement at the Conclusion of an IMF Staff Visit

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Knesset Finance Committee Approves F-35 Deal
1.2 Bank of Israel Lowers 2011 Growth Forecast

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 AOL Acquires 5min Media, Web's Largest Video Content Syndication Platform
2.2 Nano Israel 2010 – The International Technology Conference and Exhibition
2.3 VeriTainer Receives Important Crane-Mounted Scanning Patent for Israel
2.4 Noble Energy Sanctions Tamar Project Offshore Israel
2.5 Growth of Israeli Companies' Overseas Operations Slows
2.6 Magal Awarded $2.3 Million for Major Perimeter Security System
2.7 Face.com Gets $4.3 Million from Russian Yandex and Rhodium

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Kuwait Consumer Electronics Report Q4 2010
3.2 General Cable Announces Joint Venture in Oman
3.3 Saudi Arabia's Consumer Electronics Market
3.4 Kentucky's General Cable Acquires BICC Egypt
3.5 Chevron Acquires Deepwater Exploration Lease in the Turkish Black Sea
3.6 Exar Adds 2BePresent as Representative for Eastern Europe
3.7 RPM's Building Solutions Group Acquires Turkish Distributor
3.8 Israeli Tourists Renounce Turkey & Choose Greece
3.9 Bulgarian Business Delegations to Head For Chicago & Cleveland

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Israel Enjoys Clean Air On Yom Kippur
4.2 Golan Heights Wind Farm Project Underway
4.3 Haifa's Oil Refineries Gives NIS 90 Million for Kishon Cleanup
4.4 Ness Wins $3.7 Million Contract With Israel's Meitav Regional Water and Sewage Corporation

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan's Real GDP Grew by 2.9% Second Quarter
5.2 Persian Gulf States in $123 Billion Arms Buying Spree
5.3 Kuwait Registers $22 Billion Budget Surplus
5.4 Kuwait & Russia Sign Nuclear Cooperation Deal
5.5 Bahrain August Inflation Rises On Food Costs
5.6 UAE Economic Assessment for 2009
5.7 UAE GDP to Exceed $272 Billion in 2010
5.8 UAE Oil Pipeline Bypassing Hormuz Strait Nearly Finished
5.9 Dubai Annual Inflation Registers 0.8% in August 2010
5.10 Dubai Sees Stronger Recovery in Foreign Trade in Second Quarter of 2010
5.11 Nakheel to Re-Start Work on Al-Furjan Project in Dubai
5.12 Oman Inflation Eases As Trade Surplus Soars
5.13 Saudi Arabia Ranked 13th Easiest Place to do Business in the World
5.14 Egypt May Extend Rice Export Ban Until October 2011
5.15 Egypt Slides 11 Places In Competitiveness Index
5.16 European Commission Increases Allocation of €152 Million Grant to Egypt

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Recovery in Cyprus Seen Picking Up
6.2 Greece Deficit Narrows
6.3 Qatar Considers $5 Billion in Investment Deals in Greece
6.4 Investors Rush To Buy Greek Bond Issue
6.5 Bulgaria Plans To Issue Bonds Worth €1 Billion in 2011
6.6 Bulgaria Food and Drink Report Q4/10
6.7 Bulgarian State To Invest €2.5 Billion In Construction 2011

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Population is Aging
7.2 ZAKA Expanding to Druze & Arab Towns
7.3 Eight US Universities To Launch Study Programs In Israel
7.4 Ozzy Osbourne Arrives in Israel

*REGIONAL:

7.5 Half of All University Branch Campuses Located In the Persian Gulf
7.6 New Turkish School Year Started in 20 September

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Angioslide Commercializes Device Combining Balloon Angioplasty & Embolic Capture
8.2 Oral Laquinimod Effective & Safe in Patients with Multiple Sclerosis
8.3 NasVax Initiates Phase 2a Clinical Trial for Oral Anti-CD3 Immunotherapy
8.4 OrSense Introduces Non-Invasive Hemoglobin System for Anemia Monitoring in Maternal Health
8.5 Results of Successful Trial for Alzheimer Patients Applying Novel, Non-Invasive Technology
8.6 Objet Geometries Gains ISO 13485:2003 for Medical Devices Certification

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Waterfall Security Solutions Passes INL Cyber Security Assessment
9.2 Peer39 Semantic Targeting Data Maximizes Performance on the AppNexus Platform
9.3 Nova Celebrates Installation of the 200th Metrology System in South Korea
9.4 Billion Chooses BroadLight's 3rd Generation GPON Processor Family
9.5 Orckit-Corrigent Successfully Demonstrates Full Product Line Interoperability
9.6 HSE Technik Selects ClickSoftware for Optimized Mobile Workforce Management
9.7 RiT Technologies' 1st Intelligent LC-MPO Cassette Panel for Datacenters
9.8 CTERA Networks Announces First Hybrid-Cloud Solution for Bare Metal and Server Backup
9.9 Users Stay Longer on Personal News Engine Genieo Than on Facebook
9.10 Digital Power Buys Compact PCI 600 Watts AC/DC Power Supply Series IP From Telkoor
9.11 Wavion Releases the First Beamforming-Based Solution for the 700 MHz Licensed Band
9.12 SortFix Unleashes Full Capabilities of Unique Sort-Search Technology Platform

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's August Inflation Higher Than Expected
10.2 Israel's GDP Growth Revised Downward
10.3 Israel's State Of The Economy Index Shows Growth
10.4 Israel's Exports Decline During August
10.5 Israel's Unemployment Drop Continues in July
10.6 Israel's Household Expenses Rise By 2% in 2009
10.7 Israeli's Holiday Spending Up By 13%
10.8 Top 10th Percentile Buys More for Less People
10.9 Israel Slips to 81 in Economic Freedom Index

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11: IN DEPTH

11.1 ISRAEL: Consumer Electronics Report for 2010's Fourth Quarter
11.2 LEBANON: Tourism's Place in the Sun
11.3 LEBANON: The Lebanese Army: Victim of the Politicians
11.4 KUWAIT: Defense and Security Report Q4 2010
11.5 KUWAIT: Testing Times for Education
11.6 KUWAIT: Infrastructure Report for Q4 - 2010
11.7 BAHRAIN: Bahrain's Electoral Campaign Starts to Ignite
11.8 QATAR: Pharmaceuticals and Healthcare Report Q4 2010
11.9 QATAR: Consumer Electronics Report for Q4 2010
11.10 UNITED ARAB EMIRATES: Consumer Electronics Report Q4 - 2010
11.11 OMAN: Consumer Electronics Report Q4 2010
11.12 LIBYA: Energy Profile - Largest African Proven Oil Reserves
11.13 LIBYA: Defense & Security Report Says Libya Now Looking Outside Russia for Equipment
11.14 ALGERIA: Focusing on the Local
11.15 MOROCCO: Agribusiness Report for Fourth Quarter of 2010
11.16 MAURETANIA: Statement at the Conclusion of an IMF Staff Visit
11.17 TURKEY: The Fastest Growth in CEEMEA - Revising Up Our GDP Forecast
11.18 TURKEY: Erdogan Pulls It Off
11.19 BULGARIA: Defense and Security Report for Fourth Quarter 2010

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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Knesset Finance Committee Approves F-35 Deal

On 21 September, the Knesset Finance Committee approved the purchase of 20 F-35 Lightning II stealth combat aircraft from the US - the largest arms deal in Israel's history. The purchase of the aircraft, the most advanced in the world, will cost $2.75 billion, or $96 million per aircraft. The deal also includes spare parts, maintenance costs and simulators. The F-35 is able to attack distant targets without being detected by radar. Delivery of the first aircraft is scheduled to begin in 2015. The Knesset Finance Committee gave the Ministry of Defense permission to make a commitment to Lockheed Martin for the purchase of the aircraft. The Knesset Finance Committee convened despite the summer recess, at the request of the Ministry of Defense and in order to push the deal through more rapidly. The IDF chief of staff's economic advisor said that $150 million from the defense budget will be allocated for the purchase of the F-35s spread over eight years. Israel may request to buy additional F-35s in the future. (Globes20.09)

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1.2 Bank of Israel Lowers 2011 Growth Forecast

In a macroeconomic forecast update for 2010 and 2011, on 28 September the Bank of Israel lowered its GDP growth forecast for 2011 to 3.8% from 4%. Giving its reasons for the lower forecast, the Bank of Israel said the rapid economic growth in 2010 and the low unemployment rate in the second quarter (6.2%) point to the continued narrowing of the "output gap" that had opened during the global crisis. The Bank of Israel also expressed concerns about lower exports. Another reason for the lowered adjustment of the 2010 growth forecast is the expected slowing of export growth to 5.8%, slightly under the foreseen growth rate of global trade of 7%. The downward adjustment of the growth outlook in the US, to which Israeli exports are particularly exposed, will contribute to this. The rate of increase in private consumption is also expected to decelerate, as the level of private consumption is very high today relative to GDP, also due to the adjustment of the inventory of durable goods. However, the Bank of Israel raised its GDP growth forecast for 2010 from 3.7% to 4%. The Bank of Israel also expects the average unemployment rate to fall to 6.3%, and expects the current account surplus to amount to $6.8 billion. (Globes28.09)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 AOL Acquires 5min Media, Web's Largest Video Content Syndication Platform

AOL Inc. announced it has acquired 5min Media, the Web's largest video syndication platform. The acquisition allows AOL to significantly expand its consumer offering of contextually relevant, high-quality video across its sites, increasing the AOL Network's appeal to advertisers and is expected to further enhance the distribution and monetization of AOL-produced original video content throughout the Web. Deal terms were not disclosed. AOL has already begun to integrate 5min Media's video content on its sites through a commercial agreement executed prior to the acquisition. Tel Aviv's 5min Media (http://solutions.5min.com) is the Web's largest video syndication network with more than 20 million unique visitors across its 800 partner sites. The company provides publishers with a comprehensive video platform that includes access to premium content from its library of more than 200,000 vertically segmented videos from thousands of the world's largest media companies and professional independent video producers. (AOL 28.09)

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2.2 Nano Israel 2010 – The International Technology Conference and Exhibition

The "Nano Israel 2010" Conference and the Exhibition accompanying will be held on 8 – 9 November at the Dan Panorama Hotel, Tel Aviv. The event will focus on Innovations and Business Opportunities in the energy, water, environment, nano-material, nano-electronics, nano-photonics, nano-bio and nano-medicine fields. This conference is targeted at industry and business persons from around the world, and will serve as the meeting point for companies and persons involved in venture capital, and in private funds, institutional and organizational investors, regulation, technology and development persons, governmental decision makers, as well as academy representatives, scientists and investors.

The three chair persons of the conference are Ms. Nava Swersky Sofer, who is one of the leaders of the Israeli Life-science industry and is the former CEO of Yissum; Mr. Dan Vilenski from INNI (The Israel National Nano-technology Initiative); and Prof. Arie Zaban from the Bar Ilan University. The number of academy researchers in the Nano field in Israel has been doubled since 2002 (ca 350 persons compared to 2009), and dozens of Israeli Nano technology companies continue to be active in Israel despite the recent economic downturn. Potential investors and business partners definitely consider Israel as a promising target and hence are all going to be in Tel Aviv next November. The conference is held in cooperation with INNI – The Israel National Nano–technology Initiative – and with the Nano-technology Centers of the various Israeli universities, and is organized by the Kenes International Company (http://www.kenes.com/nano). (Kenes21.09)

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2.3 VeriTainer Receives Important Crane-Mounted Scanning Patent for Israel

Fremont, California's VeriTainer Corporation, the world leader in crane-mounted maritime security solutions, has been issued a critical crane-mounted scanning (CMS) patent for Israel. This patent comes on the heels of four other international patents over the past two years, moving VeriTainer another important step forward in securing vulnerable port cities worldwide. The threat of nuclear smuggling in a seaborne shipping container to the United States and Israel is very real. VeriTainer has developed its CMS solution which is seamless to commerce, scalable globally, robust and inexpensive to both purchase and install. (VeriTainer 14.09)

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2.4 Noble Energy Sanctions Tamar Project Offshore Israel

On 23 September, Noble Energy announced that it has sanctioned the Tamar natural gas project offshore Israel. Discovered in 2009, Tamar is operated by Noble Energy and has total recoverable resources estimated at 8.4 trillion cubic feet of natural gas. Initial development of Tamar will include five subsea wells capable of flowing 200 to 250 million cubic feet per day (Mmcf/d) of natural gas each. Production will be gathered at the field and delivered via two 16-inch flowlines to a new platform, which will be constructed adjacent to the existing Mari-B structure. The Tamar platform will tie into the existing 30-inch pipeline that delivers natural gas to the Ashdod onshore receiving terminal, with an initial processing capacity up to 1.0 billion cubic feet of natural gas per day. The project design and connectivity to Mari-B will also provide for gas injection and withdrawal in the Mari-B reservoir. In addition, the development will allow for significant expansion as the market for natural gas grows. Noble Energy operates Tamar, offshore Israel in the Matan license, with a 36% working interest. Other interest owners are Isramco Negev 2 with 28.75%, Delek Drilling with 15.625%, Avner Oil Exploration with 15.625% and Dor Gas Exploration with the remaining 4%. Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. (Noble 23.09)

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2.5 Growth of Israeli Companies' Overseas Operations Slows

A study by the Manufacturers Association, in cooperation with academics, indicates that the global economic crisis slowed the growth of Israeli companies operating abroad. According to the research findings, in 2009 there was a decline of 11% in sales of Israeli companies abroad, and a decline of 6% in the number of people they employed. The study found that Israel Corp., Teva, Elco Holdings and Ormat, are the four largest global companies in Israel, with 75% of the total international assets of the 21 leading Israeli global companies. The total assets of these companies last year were worth more than $11.5 billion. The 21 companies surveyed in the study held assets last year valued at more than $15 million. In 2009, they employed approximately 72 thousand workers abroad, and their aggregate sales were $30 billion. The study also found that most Israeli companies operating abroad last year chose to focus their investments in Europe. Almost half of their subsidiaries operate across Europe, 20% in North America and 17% in Asia and Ukraine. (Globes 20.09)

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2.6 Magal Awarded $2.3 Million for Major Perimeter Security System

Magal Security Systems has received a $2.3 million order for the support and maintenance of a major homeland security system in Israel. The two year contract is for services related to an existing large perimeter security system. Yehud's Magal S3 (http://www.magal-ssl.com) is a leading international provider of security, safety and site management solutions and products. Over the past 40 years, Magal S3 has delivered tailor-made solutions to hundreds of satisfied customers in over 80 countries. Magal S3 offers a broad portfolio of unique products used to protect sensitive installations in some of the world's most demanding locations and harshest climates. (Magal S3 27.09)

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2.7 Face.com Gets $4.3 Million from Russian Yandex and Rhodium

In its first investment in Israel, Russian search engine Yandex invested $3.4 million in Israel's Face.com, a startup developing face recognition technology. The total amount is $4.3m and the participants included Rhodium, Yandex and current private investors. This is Face.com's second round, after previously raising about $1 million from Rhodium and local angels. The Face recognition space has recently gotten interesting, following the acquisition of Swedish startup Polar Rose by Apple, estimated at $22 - $29 million. Since opening its API in May this year, Face has seen 5,000 developers use its technology on the cloud, with no need for installations. Face has said to be working on new applications both on the commercial side (working with companies such as Ortbit chewing gum on marketing campaigns) as well as on mobile applications. Face.com (http://www.face.com) was founded in 2007. The first deployment of Face.com's technology is a photo finder application for Facebook, today's largest photo sharing site, which scans public photos in the social network and suggests automated tags for untagged faces. Face.com has offices in Tel Aviv and New York. (Face.com27.09)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Kuwait Consumer Electronics Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Kuwait Consumer Electronics Report Q4 2010" says Kuwait's consumer electronics devices market is projected at $705m in 2010. This is expected to increase to $893mn by 2014, driven by growing popularity of LCD TV sets, 3G handsets, notebook computers and other premium products, as well as ongoing expansion of the electronics retail sector. In 2010, growth is expected to pick up in a number of product categories following a deceleration in 2009 due to the economic headwinds. In April and May 2010 retailers reported a surge in demand for flat screen TV sets ahead of the FIFA World Cup, while with the advent of the summer season, cameras and camcorders were also selling well. Overall we see a recovery in consumer spending, but not a return to the stellar growth rates of the last few years (real private consumption growth averaged 9.0% between 2002 and 2007). BMI forecasts that per capita consumer electronics spend will reach $232 by 2014, from $194 in 2010. Product innovation will boost spending in the AV product category, with a focus on features like improved display quality and wider screens, while network upgrades will help drive replacement handset sales. (R&M 23.09)

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3.2 General Cable Announces Joint Venture in Oman

Highland Heights, Kentucky's General Cable Corporation has formed a joint venture with International Cable Industries LLC (ICI), a limited liability company organized in Oman. The joint venture company in which General Cable will have a majority interest will distribute a wide variety of wire and cable products for the energy, electrical infrastructure and construction markets in Oman and other Gulf Cooperation Council (GCC) countries. General Cable will provide access to a wide range of its products and offer technical support to ICI. The Company believes the demand for wire and cable products in Oman and the GCC region will continue to grow due to increasing investment in infrastructure and power generation projects as well as a regionally favorable GDP outlook. Countries throughout the region continue to invest in large-scale transport, construction, oil and gas, power generation, transmission and distribution infrastructure. General Cable, a Fortune 500 Company, is a global leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products. (General Cable 23.09)

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3.3 Saudi Arabia's Consumer Electronics Market

Research and Markets (http://www.researchandmarkets.com) "Saudi Arabia Consumer Electronics Report Q4/10" said Saudi Arabia's consumer electronics devices market is projected at around $3.8bn in 2010. This is expected to increase to $4.8bn by 2014, driven by growing popularity of LCD TV sets, notebook computers and other key products, and by ongoing expansion of the electronics retail sector. Saudi Arabia's addressable market for digital devices is forecast to grow at a compound annual growth rate (CAGR) of 6.0%, driven by a steadily growing economy.. Indeed Saudi Arabia is forecast to be one of the strongest economies in the MENA region going forward, and the country will continue to be a lucrative market for consumer electronics vendors. Youthful population demographics, a regional economic boom and a buoyant real estate sector will all drive retail growth, with per capita consumer electronics spend reaching around $168 by 2014. Computer hardware accounted for approximately 46% of Saudi consumer electronics spending in 2009. BMI forecasts Saudi domestic market computer hardware sales (including notebooks and accessories) of $1.8bn in 2010, up from $1.6bn in 2009. Computer hardware CAGR for the 2010- 2014 period is forecast at about 7%, with stronger demand for notebooks the main factor driving retail segment growth. (R&M 22.09)

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3.4 Kentucky's General Cable Acquires BICC Egypt

Highland Heights, Kentucky's General Cable Corporation has acquired BICC Egypt. BICC Egypt manufactures a wide variety of wire and cable products for the electrical markets including low voltage insulated power and control cables, building wire, instrumentation cable, halogen free power and control cables and overhead power cables. In the last twelve months, the business reported revenues of approximately $30 million. The acquisition of BICC Egypt furthers the Company's geographic expansion by establishing a production and commercial base in one of the largest and fastest growing markets in the Mediterranean and North African region. The Company believes the demand for wire and cable products in Egypt will continue to grow faster than many other nations due to increasing investment in infrastructure and power generation projects, a growing population and a favorable GDP outlook. Egypt continues to invest heavily in large-scale transport, construction, power generation and transmission and distribution infrastructure. Rapid population growth and high infrastructure investment are expected to increase the demand for power at a rate more than twice the world average. General Cable, a Fortune 500 Company, is a global leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the energy, industrial, and communications markets. (General Cable 23.09)

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3.5 Chevron Acquires Deepwater Exploration Lease in the Turkish Black Sea

Chevron Corporation announced that its Turkish subsidiary has signed a Joint Operation Agreement with Turkey's state oil company for an exploration license in the Black Sea. Chevron will acquire a 50% interest in a western portion of License 3921, an 8,700 square mile (22,505 square km) block located 220 miles (350 km) northwest of the capital city of Ankara. Turkiye Petrolleri Anonim Ortakligi (TPAO) holds the remaining 50% interest in the license and will be the operator of the initial exploratory well currently being drilled. If the initial well is successful, 3D seismic will be acquired and an additional exploratory well will be drilled by TPAO during 2012. Chevron would become operator during any future development of the project. Chevron's interests in Turkey include marine transportation and pipeline operations. TPAO, Turkey's sole national oil company founded in 1954, has pioneered efforts in all branches of petroleum industry in Turkey. In addition to intensifying activity and success in onshore Turkey, TPAO has increasingly become active in offshore and international arena. (Chevron 21.09)

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3.6 Exar Adds 2BePresent as Representative for Eastern Europe

Back to Table of ContentsBack to Table of ContentsFremont, California's Exar Corporation completed a distribution agreement with 2BePresent a leading representative of electronic components in Eastern Europe. Starting in August 2010, 2BePresent began to promote Exar's products through its locally based sales network in Bulgaria, Hungary, Poland and Romania. 2BePresent is NON-stocking representative company representing Electronic Components Manufacturers in the Middle East and Eastern Europe. Founded in 2006 and being the only pure rep company with actual offices in Eastern Europe, 2BePresent created an infrastructure and capability to successfully represent manufacturer's interests in the region and act as manufacturer office in the country at almost no cost. 2BePresent is working closely with distribution partners to increase sales and demand creation activity. Exar Corporation delivers highly differentiated silicon, software and subsystem solutions for data communication, storage, consumer and industrial applications. (Exar 20.09)

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3.7 RPM's Building Solutions Group Acquires Turkish Distributor

Medina, Ohio's RPM International announced that its Building Solutions Group has acquired Park Dis Ticaret A.S., a leading supplier of sealants, tapes and membranes to the construction markets in Turkey. Based in Istanbul, Turkey, Park has annual sales of approximately $10 million. Founded in 1994 by Adnan Akkin, Park distributes high-performance sealants, weather seals, structural silicones, one-side and double-side adhesive tapes and adhesives to customers in Turkey, Russia and the Middle East. This acquisition will provide the RPM Building Solutions Group (BSG), a strong base from which to grow their international presence. (RPM 28.09)

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3.8 Israeli Tourists Renounce Turkey & Choose Greece

While the political crisis between Israel and Turkey has resulted in a dramatic drop in the number of Israeli tourists visiting Turkey, Greece is enjoying a boom in Israeli tourists. According to data from the Turkish Culture and Tourism Ministry, the number of Israeli tourists visiting Turkey plunged by 90% in June this year, while the Greek Culture Ministry said the number of Israeli tourists visiting Greece in 2010 has risen to 250,000, from 100,000 in 2009. Only 2,605 Israeli citizens visited Turkey in June 2010, compared to 27,289 in June last year, the Turkish Tourism Ministry said. The dramatic decline came after the terrorist flotilla bound for the Hamas in Gaza was stopped by the Israel Defense Force. Israeli tourists made their choices without any pressure from the Israeli government, as Israel is a free democracy. Concurrently, under the new era of Greek-Israel relations, the number of Israelis who visit Greece will continue to increase. (Hurriyet 20.09)

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3.9 Bulgarian Business Delegations to Head For Chicago & Cleveland

A business delegation of the Bulgarian Chamber for Commerce and Industry (BCCI) will visit Chicago and Cleveland in October 2010. This was announced at a meeting between US Ambassador Warlick and the chair of the BCCI, Simeonov. During the meeting, Warlick and Simeonov focused on the needed measures to boost the work of the Bulgarian-American Trade and Economic Council (BATEC), which is a structure of the BCCI. The BCCI head pointed out the need to promote Bulgarian investment opportunities with American companies through advertising and various visits, fairs, and similar activities, while Warlick said the Embassy would further its cooperation with the Chamber. Simeonov, together with the Chair of the BCCI Court of Arbitration Silvi Chernev, presented to the US Ambassador and his staff the new electronic system of the court that provides long-distance access to authorized persons. (SM 24.09)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Israel Enjoys Clean Air On Yom Kippur

As is true every year, there was a drastic decrease in air pollution during Yom Kippur measured throughout the country. The Environmental Protection Ministry reported that particularly good air quality was registered in the ministry's monitoring stations, particular those which typically are plagued by high concentrations of vehicles. The ministry noted that nitrous oxide concentrations, indicative of pollution caused by automobiles, plummeted as the holiday was ushered in. This was particularly notable in transportation hubs in the Tel Aviv metropolitan area and Jerusalem. For example, nitrous oxides on Yom Kippur in the Tel Aviv metropolitan area ranged between one to eight parts per billion versus 84 parts per billion as was measured the morning before the holiday. A significant improvement in air quality was registered at the monitoring station in the center of Jerusalem, where nitrous oxide measurements soared to 114 parts per billion at 14:00 before the holiday started and plummeted to one to eight parts per billion during the holiday. Similarly low concentrations of pollution were measured in other cities as well. In Haifa, pre-holiday measurements hovered at 78 parts per billion and dropped to one to seven parts per billion during the holiday. The Environmental Protection Ministry noted that the phenomenon of drastic dips in air pollution is unique to Israel because of Yom Kippur and is felt mainly in the Tel Aviv metropolitan area and Jerusalem, areas plagued by vehicular pollution. (Ynet 19.09)

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4.2 Golan Heights Wind Farm Project Underway

Prime Minister Netanyahu signed a decree for the construction of a huge wind farm in the northern Golan Heights. A public company, Multimatrix, will establish the wind farm as a national project. The farm will be established on the area between Massadeh and Majdal Shams. It will comprise 70 giant turbines, at a total investment of approximately $400 million. US energy giant AES Corp. is a partner in the venture. AES raised the necessary funds to promote the project, and will receive half the profits. The turbines to be set up built on the northern Golan Heights will be capable of an output of 155 megawatts. Multimatrix said annual sales of power to Israel Electric Corporation (IEC) will be approximately $70 million. Construction of the farm will begin within six months. Meanwhile, Multimatrix and AES will try to obtain approval from the army to set up more huge turbines that will be capable of expanding the output the farm to about 200 megawatts. Construction of the farm will be relatively short: every three days one turbine will be installed, so that it should begin operating no later than the second half of 2012. The company's controlling shareholders are conducting intensive negotiations with General Electric and with a South Korean company on the procurement of the turbines. (Globes 21.09)

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4.3 Haifa's Oil Refineries Gives NIS 90 Million for Kishon Cleanup

Israel's Haifa Oil Refineries (ORL) have, for the first time, assumed responsibility for their part in the sorry state of the Kishon River and will allocate millions of dollars to help clean it up. The Kishon River, which runs near Haifa and flows into the Mediterranean Sea, is considered the most polluted river in Israel. It has been the subject of controversy regarding the struggle to improve the water quality. According to the Yedioth Ahronoth daily, the ORL Board of Directors approved NIS 90 million (~$24 million) for the cleanup and rehabilitation of the river. The Kishon cleanup project is expected to cost upwards of $53 million. ORL is the first of many industrial facilities, which the Environmental Protection Ministry claims is responsible for the pollution, to allocate funds to that effect. The Kishon River has been used as a waste dump site for facilities in its surrounding area for nearly 80 years. The ministry has recently decided to divert the river. The land left behind, once dehydrated, will be dug and cleaned using a special biological process. According to the Environmental Protection Ministry, ORL is responsible for 87% of the river's oil and fuel contamination, while Haifa Chemicals is responsible for 79% of the water's heavy metals contamination. Haifa Chemicals has yet to agree to any funding and refused to comment on the matter. (Ynet 14.09)

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4.4 Ness Wins $3.7 Million Contract With Israel's Meitav Regional Water and Sewage Corporation

Ness Technologies has been awarded a contract by Israel's Meitav Regional Water and Sewage Corporation to provide development, improvement and maintenance services for the company's SAP-based enterprise resource planning (ERP) and billing system. The 5-year engagement is valued ~$3.7 million. The contract also includes an optional 3-year extension, valued at an additional ~$2.2 million. The system, called Meitavit, is an end-to-end water and sewage services management system. Meitavit includes various SAP-based components including financial, logistics, procurement, inventory, control, billing and collections, customer relationship management (CRM), project management and human resources. In addition, Meitavit includes a content management component, based on EMC Documentum, which is distributed in Israel by NessPRO, Ness' software products group. Meitavit completely integrates the various processes, presenting a unified situation picture to decision makers. The billing and collection component uploads water meter readings transmitted remotely from the meters across the city. Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; and system integration, application development, consulting and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. With about 7,800 employees, Ness has operations in North America, Europe, Israel and India, has customers in over 20 countries, and partners with numerous software and hardware vendors worldwide. (Ness 15.09)

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5: ARAB STATE & PAKISTANI DEVELOPMENTS

5.1 Jordan's Real GDP Grew by 2.9% Second Quarter

Jordan's real GDP grew by 2.9% in 2Q2010 y-o-y compared to 2.03% y-o-y growth in Q1/10. Jordan's economy saw its worst performance since 1989 in FY2009, when its economy grew by 2.8% y-o-y, compared to 7.8% y-o-y growth in FY2008. The economy is expected to pick on a gradual basis as the effect of the financial crisis fades away and as domestic measures to stimulate investment and growth take effect. (Beltone 28.09)

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5.2 Persian Gulf States in $123 Billion Arms Buying Spree

The Arab states of the Persian Gulf have embarked on one of the largest rearmament exercises in peacetime history, ordering US weapons worth some $123 billion as they seek to counter Iran's military power. A package of US arms worth more than $67 billion for Saudi Arabia accounts for the largest single component of this military build-up, providing a huge boost to the American defense industry. The first phase of this agreement - soon to go before the US Congress for approval - is estimated at about $30 billion. The Center for Strategic and International Studies in Washington, D.C. noted that the United States was aiming to achieve a "new post-Iraq war security structure that can secure the flow of energy exports to the global economy." The purchase of new weaponry comes at a time when many countries in the Middle East are alarmed by Iran's nuclear ambitions. They also fear that any Israeli or US military strike on Iranian nuclear facilities could provoke retaliation against them, or disrupt the flow of oil through the Strait of Hormuz.

Saudi Arabia will receive 85 new F-15 jet fighters and another 70 will be upgraded. Boeing will be the principal supplier, allowing the US company to strengthen its ability to manufacture advanced military jets, an area where it has been slipping under competitive pressure. A successor agreement is expected to provide for the upgrade of radar and missile defense systems and an ambitious modernization of the Saudi Navy's eastern fleet.

The UAE had signed contracts to buy military equipment worth $35 billion and $40 billion. The UAE has received clearance to buy Thaad, a high altitude missile defense system being developed by Lockheed Martin. The UAE and Kuwait have each signed contracts for upgrades to their Patriot missile defense systems, developed by Raytheon, which cover lower levels of an air defense array. Elsewhere, Oman is expected to spend $12 billion and Kuwait $7 billion in the period until the end of 2014 on replacing and upgrading warplanes and new command and control systems. Oman's package will include 18 new F-16 jet fighters and upgrades for another 12. This will benefit Lockheed Martin, reinforcing its position as the leading US manufacturer of warplanes. The total value of all US arms deals with Saudi Arabia, the UAE, Oman and Kuwait is estimated at $122.88 billion over the next four years. (FT 22.09)

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5.3 Kuwait Registers $22 Billion Budget Surplus

Kuwait has posted a budget surplus of $22.2 billion for FY2009/10, up from $9.467 billion the previous year. This is its 11th consecutive budget surplus, said a report by National bank of Kuwait (NBK). The country's revenues fell 16% because of lower oil prices and production cuts last year, but they were still 219% of budgeted numbers, said the NBK report citing FY2009/10 closing accounts. The expenditures also fell by 38% and were 93% of the budgeted amount, it added. According to the report, the large spending decline was exacerbated by a special transfer to social security the previous year. Excluding that special factor, spending was down 12%, it said. Demand-impacting expenditures, those spending categories that drive domestic demand, were slightly down y/y (a drop of 1%). Oil revenues plunged 16% compared to last year to hit KD16.6 billion. Non-oil revenues reached KD1.1 billion, down 15% year on year. The slump in the economic activity in FY09/10 apparently took its toll on the governments' non-oil receipts, particularly in the first three quarters of the fiscal year. The major contributor to this decline was "Miscellaneous Revenues" which fell KD188 million (44%) and without which non-oil revenues would've been flat on the year. (TradeArabia 15.09)

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5.4 Kuwait & Russia Sign Nuclear Cooperation Deal

Kuwait and Russia have signed a memorandum of cooperation for peaceful use of nuclear energy generation in the Kuwait. The agreement follows similar deals with Japan and France. The memorandum outlines training cadres, exploration for metals, establishing a network of nuclear reactors in Kuwait and building a relevant infrastructure. It said the arrangements are for a five-year period. Persian Gulf states including Kuwait fear that Iran's nuclear energy program could lead to the country becoming a nuclear weapons state and dominant power in the region. Kuwait has also sought assurances from Iran about the safety of its Russian-built Bushehr nuclear power reactor which began operation this year. Earlier this month, Kuwait, the world's fourth-largest oil exporter, said it had decided to build four nuclear reactors by 2022, each with a capacity of 1,000 megawatts. The announcement came days after Kuwait and Japan signed a cooperation agreement to expand the nuclear capacity. Kuwait also signed a nuclear cooperation agreement with France in April. (AB 21.09)

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5.5 Bahrain August Inflation Rises On Food Costs

Bahrain's inflation accelerated to 2.4% on an annual basis in August, edging up slightly from the previous month mainly on a jump in food prices, data from the Central Informatics Organization showed. Analysts expect inflation in the kingdom to rise this year partially due to higher food prices, but it should stay in low single digits. The kingdom's economy is seen growing 3.1% this year after 3.2% in 2009, helped by the government's spending. (AB 21.09)

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5.6 UAE Economic Assessment for 2009

The global recession, which started in Q4/08, halted the UAE's economic growth significantly. After a 7.5% growth in real GDP in 2008, UAE's GDP increased by only 1.3% to reach AED515 billion in 2009. Despite the global recession, the non-oil GDP grew by 8.4% in 2009. Due to the decrease in oil prices and production, the non-oil sector contributed 71% of the GDP in 2009 compared to 66% during the previous year. The UAE government implemented expansionary monetary and fiscal policies to stimulate aggregate demand in 2009. Due to the effects of the recession on the economy, the UAE government wanted to expand the money supply and encourage growth. Money Supply (M1) and Broad Money (M2) grew by 3.7% and 2.2% respectively, while the overall broad money (M3) decreased by 0.25% as of Q2/10 due to a decrease in government deposits.

The UAE has maintained a budget surplus for its fifth consecutive year. The budget surplus in recent years was largely credited to high gas and oil profits due to high oil prices. Total government revenue was almost AED293 billion for 2009, a decline of 35% from the previous year, while hydrocarbon revenues contributed 74% of it. Total expenditures increased by 14% in 2009 to AED289 billion, compared to AED254 billion the previous year. Current expenditures were the largest contributor of expenditures as it represented 68% of total expenditures. Consequently, UAE's budget generated a surplus of AED3.6 billion in 2009, a decrease of a staggering 98% from 2008. (BI-ME 22.09)

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5.7 UAE GDP to Exceed $272 Billion in 2010

The GDP of the United Arab Emirates will exceed AED1 trillion ($272 billion) this year as liquidity returns and trade picks up, the head of the Dubai International Financial Center said. The DIFC, Dubai's financial hub, hosts offices of banks such as Morgan Stanley and Deutsche Bank AG. GDP was AED914.3 billion last year, as the economy slowed after real estate prices plummeted and credit markets tightened. The IMF will raise its economic forecasts for the U.A.E. in its next review due in a few weeks, Masood Ahmed, its Middle East director, said on 16 September. Al Tayer said Dubai's financial industry "has witnessed vast improvement and seen better liquidity, above central bank requirements, despite high provisions." When asked whether Dubai would need more government support he said: "We have overcome a lot of those stages." (BI-ME 22.09)

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5.8 UAE Oil Pipeline Bypassing Hormuz Strait Nearly Finished

A pipeline to send oil from the UAE directly to the Indian Ocean, instead of being shipped by tanker through the Strait of Hormuz, probably will be finished this year, according to a statement by UAE Minister of Oil Al Hamli. The $3.3 billion pipeline to the UAE's easternmost emirate, Fujairah, aims to bypass the Strait and will carry about 1.5 million barrels of oil a day. The strait is a strategic point at the mouth of the Persian Gulf for a fifth of the world's oil supplies. Iran has threatened to block the Strait if attacked because of its nuclear program. The UAE is the fourth largest crude producer in the Organization of Petroleum Exporting Countries. (AB 24.09)

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5.9 Dubai Annual Inflation Registers 0.8% in August 2010

Dubai annual inflation increased to 0.8% in August 2010 compared to 0.4% in July 2010, on the back of a surge in transport and food prices, reported the Dubai Statistics Centre. On a monthly basis, inflation rose 0.6% in August 2010 compared to 0.1% in July 2010. Housing and energy costs, which account for nearly 44% of the CPI basket, were flat month-on-month in August 2010, reflecting the weakness in the real estate sector, where a steady inflow of new housing units is keeping prices down. Annual food prices increased 1.8% in August 2010, while transport costs rose by 2.5%, annually, for the same month. (DSC 21.09)

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5.10 Dubai Sees Stronger Recovery in Foreign Trade in Second Quarter of 2010

Annual growth in the value of Dubai's foreign trade accelerated 22.2% during Q2/10 to AED142.2 billion, new data released by the Dubai Statistics Center showed. This was stronger than the 13% annual growth seen in Q1/10 and comes mainly on the back of a rise in exports and a pick-up in imports growth. Annual growth in exports reached 45.5% in Q2/10 from 31.9% in Q1/10 at AED17.9 billion. Imports grew 17.1% in Q2/10, annually, from 9.8% in Q1/10 to stand at AED89.8 billion, predominantly led by a 45% annual rise in imports of precious stones and jewelry. Positively, imports of machinery, equipment, basic metals and chemicals, combined, saw a 7% annual growth in Q2/10 after contracting 12% during Q1/10. Re-exports also saw a notable 26% annual growth in Q2/10 from 14.4% growth in Q1/10. The data reiterates the view that Dubai is in a solid position to capitalize on the gradual recovery in global trade movements owing to its status as a major regional and global trade hub, and its possession of modern ports' infrastructure and capacity. Dubai exports and re-exports are benefiting from higher economic growth and demand levels seen in Asian and Arab economies (vis-à-vis the Eurozone and North America), to which the bulk of Dubai exports and re-exports are directed. The positive growth seen in imports, especially imports of industry and manufacturing activities' linked goods, is also a signal of the gradual recovery in the UAE domestic economic environment. (Beltone 22.09)

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5.11 Nakheel to Re-Start Work on Al-Furjan Project in Dubai

The UAE's Nakheel has restarted work at its Al-Furjan residential project. Al-Shafar Transport and Contracting Company is the first contractor to re-commence construction work at the project and the company expects to start building again on all short-term projects by October 2010. On the progress of its debt restructuring, Nakheel said it has obtained approximately 85% acceptance for its deal (by value). Beltone believes this announcement could improve local sentiment, as Nakheel continues to show commitment to its announced plans, and local contractors and construction companies start seeing some increase in business activities. The company has already started providing the second phase of the 40% cash payments to its trade creditors and Beltone expects more announcements to be made soon by Nakheel on resuming work on other smaller-scale projects such as Jumeirah Village South and Jumeirah Park. Beltone remains concerned, however, over the larger scale white elephants such as Palm Jebel Ali and Palm Deira, the fate of which remains unclear. The current, depressed state of the property market in Dubai implies that these projects are unlikely to be prioritized over the short to medium term. (Beltone 23.09)

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5.12 Oman Inflation Eases As Trade Surplus Soars

Oman's inflation eased slightly in July, after hitting a 13-month high the previous month, while its foreign trade surplus swelled to a two-year high in April on hydrocarbon exports. Price pressures in the oil producer have been building up this year, mainly on rising food and housing costs, while higher crude prices helped its trade balance improve. Consumer inflation decelerated to 3.3% year-on-year in July, from 3.5% in June, data from the economy ministry showed, but analysts see it creeping higher again in coming months. Inflation has fallen sharply from a record high 13.7% in June 2008. Prices edged down 0.1% month-on-month in July, for their first monthly decline since March, helped by slower growth in food prices and housing costs combined with falls in clothing and personal care items.

Food inflation traditionally climbs during the holy month of Ramadan, which ended in mid-September, when families enjoy larger and more elaborate evening meals after daylight fasting. The sultanate's central bank warned in July that it needed to closely watch inflation in the second half as it could put the currency under pressure.

Oman's foreign trade surplus surged to a two-year high of $1.6 billion in April with exports up 72% from a year ago, mainly on higher hydrocarbon exports. Import growth slowed significantly to 11.9%, the data showed. Last year, the global crisis slashed oil output in Persian Gulf oil-producing nations, trimming economic growth rates in Saudi Arabia and the UAE, the biggest oil exporters in the region. Much smaller Oman was less affected because as a non-OPEC member it did not have to join the cartel's output cuts. (AB 21.09)

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5.13 Saudi Arabia Ranked 13th Easiest Place to do Business in the World

The World Bank recently released a report which ranked Saudi Arabia as the 13th easiest place to do business in the world. This means that the Kingdom is the highest rated country in the Middle East and the Arab world for the fifth year in a row. Saudi's most recent five year plan, released at the beginning of this year, outlines $385 billion of anticipated spending in the Kingdom between 2010 - 2014. While a large portion of the budget is dedicated to manpower development (human resources and employment initiatives), other important areas of the country's infrastructure will benefit from the plan. Over 15% of the budget has been dedicated to transport, telecommunications, municipal services and construction. Saudi Arabia's drive to improve its transportation infrastructure is evident as seen in the $ 6.4 billion dedicated to the sector in the 2010 budget alone. Urban transportation is of particular importance to the various municipalities and government authorities.

Already the country's first metro is operational and almost complete in Makkah after opening earlier this year. More metro and light rail projects have already been proposed for Riyadh, Jeddah and the King Abdullah Financial District to complement the strategic plans of the Ministry of Municipalities and Rural Affairs and the Arriyadh and Jeddah Development Authorities. The huge economic city developments will also require extensive transportation networks both locally and internationally. Hundreds of kilometers of roads, as well as inner city road and public transportation networks for the cities themselves will be necessary to deliver those ambitious projects. (IQPC 20.09)

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5.14 Egypt May Extend Rice Export Ban Until October 2011

Egypt may extend a ban on exports of rice until October 2011, citing officials at Egypt's Grains Industry Chamber, as well as the Egyptian Agricultural Export Council. While no official statement was made by the Ministry of Trade on the subject, it nonetheless would not come as a surprise to pundits. Cairo had taken similar decisions previously to curb or suspend exports of a product to increase its availability in the domestic market and tame their prices, such as the example of cement. The Ministry of Trade had already signaled its intention to curb rice exports earlier in June 2010 as price pressures in the domestic market had started to build up, at a time when international prices of rice did not reflect the same level of increase it did in the local market. An export ban was already put in place in March 2008 that was further extended to cover the 2009 crop season. The monthly increase in overall food prices in Egypt have generally been tame over the first six months of 2010, remaining within an average of 1.1% m-o-m growth, although with the rising demand pressure that accompanies the peak summer months and Ramadan, monthly food inflation surged to 3.8% and 6.4% in July and August 2010, respectively. Similarly, rice prices saw their first monthly acceleration in May 2010 of 9.5% and have been rising since. The last inflation note issued by the CBE put the monthly rice price increase at 8.5% in August, from 18.3% in July 2010, bringing cumulative increases since May 2010 to 43.5%. This is significantly higher than the 3% increase in the prices of rice internationally (using the IMF Primary Commodity Index' benchmark for price of rice). The government will continue to monitor market conditions and prices of the main staples and take a similar course of action when necessary. (Beltone 22.09)

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5.15 Egypt Slides 11 Places In Competitiveness Index

Out of 139 countries included in the 2010-11 Global Competitive Index (GCI) report, issued by the World Economic Forum, Egypt - the largest country in the Arab world - came in 81st place, down from 70 in 2009-10. Topping the list was Switzerland, which the report described as exemplifying "capacity for innovation and a very sophisticated business culture." Chad bottomed out the list at 139th. The GCI report breaks down its ranking into 12 different pillars, ranging from institutions, infrastructure, health and primary education to technological readiness, innovation and business sophistication. Within this pillar structure, the report notes that Egypt's main competitive strengths are the "sheer size of the market," ranking it 26th, which allows businesses to "exploit economies of scale." It rates its institutions 60th, providing it with "good governance." Third, transport infrastructure is rated relatively high at 56th overall, ensuring that goods and services can be delivered and used efficiently. The report highlights that the market "continues to be over-regulated," which results in a weakened ability to properly allocate and employ human resources. This dilemma is all the more troubling as a significant segment of the young work force remains unemployed. Underscoring the severity of this issue, the report places Egypt at 133rd in terms of its ability to efficiently exploit the talent of its work force, making it one of the "poorest performers in the GCI sample." (DNE 23.09)

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5.16 European Commission Increases Allocation of €152 Million Grant to Egypt

The European Commission approved the action plan for cooperation with Egypt, increasing its allocation of a €152 million grant. Minister of International Cooperation Abul Naga announced that the plan includes: €70 million to be allocated to water reform projects; €20 million for research and development; €20 million to wind power generation; €20 million to fund an existing partnership with the EU; €10 million to modernize the administration of justice, €3 million to preserve cultural heritage and €9 million to support the decentralization of local administration. These amounts are part of a €558 million grant program that is extended to the government of Egypt over a four-year period. (Beltone 23.09)

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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS

6.1 Recovery in Cyprus Seen Picking Up

Cyprus's economy will grow 1.5% in 2011 from 0.6% in 2010, according to Finance Minister Stavrakis, who unveiled the country's 2011 state budget on 15 September. The island economy, the second smallest in the eurozone, registered a 1.7% contraction in 2009. It returned to growth in Q1/10 after five successive quarters of recession. Cyprus registered growth of 0.4% in Q1 and 0.6% in Q2/10, with the recovery rooted mainly in a recovery in the financial services sector. The third quarter of the year was expected to show stronger growth, factoring in a 6% increase in tourism during the peak summer season of July and August. Minister Stavrakis said even with very conservative estimates [Q3 growth] will exceed 0.5%. Tourism directly represents about 11% of Cyprus's GDP of €17.2 billion. A summer rebound in arrivals followed a 10.9% drop in tourists last year. Stavrakis said the island "has no other choice" but to slash its bloated fiscal deficit, as he called for broad political support for additional austerity measures. Political partisanship must give way to consensus on ways to save an additional €150 million over and above cutbacks included in the budget for 2011, he said. The savings would bring the fiscal deficit down to 4.5% of GDP next year, in line with a pledge to the European Union. Without the additional savings, Cyprus would miss the mark by about 1%. (FM 16.09)

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6.2 Greece Deficit Narrows

Greece's budget gap shrank 32.3% in the first eight months of the year, beating a 26.5% target for the period, as cuts in state wages and pensions offset slower-than-forecast increases in revenue. The deficit, which doesn't include spending by state-owned institutions and companies, contracted to €14.5 billion from €21.4 billion a year earlier, according to the Finance Ministry in Athens. Athens is targeting an annual decline of 39.5%, the ministry said. The figures are broadly the same as preliminary data released on September 10. The deficit reduction is characterized by the accumulation of interest payments in July and August 2010, which make up 40% of yearly interest payments as well as by a lag in revenue. (Kathimerini 21.09)

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6.3 Qatar Considers $5 Billion in Investment Deals in Greece

On 23 September, Greek and Qatari officials signed a framework deal that paves the way for the Gulf emirate to invest $5 billion in the euro zone's most indebted country. A non binding memorandum of understanding was signed in New York between Qatar Investment Authority (QIA) executive Ahmad Al Sayyed and Harris Pamboukis, Greece's state minister in charge of investment. Greece has become increasingly reliant on foreign investment to boost its ailing economy as it clamps down on state spending to slash its budget deficit under an EU/IMF bailout agreement. The government said earlier this month it would set up a fast track procedure to cut red tape for big investments. Within two months, the QIA and Greece will set up a joint committee to identify possible investment projects, mainly in tourism, real estate, infrastructure and energy. No specific projects were mentioned in the MoU. Qatar's Prime Minister Hamad bin Jassim al Thani first expressed his country's interest in investing in Greece during an official visit to Athens in May. Al Thani had then signed non binding agreements to build an LNG terminal and a power station at Astakos, western Greece. (Various 25.09)

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6.4 Investors Rush To Buy Greek Bond Issue

Greece raised €390 million via a three-month debt issue at a rate of 3.975% on 21 September, with demand six times greater than the amount on offer, the Greek debt office said. The office had intended to raise €300 million but said after an initial statement that bids totaled €1.874 billion and it had increased the amount raised to €390 million. Analysts had said before the operation that an important test for Greece was successfully placing a three-month issue at a yield or interest rate of less than 4.0%. The last issue of three-month bonds on July 20, raising €1.5 billion, was made at 4.04%.

Greece was frozen out of the sovereign debt market four months ago when a debt crisis brought it close to default but it was then rescued with huge loans from the European Union and the IMF. Since then, Greece has been dipping its toe back into the water and is now stepping up the rate of issuance. Recently, Finance Minister Papaconstantinou toured financial centers in Europe to explain to investors what Greece is doing to put its public finances in order and to restructure the economy. The latest Greek issue of bonds for six months raised €1.17 billion at 4.82%. It is normal that the longer maturity of a debt instrument, the higher the interest it carries to compensate for the risk over time. The rate of 4.82% was considered high, however, reflected continuing concern about the standing of Greece as a borrower. (BI-ME 21.09)

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6.5 Bulgaria Plans To Issue Bonds Worth €1 Billion in 2011

Bulgaria is planning to sell bonds amounting to €1 billion on the international market in 2011 to shore up its finances, according to a finance ministry draft paper, cited by local media. Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft. In June, the center-right cabinet revised the state budget increasing its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates. The center-right government dropped its plans for applying for ERM II after raising the alarm that the 2009 budget gap was 3.7% of GDP rather than the 1.9 % due to unaccounted procurement deals. Bulgaria's economy contracted by 3.6% on an annual basis in Q1/10 from 5,9% in the previous quarter, but the government hopes for a 1% economic growth for this year as recovering exports bolster the expansion. Prime Minister Borisov's government previously estimated the economy would grow 0.3% after a 5.1% contraction in 2009 as investments dwindled and consumption shrank. Bulgaria boasts one of the lowest public debt-to-GDP ratios among European Union member states at about 15%. Economists are cautious in their forecasts for Bulgaria's economy and say it will remain in recession or be about zero this year. (SM 24.09)

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6.6 Bulgaria Food and Drink Report Q4/10

Research and Markets (http://www.researchandmarkets.com) "Bulgaria Food and Drink Report Q4 2010" says Bulgaria remains, in our opinion, one of the least attractive food and drinks markets in the emerging Europe region. A poor economic outlook, with little optimism expected in the short term, is one of the key factors responsible for Bulgaria's low ranking, with local currency depreciation also deterring foreign investment. In 2010, the consumer outlook in Bulgaria will remain suboptimal, given the expected 1% decrease in real private consumption. Additionally, the food and non-alcoholic beverages component of the consumer price basket remains adversely afflicted by deflation, with prices falling 2.6% year-on-year (y-o-y) in May 2010, having recorded negative growth since April 2009. While some recovery of food and drinks spending is expected in the latter parts of the forecast period, other emerging markets both in the region and wider are likely to attract more attention than Bulgaria.

Headline Industry Data:
2010 per capita food consumption: +0.99%; forecast to 2014:+12.66%
2010 alcoholic drinks sales (value): +1.07%; forecast to 2014: +12.21%
2010 soft drinks sales (value): -3.25%; forecast to 2014: +8.66%
2010 mass grocery retail sales: -2.77%; forecast to 2014: +18.54%

Over the past months, Rewe-owned supermarket chain Billa reported that it was planning to invest ($40.8-44.5mn) per annum during 2011-2014 in Bulgaria. The company plans to open 10 new outlets by investing more than BGN65mn in the country by end-2010 in order to expand its store presence, according to company executives. We expect regional launches to gradually pick up over the H2/10 period after geographical recalibration in 2009. Along with Russia and Ukraine, Bulgaria was largely responsible for driving Rewe's foreign market sales growth in 2009, boosted by the introduction of its discount banner Penny in Bulgaria. (R&M 16.09)

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6.7 Bulgarian State To Invest €2.5 Billion In Construction 2011

Bulgaria's construction sector will have about €2.5 billion from the state on public procurement projects during 2011, according to Minister of Regional Development Plevneliev. This is the combined amount of funds from the Ministries of Transport, of Environment, of Regional Development, as well as from local authorities and EU operative programs, stated Plevneliev at the opening of the new academic year in the University of Architecture in Sofia. Plevneliev once again reiterated his worries that the budget of his ministry is inadequate for 2010 and will continue to be insufficient in 2011. He said that the state won't be able to invest in the water sector and other infrastructure projects, except for roads, during the coming year. (SMN 21.09)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Israel's Population is Aging

The Central Bureau of Statistics announced on 21 September that one in ten Israeli citizens is over the age of 65. The data show that some 742,000 people aged 65 and above live in Israel. Since 1995, the percentage of this age group has remained stable, but according to forecasts up until 2030, their numbers are likely to double within the next 20 years, reaching some 14% of the population. Of those aged 65 and above, some 89% are Jewish, compared to 76% in the general population; 8% are Arab compared to 20% in the general population; and 3% classified as "others". Women, the data show, live longer than men. Nearly 57% of this age group are women, and the percentage of women in the general population increases with age. Women comprise some 62% of people aged 85 and above. Some 57% of people aged 65 and above are married, about one third widowed. The percentage of those widowed increases with age: Some 55.2% among those aged 80 and above are widowed, with just 37.4% married. Among men aged 65 and above, some 77.5% are married, and among women of this age group nearly half (45.6%) are widowed.

Nearly half of this age group lives in Tel Aviv and the surrounding area. Judea & Samaria has the lowest percentage of people from this age group. Some 94% of this age group lives in an urban environment. Most people aged 65 and above report being satisfied with life (77%). However, a relatively low percentage from this age group believes life will be better in the coming years (11% compared to 54% among those aged 20-64). Nearly two thirds (64%) are satisfied with their financial situation, compared with just 55% among those aged 20-64. The percentage of those able to cover monthly expenses such as food, electricity and telephone bills is higher among the older population: 74% of those aged 65 and above are able to cover expenses compared with 63% in the rest of the population. (Ynet 22.09)

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7.2 ZAKA Expanding to Druze & Arab Towns

Israel's voluntary rescue organization ZAKA is to expand its activities and set up units among the non-Jewish population in the north of Israel. The step was agreed during a meeting on 19 September at the Galilee Development Authority. The first units will be set up in the Druze towns of Beit Jann and Yirka. Until now, ZAKA has dealt with the Jewish sector alone – mostly victims of road accidents and terror attacks. In some cases, in response to police requests, ZAKA also handles the bodies of other sectors. Now, in keeping with the program initiated by the Likud's Deputy Development of the Negev and Galilee Minister Kara, volunteers in Druze and Arab towns will be trained by ZAKA staff in programs financed by the Galilee Development Authority, until they are able to become full-fledged ZAKA staff. ZAKA said the new units would be trained to operate according to the religious and ethnic customs of the residents of the region. ZAKA expressed hope that the project would bring Jews and minorities in the Galilee closer and offer solutions for daily life and emergency situations for the Druze, Circassian and Arab villages. The first two new units should be operational by the beginning of 2011. In total, some four new units will be created. The new units will join a unit which is already operational among the Bedouin population in the south, or the Hatzalah branch in east Jerusalem which provides first aid services. (Ynet 23.09)

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7.3 Eight US Universities To Launch Study Programs In Israel

Eight of the US' top universities will launch study-abroad programs in Israel in 2011 and 2012 as part of a new initiative to encourage study abroad and academic exchange here, the Jewish Agency announced. Currently, some 1,500 American university students study in Israel each year. The Masa program, which is part of the Jewish Agency, hopes to boost those numbers considerably so that one day they are on a par with places like London and Paris, where tens of thousands of young Americans go to spend a semester abroad each year. Working closely with the Institute of International Education (IIE), Masa has selected eight institutions that will receive a total of $400,000 ($50,000 each) in seed grants to develop study programs with Israeli institutions. The partnerships include Washington University's Olin Business School with IDC Herzliya; Columbia's Barnard College with Hebrew University; and the University of Maryland's Smith School of Business with the University of Haifa. The other participating universities are Arizona State University, Case Western Reserve University, Michigan State University, the New Jersey state university system and the University of Florida. Other universities with already existing programs in Israel are Harvard, which partners with the Hebrew University, and the University of Miami's UGalilee, which receive a combined total of $85,000 in seed grants from Masa Israel. Israel currently ranks 22nd out of the top 25 study-abroad destinations for students from the United States, according to the IIE's 2009 Open Doors Report on International Educational Exchange, trailing behind countries like Ecuador, which is number 14. (Various 16.09)

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7.4 Ozzy Osbourne Arrives in Israel

On 26 September, English rock star Ozzy Osbourne arrived at Ben-Gurion Airport on a private plane, along with his family members. Osbourne and his wife, Sharon, held a press conference at a Tel Aviv hotel. Asked whether he had any hesitations about visiting Israel, on the backdrop of the latest cancellations by international artists, he replied that he tries to stay away from politics because "I wouldn't know what I was talking about." His wife added that "Britain has the IRA and no one cancels concerts there." Asked why it took him so long to arrive, Osbourne said, "I don't know, I was drunk for years." The family visited Jerusalem and on 28 September performed with groups Korn and Soulfly, as part of the Ozzfest. (Ynet 27.09)

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*REGIONAL:

7.5 Half of All University Branch Campuses Located In the Persian Gulf

Of the 162 branch campuses in the world today, half are located in the Persian Gulf, with 25% in the UAE alone, according to the Observatory on Borderless Higher Education (OBHE), a London-based information service. Branch universities are when students can earn a degree from one country, while studying in a different one. They also traditionally operate independently from the main universities they are associated with.

The Abu Dhabi government plans to spend more than AED1.3bn ($350m) on education this year, compared with AED655m in 2009 and more than six times the expenditure in 2008, according to statistics included in a preliminary government-guaranteed bond prospectus in July. It is felt as much as $1bn in academic research investments is needed per year through 2018 for Abu Dhabi to compete globally with some of the top universities in the world. The OBHE reported that around 80% of branch universities had opened within the past decade and almost half are outposts are of American institutions. However, the concept has drawn criticism recently from those within the educational sector. Soumitra Dutta, professor of business technology at the Paris-based business school INSEAD, told the International Management for Higher Education conference in Paris that branch campuses were no more than "hollow shells".

Some US branch campuses have also admitted failure and have shut up shop in the UAE. Washington-based George Mason University shut its doors last year in Ras al Khaimah, citing the global economic crisis. Michigan State University closed its Dubai campus in July, six months after the bailout by Abu Dhabi. (AB 16.09)

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7.6 New Turkish School Year Started in 20 September

The 2010/11 education year began in elementary and high schools in Turkey on 20 September, with nearly 16 million students and 600,000 teachers beginning the new school year. Nearly 1.3 million students have been enrolled in elementary schools this year. An "orientation program" was held between September 14-17 for the students who are currently experiencing their first year at the elementary school. The first term of 2010/11 education year will end on January 28, 2011. Students and teachers will have a term holiday until February 11, 2011. The second term will begin on February 14 and end on June 17, 2011. (Various 19.09)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Angioslide Commercializes Device Combining Balloon Angioplasty & Embolic Capture

Angioslide has commercialized the Proteus device for Embolic Capture Angioplasty (ECA) in the United States. The device combines an angioplasty balloon and embolic capture feature into one device, thus providing physicians with a simple and cost-effective method of capturing of embolic particles during angioplasty procedures. Proteus is a one of its kind device to combine balloon angioplasty and embolic capture to receive FDA clearance, which was received in April 2010. The Proteus device is presently indicated for use in the lower limbs during Percutaneous Transluminal Angioplasty (PTA) procedures. Proteus joins the new class of medical devices aimed at treating peripheral arterial disease (PAD), one of the fastest-growing segments in the worldwide interventional marketplace. The Proteus device combines a standard angioplasty balloon with a feature that can capture the debris that maybe liberated during the PTA procedure. Proteus has the same characteristics as a standard angioplasty balloon but the embolic capture feature allows debris to be trapped within the balloon and removed as the physician removes the angioplasty balloon at the end of the PTA procedure. Herzliya's Angioslide (http://www.angioslide.com) is a privately held company. The company's first product is Proteus which is indicated for use in the United States for usage in the lower limbs. (Angioslide 15.09)

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8.2 Oral Laquinimod Effective & Safe in Patients with Multiple Sclerosis

Teva Pharmaceutical Industries announced results from a 36-week active extension study evaluating two doses of laquinimod, an investigational, once-daily oral immunomodulator, for the treatment of relapsing remitting multiple sclerosis (RRMS). The double-blind, multinational study demonstrated the sustained positive benefit-risk profile of laquinimod, which was shown to reduce Gd-enhancing (GdE) T1 lesions, while maintaining a good safety profile. These findings were published online by the journal Multiple Sclerosis. Laquinimod received Fast Track designation from the U.S. FDA in February 2009. Two global Phase III clinical studies, ALLEGRO and BRAVO are currently ongoing, with results anticipated during Q1 and Q3 2011, respectively.

Laquinimod is an investigational, novel, once-daily oral immunomodulator being developed as a disease-modifying treatment for RRMS. Active Biotech developed laquinimod and licensed it to Teva Pharmaceutical Industries in June 2004. A Phase IIb study in 306 patients was published in The Lancet and demonstrated that an oral 0.6 mg dose of laquinimod, administered daily, significantly reduced MRI disease activity by 60% versus placebo in RRMS patients. In addition, the study showed a favorable trend toward reducing annual relapse rates and the number of relapse-free patients compared with placebo. Treatment was well tolerated, with only some transient and dose-dependent increases in liver enzymes reported.

Israel's Teva Pharmaceutical Industries (http://www.tevapharm.com) is a leading global pharmaceutical company, committed to increasing access to high-quality healthcare by developing, producing and marketing affordable generic drugs as well as innovative and specialty pharmaceuticals and active pharmaceutical ingredients. Teva is the world's largest generic drug maker, with a global product portfolio of more than 1,250 molecules and a direct presence in approximately 60 countries. Teva's branded businesses focus on neurological, respiratory and women's health therapeutic areas as well as biologics. (Teva 20.09)

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8.3 NasVax Initiates Phase 2a Clinical Trial for Oral Anti-CD3 Immunotherapy

NasVax initiated recruitment and dosing in a Phase 2a clinical trial for oral anti-CD3 (aCD3) monoclonal antibody (MAb) immunotherapy. This study is being conducted at Hadassah Medical Center - Hebrew University in Jerusalem Israel in subjects with nonalcoholic steatohepatitis (NASH), a serious inflammatory disease of the liver, and including those with metabolic syndrome. This Phase 2a trial, which was recently approved by the Israel Ministry of Health, is designed to evaluate the safety and immune-modulatory effects of this immunotherapy. A published Phase 1 trial conducted at Hadassah Medical Center in 15 healthy volunteers who received aCD3 MAb showed that oral aCD3 immunotherapy is generally safe and induced immune-modulatory effects consistent with the induction of regulatory T cells and of anti-inflammatory immune responses. Such immune responses are associated with efficacy in animal models for inflammatory and autoimmune diseases.

NasVax also entered into an evaluation and option agreement with Centocor Ortho Biotech, in which Centocor will provide NasVax its aCD3 antibodies on beneficial commercial terms, to be used by NasVax for its clinical trials. In return, Centocor shall be given the exclusive option for several months after receiving the results of the clinical trial to conduct negotiations with NasVax towards a license and/or collaboration agreement relating to the aCD3 technology.

Ness Ziona's NasVax (http://www.nasvax.com) develops improved vaccines and immunotherapeutic products. The company has four product development programs. The aCD3 oral immunotherapy program employs a MAb for down-regulating pathogenic immune cells in inflammatory and autoimmune diseases. NASH represents the initial indication for a Phase 2a clinical trial with this approach. VaxiSome is an adjuvant/delivery system for enhancing the immunogenicity of vaccines and immunotherapeutics. VaxiSome-Influenza vaccine has been in a Phase 2 clinical trial that did not meet its primary immunological endpoint. The Company is working with Novartis under a Research and Option-for-License Agreement on applying VaxiSome to Novartis' influenza and one other vaccine target non-exclusively. (Nasvax 20.09)

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8.4 OrSense Introduces Non-Invasive Hemoglobin System for Anemia Monitoring in Maternal Health

OrSense introduced a non-invasive hemoglobin (Hb) measurement system for anemia screening and hemorrhage detection. The Company presented results showing that Hb measurements obtained by the NBM200 showed accurate performance compared with invasive point of care (POC) devices. OrSense has developed and commercialized a non-invasive, portable point of care (POC) monitoring system for measuring spot and continuous hemoglobin and other blood parameters. NBM200 offers, for the first time an accurate, safe, fast, easy to operate and affordable solution that would allow for anemia screening and monitoring. Being non invasive, it eliminates the need for finger prick and biochemistry based blood test, prevents infection risks and eliminates the need for handling bio-hazardous material. The continuous non-invasive hemoglobin functionality can serve for early detection of post partum hemorrhage and improved blood management post delivery. It has the potential of improving maternal health in the developed world by offering online needed information and eliminating safety risks while reducing cost of care. The system was tested on over 8,000 patients and blood donors at 20 sites in the U.S., Europe and South Africa exhibiting comparable accuracy to invasive POC solutions while also demonstrating a strong safety profile, ease of use and substantial cost reduction. It has received CE and CDN approvals and was submitted for FDA 510(k) clearance. The device is based on OrSense's proprietary Occlusion Spectroscopy technology, which uses a non-invasive optical measurement platform combined with a ring-shaped pneumatic probe that fits on the finger.

Ness Ziona's OrSense (http://www.orsense.com) develops and commercializes non-invasive monitoring systems for measurements of oxygen saturation, hemoglobin, glucose and other blood parameters. The Company's FDA cleared NBM-200MP, is a multi-parameter non-invasive continuous blood oximetry monitor for use in hospitals. OrSense's non-invasive hemoglobin/hematocrit monitor was granted the CE and CDN approval and was tested on over 8,000 subjects at 20 sites in the U.S. and Europe. The Company's products are based on its proprietary Occlusion Spectroscopy technology, which overcomes key obstacles that hinder the performance of competing approaches. OrSense's CE approved glucose monitor was tested on over 450 diabetic subjects, showing performance similar to those of invasive glucose sensors. (OrSense 28.09)

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8.5 Results of Successful Trial for Alzheimer Patients Applying Novel, Non-Invasive Technology

The results of a successful clinical trial using Neuronix' patent-pending, non-invasive system for Alzheimer's Disease and related conditions WERE presented for the first time at the annual Congress of the European Federation of Neurological Societies in Geneva, Switzerland. The clinical trial took place in Assaf Harofe Medical Center. Daily treatment sessions were administered for six weeks, followed by three months of maintenance treatment and six months of follow-up. The treatment used in the pilot study involved non-invasive Transcranial Magnetic Stimulation (TMS) applied to specific diseased regions of the brain, concurrently interlaced with software-based customized Cognitive Training. Although TMS treatments have been attempted for Alzheimer's patients in the past, this is the first time the technology has been successfully combined with mental exercises to implement and augment their effects, creating effective, lasting improvement. Researchers saw a four-point improvement on the Alzheimer's Disease Assessment Scale (ADAS-cog), which is at least as good as the average improvement from current FDA-approved medications. Furthermore, the natural decline of these patients was limited for nine months following the initiation of treatment. They are encouraged by these early findings, which show that patients regained a significant part of their lost mental abilities and are now moving ahead with an ongoing, larger controlled study.

Established in 2008, Yokneam's Neuronix (http://www.neuronixmedical.com) has developed a non-invasive technology-based treatment of brain conditions and their related symptoms, with a focus on Alzheimer's Disease. Neuronix' proprietary technology is based on the concurrent use of non-invasive Transcranial Magnetic Stimulations to specific regions of the brain, interlaced together with software-based Cognitive Training. (Neuronix 28.09)

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8.6 Objet Geometries Gains ISO 13485:2003 for Medical Devices Certification

Objet Geometries has achieved the ISO13485:2003 certification for medical devices. ISO 13485 specifies requirements for a comprehensive quality management system for the design and development, production, installation and servicing of medical devices. This international standard confirms Objet's ability to provide the medical industry with 3D printers and related services that meet the regulatory requirements applicable to medical devices. Rehovot's Objet Geometries (http://www.objet.com), the innovation leader in 3D printing for rapid prototyping and additive manufacturing, provides 3-dimensional printing systems that enable manufacturers and industrial designers to reduce cost of product development and dramatically shorten time-to-market of new products. Objet's ultra-thin-layer, high-resolution 3-dimensional printing systems and materials utilize PolyJet polymer jetting technology, to print ultra-thin 16-micron layers. The market-proven Eden line of 3D Printing Systems and the Alaris30 3D desktop printer are based on Objet's patented office-friendly PolyJet Technology. The Connex multi-material family is based on Objet's PolyJet Matrix Technology, which jets multiple model materials simultaneously and creates composite Digital Materials on the fly. All Objet systems use Objet's FullCure materials to create accurate, clean, smooth and highly detailed 3D parts. (Objet Geometries 28.09)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Waterfall Security Solutions Passes INL Cyber Security Assessment

Waterfall Security Solutions announced the successful completion of a security assessment, undertaken by the Idaho National Laboratory (INL), of Waterfall's Unidirectional Security Gateway's technology and products. The assessment was conducted as part of the Department of Homeland Security (DHS) Control Systems Security Program (CSSP). The whole process, originating in 2009, was successfully concluded in July 2010, when INL released the final assessment report. The assessment verified that the Waterfall system provides one-way communications between two different security zones. The physics of the system prevent any data transmission from the low security enclave to the high security enclave. Waterfall's methodology of protecting an industrial network from an external connection in a lower security zone was verified by the assessment.

The assessment identified three software vulnerabilities; all associated with the software interfaces between the Waterfall gateway and third party applications. Obviously, as the security of the Waterfall product is built on a sound and verified physical basis, no vulnerability, including the three identified, can allow an attacker to move "upstream" from the Receive side to the Transmit side. Waterfall's patented cyber security solutions enable Utilities and Critical Infrastructures to securely connect their critical industrial networks to external networks, thus securely fulfilling their business needs without exposing these networks to risks and threats of cyber-attacks, cyber terror and hacking from the external, less secure networks. Waterfall's cyber security solutions assists Utilities and Critical Infrastructures to achieve compliance with NERC-CIP, NRC, CFATS and other regulations and standards, as well as cyber-security policies and best-practices.

Tel Aviv's Waterfall Security Solutions (http://www.waterfall-security.com) is the leading provider of Unidirectional Security Gateways and data diodes for Control networks, SCADA systems, Remote Monitoring and Segregated Networks. Waterfall's security solutions assist Utilities and Critical Infrastructures to easily and comfortably achieve compliance with NERC-CIP, NRC, CFATS and other regulations as well as cyber-security best practices. Waterfall's products have been deployed in many utilities, critical national infrastructures, mission critical environments and homeland security agencies throughout North America, Europe and Israel. (Waterfall Security 15.09)

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9.2 Peer39 Semantic Targeting Data Maximizes Performance on the AppNexus Platform

New York City's Peer39, a leader in semantic advertising solutions, announced integration of the company's semantic targeting capabilities with AppNexus, the real-time advertising platform for ad networks, demand-side platforms, trading desks and other leading online advertising companies. This partnership will enable clients on the AppNexus platform to access Peer39's semantic data to target and optimize their display advertising campaigns. In addition, semantic targeting data can be leveraged with other targeting technologies to provide a superior, comprehensive targeting solution which allows for maximized performance.

AppNexus (http://www.appnexus.com), with a Research and Development Center in Petah Tikva, Israel, is the real-time advertising platform for ad networks, demand-side New York's platforms (DSPs) and other leading online advertising companies. Founded and managed by the pioneers of the Web's original and most successful ad exchanges at Yahoo!'s Right Media and Google's DoubleClick, AppNexus offers a comprehensive suite of core infrastructure and ad technology capabilities including data management, optimization, APIs, financial clearing and support for directly negotiated media campaigns. Overall, AppNexus empowers sophisticated companies to build, manage and optimize their entire display advertising businesses and provides single-point integration to the largest sources of inventory, including the major aggregators and exchanges like Google's DoubleClick and Microsoft's AdECN. (Peer39 15.09)

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9.3 Nova Celebrates Installation of the 200th Metrology System in South Korea

Nova Measuring Instruments announced the installation of its 200th metrology system in South Korea. The Company also announced that it is in the process of establishing a local branch to further enhance its support of the rapidly growing installed base in South Korea. The Company will continue its long standing and successful collaboration with Misan Corporation which played a key role in establishing and growing Nova's business in South Korea in the past decade. Rehovot's Nova Measuring Instruments (http://www.nova.co.il) develops, produces and markets advanced integrated and stand alone metrology solutions for the semiconductor manufacturing industry. (Nova 15.09)

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9.4 Billion Chooses BroadLight's 3rd Generation GPON Processor Family

Taiwan's Billion Electric Co. has selected BroadLight's 3rd generation BL23500 GPON processor family for their new product development of the BiPAC 9300 GPON gateway. Billion's new GPON CPE products designed with newest BroadLight processors will deliver the carrier-class performance in a low cost design that meets all the carrier new service requirements. As a leader in the worldwide broadband market, Billion has made significant investments in its own proprietary software stacks that ported onto BroadLight's 2nd generation GPON Residential Gateway processor. Because of the design excellence of BroadLight's gateway processors, and its unified software middleware, Billion will be able to easily port their own software onto the newest generation BL23500 GPON family and roll out more new models of the BiPAC 9300 GPON gateway series, thus enabling quick, seamless and powerful run times. Ramat Gan's BroadLight (http://www.broadlight.com) is a fabless semiconductor company supplying processors to equipment vendors for fiber access applications around the globe. BroadLight enables service delivery with its highly integrated processors and software for central office and customer premises equipment. A worldwide leader in fiber access semiconductor and software, BroadLight powers all the GPON deployments worldwide. (BroadLight 20.09)

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9.5 Orckit-Corrigent Successfully Demonstrates Full Product Line Interoperability

Orckit Communications successfully participated in the Carrier Ethernet World Congress multi-vendor interoperability testing event, organized by the European Advanced Networking Test Center (EANTC). Orckit-Corrigent participated with its full CE+T product portfolio, including the CM-4314, CM-4206, CM-4140, CM-11 and CM-View Network Management System. The solution interoperability tests focused on IP/MPLS and MPLS-TP technologies, and Operation Administration and Maintenance (OAM) and synchronization capabilities. Orckit-Corrigent's CM-4000 metro aggregation switches, part of the company's CE+T solution, are designed to deliver packet-based services and to help telecommunication service providers migrate their existing TDM traffic to the fast growing, data-oriented, Carrier Ethernet networks. This makes interoperability between Orckit-Corrigent's products and other vendor systems crucial. Orckit-Corrigent's CM-4000 product portfolio was a single platform at the industry-wide testing event to demonstrate IP/MPLS and MPLS-TP interoperability.

Headquartered in Tel-Aviv, Orckit (http://www.orckit.com) facilitates telecommunication providers' delivery of high capacity broadband residential, business and mobile services over wireline or wireless networks with its Orckit-Corrigent family of products. With 20 years of field experience with Tier-1 customers located around the world and sound leadership, Orckit has a firm foothold in the ever-developing world of telecommunication. Orckit-Corrigent's product portfolio includes Carrier Ethernet + Transport (CE+T) switches - an MPLS based portfolio enabling advanced packet as well as legacy services over packet networks with a wide set of transport features. (Orckit-Corrigent 20.09)

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9.6 HSE Technik Selects ClickSoftware for Optimized Mobile Workforce Management

ClickSoftware Technologies announced that HSE Technik GmbH & Co., a German utility and facilities management provider based in Darmstadt, has selected and implemented their workforce optimization software. The wholly owned subsidiary of HEAG Sudhessische Energie (HSE) wants to sustainably improve both the efficient use of its workforce and the services that it provides to its customers. As the effectiveness of HSE Technik's 400 field technicians is crucial to the economic success of the company, the assembly service department requires a mature workforce management system. This is supported by solutions from ClickSoftware. HSE Technik selected six modules from ClickSoftware's ServiceOptimization Suite. ClickSchedule will automatically assign the best possible technicians to customer appointments by optimizing variables such as skills, current workload, proximity, parts availability and Service Level Agreements. The technicians' mobile devices will run ClickSoftware's GIS solution that can be used to rapidly find and route available engineers to customer locations. The mobile devices will also provide access to ClickMobile which technicians will use to receive work orders from ClickSchedule and update progress while on site. Dispatch staff will also have real-time visibility of operations using ClickSoftware location-based services solution, ClickLocate, which will display the exact location of each technician. ClickAnalyze will provide intuitive reports that benchmark the data collected against the company's Key Performance Indicators (KPIs). This information will then be used by management in ClickPlan for medium to long term capacity planning.

Tel Aviv's ClickSoftware (http://www.clicksoftware.com) is the leading provider of automated workforce management and optimization solutions for every size of service business. Their portfolio of solutions, available on demand and on premise, create business value through higher levels of productivity, customer satisfaction and operational efficiency. Their patented concept of 'continuous planning and scheduling' incorporates customer demand forecasting, long and short term capacity planning, shift planning, real-time scheduling, mobility and location-based services, as well as on-going communication with the consumer on the expected arrival time of the service resource. (ClickSoftware 20.09)

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9.7 RiT Technologies' 1st Intelligent LC-MPO Cassette Panel for Datacenters

RiT Technologies introduced a new product for the datacenter environment: the SMART LC-MPO Cassette Panel. This high-density fiber optic patch panel is differentiated by its ability to be configured with PatchView, RiT's advanced real-time intelligent infrastructure management (IIM) solution. MPO cassette panels are recognized increasingly as the answer to the market's demand for increased optical port density. RiT's new product supports up to 96 fibers in just 1U of rack space, making it an ideal small-form-factor solution for resource-challenged datacenters. RiT's patch panel is also differentiated by its ability to self-monitor for continuity, physical security and resource utilization, reporting the configuration of all patch cords to the network administrator's management station. RiT's SMART LC-MPO Cassettes are sold separately and can be individually mounted in the SMART LC-MPO Cassette Panel, providing the user with maximum flexibility for the required numbers of ports. As an additional advantage, the cassette is sealed, ensuring customers the highest reliability in all installations.

Tel Aviv's RiT (http://www.rittech.com) is a leading provider of intelligent solutions for infrastructure management, asset management, environment and security, and network utilization. RiT Enterprise solutions address datacenters, communication rooms and workspace environments, ensuring maximum utilization, reliability, decreased downtime, physical security, automated deployment, asset tracking, and troubleshooting. RiT Environment and Security solutions enable companies to effectively control their datacenters, communications rooms and remote physical sites and facilities in real-time, comprehensively and accurately. RiT Carrier solutions provide carriers with the full array of network mapping, testing and bandwidth qualification capabilities needed for access network installation and service provisioning. RiT's field-tested solutions are delivering value in thousands of installations for top-tier enterprises and operators throughout the world. (RiT 20.09)

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9.8 CTERA Networks Announces First Hybrid-Cloud Solution for Bare Metal and Server Backup

CTERA Networks announced the availability of the first hybrid cloud solution incorporating server backup and bare metal backup. Designed for managed service providers (MSPs) and value added resellers (VARs), CTERA's Cloud Attached Storage family combines cloud and local storage, data protection, and collaboration in a simple, centrally managed appliance-based solution. CTERA is also announcing first shipments of its new data protection appliance, the CTERA C400. With its extended capabilities, CTERA's Cloud Attached Storage solution now protects PCs, roaming laptops and servers with backup at both the disk and file level, stored both locally and in the cloud. The highlights of the new release (version 2.5) include Bare-Metal Backup and Recovery: Incremental, disk-level backup of live workstations and servers, stored both locally and in the cloud, as well as Server Agents for the backup and recovery of Microsoft Windows servers, including live backup of Microsoft Exchange, SQL Server and Active Directory. The new CTERA C400 appliance is the most recent addition to CTERA's Cloud Attached Storage line of appliances. Ideal for small to medium businesses and enterprise branch offices, the CTERA C400 sports up to 8TB of local storage space, with RAID5/6 capability and four hot-swappable drive bays. A single appliance is capable of supporting sites ranging from 50 to 200 users and acts as a gateway for secure, performance-optimized cloud services.

Petah Tikva's CTERA Networks (http://www.ctera.com) revolutionizes storage and data protection for SMBs and enterprise branch offices with Cloud Attached Storage, a hybrid solution that combines secure cloud storage services with on-premises storage appliances for a seamless user experience. CTERA provides a cloud services platform that enables service providers and IT resellers to quickly deliver cloud storage, hybrid local/offsite data protection and collaboration as managed services to their customers. (CTERA 21.09)

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9.9 Users Stay Longer on Personal News Engine Genieo Than on Facebook

Ultra-private, ultra-personalized news engine Genieo.com announced that its users spend more time on their pages than on Facebook, according to statistics independently generated by random groups of thousands of users, making Genieo one of the stickiest sites on the Web. Genieo users spent 300 minutes per month online, according to the analytics. Facebook reported last week that its users spend approximately 100 minutes per month online, according to comScore. Unlike other news readers, Genieo is a completely automatic, completely private personalization engine that can sense the difference between intention (I am looking for a new apartment) and attention (I will always care about stories related to Venture Capital); it can differentiate between caring about Derek Jeter all the time (you are a scary stalker fan) and only caring about him from May to October (you're just a Yankees fan). Another innovative personalization feature involves Facebook and Twitter feeds. Genieo brings its users the tweets, posts or Facebook status updates they care about that they might otherwise miss. Genieo's powerful algorithm will search for your active interests – not just in the news stream but also in your social stream, including live events or posts you missed because you weren't online or because Facebook's algorithm didn't promote them in your feed. The user numbers were reported for the period from July to September, 2010, by a large group of users mostly based in the U.S. who had recently installed and were using Genieo.

Herzliya's Genieo (http://www.genieo.com), for the first time, combines privacy and personalization to bring content that is as dynamic as its users' lives: connected, evolving, relevant – and private. Genieo's proprietary algorithms privately detects users' intentions and attention and delivers interesting and relevant content like blogs, videos, Facebook links, Twitter feeds, or breaking news. Genieo also automatically detects the difference between short-term interests like an apartment search, or a long-term interest like news of a specific sports team, favorite artist or even a local topic like school news. (Genieo 23.09)

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9.10 Digital Power Buys Compact PCI 600 Watts AC/DC Power Supply Series IP From Telkoor

Fremont, California's Digital Power Corporation (DPC) announced a definitive agreement to purchase the intellectual property (IP) and production packages of the compact peripheral component interface (Compact PCI, or CPCI) 600W AC/DC power supply series from Telkoor Power Systems (TPS) of Israel, a global leader in the development and manufacture of high-grade, high-density power supply solutions for military and commercial applications. This purchase brings to DPC a rich portfolio of industry-leading CPCI AC/DC power supplies delivering 600W of continuous power. These hot-swappable power supplies feature N+1 redundant connection and active load current share. Under the terms of the agreement, Digital Power Limited (DPL), a wholly-owned subsidiary of DPC, will pay approximately $500,000 in cash for the IP and production packages of the complete CPCI 600W AC/DC power supply series. This IP acquisition supports a higher power of broad range of CPCI military rugged products designed to operate in harsh environments. Specific product modifications will be also available to support exclusive customer requirements. (DPC 22.09)

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9.11 Wavion Releases the First Beamforming-Based Solution for the 700 MHz Licensed Band

Wavion released its new product line, the WBS-700 – a family of base stations and compatible CPEs for the entire 700 MHz band. The WBS-700 is tailored to the 700 MHz licensed band which has been recently opened for wireless broadband access in the US and in other parts of the world. Based on Wavion's unique and powerful spatially adaptive Beamforming technology, this product leverages six radios and six antennas to provide extended range, increased capacity and superior indoor penetration, as compared to other products in this band. Enjoying the excellent propagation characteristics of the 700 MHz band this product is especially suited for extended coverage in rural areas and for better indoor penetration in urban and suburban areas. The WBS-700 base station supports EIRP of 48 dBm and sensitivity of -108.5 dBm, and enables selectable channels of 5, 10 and 20 MHz. The compatible CPEs have a dual-zone capability, that is, apart from their 700 MHz connectivity to the base station, they provide 2.4 GHz Wi-Fi wireless connectivity to the surrounding area in the home and office. The WBS-700 flexible architecture and rugged weather-proof enclosure add significantly to its unique value offering to Telecommunication Operators.

Yokneam's Wavion (http://www.wavionnetworks.com) is a technology leader in Metro and Rural Wi-Fi and Wireless broadband access, with deployments in more than 60 countries. The company's digital beamforming and SDMA technologies are the first and only to resolve the significant performance, penetration and profitability challenges facing large scale Metro and Rural deployments. (Wavion 28.09)

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9.12 SortFix Unleashes Full Capabilities of Unique Sort-Search Technology Platform

SortFix launched SortFix Touch, an iPad Application for its unique sort-search platform. The free application, available for download on iTunes, will allow users to refine their search query and allow them to get more accurate results, without the need to type in extra words. SortFix's technology improves the answers provided from search engines by employing its powerful text-analysis algorithms and distinctive, intuitive and simple SUI (Search User Interface). The platform analyzes keywords of interest within the results, listing them as "Power Words." The "Power Words" are extracted in real-time, simplifying the search experience and providing the user with a dynamic alternative to traditional search methods. The technology is available in several languages, allowing people all over the world to enjoy the simplicity and unique capabilities of the SortFix platform. SortFix Touch is simple and easy to use, enhancing the ability of users to conduct complex searches quickly and efficiently, all in a specially designed interface for the iPad. With quick finger movements, iPad users can easily slide Power Words into place, giving them the ability to shape detailed queries in minimal time.

Tel Aviv's SortFix (http://www.sortfix.com) is an innovative search technology company that has developed a unique sorting/search technology for providing personalized search experiences. Combining powerful text-analysis algorithms with a simple and intuitive SUI (Search User Interface), SortFix lets users easily define a concept or a question, then sort, navigate, review and update their search query to meet their exact requirements. (SortFix 28.09)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel's August Inflation Higher Than Expected

On 15 September, the Central Bureau of Statistics announced that Israel's Consumer Prices Index rose by 0.5% in August to 106.9 points. The main items contributing to the rise in the CPI in August were fresh fruits and vegetables, which rose 5.2%, and housing, which rose 1.7%. The housing items accounts for about a fifth of the general index. There were also notable rises in the culture and entertainment (1.7%) and the food (0.7%) items. Drops were recorded in the clothing and footwear (5.3%), furniture (1.7%), and transport (0.3%) items. Automobile fuels and oils fell 0.7%, and overseas travel fell 1.4%. Inflation since the beginning of the year totals 1.6%. Over the past twelve months, inflation has been 1.8%, within the government's price stability target range of 1-3%. Excluding housing, inflation over the past twelve months has been just 0.7%. (CBS 15.09)

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10.2 Israel's GDP Growth Revised Downward

The Central Bureau of Statistics announced that Israel's GDP grew at a 4.6% annualized rate in Q2/10, slightly lower than the 4.7% reported in the CBS's initial estimate. According to the revised estimates, GDP grew 3.8% in the first quarter, 4.4% in the fourth quarter of 2009 and 4% in the third quarter of 2009. Exports of goods and services rose 19.9% in the second quarter, up from a 6.4% rise in the first quarter and private consumption expenditure rose 9%, up from 0.7% in the first quarter. GDP rose at a 4.1% pace in the first half of 2010, compared with the previous six months. The data is seasonally adjusted, and is compared with the previous period. (CBS 16.09)

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10.3 Israel's State Of The Economy Index Shows Growth

The Bank of Israel's composite state of the economy index rose 0.2% in August. The Bank of Israel said that together with changes in recent months, the index figure points to continued growth in the economy. The index rose due to a rise in industrial output, a rise in trade and services revenue, and in a rise in the services exports index. The rises were offset by a drop in goods import and export indices. Data for recent months was also revised. May was revised from a rise of 0.3% to 0.4%, while June was revised downward from 0.5% to 0.3%. July data remained unchanged. (BoI 20.09)

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10.4 Israel's Exports Decline During August

The Central Bureau of Statistics announced that Israel's goods exports decreased during the month of August on all technological levels, excluding high-tech. A decline was also recorded in the import of raw materials – pointing to a lower rate of exports expected in Israel in the near future. A slowdown was also recorded in the import of consumer goods. Nonetheless, the figures do not signal a recession, but rather a temporary slowdown in trade. The import of goods amounted to $5.1 billion in August, while the export of goods totaled only $3.9 billion, leading to a $1.2 billion deficit. Since the beginning of the year, Israel's deficit in the trade of goods has reached a monthly average of $492 million, with an August deficit of nearly three times more than the rest of the year. From June to August the import of goods decreased by 3.1% according to an annual calculation, compared to an 11.2% rise from March to May. The export of goods dropped by 5.1% between June and August, according to an annual calculation, following a 6.1% increase between March and May. The exports of goods totaled $3.9 billion in August and were comprised of 84% industrial exports, 14% diamond exports and only 2% agricultural exports. The high-tech industry's exports, which make up 49% of all industrial exports, recorded a 25.1% rise in the past three months, according to an annual calculation – an average monthly increase of 1.9%. (CBS 21.09)

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10.5 Israel's Unemployment Drop Continues in July

The Central Bureau of Statistics announced that Israel's unemployment rate fell to 6.2% in July, from 6.3% in May and June, and from 6.5% in April, based on preliminary monthly trend data. The unemployment rate is at its lowest level since September, 2008. The current number is not that much higher than the record low 5.9% of June and July 2008. Recently published quarterly figures showed that Q2/10 unemployment was 6.2%. However, there was also a rise in the number of workers who are involuntarily employed part time, meaning they were seeking full time work but did not find it. There was also a drop in the number of full time workers. (CBS 21.09)

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10.6 Israel's Household Expenses Rise By 2% in 2009

According to a Central Bureau of Statistics survey, Israeli's monthly housing costs stood at NIS 3,168 (~$840) in 2009, remaining the largest portion of household expenditures. Monthly household expenditures in 2009 averaged NIS 13,009 (~$3,450), an actual increase of 2% compared with 2008 numbers. Ranking household expenditure items, according to their relative portion in overall expenses, puts housing first, followed by transportation, communications, food (excluding fruits and vegetables) and culture, in descending order. Monetary expenditures per household (which are defined as the expenses excluding housing or vehicle services) averaged NIS 9,914 (~$2,630), a 1.2% increase in real terms in comparison with 2008's expenses.

Housing accounted for about one quarter of household expenses, making it the highest relative expense within household spending. Next in relative household expenses was transportation, which stood at NIS 2,485 (~$660) – 19.1% of overall expenses. Spending on foodstuffs (excluding fruits and vegetables) averaged NIS 2,120 (~$560) and represented 16.3% of overall expenses.

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10.7 Israeli's Holiday Spending Up By 13%

Israeli households are spending more this year for the holidays in the Hebrew month of Tishrei that began with Rosh HaShanah, the Jewish New Year. According to a survey conducted by the National Chamber of Commerce, the average expenditure per household this year from Rosh HaShanah to Sukkot was approximately NIS 2,600 ($700). The figure constitutes an increase of nearly 13% over last year for the same period. Israeli expenses totaled some NIS 5 billion for the period. The total expenditures for households during the holidays, not including food, was NIS 2 billion. The highest percentage was spent on fuel and public transportation (32%), with the next largest amounts spent on travel abroad – including to the Sinai Peninsula – (24%) and entertainment (23.5%). Approximately 10% was spent on recreation, including hiking and other pursuits, 8% was spent on clothing and 3% was spent on toys and games. (IsraelNationalNews 28.09)

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10.8 Top 10th Percentile Buys More for Less People

The Central Bureau of Statistics found that nearly half of monthly household expenditures for the bottom fifth percentile of wage-earners was spent on food and housing. In addition, the top fifth percentile spends nearly five times more than the bottom fifth percentile on transportation and housing, and nearly three and a half times more on education, culture and leisure.

According to the survey, nearly 60% of all food purchases were carried out in supermarkets, of which 39.3% are carried out on Thursday and Friday. On average, these purchases are done for an average of 3.3 people, the number of people in the average Israeli household. In the top 10th percentile, the average household size is 2.6 people, in comparison with 4.4 people on average for the bottom 10th percentile. The average number of wage-earners per Israeli household is 1.3. The percentage of ownership of durable consumer goods in the top 10th percentile is higher than in the bottom 10th percentile. Some 70.4% of the top 10th percentile own two or more television sets, in comparison with 18.2% in the bottom 10th percentile. Some 18% of Israeli households own two or more cars, with 51% of the top 10th percentile and just 1% of the bottom 10th percentile owning two or more cars.

Some 49.4% of households in the top 10th percentile own two or more computers versus just 6.3% in the bottom 10th percentile. The CBS survey also found that there are 68 computers for every 100 people in the top 10th percentile, while there are just 14 computers for every 100 people in the bottom 10th percentile. The survey also found that 96% of households in the top 10th percentile have air conditioning in comparison with 45% in the bottom 10th percentile.

Decrease in Number of Cable Subscribers

The survey also indicated a continuing upward trend of technology consumption. In 1999, just 40.7% of households had a computer, versus 74.4% in 2009. Just 11.9% of households were connected to the internet in 1999, versus 66.3% in 2009. The percentage of cell phone ownership rose from 52.3% in 1999 to 91.8% in 2009. With that, the rate of cell phone ownership in 2009 is higher than the rate of land-line ownership, which stands at 82.4%. In comparison with OECD countries, Israel is ranked in the middle in terms of computer ownership (74%) and internet connectivity (66%). Regarding these parameters, Israel is ranked higher than France, but lower than Germany and the US.

There is a downward trend since 2002, according to the survey, in cable and satellite TV subscriptions. In 2001, 73.2% of households held cable or satellite subscriptions in comparison with 64.3% in 2009. One explanation for this trend, according to the CBS, is increasing use of private satellite dishes. In 2009, 15.2% of Israeli citizens had a satellite dish. Some 75% of the households with satellite dishes were Arab.
The CBS reported that the 2009 figures are based on 6,270 households surveyed throughout the year in 174 cities and towns throughout the country, not including kibbutzim, cooperative settlements or Bedouins living outside towns. These households are representative of some 2,100,000 households within the broader population. (CBS 14.09)

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10.9 Israel Slips to 81 in Economic Freedom Index

Israel was ranked 81 in the world out of 141 countries in terms of economic freedom, down from 78 last year, according to the Economic Freedom of the World: 2010 Annual Report published by Canada's Fraser Institute. Israel found itself ranked behind Haiti ranked 78, Fiji 79 and Egypt 80 but ahead of China and South Africa ranked 82 and Russia ranked 84. Hong Kong topped the rankings followed by Singapore, New Zealand, Switzerland, Chile and the US in sixth place. The UK was in 10th place. The economic freedom ranking is calculated by five different areas: size of government, legal structure and protection of property rights, access to sound money, freedom to trade internationally and regulation of credit, labor and business. The Index is based on data from 2008. The area in which Israel is least free, for which it received a score of 5 out of 10, is the size of government. A high marginal tax rate (5) and a high level of government spending as a share of GDP (3.0) also lowered Israel's score. (Globes20.09)

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11: IN DEPTH

11.1 ISRAEL: Consumer Electronics Report for 2010's Fourth Quarter

Research and Markets (http://www.researchandmarkets.com) "Israel Consumer Electronics Report Q4/10" says that Israel's consumer electronics devices market, defined as the addressable market for computing devices, mobile handsets and AV products, is forecast at around $2.4bn in 2010. Following a deceleration in 2009, the market is expected to grow at a compound annual growth rate (CAGR) of 5%, to $3.5bn, by 2014, driven by a growing population as well as rising computer and internet penetration, along with product innovation and new technologies. Israel's economic growth slipped slightly in Q1/10, but still looks well supported by factors such as stimulatory fiscal spending as well as low inflation and interest rates. In 2009, consumer electronics spending was stronger than initially expected, and we highlight the strong recovery in purchases of durable goods over the course of last year. BMI expects growth to recover further in 2010, but remain below the trend rate of 2006-2008, with faster growth areas including smartphones, netbooks and premium TV sets.

Computers : Computer hardware accounted for around 79% of Israeli consumer electronics spending in 2009, due to demand from key verticals such as government and military. Notebook sales grew strongly in both Q209 and Q309, with growth in regular notebook shipments as well as those of lower priced netbooks. Computer hardware CAGR for the 2010-2014 period is forecast at about 5%, driven by sales of notebooks and netbooks.

AV Devices: AV devices accounted for around 12% of Israeli consumer electronics spending in 2009. In 2010, Israel's domestic AV device market is projected at $371mn. The market is expected to grow at a CAGR of 7% between 2010-2014 to a value of $482mn, with drivers including the launch of digital TV services.

Mobile Handsets: Mobile handset sales accounted for around 9% of Israel's consumer electronics spending in 2009. Following a dip in 2009, Israel's market handset sales are expected to grow at a CAGR of 5% to $315mn in 2014, as mobile subscriber penetration reaches 126%. In 2009, all of Israel's major mobile operators launched Apples iPhone, with average subsidies of around NIS 2,000. Handset sales will be dominated by the replacement market, with growing demand for smartphones, and 3G handsets. (R&M 23.09)

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11.2 LEBANON: Tourism's Place in the Sun

Lebanon is quietly confident of breaking through the 2m mark for tourist arrivals this year and setting a new record both for visitor numbers and revenue, but the government is being urged to do more to ensure the sector's growth. Tourism is one of the key sectors of the Lebanese economy, representing some 20% of gross domestic product (GDP), and – according to the World Council of Travel and Tourism (WTTC) – accounting for 38% of employment, a figure it expects to increase to 42% over the next decade.

Last year, just over 1.85m tourists went through passport control at Lebanon's ports of entry, a 39% increase on 2008 that smashed the previous best of 1.4m, posted in 1974, a year before the outbreak of the 15-year-long civil war. The recovery will be given further momentum if the tourism sector meets the high expectations held for it in 2010 by the Ministry of Tourism, which predicts that arrivals could top 2.25m this year.

To date, this forecast looks like being fulfilled, with some 964,000 visitors arriving in the first six months of the year, a 26.6% rise on the 761,415 tourists in the same period of 2009. The trend appears to be continuing in to the second half of the year, with July arrivals up 11.58% on the same month in 2009, with 361,934 visitors landing, according to Tourism Ministry figures released in mid August.

Lebanon still has to contend with the long-standing impression, dating from the civil war and reinforced by Hezbollah attacks on Israel, that it remains an unsafe place to visit. Changing this could take time and a sustained period of uninterrupted peace. While some tourists may be wary of coming to Lebanon, investors in the tourism sector are not, with around $3bn worth of projects currently being implemented across the country. In Beirut alone, there are some 1200 new hotel rooms being added to the existing short-term accommodation stock, with the total number of rooms expected in all of Lebanon to rise from the current 16,000 to 21,000 by 2011, according to Tourism Ministry figures.

Though investments from the private sector are on the rise, they are not being matched by government funding, a problem that could harm the tourism industry down the track. Road links to some of Lebanon's most popular and scenic sites outside of Beirut are poorly maintained, making for extended traveling time and a bumpy ride. While booming visitor numbers strain water supplies, especially in the summer months, many hotels, resorts and tourism attractions need to operate their own electricity. While many tourists might not mind roughing it a bit, most would still like a hot shower and a cold drink after doing so. If the Lebanese tourism industry is to meet the predictions of global travel bodies and become a bigger employer and the economy's driving force, the government may need to try harder to smooth the sector's path. (OBG 20.09)

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11.3 LEBANON: The Lebanese Army: Victim of the Politicians

On 22 September, Nadim Hasbani wrote in the Carnegie Arab Reform Bulletin (http://www.carnegieendowment.org/arb) that street battles in Beirut's Borj Abi Haidar neighborhood during August, as well as the attack by Lebanese forces on Israel that left three Lebanese and one Israeli dead, have highlighted the importance of the Lebanese Armed Forces (LAF) in maintaining stability in the country. But while Lebanese politicians talk about strengthening the LAF, most of them do not really want a strong national army. A strong LAF would mean empowered state institutions that, in turn, would weaken feudal political leaders who have been in power for decades. Lebanon's current weak state institutions allow politicians to offer their supporters services such as medical care, education and welfare support. Should the Lebanese ever decide they are serious about strengthening the LAF, their first steps should include formulating a real defense strategy and increasing spending on military procurement.

After the Lebanese civil war ended in 1991, Syria's military played the central security role in the country and kept the LAF both nationally and internationally marginalized and away from international attention. Following the 2005 Syrian withdrawal, the LAF slowly began to rearm and equip itself as a fighting force. But with no domestic defense industry or real procurement budget, the LAF has had to largely rely on foreign donations. The United States and other outsiders became increasingly aware of the LAF's needs after it ousted an al-Qaeda inspired group entrenched in the Palestinian refugee camp of Nahr al-Bared in 2007. An underequipped, undertrained army was sent into an urban fighting environment. Commanders managed the battle via regular cell phones, and soldiers had little ammunition, no real air support and limited intelligence. The LAF won the battle after three months, but it cost the lives of 169 soldiers.

This confrontation showed the international community the potential value of the LAF and highlighted the importance of a strong state capable of curtailing the growth and infiltration of violent extremist groups in Lebanon. But because of the continued state of war between Lebanon and Israel, most Western countries donated insufficient, secondhand or technologically outdated military equipment. Since 2006, the United States has provided more than $600 million worth of vehicles, spare parts for aging aircraft, Howitzers, ammunition, light weapons, radios and training. Substantial aid came also from the UAE (Gazelle and Puma helicopters) and, to a much lesser extent, from Germany (coastal patrol boats), France (training), the U.K. (spare parts) and Belgium (armored transporters and ambulances). This support was much needed after decades of an undeclared international embargo on weapons to the LAF, but it was far from adequate in strengthening the military.

The LAF is often seen as a test case for institution building in Lebanon because it enjoys the support of the vast majority of Lebanese across the sectarian spectrum. But the lack of real political will is reflected, for example, in the "National Dialogue Table" talks, held every few months since 2006 with the stated aim of formulating a national defense strategy. Participants have used the talks as a debating club, putting forth superficial proposals chiefly for public consumption and failing to make any real contributions toward formulating a defense strategy.

Another sign of the lack of seriousness with which Lebanese leaders approach the LAF lies in the absence of a realistic procurement budget. Out of a $1 billion annual defense budget, more than $800 million goes towards salaries (including hundreds of generals and close to a thousand colonels) and only $30 million per year is allocated to procurement, most of it spent on spare parts and logistics. In comparison, defense budgets for Jordan and Syria for 2009 were respectively $2.3 billion and $2 billion. According to a study by the Center for Strategic International Studies, between 2005 and 2008 Jordan spent $1.6 billion and Syria $5 billion on equipment orders.

In the latest talks on creating a procurement budget, the minister of national defense announced in mid-August the establishment of a Central Bank account to which private citizens could donate money to support the army's weapon procurements. But this idea was again a public relations exercise. Indeed, the account has not been opened yet because it should, by law, be opened by the cabinet, which the ministry did not consult before its announcement. Moreover, even if the donations account were to open soon, no country can realistically plan its military procurement budget based on charitable donations.

With no real defense strategy or a serious procurement budget, the LAF is pushed into a domestic security mission for which it is not prepared. Should it play that role effectively, it would clash with the multitude of local politicians protecting rogue armed supporters. The fact that it cannot ensures a weak military institution to the advantage of the same old established political elites, most of whom are former civil war warlords. This domestic role also comes at the expense of an external security role, in which the army would take over Hezbollah's self-declared mission of protecting Lebanon against Israeli aggressions.

Real-world empowerment of the LAF would start by finding the right balance between foreign assistance and national spending in order to implement a comprehensive build-up and procurement plan. The army command has such a plan in hand, which would include infrastructure construction (barracks, airfield upgrades, etc.), operational main battle tanks, air-to-ground capable jetfighters (for air support against militias in scenarios similar to the LAF's 2007 operation at the Nahr el-Bared refugee camp), short range anti-aircraft missiles, anti-tank missiles, transport and attack helicopters, naval landing craft, and other basic military development needs. The plan would cost more than $2 billion.

In the last few years, the LAF has found itself in a relatively stable national context for the first time since the 1970s, liberated from dominance by either Israel or Syria. The Lebanese military should seize this moment to do what has not yet been done in post-independence history: open dialogue channels with political leaders in order to persuade them to think and budget for long-term military development in Lebanon. Nadim Hasbani is director of communications at the Carnegie Middle East Center in Beirut. (Carnegie ARB 22.09)

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11.4 KUWAIT: Defense and Security Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) Kuwait Defense and Security Report notes that the high standard of living enjoyed by Kuwait's small population depends on a number of factors, none of which is guaranteed into the future. The most obvious of these is the stream of oil revenues from continuing high levels of production and high world oil prices. In the longer term the level of oil reserves in Kuwait is finite and may be even more limited that has been generally believed. Oil revenues represent virtually the whole of government revenue and it is government spending that underpins social cohesion and blunts the incentive for radical change. In the current economic downturn for example the government has paid out unemployment compensation and has taken steps to pay off citizens' bad debts. Increasing production efficiencies to extract more oil from the known fields will require foreign technology and FDI that is not allowed under Kuwaiti law. Efforts to relax the restrictions on foreign participation are making little progress.

Militarily, the country has been under the protection of the United States. Among other assets, Kuwait hosts Camp Arifjan, a vast, purpose-built $200m camp south of Kuwait City, housing 15,000 US soldiers. The downside is that this position is very unpopular with Islamist and anti-Western groups. The protection from direct military attack comes at the price of increased risk from terrorist attack. In common with several of the Gulf State countries, the population is made up from expatriate workers (65%) and Kuwaitis (35%). Among Kuwaitis the population is split between Sunni (65%) and Shia (35%). Allegiance among the Shia lies, to a significant extent, with Iran while the country and its Sunni majority align with Saudi Arabia. Some Shia, including members of parliament openly state that they are principally Shia and only secondly Kuwaiti. Developments in the region outside Kuwait could increase tensions between the two groups, especially if the US launches military attacks against Iran's nuclear facilities.

Kuwait's small military forces are dominated by the army, with 11,500 of the total 15,500 personnel. With only a very small industrial base virtually all military equipment is imported. Most comes from the US, but the UK and France have also received significant orders from time to time. There is parliamentary resistance to some of the programs currently being considered. The need for and the cost of some of these advanced weapons systems is being questioned - especially in the light of an essentially flat economic outlook. (R&M 27.09)

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11.5 KUWAIT: Testing Times for Education

A decision by the Kuwaiti Ministry of Education to extend school hours for the coming academic year, as reported by the Oxford Business Group, has prompted a national debate over the future of education in the emirate. The questions being raised are especially significant given that the World Bank expects a 23% increase in the population of 15- to 24-year-olds over the next 15 years.

The Kuwait Teachers Association (KTA) has been a vocal critic of the proposal, saying that "the education minister [Moudhi Humoud] has failed to reason according to documented historical and scientific evidence against extending school hours. We wonder if the minister really understands the extent of destruction to the standard of education, based on her failure to make the right decisions."

Despite such opposition, the move is likely to be welcomed by the development community. In July 2009 the World Bank warned that if the government cannot reform the education system, international academic institutions may cease to recognize Kuwaiti high school certificates. The bank's chief concern was the number of school days: the state system averaged just 528 teaching hours in 2005/06, well below the OECD average of 800 hours of primary-level education per year.

As in many other Persian Gulf states, the quality of Kuwait's educational system is a sensitive subject. Despite the fact that a commitment to education has always been a significant component of the comprehensive welfare system, indicators suggest that the emirate could perform better. The most recent World Bank data available (2006) also shows that Kuwait's expenditure per student as a percentage of GDP per capita has reached 11.1%, 14.6% and 82.8% respectively at the primary, secondary and tertiary levels.

However, a $104b development plan released in February 2010 has bolstered the country's basic economic indicators, while literacy rates are high and enrolment levels are climbing steadily. The plan designated a significant amount for education, in addition to the $4.3b allocated to the sector in the 2009/10 budget. According to a survey by the World Bank, in 2008 gross primary enrolment was at 95.5%, a rise of nearly 5% on the previous year. The country ranks in the middle of education levels for the region above Saudi Arabia, Oman and Lebanon but below the UAE, Qatar, Bahrain and Jordan.

While spending on education may be increasing, questions over the quality of teaching have been raised by international surveys. In the 2007 Trends in Maths and Science Study (TIMSS), which measures countries against international education benchmarks, Kuwait's 8th graders averaged a score of 354. This was the fifth lowest score in the 8th grade section of the survey and the third lowest in the region, above only Saudi Arabia and Qatar. It was also well below the international median level of 500. It was this poor performance that initiated the present period of debate as to the most effective way to reform the ailing education system.

This debate is critical, given the prevailing demographic conditions. According to the most recent census, conducted in 2005, the school-age population of Kuwaiti nationals represents 40% of the total population, or 426,000 people. This is well above the average for OECD countries such as France or Germany, where the percentage of the school age population stood at 21% and 18%, respectively.

The burgeoning school-age population might burden the educational system, but it also presents an opportunity for human capital development and economic growth. The outcome of the school hours debate may prove particularly significant in determining whether eventually there are enough competent graduates to meet the demands of the local and international labor markets. (OBG 21.09)

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11.6 KUWAIT: Infrastructure Report for Q4 - 2010

Research and Markets (http://www.researchandmarkets.com) "Kuwait Infrastructure Report Q4 2010" says that while the recent passing of a privatization law and a government commitment to mobilizing a $108bn infrastructure package certainly provide cause for optimism, we nonetheless maintain our core view that in the short to medium-term (2010-2014) at least, political and bureaucratic hurdles will continue to deter much-needed private investment in Kuwait's infrastructure sector.

Following the release of new 2008 data we have upwardly revised our forecast for Kuwait's construction industry value, pointing to a more favorable outlook for the Persian Gulf country construction sector in 2010. We now expect Kuwait's construction industry value to grow by 2.4% in 2010 in real terms and to experience stable average real growth of 2.36% over the duration of the 2010-2014 forecast period.

Recent major developments:

In May 2010, a long-awaited privatization law was passed, which it is hoped will provide a boost to the country's much-maligned business environment and long-term foreign direct investment (FDI) prospects. Importantly, the law paves the way for foreign companies to hold a stake in Kuwait's power sector for the first time, opening up the country's power sector to crucial private sector capital and expertise. Still, however encouraging this positive step forward, optimism must be tempered given the widespread political opposition to what was already a considerably watered down legislative bill, which we believe will continue to affect foreign investor interest in the short to medium-term

Following the approval of a wide-ranging $108bn infrastructure package in February 2010 there is reason to hope that Kuwait is on the brink of an infrastructure boom. In particular, a slew of planned power projects including a plan to tender an estimated $17.4bn worth of power generation and desalination projects with the aim of installing 14,260 megawatts (MW) of new generating capacity by 2017 provide hope that the industry is on the verge of seeing the implementation of much-needed projects.

The progress of Kuwait's first independent power and water project (IWPP), for which a tender was launched early 2010, will be watched closely by many foreign investors for its potential to act as a bellwether for Kuwait's future energy strategy. With investors due to submit indications of interest (IOIs) in June 2010 for a 40% stake in the 1,500MW Al-Zour power and desalination plant, much significance will be attached to the project's progress and implementation. Indeed, if successful the project has the potential to pave the way for greater private sector participation in Kuwait's infrastructure development.

The defining four-year development plan albeit reduced from $129bn leaves few sub-sectors untouched, with rail, power, oil, water, health and education all slated for investment as the government develops new ports and cities. The smooth implementation of the development plans will be paramount in a country where projects have been plagued by disputes between the executive and legislature. The litany of projects or at least those that come to fruition will lift growth Kuwait's construction sector up from $2.36bn in 2010 by an average of 2.4% year-on-year (y-o-y) to $3bn in 2014 according to the author's calculations. (R&M 22.09)

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11.7 BAHRAIN: Bahrain's Electoral Campaign Starts to Ignite

On 15 September, Fred Lawson wrote in the Carnegie Arab Reform Bulletin (http://www.carnegieendowment.org/arb/) that campaigning for elections in Bahrain is typically combative, but this year the circumstances leading up to the combined parliamentary and municipal elections scheduled for October 23 are nothing short of explosive. Amidst a major crackdown on opposition figures and organizations, most of which champion the interests of the disadvantaged Shia community, various political societies (Bahrain has no political parties) are scrambling to define their platforms.

Just one week after King Hamad bin' Isa Al Khalifa announced the date of the balloting on August 8, the campaign against liberals and leftists commenced with the arrest of Dr. 'Abd al-Jalil Singace, a key figure in Haqq (the Movement for Liberties and Democracy). Three other prominent human rights activists were rounded up the next day. The four were charged with setting up "an organized network aiming to undermine the security and stability of the country," as well as with inciting violence and terrorist acts against private and public property.

In response to the arrests, protesters clashed with riot police in poorer predominantly Shia districts around Manama. Setting tires and trash cans on fire to block main roads in suburbs became more widespread and frequent. Security forces responded by stepping up forces against critics of the regime - by contrast, in April 2009, expressions of popular anger compelled the ruler to release Singace. Four more leading proponents of reform were taken into custody on August 19, along with a dozen young people who had allegedly engaged in tire burning and tossing Molotov cocktails.

Because they have been charged under the terms of the draconian 2006 anti-terrorism statute, the detainees enjoy no rights of judicial review or access to counsel. The Bahrain Center for Human Rights (BCHR) joined Human Rights Watch and the regionally-based Gulf Group in reporting that the detainees have been subjected to torture. The government responded by adding the head of BCHR to the roster of reputed terrorists. When the Bahrain Human Rights Society (which is usually more deferential than BCHR to the regime) called for the detainees' civil rights to be respected, the Ministry of Development and Social Affairs seized control of the organization.

Bahraini authorities justified such extraordinary measures on the grounds that Haqq and other groups that reject the electoral process have allegedly received funding from religious networks based in Iran and Iraq, and that they maintain links to suspected cells of the Iranian militant group Ansar-i Hizbullah. There is widespread suspicion, however, that the arrests are more an attempt to divide and weaken the opposition than a response to a looming threat of terrorism or sedition.

The primary targeted organization, Haqq, has consistently criticized Bahrain's pre-eminent Shia political association, al-Wefaq (the Islamic National Accord Society), for its decision to contest the 2006 elections and start playing by the rules of the political game. The crackdown on Haqq in the run-up to next month's balloting confronts the leadership of al-Wefaq with a dilemma: it can close ranks with fellow Shia and pull out of the electoral process, opening itself to government accusations of complicity with hostile outside forces, or it can participate in the elections and abandon a large part of its potential constituency in the hope of effecting change from inside.

Al-Wefaq reacted to the August arrests by condemning the use of violence by the authorities and supporters of Haqq alike. The head of the society charged that the regime's resort to force had "destroyed ten years of progress," and a spokesperson blamed escalating protests on long-standing economic grievances rather than external provocation. Despite its public appeal for calm and expanded dialogue, al-Wefaq quickly found itself dragged into the confrontation. The society's website was blocked by the authorities in early September together with several others affiliated with the opposition. Al-Wefaq then released a statement that decried the fact that the accused had been stripped of their legal rights and pointed to evidence of torture. At the same time, however, al-Wefaq registered a slate of candidates to run in the October elections. The list did not include three prominent sitting deputies, including the society's leader Sheikh 'Ali Salman, who chose to disengage from battles in parliament.

The crackdown has sharpened rivalry between al-Wefaq and other political societies. Widespread frustration with the inability of the lower house of parliament to enact any real change has resuscitated the liberal al-Wa'd (National Democratic Action Society) and al-Minbar al-Taqqdumi (the leftist Progressive Platform), neither of which won seats in the 2006 elections. Both organizations have castigated al-Wefaq's lackluster performance in parliament, and an off-shoot of al-Minbar al-Taqaddumi called al-Shabiba (the Youth Society) is taking steps to mobilize younger voters to break the grip that Islamists of all stripes have on parliament.

Among Sunni Bahrainis as well, new groups have emerged, such as ‘Adala (the Integrity National Movement), which opposes the government's policy of extending nationality, and thereby voting rights, to thousands of non-Bahraini Sunnis. In addition, independents (mostly businesspeople) have emerged in unprecedented numbers, seeking to replace interminable partisan bickering with orderly governance. While al-Wefaq's electoral list consists entirely of men, a few influential women have stepped forward as candidates for al-Wa'd and as independents.

The broader context for the current repression is a society simmering with discontent over the lack of employment opportunities, particularly for educated citizens. University graduates have demonstrated regularly in front of the ministries of education and labor to demand secure jobs in the civil service, and a thousand members of the General Federation of Bahraini Trade Unions marched on the parliament building on May 1 to protest job losses in construction and finance, and to demand that public sector employees be permitted to unionize. Other persistent irritants continue to fester as well, notably the systematic confiscation of agricultural land and shoreline property by well-connected individuals. Such actions have not only enriched members of the ruling family and their closest allies but have also sent land prices soaring.

As of this writing, it is unclear whether the authorities will end up releasing the detained activists in the face of popular outrage, as they have done in the past. If not, the October elections are likely to take place in the most volatile atmosphere in Bahrain since King Hamad came to power in 1999. Such a development would effectively deprive the king's reform program-about which most Bahrainis have become disillusioned since the issuance of the "amended constitution" in 2002-of any remaining credibility. Fred H. Lawson is a professor of government at Mills College. (CARB 15.09)

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11.8 QATAR: Pharmaceuticals and Healthcare Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Qatar Pharmaceuticals and Healthcare Report Q4/10" states that in the updated Q4/10 Business Environment Ratings (BER) for the Middle East and Africa (MEA) region, Qatar is placed 10th out of 19 countries. Globally, Qatar ranks 58th, out of the 77 countries surveyed in our ever-expanding pharmaceutical universe. On the Risks side, Qatar offers an attractive operating regime, in addition to a sound economic base and predictable policies. However, on the recently remodeled Rewards side, we judge Qatar to be more challenging, given its smaller and young population, which precludes higher rates of the use of pharmaceuticals and medical services in general. Nevertheless, we expect the compound annual growth rate (CAGR) of the overall market value to be a strong 10.01% over our five-year forecast period (local tender is pegged to the US dollar), reaching $375m in 2014, from the calculated $233m in 2009.

However, although pharmaceutical regulatory risk is low at present, we also caution that the government may be forced to take a less generous approach to reimbursement if oil revenues decline, especially in the aftermath of the creation of a new Supreme Council of Health, with powers to set prices for medical services and pharmaceuticals. Still, given the relative wealth of the country, spending by Qataris will continue to favor high-value drugs. Moreover, the prevalence of chronic diseases such as diabetes and hypertension will also serve maintain demand for patented products, although patent expirations will hamper faster value development of the segment.

Economic fundamentals of Qatar are also solid, with the GDP expected to grow by 15% year-on-year (y-o-y) in the course of 2010, backed up by relatively high oil and gas prices, thus allowing for an increase in fiscal expenditure. However, domestic consumption does not reveal a particularly bright outlook, which will also have a bearing on the usage of non-essential medical products and services. On a more positive note, international ratings agency Standard & Poor's (S&P) recently upgraded Qatar's long term sovereign credit rating to AA, due to the government's solid fiscal and external balance sheets.

In the meantime, Qatar and the wider Gulf Cooperation Council (GCC) region will continue to attract healthcare investments as demand for medical services continues to grow. In fact, in line with our core view that emerging markets will drive industry growth, Qatar First Investment Bank (QFIB) and Dubai-based Ithmar Capital, a regional private equity firm, recently launched a new healthcare platform which will seek to capitalize on the extensive growth opportunities in the sector in the GCC. Ithmar Capital has taken a $272.2m majority stake in Al Noor Medical Company in Abu Dhabi, a privately-run healthcare company that operates three hospitals, three clinics and 10 pharmacies, in order to create a regional healthcare services company. (R&M 20.09)

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11.9 QATAR: Consumer Electronics Report for Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Qatar Consumer Electronics Report Q4 2010" says Qatar's consumer electronics devices market is projected at around $424.9m in 2010. The Qatar market entered 2010 in stronger condition than many of its regional neighbors and healthy growth is expected, after a deceleration in 2009, and spending is forecast to increase to $551.1m by 2014. The addressable market for consumer electronics devices will be driven by a rapidly expanding economy and an average population growth rate of 3% over the next five years. An evolving retail landscape will help to stimulate sales of consumer electronics devices, as the market grows at an expected 2010-2014 compound annual growth rate (CAGR) of 6.7%. Other drivers will include product innovation and factors such as increased competition in the mobile communications sector and the rollout of high-spend broadband services.

Computer hardware accounted for about 48% of Qatari consumer electronics spending in 2009. BMI forecasts Qatari domestic market computer hardware sales (including notebooks and accessories) of $204.8m in 2010, up from $189.6m in 2009. Computer hardware CAGR for the 2010-2014 period is forecast at about 9.4%, with drivers including tenders in sectors such as healthcare and education.

Audio and video (AV) devices accounted for around 36% of Qatari consumer electronics spending in 2009. Qatar's domestic AV device market is estimated at $148.2m in 2010. The market is projected to grow at a CAGR of 3.1% between 2010 and 2014 to $166.6m by 2014.

Mobile Handsets Handset sales in Qatar are expected to grow at a CAGR of 5.7% in 2010-2014 to $90m by the end of the forecast period. The replacement market will continue to dominate as mobile penetration passes 271% in 2014, and there will be growing demand for smartphones and 3G handsets. Increased competition in the mobile communications market following the launch of services by Vodafo ne Qatar in August 2009 will help to boost handset sales. During 2010, Vodafone Qatar has promised to launch internet-enabled low-cost handsets, some for as little as $20, to encourage uptake from lower-income consumers. (R&M 22.09)

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11.10 UNITED ARAB EMIRATES: Consumer Electronics Report Q4 - 2010

Research and Markets' (http://www.researchandmarkets.com) "United Arab Emirates Consumer Electronics Report Q4 2010" defines the market as the addressable market for computing devices, mobile handsets and video, audio and gaming products. It is projected to be worth $3.1bn in 2010. This expected to increase to $3.9bn by 2014, driven the popularity of new electronic devices such as LED and 3G TV sets, 3G mobile handsets, smartphones, feature-rich notebooks, MP3/MP4 players and Bluray players. For 2010, modest single-digit growth in consumer electronics sales is forecast, following a market pickup in Q4/09. Sales were sluggish in January 2010 and while large consumer electronics retailers such as Jackys and Jumbo Electronics expect better times ahead, they remained cautious. The shift towards more cautious spending patterns is likely to persist well into 2011 and, following the Dubai financial crisis, the coming years will bring about a shift in the balance of population and GDP in Abu Dhabi's favor.

Computer hardware accounted for 57% of the UAEs consumer electronics spending in 2009. BMI forecasts domestic market computer hardware sales, including notebooks and accessories, of $1.9bn in 2010, up from $1.6bn in 2009. The compound annual growth rate (CAGR) for sales of computer hardware over 2010-2014 is forecast at about 7%. Stronger demand in the notebook sector was the main growth driver in 2009 as consumers felt the benefits of aggressive channel promotions.

AV devices accounted for about 30% of consumer electronics spending in the UAE in 2009. The addressable Emirati AV device market is projected at $855mn in 2010. The market is expected to grow at a CAGR of 4% between 2010 and 2014 to reach $1.07bn by the end of the forecast period. The rollout of high definition broadcasting will drive demand for premium TV sets and Blu-ray devices. Meanwhile following the launch of 3D TV services by triple-play service provider Etisalat, vendors will target this potential growth area.

Mobile handset sales accounted for approximately 13% of UAE consumer electronics spending in 2009. Following a reverse last year, market handset sales are expected to grow at a CAGR of 5% to $410mn through to 2014, when mobile subscriber penetration is forecast to reach 246%. Sales will be dominated by the replacement market and revenues driven by demand for smartphones and 3G handsets, despite recent uncertainty surrounding potential restrictions on BlackBerry services in the UAE. (R&M 22.09)

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11.11 OMAN: Consumer Electronics Report Q4 2010

Research and Markets (http://www.researchandmarkets.com) "Oman Consumer Electronics Report Q4 2010" says the market is forecast at $480m in 2010. This is expected to increase to $593.2m by 2014, driven by new technologies and the growing popularity of digital lifestyle products such as LCD TV sets, feature-rich notebook computers and digital cameras, as well as other key product groups.

Spending is expected to pick up again after 2010, as new technologies and features such as higher capability netbooks, light emitting diode (LED) TV sets and feature-rich smartphones and the rollout of 3G services act as demand drivers. However, growth is forecast to remain below pre-credit crunch levels in 2010-2014, as consumers feel the effect of the regional property slump and credit tightening. An evolving retail landscape will help to stimulate sales, with a growing population attracting more large electronics retailers to the market.

Computer hardware accounted for around 36% of Omani consumer electronics spending in 2009. BMI forecasts Oman's domestic market computer hardware sales (including notebooks and accessories) of $170.9m in 2010, up from $162.7m in 2009. Computer hardware compound annual growth rate (CAGR) for the 2010- 2014 period is forecast at about 7%, with growth drivers including the governments Towards Digital Oman strategy. Wireless capabilities will boost demand for PCs, stimulated by new infrastructure investment.

Audio and video (AV) devices accounted for about 30% of Omani consumer electronics spending in 2009. Oman's addressable AV device market is estimated at $144m in 2010. The market is expected to grow at a CAGR of 4% between 2010 and 2014, with growth drivers including LED TV sets and Blu-ray disc players.

Mobile handset sales accounted for around 34% of Omani consumer electronics spending in 2009. Oman's market handset sales are expected to grow to $199m by 2014 as mobile subscriber penetration reaches 177%. There will be growing demand for 3G handsets, which could account for about 10% of Oman's handset sales in 2010. Oman is in the regional vanguard of the mobile virtual network operator (MVNO) trend, following the launch of a third virtual operator, which could lead to a more segmented handset market. (R&M 23.09)

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11.12 LIBYA: Energy Profile - Largest African Proven Oil Reserves

The US Energy Information Administration (EIA) wrote that the Libyan economy is heavily dependent on the hydrocarbon industry which, according to the International Monetary Fund (IMF), accounted for over 95% of export earnings and an estimated 80% of fiscal revenues in 2008 – preliminary 2009 data and short-term forecasts indicate that these figures will remain relatively stable through 2014. According to the Oil and Gas Journal (OGJ), Libya holds around 44 billion barrels of oil reserves, the largest in Africa, and slightly over 54 trillion cubic feet (tcf) of natural gas reserves. In 2009, total oil production (crude plus liquids) was approximately 1.8 million barrels per day (bbl/d). The Libyan government plans to increase its oil reserves, production capacity, and further develop the natural gas sector in the medium-term as the country continues to recover from over a decade of U.S. and international sanctions. The United Nations and the United States lifted sanctions on Libya in 2003 and 2004, respectively. In 2006, the United States rescinded Libya's designation as a state sponsor of terrorism. Since then, international oil companies have stepped up investments in hydrocarbon exploration and production despite some degree of regulatory uncertainty.

Libya's energy consumption mix has remained relatively constant throughout the decade, with approximately 74% of energy demand being met by oil and 26% by natural gas. However, with electricity demand on the rise, the government is planning to expand the use of natural gas to meet domestic needs while also exploiting solar and wind potential in more rural areas. Natural gas currently represents about 45% of generated electricity.

Oil: Libya, a member of the Organization of Petroleum Exporting Countries (OPEC), holds the largest proven oil reserves in Africa, followed by Nigeria and Algeria. According to Oil and Gas Journal (OGJ), Libya had total proven oil reserves of 44 billion barrels as of January 2010, the largest reserves in Africa. About 80% of Libya's proven oil reserves are located in the Sirte basin, which is responsible for most of the country's oil output.

Libya hopes to increase oil reserve estimates with incentives for additional exploration in both established oil producing areas as well as more remote parts of the country. Recent increases in foreign investment have begun to slow as a result of uncertainties stemming from OPEC quotas, infrastructure constraints, and contract renegotiations.

Production: Despite Libya's oil reserves, oil production peaked at over 3 million bbl/d in the late 1960s and has since been in decline. The National Oil Company (NOC) would like to once again raise oil production capacity back up to 3 million bbl/d – a target that the NOC has recently delayed until 2017. Nonetheless, crude oil capacity has increased somewhat over the past decade from 1.43 million bbl/d in 1999 to 1.8 million bbl/d in 2009. Crude oil production in 2009 was approximately 1.65 million bb/d, about 150,000 bbl/d below capacity but still above the production quota set by OPEC which is currently at 1.47 million bbl/d. Most of the short-term oil production increases are expected to come from enhanced oil recovery (EOR) processes and any major new production in Libya will require additional pipeline capacity for exports.

Exports: With domestic consumption of 280,000 bbl/d in 2009, Libya had estimated net exports (including all liquids) of 1.5 million bbl/d. According to 2009 official trade data as reported to the Global Trade Atlas, the vast majority of Libyan oil exports are sold to European countries like Italy (425,000 bbl/d), Germany (178,000 bbl/d), France (133,000 bbl/d) and Spain (115,000). With the lifting of sanctions against Libya in 2004, the United States has increased its imports of Libyan oil. According to EIA estimates, the United States imported an average of 80,000 bbl/d from Libya in 2009, up from 56,000 bbl/d in 2005 but, as a result of the U.S. economic downturn and subsequent decline in oil demand, 2009 levels were below 2007 highs of 117,000 bbl/d.

Libyan oil is generally light (high API gravity) and sweet (low sulfur content). The country's nine export grades have API gravities that range from 26.0o – 43.3o. While the lighter, sweeter grades are generally sold to Europe, the heavier crude oils are often exported to Asian markets.

Refining: According to OGJ, Libya has five domestic refineries, with a combined capacity of 378,000 bbl/d. Libya's refineries include: 1) the Ras Lanuf export refinery, completed in 1984 and located on the Gulf of Sirte, with a crude oil refining capacity of 220,000 bbl/d; 2) the Az Zawiya refinery, completed in 1974 and located in northwestern Libya, with crude processing capacity of 120,000 bbl/d; 3) the Tobruk refinery, with crude capacity of 20,000 bbl/d; 4) Sarir, a topping facility with 10,000 bbl/d of capacity; and 5) Brega, the oldest refinery in Libya, located near Tobruk with crude capacity of 8,000 bbl/d.

Libya's refining sector reportedly was impacted by UN sanctions, specifically UN Resolution 883 of November 11, 1993, which banned Libya from importing refinery equipment. Libya is seeking a comprehensive upgrade to its entire refining system, with a particular aim of increasing output of gasoline and other light products. In 2009, the NOC and the Trusta Consortium (United Arab Emirates) signed an agreement for upgrades on the Ras Lanuf refinery to expand output to 240,000 bbl/d.

Sector Organization: Libya's oil industry is run by the state-owned National Oil Corporation (NOC). The NOC is responsible for implementing the Exploration and Production Sharing Agreements (EPSA) with international oil companies (IOCs). NOC is also responsible for field development and improvements as well as downstream activities. IOCs operating in Libya work in exploration, production, transportation and refining and include Eni, StatoilHydro, Occidental, OMV, ConocoPhillips, Hess, Marathon, Shell, BP, ExxonMobil and others.

IOC participation in Libya's oil concessions was initially as high as 49%. However, changes to the production sharing agreements under the EPSA – IV licensing round (2005) limited IOC production shares. The Libyan government has since required that IOCs already operating in the country rewrite existing contracts to comply with the new framework. The key elements included a reduction of the companies' share of output (up to half of what it was) in return for a commitment of fresh investment and an extension of the license period (some up to 15 years).

Overseas Investment: In 2009, the Libyan government invested in Eni, an Italian oil company that has been operating in Libya since 1959 and is Libya's largest foreign oil producer. Through the country's sovereign wealth funds, Libya has been eyeing additional energy investments in Europe and Africa.

Libya also has refinery operations in Europe through its overseas oil retail arm, Tamoil. Through Tamoil, Libya is a direct producer and distributor of refined products in Italy, Germany, Switzerland and Egypt.

Natural Gas: Libya's proven natural gas reserves as of January 1, 2010 were estimated at 54.4 trillion cubic feet (Tcf ) by OGJ. Recent new discoveries and investments in natural gas exploration are expected to raise these estimates in the near-term. The Libyan government plans to significantly increase the country's natural gas production in order to expand the use of natural gas in the power sector; free up more oil for export while maintaining and expanding existing pipeline and LNG exports. These objectives will be met by further promoting the development of existing and new discoveries while at the same time, reducing the volumes of flared natural gas (estimated at 133 Bcf in 2008).

Production: Libya's natural gas production has grown substantially in the last few years. According to EIA, Libya produced 1,070 billion cubic feet (Bcf) of gross natural gas in 2008 of which 562 Bcf was marketed dry natural gas – the remainder was vented, flared or re-injected to enhance oil recovery.

Natural gas currently accounts for 45% of generated electricity. Despite plans to increase natural gas consumption for electricity generation, project delays and infrastructure limitations have kept domestic consumption relatively stable over the past decade. However, the International Energy Agency (IEA) is estimating that by 2012, domestic consumption could increase by as much as 50% if planned pipelines and gas-fired plants come online.

Exports: In 2008, Libya consumed 194 Bcf and exported 368 Bcf of natural gas to Europe, of this, 348.5 Bcf was exported by pipeline, with the remaining 19.5 Bcf in the form of liquefied natural gas (LNG). Natural gas is piped from the Wafa concession and the offshore Bahr es Salam fields to Melitah where it is treated then exported.

Natural gas exports to Europe have grown considerably over the past five years through the 370-mile "Greenstream" underwater natural gas pipeline from Melitah to Gela in Sicily. From Sicily, the natural gas flows to the Italian mainland, and then onwards to the rest of Europe. The Greenstream pipeline came online in October 2004 and is operated by Eni in partnership with NOC.

Liquefied Natural Gas (LNG): In 1971, Libya became the second country in the world (after Algeria in 1964) to export LNG. Since then, Libya's LNG exports have remained low, largely due to technical limitations. Libya's LNG plant, at Marsa El Brega, was built in the late 1960s by Esso and has a nameplate capacity of about 125 Bcf per year. However, U.S. sanctions prevented Libya from obtaining needed equipment to separate out LPG from the natural gas, thereby limiting the plant's output to less than half of capacity. In 2009, LNG exports increased slightly to 24.4 Bcf, all of which was exported to Spain. (EIA 22.09)

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11.13 LIBYA: Defense & Security Report Says Libya Now Looking Outside Russia for Equipment

Research and Markets (http://www.researchandmarkets.com) "Libya Defense and Security Report Q4 2010" report says there was a time when the analysis of Libya was quite straightforward. The country was a pariah state, a supporter of multiple terrorist organizations and hard line anti-West. In the cold war dichotomy is was squarely in the Soviet camp.

Over time, though, that simple position has become more complex. Libya is now quite enigmatic. It uses its oil revenues and consequent economic leverage rather than terrorism to bargain for what it wants. It adopts a much more conciliatory approach to the EU and has lowered tensions with the United States, without actually being friendly towards the United States. On the other hand, Colonel Muammar Qaddafi still employs erratic, contradictory and arbitrary changes in policy that makes predicting future decisions almost impossible.

There is an increasingly important but unanswered question hanging over the succession. Qadhafi has been in power since 1969. His son Saif sometimes, but only sometimes, looks likely to succeed. Saif favors a more liberal economic policy and improved international relations.

The old guard opposes this. While the old guard holds a degree of power, they are indeed old in a country where one-third of the population is under 15 years of age. Finding jobs for this coming surge of young people entering the workforce will be the most important single factor in maintaining social cohesion.

Underneath the occasionally eccentric behaviors the trend has clearly been towards a more international outlook. The collapse of the Soviet Union, which had supplied almost all Libya's military equipment, dealt a blow to its capability. Lacking a meaningful industrial base, Libya struggled to even maintain the (slowly obsolescing) equipment it already had.

In recent times, Libya has again been dealing with Russia for military equipment. It was reported in February 2010 that a deal had been struck to buy arms worth $2bn. The news agency Interfax reported that Libya wants to acquire 20 fighter planes, at least two S-300 air Defense systems, several dozen T-90C tanks and other arms. Other reports however say that the signing of any contracts have been continually delayed because a financial agreement cannot be concluded.

For the first time, Libya is now looking outside Russia for its equipment. There have been discussions with French companies with regard to naval purchases. Polish companies have proposed upgrades for Libya's armored vehicles and air Defense radars as well as a range of new equipment. In 2008, the UK signed a $165m contract to supply a tactical communications and data system. Deals have also been mooted with Italy and Ukraine. A Libyan delegation visited South Korea to explore the possibility of buying equipment there. Libya's oil revenues do give it the ability to complete quite large re-equipment programs.

While the future remains quite uncertain there is reason for some level of optimism that the process of opening up and modernization will continue. The greatest risk is probably the potential, unless the level of employment can be increased, that a large pool of unemployed and disaffected youth living under an ageing authoritarian regime will rebel. (R&M 28.09)

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11.14 ALGERIA: Focusing on the Local

He Oxford Business Group reported that Algeria is looking at changing the way it does business, giving greater priority to domestic firms and upping requirements for foreign companies looking to grab a slice of the rapidly expanding economy. Under new rules announced in mid-July, local companies are to be given preferential consideration in state tenders so long as their bids are under 25% more than those lodged by overseas firms. Under the previous rules, the ceiling was set at 15%. The regulations also stipulate that any state contracts must be opened to a nationwide tender in which only local firms can bid. Foreign companies will only be invited to bid on the tender if the work is not awarded to a domestic firm.

Announcing the new measures, President Abdelaziz Bouteflika said that while overseas firms had a role to play in Algeria, the change in regulations was necessary to assist domestic companies and lower unemployment, especially among the young. "It is up to our businesspeople to seize the opportunities offered by the program of public investment, as well as the preferential treatment afforded to them," Bouteflika said. "It is up to foreign firms interested in the Algerian market to join us on the path to a win-win partnership and, in return for the contracts they will obtain, to take part in the modernization of our own enterprises."

The change is to be reinforced by the government when it hands down a supplementary budget, expected sometime in August. The minister of finance, Karim Djoudi, has already said that the extra budgetary law will further underscore the government's determination to buy local. "The budget law for 2010 fits in with the continuity of what has already been decided. That is to say, there is a priority for our national firms," Djoudi said on July 22.

In parallel to efforts to boost local involvement in tenders and projects, the government is also considering draft legislation that would set out how the state determines the price of foreign-owned enterprises it intends to buy. If enacted, the law would require that the sale price be set by expert valuation, rather than market value, when the state buys stakes in Algerian firms held by overseas companies. According to a draft of the legislation cited in a Reuters article on July 20, this measure would enable the state to fight against speculation, facilitate access for domestic companies to international investment and "protect the national economy from the negative effects of the global financial crisis".

The new regulations are far from unique to Algeria, and preferential contracting and bidding rules can be found around the world, from the US to South Africa and Brazil. The reforms will limit the extent to which foreign companies are able to compete for tenders issued under the government's massive investment program, however. Under the scheme, which was announced in the middle of the year, the state is to plough some $286bn into projects aimed at expanding and diversifying the country's economic base, creating employment for hundreds of thousands and providing incentives and support for private sector enterprises.

Some $130bn of the 2010 investment program is to be spent on big-ticket items such as transport and utilities infrastructure, with the balance to be directed to other public works and housing projects, support for the agriculture sector, education, training and business assistance schemes. The five-year plan represents a massive opportunity for contracting firms, and a number of foreign companies have announced their interest. Indeed, some of Algeria's previous infrastructure projects have gone to major international players from countries ranging from China to Spain.

It is as yet unclear just how strictly the new regulations will be applied, with the government having called on businesses from Europe, Russia, the US and Asia to step up their investments in the Algerian economy. Though the government is fast-tracking the development of large-scale firms in the private sector, that process takes time and in some areas at least, domestic service providers will not be able to meet demands set by the state. If the government is going to achieve all of the goals it has set under the plan, it will require a skilful balance of encouraging foreign involvement and expertise, while increasing the role played by domestic companies in broadening the economy. (OBG 20.09)

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11.15 MOROCCO: Agribusiness Report for Fourth Quarter of 2010

Research and Markets (http://www.researchandmarkets.com) "Morocco Agribusiness Report Q4 2010" report is an in-depth analysis of latest industry developments; and essential industry context on Morocco's agribusiness service. Morocco's real GDP growth for 2010 is forecast at 3.6%, down from 4.6% growth during 2009.

Morocco's beef industry is already a major importer of both breeding heifers and veal calves. Although the country imports around 30,000 head of cattle annually - mostly from France, Holland and Germany - the majority of these are used for breeding dairy stock. However, following the recent granting of modest trading quotas to the EU and the US, Morocco looks set to increase the volume of beef it currently imports. For the EU, an annual import quota of 4,000 tonnes is envisaged in the provisions of the association agreement signed between Morocco and the EU. Until recently, EU beef has been banned because of concerns about BSE. However, in recent months, Morocco has moved to sign new certification agreements with several countries, including France. In July, it was reported that, after almost a decade and a half, Morocco had reopened its market to beef and live cattle imports from Ireland. Other sectors set to benefit from new preferential import tariffs include certain types of processed beef. In 2011, BMI predicts that beef consumption in Morocco will rise by 5.5% year-on-year (y-o-y) to reach 210,200 tonnes.

Grains Production Forecasts, 2009-2014: Wheat: 46%; Barley: 142% - benefiting from improved technical and logistical infrastructure which is aimed at mitigating the impact of drought. Barley will also benefit from rising demand for the grain as animal fodder.

Dairy Production Forecast, 2009-2014: Milk: 24%; Cheese: 17% - fuelled by rising consumption demand, especially in the case of higher-value dairy products. Production will also benefit from the adoption of more productive technology and the introduction of higher-yielding, quality producing cows.

Livestock Production Forecast, 2009-2014: Poultry: 46%; Beef: 30% - fuelled by strong domestic demand for meat, as well as government support for modernization and expansion initiatives.

Sugar Production Forecast, 2009-2014: 23% - supported by government initiatives to double production by 2013. Improvements are expected in key areas, including irrigation, improved farming methods and greater access to inputs such as fertilizers.

The Moroccan livestock industry, particularly the poultry and beef sectors, offer considerable opportunities for future investment and development. In recent years, livestock production has already benefited from increased investment as producers look to address growing demand. Demand for poultry has been especially robust, with consumption growth reflecting an expanding population and rising GDP per capita. Meanwhile, emerging fast food outlets are boosting demand for processed meats. Although this is expected to be partially met though imports, domestic production also stands to benefit. In the five years to 2014, we predict that poultry consumption will increase by over 30%, reaching 651,200 tonnes. The production of value-added dairy products offers the highest growth opportunities for dairy producers. Demand for cheese and butter are both forecast to grow strongly. In 2014, 30,690 tonnes of butter and 44,490 tonnes of cheese are forecast to be consumed by Moroccans following five-year growth of 18% and 17% respectively.

Morocco has one of the highest per capita sugar consumption figures in the world. This has been aided by government subsidies supporting artificially low prices. Although these government subsidies are expected to be gradually lifted sugar consumption is still forecast to grow steadily through to 2014. This will primarily be driven by higher demand for value-added sugar confectionery and soft drinks resulting from higher disposable incomes. This will result in 12.6% growth in sugar consumption between 2009 and 2014. (R&M 23.09)

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11.16 MAURETANIA: Statement at the Conclusion of an IMF Staff Visit

An International Monetary Fund mission visited Nouakchott from 15 – 26 September 2010 to conduct discussions regarding the first review of the 2010–12 three-year program supported by the Extended Credit Facility (ECF). During the visit, the mission held discussions with several members of the government. In addition, the mission met with a number of economic and financial policymakers, representatives of the banking community, universities, trade unions, civil society, and the diplomatic corps. At the end of its visit, the mission issued the following statement:

"The data available point to a recovery in economic activity. Real non-oil GDP growth is expected to be around 5.5% in 2010, driven essentially by agriculture, the extractive industries (iron, copper, and gold), and the building and public works (BTP) sector. At end-June 2010, the inflation rate stood at 6.7% year-on-year owing to the rise in energy and food prices on the world market. Higher prices of the country's main export products should help bring the current account deficit back down to below 10% of GDP.

"Implementation of the government's ECF-supported economic and financial program has been broadly satisfactory, thus fostering the restoration of macroeconomic stability. The first half of 2010 saw a marked increase in revenue resulting from a combination of robust collection efforts and an upturn in economic activity. Operating expenditure has been contained, but the low rate of capital expenditure execution has persisted. At end-June 2010, official foreign exchange reserves amounted to $210.6 million, that is, equivalent to 2.1 months of imports. The mission also took note of progress made in implementing structural reforms that lay the foundation for achieving higher, sustained levels of growth conducive to reducing poverty.

"The mission welcomes the convergence of views with the authorities on the need to accelerate fiscal consolidation efforts as well as to deepen ongoing reforms in public financial management, public enterprises, the civil service, and the monetary sector. The mission and the authorities also agreed that strengthening social policies and putting in place social safety nets as well as improving the business climate are necessary steps for promoting development and improving the wellbeing of the Mauritanian people.

"In that regard, the authorities and the mission reached understandings, ad referendum, on the objectives to be achieved in 2011 under the ESF, which remain in line with the program negotiated for the period 2010-2012. These objectives consist in achieving real non-oil GDP growth of 5.5%, containing inflation at 5%, raising foreign exchange reserves to 2.7 months of imports, and consolidating the basic fiscal balance surplus achieved in 2010. (IMF 27.09)

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11.17 TURKEY: The Fastest Growth in CEEMEA - Revising Up Our GDP Forecast

Morgan Stanley's Tevfik Aksoy (http://www.morganstanley.com) wrote that they were revising their forecast for Turkey. Turkey's Q2/10 real GDP was noticeably stronger than expected: According to data released by TURKSTAT, Q2/10 real GDP growth was 10.3%Y, which was significantly higher than our 6-7%Y forecast and the 8.5%Y consensus estimate. This significant deviation between the actual outcome and our forecasts was based on our expectation of lower export growth, which came out at 12.1%Y, and stronger-than-anticipated private consumption of 6.2%Y. Some good news was also seen on the part of investments as the growth rate reached a dramatic 28.7%Y, but clearly this was a reflection of the significant recession seen in 2009.

In comparison to Q1/10, public spending accelerated again, with real growth of 3.6%, which all contributed to the headline figure. As expected, import growth was significant at 17.8%Y, and this resulted in a negative net exports contribution of some 2pp.

As opposed to the very significant contribution of inventories (stocks) to headline growth in Q1/10 (8.3pp), this time it eased dramatically to 0.6pp. In our view, this was slightly surprising, and it might suggest that the growth in manufacturing in the subsequent quarters might ease. However, with lack of health inventory data at hand, it merely remains a guess. At any rate, Q2 was another quarter of domestic demand-led growth, which is likely to be the case in Q3 and Q4 as well.

Adjusted series also points to strong growth: The double-digit yearly growth rate in Q2 was due to the weak base of 2009 and in our view was a little misleading in terms of the actual pace. That said, the seasonally and working day-adjusted GDP series also painted a solid picture, with growth reaching 3.7%Q. This growth rate compares strongly to the pre-crisis period and suggests that the Q2/10 growth was more than a base effect-driven phenomenon. Interestingly, the sharp loss of momentum in sequential growth that saw merely 0.4%Q in Q1/10 seemed to have gained speed. Whether this momentum will be preserved in Q3 or Q4 remains uncertain, but in our view a noticeable slowdown (especially in Q3) should not be ruled out.

Revising up our 2010 and 2011 growth forecasts: On the back of the higher-than-expected Q2 growth, the momentum that had been built up in Q2 with record-low interest rates and also our expectation of some increased non-interest spending on the part of the government, we are revising up our real GDP growth forecast to 6%Y for 2010 (from 5% previously). We are also raising our 2011 growth forecast to 4.2%Y (from 4%Y previously), mostly reflecting our anticipation of some election-related spending and low interest rates.

No immediate policy impact: We believe that these revisions will have no implications for monetary policy, especially in 2010. We already penciled in a 150bp hike in the policy rate in 2011, which is likely to materialize starting mid-2011.

Unemployment might benefit somewhat: With higher real GDP growth forecast and the added upside likely to be provided by the elections, we believe that the employment picture might be slightly better than our previous expectations. We now expect unemployment at 12.5% in 2010 and 12% in 2011. These are still high rates, but clearly suggest some improvement over the recession of 2009.

We expect Turkey to be the fastest-growing country in CEEMEA: With new 2010 and 2011 real GDP growth forecasts for Turkey, we expect the country to grow by far the fastest in the CEEMEA region this year and at one of the quickest paces in 2011. The risks to the growth outlook are mostly skewed towards the external side, i.e., growth in the EU, global risk appetite and clearly the domestic political stability such that consumer confidence is maintained. (MS 15.09)

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11.18 TURKEY: Erdogan Pulls It Off

The Economist writes that TURKEY'S Islamist Justice and Development (AK) party has won a ringing endorsement from voters in a bitterly contested referendum on constitutional changes that are poised to raise democratic standards and further erode the powers of the country's once omnipotent generals.

Final results show that 58% of Turks approved the government's proposed changes to the constitution, which was written by the army after it overthrew the government in 1980. Both government and opposition leaders cast the referendum as a vote of confidence in the prime minister, Recep Tayyip Erdogan. Mr. Erdogan's AK party has governed Turkey since 2002, when it catapulted to single-party rule on a platform of democratic reform and market liberalization.

The results signal continued support for AK in the run-up to nationwide parliamentary elections that must be held by next June. There is widespread speculation that, should AK replicate yesterday's success in the national poll, Mr. Erdogan will push to elevate himself to the presidency when it becomes vacant in 2012.

The EU has welcomed the constitutional changes, which, among other things, make it possible for coup plotters to be tried henceforth in civilian courts. Yet the opposition, led by Kemal Kilicdaroglu, the newly elected leader of the pro-secular Republican People's party (CHP), has sought to portray the amendments as a final assault against the secular order introduced by the founder of modern Turkey, Kemal Ataturk. The package includes measures to bar gender discrimination, bolster civil liberties and protect personal privacy. But these, the opposition charges, were no more than "bubble wrap" used to conceal more invidious changes.

The core of the package is a major overhaul of the judiciary. This gives the president and parliament greater say over the appointments of senior judges and prosecutors, and expands the size of the constitutional court and that of the judicial body in charge of appointments. The opposition claims AK will use the changes to pack the courts with Islamists, paving the way to religious rule. Some mutter darkly about an impending "civilian coup".

There is widespread debate over how the AK has used its time in office to subvert secularism. The 42% of Turks who voted against the package will have only had their concerns deepened by Mr. Erdogan's autocratic tone. During the referendum campaign he accused those opposed to the package of being "in favor of army coups" and went as far as to warn that they would be "eliminated".

Maps depicting the pattern of voting in the referendum show a deeply fragmented country. Those voting against the package were concentrated in a slim crescent ringing the country's prosperous western and south-western shores. In Istanbul, the country's largest city, the trend was close to that nationwide, with 55% in favor and 45% against. The nationalist opposition, led by Devlet Bahceli, took the biggest bashing of all, with voters in Mr. Bahceli's native province of Osmaniye supporting the package.

In a bid to assuage the naysayers, Mr. Erdogan declared in his victory speech that those who voted against the package were "worthy of respect too". But pro-secular urbanites remain unswayed. After his speech Mr. Erdogan and the president, Abdullah Gul, showed up at the final of the world basketball championship in Istanbul, which pitted Turkey against America. They were greeted with loud boos.

In newsrooms in Istanbul, downhearted pro-secular editors joked darkly about moving to Izmir, where "no" votes prevailed. But elsewhere the mood was festive. A coalition of leftists and liberals who campaigned in favor of the package were gearing up to press charges against Kenan Evren, the general who led the 1980 coup. In the aftermath of the overthrow of the government, over half a million Turks were arrested and tortured, and 51 executed by hanging. The result paves the way for the prosecution of the generals responsible.

Despite his resounding victory, Mr. Erdogan cannot afford to be complacent. Kurdish voters in the country's restive south-east provinces largely complied with orders from the largest pro-Kurdish party, Peace and Democracy (BDP), to boycott the referendum on the ground that it failed to address their demands for greater political and cultural autonomy. This in turn points to the enduring power of the Kurdistan Workers' Party (PKK), which has been engaged in an armed struggle for autonomy for the past 26 years and with which the BDP is closely allied. The PKK has threatened to call off its recently declared unilateral ceasefire unless Mr. Erdogan moves on Kurdish rights. This in turn points to the fact that so long as the Kurdish problem remains unresolved, democracy in Turkey will rest on fragile foundations. (Economist 13.09)

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11.19 BULGARIA: Defense and Security Report for Fourth Quarter 2010

Research and Markets (http://www.researchandmarkets.com) "Bulgaria Defense and Security Report Q4 2010" says Bulgaria's potential role in hosting part of the US-proposed missile Defense shield in Europe, coupled with the government's commitment to the EU-led Nabucco pipeline, will keep relations with Moscow tense. While the administration's tougher stance towards Russia may boost the popularity of Prime Minister Borissov and his GERB party, there is a risk of a significant deterioration in diplomatic and trade relations.

On the domestic front, indications that EU aid payments to Bulgaria may once again be suspended have cast a shadow on the new government's progress on eradicating corruption. While we view positively the government's tough stance on graft, we still caution that real reform will be challenging, with efforts so far focused on prosecuting previous government members rather than working to dissuade the practice. In the meantime, popular support for the Prime Minister and the government and relations with the EU will likely deteriorate should tangible results not prove forthcoming.

As one of the last economies in emerging Europe to enter recession, Bulgaria will also be one of the last to exit the downturn, with a further year of negative growth on the way in 2010. Even though we expect a return to positive growth in 2011, we nonetheless stress that private sector deleveraging, limited scope for fiscal expansion and weaker external demand will prevent economic growth returning to the 6% range seen at the peak of the previous cycle.

A key question amidst this mixed economic outlook is whether the current level of military expenditure can be maintained. A great deal of uncertainty surrounds Bulgaria's defense industry, with prospects varying greatly from one company to another. Future government spending is likely to focus on advanced technology offerings so as to modernize materiel. In this context Bulgarian companies, focused largely on low-tech products such as small arms, will not experience significant increases in demand. NATO compatible companies such as Arcus and Arsenal can reasonably hope to win contracts supplying the Bulgarian army with small arms. In addition, membership of NATO and the EU are pushing the military increasingly towards professionalization. (R&M 24.09)

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- Israeli Shekel conversions done at a rate of NIS 3.80 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.60 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.40
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.67 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 82 = $1.00

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